topping wall street expectations. lennar sold more homes at higher prices compared to a year. >> they have you on that commercial. >> yes. >> it says trump rally and it's got you talking about -- >> like that's the shot. can you get that shot? right there. >> they didn't see the irony? they're yanking your chain for doing that. >> yanking your chain. >> they are. make sure you join us tomorrow. "squawk on the street" is next. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is off today. final two weeks of 2016, dow's coming off a six-week run. but futures are mild. europe is just shy of the flat line. that ten-year yield near 2.55 this morning. our road map begins with the march toward the big rally as the man behind the big short goes big on the banks.

mick mulvaney, latest on trump's transition and apple eu heating up, strong words coming from the largest company in the world. first up, blue chips are now up 8.25% since the election, jim. everybody taking stock of what the year end will mean. and then trying to figure out why infrastructure and retail are starting to run into some roadblocks. >> yeah. boy, i'm glad you mentioned the latter because there were some comments from nordstrom last week that shook me, where they said that the mall hasn't been this bad since '72. we have a note this morning that it's out which talks about some good news at costco, that's a citi hold to buy. costco is not the mall. i do feel that what's happened is that we ran out of steam last week. except for the financials. they kept going. when i was listening to that gentleman talk this morning, the big short fella, he was saying, look, financials you want to be all in but we're not going to repeal dodd/frank. i don't know anyone at the financials who thinks that their

stocks are justified unless more owners positions from dodd/frank are repealed. so it can't just be momentum. just can't be momentum. because momentum runs out. >> a lot of people arguing we're starting to think about policy complications, right? >> yes. >> so on corporate tax. this border adjustment strategy that the national retail federation has complained about, maybe that's behind some of the retail. >> well, i mean, the department stores are big losers under that. this is imported close. i mean, this is what they do. by the way, pvh, ralph lauren, those things got killed last week, vf corp. these were all chicks i didn't count on. listen, this morning we had an upgrade of united technologies, honeywell, so we're going back to those. i think that the market doesn't know where to go right now. it knows to go up, but doesn't know what to take up. you know, i went through the charts this weekend. the charts are fabulous. the financial charts are great.

but we don't have anything to go up on. so you have to rely on research. like we got a disney upgrade from bank of america. that could be worth $3. you know, you saw the movie and the theme parks are up. i did a road map to 20,000 on friday, on "mad money," which is kind of facetious. basically you're saying here are the five stocks you can say something good about. and that's where we are. we're in an era of tremendous feeling, not just good feeling. you just need a couple analysts to say good things. see, wow, disney could be up. >> yeah, we're going to talk about that call later this morning. target is 125. "rogue one" we know second best opening for december ever. basically being called a success early on, right? >> iger correctly downplayed that. he's been very adamant these are $800 million movies and more that's upside. i crafted a scenario which says

maybe they do something tech with espn and bamtech, the minority investment they have in the small site, it's just easy to craft stories. i wish that we had more than that. i can craft a story -- i could craft a walmart story 76 because of jet.com. ifrs doing work on jet.com this weekend. i think jet.com kicks in late 2017. >> sure. >> i could craft a story so easily for ge with oil going up. i would love if the companies crafted, they win ireland and turn out bud sell well. carl, we are capable of create ing theses drive these markets up -- >> we are in a period where we're going to start waiting for q-4 results. >> nice number from lennar.

i can make a case for stanley works, sure enough make a case for -- i need cases to be made based on facts. but right now we don't have to. candidly when i was at the -- covering homicide, you don't want the facts to get in the way of the story. it's not the right time. jim -- >> you mentioned lennar, $1.34 ahead, revenue ahead. we'll get new home sales later in the week. caterpillar though the worst dow stock of the week last week. >> yeah, you know, i've been working overtime to craft one there. >> some people are going with this. reince priebus spoke last week and said their priorities will be tax reform, obamacare repealing and then infrastructure, right? >> we need that to leapfrog. but, you know, if oil stays up, that will be a nice beneficiary. if no more drones are captured, we do need china. that's not facetious. i mean, the drone capture, the tweets this weekend, but it is important that china come back. we have to have china be strong for cat. when i saw cat lagging, i said

maybe we can get a weaker dollar and we got a weaker dollar today. that would help too. >> yep. >> but cat led us. and i don't want to see infrastructure as a thesis pushed back. >> although we did see ubs ups to a buy. >> i thought that was good at uri, they did that. i had u.s. concrete on and they're feeling really great. u.s. concrete, the trucks -- that's actually a company. fantastic company. and i think we don't want to lose infrastructure because we've got to maintain the momentum of the industrials and the banks or else we come up with what was leading us at the end of the week, which is verizon. verizon and att, which look like they're going to break out. they are phenomenal stories. and then this advanced micro -- micron-western digital-seagate-intel thesis that is moving up. and then we can't lose the opticals, we've got to have juniper, these are all the leaders. and they can lead, but we don't

have any facts at this point. >> yeah. you see cuban's blog about infrastructure? urging trump to spend $100 billion on robotics as part of an infrastructure program. >> that would be good. not a lot of people involved in that, but that's okay, i guess maybe something that's done. i find that everybody has a solution. but the ultimate solution wub to put a lot of people to work. and when i see the possible -- remember, trump thinks we're in a trade war with china. a lot of people say, wow, he's starting a trade war. he thinks we're in a trade war and we're losing. and maybe what has to happen is we have to sacrifice some big companies that do business in china in order to teach china a lesson. and maybe that's why caterpillar's going down. >> speaking of big megacaps in foreign countries, apple's going to launch a legal challenge this week to the european union's demand it pay $14 billion in allegedly unpaid taxes. the eu claims the company's tax deal with ireland amounts to illegal state aid. ireland is also challenging that

ruling. we've been talking about this for awhile. kind of died for awhile but it's back today. >> i think when you look at that tax rate for ireland, you understand there are a lot of people made the case, rigorous people on the other side. i have felt while apple made this front and center really tries to get everybody to focus on it, i'm focused on the iphone 8 super cycle, how iphone sales are doing and not this. because this is a bit of a rounding error. but apple doesn't feel that way. apple's really trying to, you know, focus on the appeal and tries to appeal to a lot of us saying this is really the stand for all of american companies. >> yep. >> i prefer to think of apple as a story we need earnings for. >> on that point, a few moments ago apple put out a statement saying apple is the largest taxpayer in the world, in the u.s. and in ireland, with a worldwide income tax rate of about 26%. it goes onto say we've long advocated for tax reform with a simple, straightforward system. but this case has never been about how much tax apple pays.

it's about where that tax is paid. and it's been clear since the start of this case there was a predetermined outcome. if their opinion is allowed to stand, apple would pay 40% of all the corporate income tax collected in ireland, which is unprecedented and far from leveling the playing field, selectively targets apple. this has no basis in fact or law and we're confident the ruling will be overturned. >> i totally believe that. i've actually read the briefs, i understand there's no doubt about it they're targeting apple. at the same time this is europe. you know, one of the things that is really -- let me -- do you know we attack china all the time for currency manipulation? >> right. >> we've attacked mexico for currency manipulation. who's done the most currency manipulation? europe. but europe gets the free pass. i don't understand it. they have been manipulating their currency down to take business from us, now they're going after our taxpayers. they get the free pass. i bet under trump the free pass ends. but what a free pass -- do you

ever hear anyone say, listen, the euro's down? >> no, after we hit 1.03 -- >> it's total manipulation. that drives money here, sends the dollar up. but they get a pass. i'm ending the pass right here. i'm telling you that that is a ridiculous pass that because they are free people and democratically elected we give them a pass. i don't understand how they can manipulate their currency anymore. and now through this i think it's incumbent -- i know the u.s. is in favor of apple. they should do everything they can to be able to say, listen, this is wrong. stop your currency manipulation. stop your taxation. but, you know, we've got kind of a government in passing right now. i don't know if you caught the press conference, the wistful press conference. it was wistful. it was a kleenex press conference. >> are you saying you would take on a two-front trade war as opposed to one? >> yes. i think they declared war on us and we're like, hey, man, they're nice people and really good traveling and we send kids abroad there, my junior year

abroad, we don't want to jeopardize that. i think they should change hostel for hostile because i think it's unbelievable what they get away with over there. you ever heard anybody other than me articulate that thesis? >> no. and i would be surprised if it's not a big thing next year. >> it's outrageous they've got their currency so low, they take a huge amount of business from us and nobody seems to care. and i think that when i look at all these industrials that we've bid up, it's europe it's going to kill them. >> germany by the way did beat today after a good pmi. after good orders in germany. >> their numbers are so good over there, other than volkswagen. i've been trying to get a volkswagen now for like a month. >> and? >> they located one in the country. this is one of their big models that they're pushing. we think we may have one. i mean, that company is -- questionable. questionable. >> in terms of being protected by the state is what you mean? >> yes. the state.

germany's doing so well. i mean, but you know, as soon as you start talking about germany so well, does that make me a putin backer? like the worst guy on earth. cramer doesn't like germany, must like putin. no, i like the "saturday night live" putin. >> we'll keep an eye on that, jim. >> i know he's got our people going up there these days, maybe it's happening. >> meanwhile, president-elect trump is out with his latest cabinet pick. he's picked virtu financial founder vincent viola to be secretary of the army, former office infantry officer. >> what a great guy. sometimes you get these guys -- like i happen to love mattis, but the mad dog thing, i wish we'd lose that. the guy, if you'd go read the battle for fallujah, no true glory, he is anything but a mad dog. he was the guy saying, listen, i'm tired of our guys getting killed. >> and certainly has bourn his own share of tragedy. >> yes. enough. >> very true. when we come back, double dose

of good news for disney as jim said, it's not just "star wars." we'll get to that call out of b of a. we'll talk to steve case in the age of trump dow up six weeks in a row first time since 2015, but the s&p and nas coming off a losing week last week. back in a minute.

disney's latest "star wars" movie topping the competition at the box office. "rogue one" took in $155 million this weekend ntd u.s. and canada. that's the second largest opening in december. topped only by last year's "star wars" "the force awakens" made nearly $250 million in the first weekend. jim makes this call on b of a, basically they have a lot of time going on, but the time between po tenl stential hits w get -- >> garden of the galaxy one of the greatest movies. dead men tell know tells. that's going to be very big. the release schedule is extraordinary. quarter after quarter with a big release and then disney has a 35% corporate tax rate. it is a huge winner under president-elect trump's plan.

i don't think people understand it should be -- by the way, one of the funniest thing about this, there's no mention of espn. i keep checking. where's espn? it's not in here. it's just not in here. >> should it be? has that problem gone away? >> well, when you read this piece, makes you think that espn is kind of like abc. remember when nobody used to talk about abc and doesn't matter anymore. there are analysts trying to get us past espn and i think that's really important. >> yeah, jessica reef cohen, one of the deans of media -- >> yeah, this is not an idle piece. it is about the film schedule, which i don't think gets talked about enough and espn talks about too much. particularly if they make changes with espn you'll see it more of a technology play, which would be amazing and a play on your cell phone and a play combined with mlb, which by the way mlb site is so amazing, so much better than the nfl.com

site. sorry, guys. >> so you mean it's possible buying the laggards of the dow at year end has paid off in the following year, am i right? >> yes, it has. >> caterpillar. >> yes. >> nike -- >> now, nike reports this weekend. we're not getting any good feel whatsoever about that. caterpillar is very much regarded as a china play. the financials are so strong in the dow. i'd like to see some of the drug stocks do better. they've been -- there was a downgrade of merck today. i thought that the st. merck, i thought that was ha ras si. >> bristol got an upgrade. >> yeah, i thought it was not facetious but not so great. i'm getting some heat on twitter about the strength of europe. but let me give you a feel, there's a bank.

mo monte depaschi. i'm not as concerned about europe and others because they're misdirected and haven't done their homework. this is the oldest bank in europe and everyone is just ignoring it. deutsche bank just went up four bucks, they could easily do a rights offering. this is a banking system. unicredit did a recap last week, if you can ignore the possible destruction of the oldest bank in europe, it's because you're continent is strong. they haven't done the state, country by country, homework, and they ought to, because we all think europe's weak. and europe's numbers are very strong. >> yeah, italian yields near one-month lows today on expectations they're going to get something resolved. >> they got to get monte -- i mean, monte pasci, my dealings

with them have been superb, but i have to tell you the idea that this has not impacted europe is because europe's strong. they can handle what happens to the oldest bank. people have to start recognizing europe's better. most of the companies i deal with europe is a bright side. even the tech companies. bright side. >> yep. >> but people are so stuck with, you know -- look, a lot of people who tweet, they are into the fake news game. i mean, i got to get -- i was asking my daughter, my 25 -- could you show me fake news? i read the times. she goes, well, you know, at times -- no, times is not fake news unless everybody i went to school with who runs it is a phony. when i met them they weren't phonies, maybe something's happened to them. no, it's not phony. >> speaking of europe, we are getting headlines from france this morning. french court ruled imf christine lagarde chief was guilty of negligence -- >> oh, come on. >> -- in a case involving her

term as the country's finance minister. back in '08 she approved a 400 million euro loan to a business magnate who was involved in aborted sale of sportswear maker adidas. no sentence handed down, but that was a pretty high profile case the last couple weeks. >> geez. she's a very distinguished -- you know, i am kind of just shocked. i was thinking that was something that would not be a factor. here it is. i kind of -- i am lagarde. >> yeah. sara's working on that. >> i have to tell you, look, i guess any court can do anything. we've seen our courts do something -- she's very distinguished, very smart person. but, you know, courts are courts. >> true. >> but again, i think france is probably one of the weaker countries, but they can make a comeback too. when we come back, we'll get cramer's mad dash, we'll countdown to the opening bell on this monday morning. a lot more "squawk on the street" from the nyse straight ahead.

♪ six minutes before the opening bell. let's get cramer's mad dash. a stock you know well. >> yes, costco, my travel trust owns it, this is a company i've been waiting and waiting and waiting for a story about accelerating same store sales and the end of the gasoline price deflation. remember, we heard from kroger, we're only six months away from the end of food deflation. the new coke branded carb doing very well. i like this call very much, one of the finest retailers and it has a model, because it's a club

model that i think can defeat amazon. at least in the things that it sells. >> interesting. >> now, i was on amazon yesterday, and it was like, i ordered socks for my daughter, and it's like five minutes later i got they've been sent. five minutes later it's like expect them tomorrow. i didn't even wait until wednesday. very hard to defeat amazon in that business. but costco has a business model that makes it so things cost less. and it's about time that people were worried about head & shoulders play, it's about time people worried about it was deflation of food that really hurt them and that's going to be in the past by the march quarter. >> i remember when we did our documentary a few years ago we asked what they thought their own weakness was and they said e-commerce. >> yes. they have fixed up their site. their site was horrendous. their site made me feel like, okay f you like this, you don't like that. you know amazon's like feel man of the high castle, say you like grills at costco, you may like lettuce and tomato. it was really ridiculous.

done. >> we'll watch that when it opens. in the meantime we'll get the opening bell in just about four minutes. don't go away.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in about 60 seconds on this monday. watching a few things. donald trump's response to china and that underwater drone. we'll watch the transition as well. yellen actually speaks today at commencement address in baltimore about the state of the job market. for the week we're going to get some housing data. we'll get durables. and even though friday is the day before christmas eve, it is a full trading week. >> yeah, that's right. look, this is usually a period where you can craft good stories because there's not much going on. but i did think that when janet yellen barely raised her growth forecast and then was bombarded with questions about trump, you don't know what to do. i mean, if that forecast is too unchanged, you can't buy a lot of the stocks we're buying. you just can't. >> let's get a look at the

opening bell. the s&p at the bottom of your screen. at the big board it's enterprise community partners, a nonprofit providing affordable homes to low income americans. celebrating their 30th anniversary at the nasdaq nbt bank celebrating its 160 @venn sar. >> remain a great place to be. i saw another downgrade of key and every time that happens is it goes higher. i want to warn analysts, you're not doing this oddly. i'm keeping track of every one of your downgrades. there's been six downgrades since right before the election, and yet all that happens is beth moony continues to deliver and deliver. she did a great acquisition. i see you, you downgraders, and i know you. and i will find you. okay. >> you got to do the thing. i will be watching you. >> oh, i am your captain. >> yeah. >> by the way, you know, i have a -- do you know i have a career set of skills that makes me really able to find out these guys without a problem.

i'm introducing sara. >> sara is here. once lagarde got mentioned on air sara made a beeline. >> i like that. i thought you were going to talk about the yen, but you have more going. >> this is big news, and it's a big surprise actually. >> is it a downside surprise? >> it's a downside surprise for her i would say certainly. on the plus side for her she is not going to have jail time. there was no sentence handed down. so this is a big slap on the wrist. and what we're talking about is christine lagarde, the managing director of the imf was found guilty -- >> will she have to resign? >> -- of criminal charges -- well, that's unclear. it's going to be up to the imf board. and they will be meeting in a few days. and they are going to have to determine whether this is enough of a blemish and a problem. >> a huge policewomen iblemish. >> it's a huge blemish. these are criminal charges linked to misusing public funds eight years ago during her time as finance minister. she does face up to a fine of

$15,000. did face up to one year in jail. won't get those punishments but does get that guilty mark. there were two counts here. she was found negligent on one count of misusing public funds. so this is going to be a problem. >> negligence is a criminal crime there? is it criminal? >> right. the courts -- it's sort of different. works in a different way in france. and i don't portend to understand. but, look, it's a problem, and it also comes -- >> impact? impact? >> impact is going to be on the imf, which is involved in advising countries and sovereigns like europe and i know you've been paying very close attention to the italian banking system on trying to break the link between the sovereigns and the banking system. look, she took over the imf, this is her second term, she took over after another scandal. >> i was going to mention that, but that was kind of a different kind of scandal. >> and she has led this institution.

she's been a world class leader. you know i've spoken with her many times. she's treated as a world class leader. >> she is a world class leader. >> she's in the room, she's been right. the imf has been right on a lot of calls when it comes to the global economy when it comes to the federal reserve to wait on interest rates to protect emerging markets and some of the rest of the global economy that was very nervous. she is considered a champion of emerging markets as well, bringing more leadership. and china into the imf in the form of bringing the chinese currency into the imf's basket of currencies. so it's going to be political from here to see whether she will continue her leadership of the imf. she just assumed her second term, which is supposed to last for several years. >> shocking. i thought this was just a show trial and that there would be in the end nothing to come of it. the imf has been at various times very hard, you know, the imf is a rigorous institution. i don't know. i'm trying to put this in the context of the eu, trying to put this in the context of the emerging markets. i just think that if it's a slap

on the wrist and she can continue -- >> i think there's another context to put it into, which is faith in global institutions right now. in the global elite. >> the elite is very important. >> the imf, the world bank, you know, so many of these institutions, she came out telling british people that she does not support a brexit and then a brexit happened. and she sort of had to come back and say, well, we don't know the impact of that. there are a lot of questions right now. this idea of crony capitalism. >> but she's a globalist. in an era where we've become nationalists. >> she is. >> with the con notations of nationalism in the '30s. >> she's become a voice for free trade and open borders. the question is without a champion like that, and she was one, a very public and popular one, what will that mean? and does this hurt the credibility of the institution and of her? >> a lot of questions. >> talk about impact. some big ideas to ponder.

>> no, i'm glad you came up. when i heard about this, okay, you put it on trial, nothing will happen. if she loses the imf job, she will be a person whom remembers being the sunset of the elites. and i have felt just so you know i thought she was doing a fabulous job. >> right. >> come on, admit it, she's been the rock of gibraltar. >> yes, a lot unhappy did not have a head at the table of the imf, and she's been a champion for countries like greece who have been suffering. >> and then less than $14 billion do a rights offering -- >> could come as early as wednesday. >> they might have to. >> set to pay less than 14 which i'm sure you had been expecting. >> yes, i didn't think it would be more than that since the only -- few -- very handful of u.s. banks paid that or more.

but get it out of the way, the stock moved up to 19. they could do a rights offering at 17. they should do that, they don't listen to me, but that's okay. that's exactly what they do. we have some very big international news. if we get that monte paschi bailout, i think we begin to have a nationalist theme. >> stock is down on the share sell. >> well, it should -- oh, at deutsche? >> no. monte paschi -- >> our number one viewer, thank you, jim. >> i never miss a minute of the show. >> meanwhile, we were talking about infrastructure policy implications. >> yes. >> not only is cat lagging the dow, copper's down close to a one-month low. >> yeah. we have seen over and over again the baltic freight index going down. we don't want that. we don't know what china's up to right now. we know that the chinese banks, good to have you here, the chinese banks are on the wrong side of history right now in terms of their balance sheets. we know that the chinese have repatriated so many treasuries to the point where they're now number two after japan both in

liquidating. so i think there's a lot happening internationally that we ignore. while our market goes higher. >> chinese currency at an eight-year low against the dollar. that's something we're watching as well. as the fed predicts three rate hikes this year. remember what happened last time. >> now, what did you think about my notion that the europeans are currency manipulators? >> i think you're going to have a hard time proving that considering what they're doing low interest rate policy and qe and stimulus. we did that. we created the playbook for that in the united states, ben bernanke. >> yeah, i agree with that. >> you didn't call the u.s. a currency manipulator. >> that's what they're saying what about king dollar, talking up the dollar for years. >> we were about to have a depression, let's remember that. and germany beginning 2011 because of our buddy with the two rate hikes, they were about to have a depression. but all good things come to an end including depression talk that allows you to get away wit. for the most part fixed and time

to start letting their currency go up, but no one's allowed to say that because europeans are our allies and everybody else is our enemy? come on. brazil got its act together? have you watched vale, petrobas? >> second to, the russian ruble. >> well, i don't mention russia because i don't like him. >> yeah. >> wish might have bought some russian etfs earlier in the year. >> i can do without backing anything involving russia. >> a lot of the big winners this morning are research related. disney is in the top ten. >> right. >> lam research. >> now, orders to the semiconductor companies are off the charts. i really believe kla should have been allowed to merge with lam. i like the fact lennar is up. remember housing companies just fell -- they've been off a cliff coming in. there's some good trends. but, again, i urge people to

recognize that we have not much to really go on here. but we can keep taking things up. and some things don't want to go up. there was a note, a really good note out of suntrust facebook, instagram doing very well. no one cares. i would be careful, there's not a lot of news but a lot of stocks going higher. and i'm worried about this imf situation. the nationalists streak is not what -- we've had some periods in the world where there's been a great nationalistic streak and it's never been good for the world. it hasn't been. >> populism. >> nationalism. nationalism is something that had been the bane of the world from 1919 on. and i hate to see it. >> yeah. on a winning streak right now though, that's for sure. >> absolutely. >> disney far and away the top dow stock of the morning. index is up 20. let's get to bob pisani. hey, bob. >> good morning, carl. happy monday everybody. we're up just barely. and i would say once again this is the fourth day in a row a bit of trendlessness in the market right now. take a look at the sectors for

the morning. and remember our leadership groups, banks are up, but they've stopped really providing leadership for the last several days. industrials same thing, very fractional gains here, materials were okay until the middle of last week when they just sort of fell apart. so we're looking for some leadership here just up fractionally today. i say trendless because there's a battle going on, not between the bulls and the bears. i call it the battle between the pragmatists and the optimists. the pragmatists are saying we can't keep going up because we don't have any idea how much tax reduction and fiscal stimulus is going to impact earnings. we can't do a model on it. we don't have the numbers. the optimists are simply saying, listen, just use your imagination here. higher economic activity is going to justify an expansion of earnings, it's going to justify higher multiples. we'll figure out exactly the details a little bit later on. but it's going to be good. now, remember the optimists have taken this pretty far, but it's starting to hit resistance. and this is why we're seeing this trendlessness.

so look what happened last week, for example, health care was a laggard through most of november. it was a modest leader last week. and the leadership groups, your industrials, materials and financials, those were your three leadership groups, they just sort of trended down and started selling off. little is good news, working off some very overbought positions we talk about last week, strong relative strength indicator we had in banks, some of this is good. but the trendlessness is continuing to other asset groups. so the dollar has pulled back from its 14-year high. that had gone up dramatically. gold has stopped dropping. bond yields have stopped rising. in a sense these are good trends to have because they had been moving so far so fast. but, again, we're sort of in this trendless situation right now. and this trendlessness issinfecting other global equities. so, for example, look at europe. ecu is the etf everybody buys when they want to own europe. it's the eurozone.

you saw a small move up a couple of weeks ago as the euro stabilized a little bit. but for the last week or so nothing's really happened. nothing going on there. that's again a little bit of trendlessness. same thing with emerging markets. surprisingly they had a little bit of a brief rally despite the dollar strength about a month ago. and as you can see here back down again. there's nothing really to conclude by this either. so we're sort of in this trendless situation right around -- right across the board. i think, jim had a very good line this morning, the market wants to go up but doesn't know what to take up with it. that's exactly the situation they're in right now. somehow we'll resolve this. i still believe that the trend is on the side of the optimists, that's why i do think that we will break through dow 20,000 sooner rather than later. meantime, show you lennar here because another decent quarter for another home builder. not an amazing number. year over year earnings up 11%, beat expectations. order growth almost 10%. they wenlt across all the geographic segments. price growth 2.8%, maybe a

little disappointing. some of the other ones had numbers closer to 4% or 5%, but still perfectly respectable. most of the builders are up. by the way, since the election despite the fact that higher interest rates will generally negatively impact them, the better economic growth is really what's mattering here, lennar, toll, kb home all doing a bit better and all up since the election despite higher rates. right now dow is up 34 points. we're just 120 points shy of dow 20,000. carl, back to you. >> bob, thanks a lot. bob pisani. let's get to the bond pits as well, rick santelli at the cme group in chicago. good morning, rick. >> good morning, carl. you know, there's a lot of things going on in treasuries, and it's hard to say rates are coming down when they're so close to lofty levels, but they are a little bit. it's something you want to pay attention to going into year end. look at a two-day of two-year, easing back. one-week you can see persistent strength. by the way, the area that has

the wildest moves is the five-year note. and you'll see in a moment look at one-week of tens, two-day given up, down four or five basis points even though the five-year is down more. and if you look at the one-week of tens, they still look up. but one-week of 30s you really see how the long end is losing it a bit. the yield curve gives us lots of clues. let's look at a december 1st start one-year basically of tens minus twos. it's been getting steeper. look at 30s minus fives, not so much. more of a flattening trade to a lesser extent but certainly important, tens minus fives. what's the kmom denominator? the five-year. five-year upward yields, downward price trajectory is creating kind of a camel hump in the curve. you want to pay attention. that's a real fulcrum for true financing on the five-year part of the curve. let's look at foreign exchange, shall we? this is really easy. this you have to take macro view on. four-year of the dollar index, it is picture perfect. when it went through 100, it

comes back, kissing that area and zooms up again. if you want to take the old mirror off the closet door and look at kind of mirror image, it's the euro versus the dollar, level, not 100. it's 1.05 and it's rather significant. if we go to parody, we'll be looking at 1.07, 1.08 index. carl, back to you. >> rick santelli in chicago. thanks so much. when we return, growth hopes under a trump infrastructure plan. the stock up more than 30% since the election, dow's up 38 largely on the back of disney. back in just a moment.

♪ from outer space to underground, elon musk taking to twitter this weekend with a new plan to disrupt traffic digging tunnels to get around congestion.

in a series of four tweets, musk says he wants to open the boring company, which he says will actually happen, but he didn't reveal exactly how he would do this without causing even more traffic. while he may have just been venting about traffic, it's worth noting the billionaire entrepreneur did update his biobi bio on twitter to read tesla, spacex, tunnels and a.i. >> he obviously did not live in boston -- >> no. >> i think that's okay. he is he is -- disney is up two, it will probably be up four. how to you get to dow 20,000? you take the stocks that are already going, perhaps people think they're going to win or had a good weekend, this is that era of good feeling where we suspend judgment, take things up because it's -- we've levitated before, and we could levitate on

nothing but analyst upgrades and i sense that's happening. >> inflows first since july of '15. >> individuals are back and they're not just buying etfs because some stocks are moving a lot hafrder than others. and the analysts are very against it. goldman downgrades amat but upgrades lam research. did you know they trade together? you may think -- facebook turns around, watch facebook and watch adobe. facebook the news is good, and adobe the quarter was great. and watch honeywell where people mistakenly thought the preannouncement to the upside was a preannouncement to the downside. >> yes. >> look at this market. come on, this market wants to go higher saying please, please get behind me but analysts just won't. lowe's buy to hold citi, are you insane? look at home depot. this is not a period -- you can downgrade them in january. but go with the flow now. i'm taking nvidia right now up

to 105. >> really? >> yeah. >> so i'm hearing you think we hit this magical level by the end of the year. >> i'm telling you, you can glide up. i've made a case for walmart, disney, ibm, american express, j.p. morgan, i can make it for all these without a lot of problems. because that's what happens. i used to buy deep in the money calls when it was my hedge fund for all the stocks that were loved and took them up and sell the call and january calls so common against it, but i would see a western digital and say, listen, they were on "mad money" -- of course we didn't have "mad money," but theoretical "mad money," eight times earnings, goes to 12 times, 85, this is what's happening on every desk. there's guys saying, please, we got a big break. key was downgraded. that's our chance. look at united technologies. remember, they got the call from the president. that wasn't a positive call. i wore my jacket don't worry only cost about $18. my wife said who is patton

whitney, i said stock going higher. >> that's right. with that we are about 109 points away from 20k. we're going to watch all that. we'll get stop trading with jim in just a moment. "squawk on the street" continues after a short break. can share o amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

time for cramer and stop trading. >> i was born at night, but not last night, able words from a man we thought was on the defensive, i'm talking about greg hayes from united technologies. looks like that call and response didn't get in the way along with boeing, there's a lot of thought boeing has been able to get ahead of what might be president-elect trump's freeze with iran by getting those planes over or at least getting that deal done airbus got a big order too. but remember, boeing is a company that also was in the cross hairs of president-elect. and it looks like if you resolve and the president-elect starts tweeting about you and you've got a good industrial story, you can go higher. remember, you have to buy boeing in dollars. don't think that is a, wow, how is that doing that with a strong dollar play. >> yeah. >> so anyway, i noticed those because like i said there will be many opportunities to craft stories that go higher with dow stocks, here you go. boeing, united technologies, disney, we're crafting. >> we've not seen that showdown on twitter ends poorly for the

company, not yet. >> no. no. we've had -- and, look, you could argue that the drone story, which is, hey, keep the drone, that that would once again cause a lot of stories like united technologies to go down because the growth on the other comes almost entirely in china. so while we're whistling past the chinese graveyard and thinking the chinese don't have maybe big hat no cattle, i know trump has told me many times that the chinese are big hat no cattle. so this is from the old days. i have not visited -- i did go near harry winston, which is across, and found those prices ridiculous and immediately beat at costco. >> jim, what's on mad tonight? >> do not laugh. they've got some beautiful jewelry. >> and handbags. >> yes. we have ionis on, which is a company that had some fabulous news last week about some diseases. and i'm trying to stay very current with biotech because if biotech moves, then you really have a kind of air of -- if you

can create the drugs, it's mylan and teva the president-elect's been about. >> you lit up the phone lines today. >> well, i think europe's a currency manipulator because germany's 27% and doing really, really well. try to buy a volkswagen you can't buy them, or they're such knuckleheads they don't make them anymore. what does it say? >> we'll see you tonight, jim, "mad money" 6:00 p.m. eastern time. when we come back, more on lagarde being found guilty in that negligence case. and then later, aol co-founder steve case on tech and trump. dow's up 38. s my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do,

then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.

♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, mike santoli at post nine of the new york stock exchange. david faber is off today. don't let the markets fool you, are getting some moves a lot centered around research but whatever works, dow's up 37 right now just shy of 19,900. s&p up 4.5 to 2262.

our road map for the hour begins with that stubborn path to dow 20,000. one sector falling behind, retail, during what should be one of the busiest times of the year for that sector. we'll talk to a technical analyst on which levels to watch. a closer look at trump's infrastructure plan, one company getting a big boost, u.s. concrete. the shares have soared 30% since the election. the ceo's coming up. and imf chief, christine lagarde found guilty of negligence during her time as finance minister. we'll have details on this developing story later this hour. let's start with the markets rally mode since the fed's rate hike last week, the dow closing in here again on 20k. we're just a little over 100 points away. there's still investor skepticism though about 2017. joining us now to discuss this market is pimco market strategist and portfolio manager and chris of bank of america lynch global wealth management, he's the cio there. chris, are we going to see 20,000 in 2016? >> we should. the momentum of investor

rotation is phase one right now. we should see another two phases next year, but right now the market wants to go up. the question is what's going to take it higher? what are the two new catalysts that take us to 20,000 or perhaps higher, 2,400 or so on the s&p. that's not base case, but with this wind that's coming here to close the year, it's a little bit of cyclical momentum. but it's a lot of rotation. it's rotation away from fixed income and into equities as we close out the year. >> so what's the second leg? you said there were two legs of rotation. >> the second leg would be next year after a pause. think about it, if taxes are going to do down, there are going to be some that wait before they take profits. and that will happen most likely at the end of january or early february. that will be a pause in the marketplace. that will be second phase and third phase probably the end of next year. >> do you see, tony,ed trends we've seen in the last week continuing as well namely pushing yields up and a strong dollar? >> well, we believe in neither the new normal which is an era of slow growth and low interest rates, or the new neutral as we

call it. globally, think of japan's market remain zero, europe near zero through 2020 and even the fed about 2% in 2020. we think those theses, normal neutral, are still valid. so while yields might rise and be pressured upward by this idea of faster growth and faster inflation, we wouldn't expect too much more on rate rise. and what the bond market seems to be worried about of course is this rising growth, tru trumponomics, but we saw janet janet yellen act a bit tough and hawkish and should help contain the fears in the bond market ultimately. >> so when well-known managers start throwing out numbers like three and worry about the effects of such a number, you doubt it? >> well, it is possible that the u.s. ten-year moves toward three

in 2017, but with the prospect of 0% policy rates in both europe and japan, low rates globally and the likelihood of the fed pushing its rate maybe into the twos, it's not reasonable to expect rates much higher than that. rates that -- yields that are widespread relative to the world will of course compel the world to invest in the united states and keep upward pressure on the dollar. that in itself is a cop who can arrest the worries about inflation because as the dollar rises that can suppress u.s. economic growth, suppress inflation and of course suppress inflation fears, which is ultimately what the bond market worries about. >> chris, if we get these kind of follow on tailwinds that you're expecting, how would you scale the opportunity for the potential upside? i mean, a lot of the market action has been in these sectors that seem to do great at the beginning of a bull market. you're actually seeing streaks in terms of consecutive weekly gains like we last saw in 2009. on the other hand market's been going up for almost eight years and valuations are hardly at the

beginning of a cycle. so where are we? >> you know what, that's a good question. it's a good question. it's a good layout for all of next year, which is earnings are going to have to eat into the multiple. and the weird part about next year is the fact that we're heading into a really wide dispersion of potential earnings growth. you don't know if it's going to be 8%, 9%, or 15% or 16% depending on the tax cuts. you could see somewhere between 129 and 138, so it's hard to put targets -- >> for the s&p. >> for the s&p. yeah. it's hard to put any rational target out there other than to say markets are going to have to eat up into the valuation and we could potentially expect whatever the earnings growth will be that's the return on the market for next year. >> tony, i know you focus on fixed income at pimco, but when you have, we were talking about barron's this morning all top strategists say market's going up next year and it's hard to find someone who's very bearish on the stock market given what we could see from washington. does that worry you? does it seem sort of toppish when you have that kind of overwhelming bullish sentiment? >> well, we think a lot of the

trump no, ma'amics have been figured in and it is reasonable to expect earnings per share could rise next year in various areas. consider the banks for example, simply the steepening of the yield curve, lowering of tax rates could boost earnings a great deal. so that sector of the economy it's rational for prize u prices to have gone up. it's reasonable to expect as well which consumers that have been saving at a rate of about 6% over years, building audiotape huge stock of money, might pull back on savings, going from 6 to 4, 2% on $15 trillion is $200 billion potentially of spending. so it's reasonable for investors to expect there could be a pickup in spending because of the tax cuts, pickup in the economy, pickup in earnings per share, which can help the stock market over time. but whether or not this is permanent, the upward trajectory on growth, that's the big question. what that requires ultimately is a change if the productivity

trends. that's a big undertaking, requires huge investment by government and companies to change the path. >> all right, for now though it sounds like you're both pretty positive at least son stocks. thank you for joining us on a monday morning. with the dow up 43, chris and tony. well, steve eisman on "squawk box" earlier. >> i think the financial system is going to be at least partially deregulated, i think over the next couple years they'll be more leverage and this will be a golden age of investing in financial stocks. >> so you would be very long right now financial stocks? >> as long as i could be. >> and is that what you are? >> and that is what i am. >> all right. for more on this call, let's bring in our own wilfred frost. clearly eisman a goot not afraid to go negative on banks but likes them here. >> absolutely right. he said it was a golden age in investing for banks. of course that era has already

begun with a huge rally we've seen in banks over the last few months. what's that down to? it is in part hopes for things like deregulation and tax changes, but it is the move in the yield curve more than anything else that is played the biggest part in the share price moves. thus, a constructive view on the banks from here should be more based on whether you feel the rise and steepening of the yield curve can be maintained or extended than hopes for deregulation or tax reform. and that rests on the hope more for growth and inflation than anything else. it is this reason why bank of america's been the best performer of the big universal banks. it is widely known to be the most geared to interest rate increases. low rates of course have been good for most sectors and the stock market as a whole over the last decade but bad for banks. that has now changed and it is worth noting that banks of course not just underperforming over the course of 2016 but for the last decade. so there's a lot of pent up negativity being turned around at the moment. in terms of valuations, banks

have since the election improved from one times tangible book to 1.3 times, but they remain below the ten-year average highlighting the scope for further upside despite the recent rally, guys. >> so, wilf, where are we in this process of analysts trying to raise earnings estimates to catch up with what the yield curve has done and maybe price in some of the deregulatory effects? >> well, i think the price-to-book change their highlights we've had a big move 30% when we talk about bank of america, but still decent upside. goldman sachs for example still thinks there's another 10% to 15% upside in bank of america. there's no doubt we've had this big chunk of this rally, sort of surprise move if you will which is always the fastest and biggest, and now it's a case of grinding out the earnings and making sure they do catch up with where expectations have been. i don't think we'll expect another sharp 30% increase for example, but if they now deliver the types of earnings people hope will come, they're certainly room for the e part of

the p/e to move. >> it's interesting because on a one in five year basis the financial stocks have in and out outperformed the s&p 500. so you've had a lot of catchup in a very short amount of time. >> exactly right. very short amount of time. it's interesting as we came into this decade it was banks lagging. if we talk about the move from dow 10k to dow 20k, it was the vast majority of the period where they lagged and sharpness of the move now puts them as market leaders as we head into the new year. >> big engine for the overall index. guys, thank you very much for that. meanwhile, the president-elect picking his nominee for the director of the office of management and budget over the weekend, this ahead of the electoral college vote which as you know is today. our eamon javers has more on all of that. hey, eamon. >> good morning, carl. so much to bring you up to speed on today, a lot of moving parts here in d.c. and in florida where donald trump is at

mara-largo. m mick mulvaney will set up the idea of a big infrastructure spending in the trump administration, we'll see how he comes down on that debate. we're also hearing david mccormick of bridgewater could be a possible choice for deputy secretary position. bridgewater manages $160 billion for hundreds of clients so would be familiar with the big numbers at the pentagon. and of course we learned this morning that donald trump will nominate vincent viola of virtu financial as secretary of the army. a lot of wall street names coming into play here in this new administration as they begin to pull together. and a lot of wall street folks with military backgrounds as well. all of that happening as the electoral college members will meet today in their states. here's the way it will all shape up throughout the day. they're going to meet in their individual states. they'll cast votes for president and vice president. they'll deliver a certificate of vote to both the national archives and to congress on capitol hill. fast forward to friday january

6th, that's when the house and senate will meet to count the votes that day. again, guys, against the backdrop here of increased tension with the chinese over the weekend we had this incident in which the chinese navy seized a u.s. navy underwater drone. here's the tweet from donald trump over the weekend. he said, quote, we should tell china that we don't want the drone they stole back, let them keep it. the pentagon meanwhile says they have secured an understanding that the chinese will return that underwater drone. so that's something that's simmering as well and something to keep an eye on, carl. >> hey, eamon, on the pick of mulvaney for the office of management and budget, it's interesting that he's a fiscal hawk, sort of an anti-establishment tea party type on budgets when you have the trump camp talking about a massive infrastructure spend and all sorts of other sort of debt-fueled ideas. >> yep. >> that some of the establishment republicans are even saying, hey, wait a second, this could blow a giant hole in the budget. i just wonder how this is all going to actually pan out and

what it says as far as how realistic some of these trump policies are. >> well, it's absolutely a potential point of tension between his new boss and mi mick mulvaney, but one thing to look at is he is one of those republicans on capitol hill who's been willing to call for decreases in pentagon spending, defense spending. traditionally you've seen a lot of republicans say they'd like to have cuts in government spending but hold the line at the pentagon. he's not one of those, and that could align with what donald trump has been doing in terms of the new air force one contract with boeing, some other military contracts that donald trump has put his finger on and said these things are costing too much money. that could be an area where he really dovetails with donald trump. so all of this is fascinating to watch donald trump put his team together. you've got these people who don't necessarily see eye-to-eye on all of these core issues to trump's campaign, he's going to have to manage all that next year. >> and he can say, hey, look, i'm fiscally responsible. i just appointed mick mulvaney to lead the bujdget and spendin

plans. eamon, thank you. when we come back, we'll talk to the ceo of u.s. concrete on that trump trillion-dollar infrastructure plan. his company's shares have soared since the election over 30% higher. take a look at the markets here. we're keeping an eye on the dow levels 19,900 just about, we've got a quarter percentage point rally in the s&p. and the nasdaq leading the bunch up more than three times. much more "squawk on the street" when we come back.

they are the natural borns enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.

the chinese media calling out donald trump saying the president-elect has no idea how to run a superpower nation. our own eunice yoon has more on this this morning. eunice. >> thanks so much, carl. well, the global times is a fiercely nationalist paper and it along with the rest of the state press has been spending the entire day mocking donald trump. the global times said that trump is not behaving as a president and has no sense of how to lead a superpower. it also said that trump's tweets just add fuel to the fire. and this is while other chinese media had called his tweet that beijing should keep the drone emotional. now, the official press has also been strongly defending beijing's actions to seize the drone, calling the u.s. survey ship a serial offender spying against china. the government officially though has been trying to tamp down some of that excitement. the chinese foreign ministry today said that the chinese and u.s. militaries were in direct contact in order to try to negotiate the handover of the

drone. the ministry also went one step further trying to soften and very cautiously defend beijing's actions saying, china's navy had a responsible and professional attitude to identify and ascertain this object. if you discover or pick something up from the street, you have to examine it. now, trump has been indicating that he wants to get tougher and more aggressive on the south china sea. and the analysts that i speak to here say that beijing has been showing restraint but that if he does follow through with his more aggressive policies and turn it into actual action in the white house, that beijing would also take stronger action. some of the ideas that have come up is that beijing would recall its ambassador or that it could potentially cut diplomatic ties. now, the state media has been trying to steer donald trump away from confrontation. the china daily today said that trump should take president obama's advice to think through what the consequences are of

ending a longstanding policy and avoid full conflict mode, carl. >> eunice yoon in beijing. eunice, thank you so much for that. the imf executive board expected to meet shortly to consider today's negligence verdict against managing director christine lagarde. lagarde found guilty for her misuse of public funds. that was during her time as france's finance minister almost ten years ago. the case centered around a 403 million euro arbitration deal given to a business tycoon back in 2008 over the botched sale of adidas in the '90s. lagarde, who began her second five-year term at the imf in just february will not face any jail time. and maintained her innocence throughout the trial. she will also not face a fine but the guilty and negligence charge, guys, is considered a big surprise, is a blemish, and it's going to be a question whether the imf executive board

decides she can stay on as her role. a few things to consider here, she has been very popular on the world stage. she's been popular among the shareholders of the imf, which are various governments around the world, particularly emerging markets including for instance china in the currency basket of the imf. but it's going to be a question whether she can continue to lead this global institution. on that note, let's bring in cnbc's senior economics reporter steve liesman to this conversation back at hq. has followed the imf for a long time here, steve, they don't have to terminate her as the head of the imf, but they're certainly going to have to discuss it now after that negligence surprise announcement this morning. >> you know, sara, i think whether or not lagarde stays or goes is almost besides the point. i have to go back to your instant analysis in the 9:00 hour where i think you hit it just right by going to the kind of global macro aspect of this. the first thing is that international institutions such as the imf are under siege

throughout the world where concepts of global trade, global organizations, global economic organizations are being heavily criticized. and rejected on a popular level. i think it was jimmy who said we're in a nationalist time right now, not an internationalist time. so if she stays, it's a blemish on the imf. if she goes, it's a blemish. you have to layer in the idea that you have republicans coming in to control congress. they have generally been very skeptical, antagonistic i would say towards groups like the imf. so the thinking had been, i think, that amid the challenges to global free trade that were going to be part of the trump administration, there was the imf to stand as a pillar. and i think no matter what happens this blemish on lagarde is a blemish on the imf. and it ends up, i think, hurting that pillar of free trade around the world. >> i totally agree with you, steve. and i think it undermines the further credibility and faith in our institutions.

it's not just popular sort of backlash against the institutions, but when you have the panama papers, these ideas of crony capitalism and now this negligence, it certainly hurts the ability of a christine lagarde who is very powerful politically and has a seat at the table to say, listen, we need to be trading freely, we need to be enacting regional trade agreements at a time where the populist is moving against it. >> not to mention currency regimes, not to mention open currency regimes and those sorts of things that lagarde has also championed as well as as you said the emerging markets. i think that this is a moment when everybody sort of figured that the ground underneath our feet -- remember, the imf goes back to 1944, it is a principle way by which the world has sort of organized itself monetarily and financially for many years. i think that was going to change in any event, having a weekend or even new leader at the imf is going to make that change i

think more rapid. and we need to hear what president-elect donald trump thinks about the imf and what his plans are. >> absolutely. i would say also opens the opportunity for leadership in places like china, for instance. we've heard a lot about that after trump says he wants to withdraw from the tpp on day one. china's stepping in to fill the void here. >> right. >> we know they've been angling for more power in institutions like the imf. steve, thank you. we have to leave it there. our senior economics correspondent steve liesman. as we go to break, take a look at the dow firm 50 points, about 107 points away from 20k. the watch for that has not diminished at all despite perhaps a lighter news volume week. right now s&p up almost five. we're back in just a moment.

take a look at some of the retailers here. the sector hit the hardest last week during what should be the busiest time of the year for this group. of course the week before christmas we've seen nordstrom, kohl's, macy's, gap, all having a tough week. we'll continue to watch that sector, carl, see if the traffic numbers are up from last year. one thing that is up, and i can tell you firsthand, is the discounts. >> yes. >> big. 50%, 60%, 70% off.

>> yeah, somebody was mentioning j. crew, normally 25%, this year it's 40%. this border adjustment strategy regarding tax reform remains troublesome for the sector. nordstrom was the worst s&p for the week, down 17. >> yeah, it was a big giveback. so many of those stocks heavily shorted, they had huge bounces and then a little bit of retracement there. >> we'll keep our eye on that. when we come back, u.s. concrete shares are up more than 30% since election day, you can probably guess why. we're going to talk exclusively to the ceo when "squawk on the street" continues.

good morning everybody. i'm sue herera. here is your cnbc news update at this hour. china's foreign ministry says the chinese and u.s. military are discussing the return of the u.s. underwater drone taken by a chinese vessel in the south china sea last week.

a chinese spokeswoman says the issue will be handled appropriately. the fragile cease-fire resumed in aleppo today. dozens of evacuees including women and children were evacuated from east aleppo. they did receive aid from humanitarian groups when they arrived at a village west of the city, which was controlled by the rebels. things are back to normal at los angeles international airport after two power outages last night. it impacted facilities in the central terminal as well as some traffic lights outside the airport. but there were no cancellations, but flights were delayed. winter continuing its strong grip on parts of central illinois. the morning temperature here was minus 11. the cold weather is expected to continue with highs in the low teens. bundle up. layers. all right, that's our cnbc news update this hour. i'll send it back downtown to you, carl. thanks so much, our sue herera at hq. one major campaign promise from president-elect donald trump, a

$1 trillion infrastructure investment plan to rebuild roads, bridges, ports and other public works and projects. since election day infrastructure focused stocks have seen some big gains including that of our next guest soaring more than 30%. joining us this morning u.s. concrete president and ceo bill sandbrook joins us. good morning. good to see you. >> good morning, carl. great to be here. >> questions about where it lies in the list of priorities, how are you looking at the promise of this in '17? >> well, we look at it as very high priority. remember president trump's initial speech on november 9th, the very first campaign promise he talked about was increased infrastructure spending. so we don't know exactly what the ultimate level is going to be, but we're very, very optimistic that we will see increased funding. >> is this something you bid for directly? or you subcontract to others who will be after federal money? >> we're a concrete supplier. we have 170 concrete plants and

1,600 concrete trucks in california, texas, new york city metro area. so we bid our product to sub contractors who will bid to a general contractor who bids the ultimate project. >> i remember looking at a research note from bernstein, this is well before the election, but when the idea of a wall was obviously talked about a lot, their point was that u.s. there's not enough capacity here in the states. you'd have to rely on cemex for instance to get the concrete going. how much of this is about a wall versus roads versus bridges versus something else? >> i think it's primarily about roads and bridges, not so much about a wall. but our company for instance only 15% of our revenues come from infrastructure. 61% of our revenues come from commercial and industrial construction. the trump policies on taxes for instance or regulatory reform are going to be just as important or more important for us than the infrastructure part of his platform. >> if you look at infrastructure spend, it's not clear, bill, that it automatically leads to growth. look at japan for instance, best

high speed trains, so much great public infrastructure and yet it's one of the mostin de in dd nations in the world and can barely have any economic growth. how do you ensure that these projects do create economic value? >> take congestion for instance, to get around our major cities today there's so much time wasted either for workers going to work or trying to get home to their families or for the movement of goods and materials. any increase in the ability to move our goods and people to work and to market is going to have a positive economic benefit. >> bill, you mentioned the commercial industrial construction side of the business, and perhaps the tax incentives to spend a lot on capital investments that's now being proposed by president-elect trump would be a help. but do you actually expect that companies would take that incentive and go to buildings as one of the first things as opposed to, you know, labor saving technology or other things? >> well, for us, for instance, with any extra cash that we might have because of tax

reform, for instance, we would invest in new plants, we would invest in new trucks in order to grow our business. people that need factories, they would invest in factories to increase capacity. especially with buy american build american, there will be reinvestment either in hard assets for factories or in trucks and machinery to help our own businesses. >> bill, how about hiring? how much slack do you think there is in the labor market for the jobs you need to fill? >> yeah, that's a very good point. there's not a lot of slack for ready mix truck drivers right now. i think the participation rate in america is at an all-time low. we'll definitely have to get americans who find a more add venn teenageous not to work right now from maybe the wages they could earn with high paying jobs. our jobs that we have in our company are well, well, well above minimum wage. the more the wages increase, the more we can get an increased participation rate and use u.s. laborers to build that slack. >> and you think they're coming back? that's obviously one of the huge

debates we have every jobs friday and in between is whether or not that's just a demographic story or a retirement story over the long term or whether it's true discouragement, people who say i'm out for now. >> i think it's true discouragement. well paying jobs will make it worthwhile to come back to work again. >> how do you determine your financial guidance for next year and your forecast without knowing the exact size and scope of what we're going to get out of a trump administration? and more specifically out of congress what they're going to get onboard with? because it's one thing to say infrastructure building. it's another to figure out how to pay for it. >> sure. two parts of that. our company doesn't give guidance, so we don't have to go to the street with what our expectations are. however, on an infrastructure bill or everyone on tax policy change we would internally on our own budgets, we're not looking for great effect in 2017. this is more long term planning the second half of 2018 and 2019 as we plan how many more trucks and plants we need for a growing

economy. >> when do we see the economic benefits of that if it doesn't start until 2018, 2019 to even get built? >> well, we would see it in our business as it's being built that's what grows our business. so we would look for 2018 and '19 to have tangible benefits with an increased infrastructure spent or increased economic activity. >> things you're worried about next year, are there things you're worried about right now? >> i'm not losing any sleep. i could use more truck drivers. >> it's going to be about labor, yeah, that doesn't surprise us atd all. bill, we appreciate you coming on. we hope you'll come back. >> thank you, thank you very much. >> in the beginning of next year. bill sandbrook of u.s. concrete. thanks so much. >> okay, great. and as we head to break here, we continue to watch the dow up 0.3%. that's about 60 points and it continues to flirt with 20,000. we're 100 points away, are there resistance levels we should know about holding us back? it certainly has been a stubborn rally. we'll get a technician take on

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is the real bull run for stocks just getting started? one veteran trader says the rally has legs. and he explains why on tradingnation.cnbc.com. more "squawk on the street" coming up.

welcome back sto "squawk on the street." stocks posting modest gains. the s&p real estate sector leading the way, nearly all components are positive. you've got hcp, realty income and federal realty among the biggest gainers so far in early training. the sector has turned positive year-to-date up just a fraction of a point though. sara, we'll watch see if real estate can keep the run up. back over to you. a lot has to do with what we're seeing in the bond market. let's go to rick santelli, thank you, dom, now to chicago for "the santelli exchange."

good morning, rick. >> good morning, sara. thank you. i'd like to welcome my first guest of the holiday week, jim karen, thank you for taking the time. >> thank you. >> i've had many spots we've talked about get used to natural gas in the room and you can't even notice it's there. this kind of baton handoff from abnormal to normal with regard to rates and many things about the economy, what observations do you have at this critical juncture? >> well, i think what's important to us going forward is really looking how we return to organic growth. so a lot's been talked about fiscal policy. you know, if it was really all about building roads, bridges and tunnels, then places like europe and japan would be growing at remarkable rates. it's not about that. it's really about structural reforms, about regulatory reforms, it's about kickstarting organic growth. what's been missing in the economy has really been for the u.s. has been business investment. so why have businesses been remiss to invest? we have to think about incentive programs to get them to invest, to drive a cap x cycle and then

ultimately to drive a business cycle and an economics cycle. that's what we need is more of the efficient use of capital that drives that organic growth. >> well, you know, we've had so much deer in headlights policy from central bankers that the notion of incentives seems to have gotten modeled out. instead of these investments jou talk about, much of the easy money ended up in stock purchases. we can debate if that's good or that's bad, but if you had some advice for president-elect trump as to how to do things like repatriate money and implement policies that will free up money for things like capital expenditure business investment, how can incentivize it not just to end up purchasing stock back? >> well, that's really the key, right? i think tax policies have to be put into place where, you know, maybe you penalize, you know, payments on interest rates as far as tax deductions and things like that. maybe you reward a cap x and business investment. i think if you can get that, then you can actually kickstart

some animal spirits in the markets which will eventually get this organic growth moving. i mean, you know, look, one of the problems with 2016 is that we've seen a lot of policy mistakes. we've seen more qe and negative interest rates. if you look at the shape of yields, fives, tens, 30s, it's like a bathtub shape. we went down in yield, went low for too long and low rates are okay, but too low for too long is not good. and now money is becoming priced at a more economic value, it's becoming more economical to create that credit and to do those business investments and importantly get a return on those business investments. that's really what we need to start. >> i couldn't agree with you more. there's kind of genetically modified growth and then there's the real growth, and i think we are doing a transition into the latter. jim caron, thanks for your opinions and advice today. and of course thanks for taking the time. sara, back to you. >> all right, rick. thank you. we have some breaking news to get you now from washington. eamon javers has that. eamon. >> yeah, hi, sara.

the incoming democratic governor-elect of north carolina has said that north carolina legislators will meet on tuesday to repeal that law known as hb2, that's the so-called bathroom bill that blocked the ability of transgender individuals to use government-owned bathrooms of the gender at which they identify. that coming from the incoming governor-elect of north carolina. of course that was a big measure in terms of provoking business opposition to doing business in north carolina. that's something that the incoming governor-elect says he wants to get resolved and get resolved soon, sara. looks like there might be some movement on that front starting tomorrow. >> all right. we'll continue to follow it. eamon, thank you. let's send it over now to jon fortt with a look at what's coming up in the next hour on "squawk alley." good morning, jon. >> good morning, sara. well, the tax tiff between apple and the eu with ireland in the middle has heated up again. we will take a look at what's new there. also, the internet of things needs to be secured. we're going to talk to a company that's looking to expand its

presence to millions and millions of end points. all that and more coming up on "squawk alley."

the 20,000 mark for the dow is back in sight and markets are up today as we head into the final weeks of the trading year. joining us now to talk about these markets is mkm partners chief market technician, jonathan, good to see you this morning. thanks for coming on. so a couple of weeks ago it seems we started to talk about this rally as maybe getting a little stretched, overbought readings, we've kind of flattened out since then. i think the big question in a lot of people's minds is how we're positioned in stocks heading into this coming january relative to last year when we've actually had kind of a rude surprise in the first month of the year. >> yeah, well, we would say first of all we're much better positioned as far as breadth, as far as leadership. we're seeing cyclicals outperform defensives. that was really the inverse of how we came into last year. i think if last year taught us anything it's you have to keep an open mind and be flexible as that can easily change. but i think if you look at the market internals, they're set up much better now than they were coming into last year. >> so do you think that we need some kind of a pullback or at

least an extended rest before we get to higher levels, as you're anticipating? >> well, it's certainly in the very near-term we are coming off some pretty extreme overbought conditions. that could work itself off through price or time, maybe ootd week or two, but i think what's really important to remember and what we've been telling clients is if you look at something like the nyse composite, which is 1900 stocks, very broad based, that's trading at the same levels it was in july of 2014. when you hear people say it's come too far too fast they're really only looking at a short period of time. and the bigger picture you could say that we've had a 2.5-year consolidation of stocks, we're just now starting to emerge from that. i think you have to take a step back and put things in context when you say things are stretched or overbought. >> what about sector, you know, emphasis right now? obviously it's been all about where you were and where you weren't, at least in the last several weeks. >> yeah, i think you want to stick with what's showing relative leadership right now.

that's financials, industrials, some materials, some energy. we've seen a bounce off the lows in some of the defensive names being reits, telecom, utilities, but i think as interest rates r to grow higher, you're going to see that relative leadership stick with the cyclical areas. we're not seeing any signs that's nearing major inflection. we're continuing to be focused in those areas. >> jonathan, 11 handled on the vix today has people's attention. to what degree is that an important marker in the next couple of weeks? >> yeah, so december seasonally you do see lower vix readings. i think a near term concern is maybe sentiment and some of the transactional indicators, ratios are extremely low, so that can be a near term warning sign, but again, when you're talking about sentiment, it's important to put it in confines of what the primary trend is. oftentimes in very strong

uptrends you see low vix ratings, low ratios, and you see optimistic work from the sentiment service. we've seen the latest investor intelligence polls around the 60% ratio. while that would tend to say let's get a bit contrarian here, we remind people from 2004 to 2006 you saw a sentiment in the 60% threshold, so sentiment is one of those things where everybody sees a low vix, see people getting bullish, they want to fade that, but sentiment is difficult to use as a timing tool at market tops. >> i'm curious what history has to tell us about correlations with bonds and the dollar and how that dictates what happens with stocks, because you think about higher interest rates and a stronger dollar and you think that hurts economic activity or u.s. corporate earnings, but so far markets are taking it in stride. >> yeah, so correlations are interesting, and again, i think people have a lot of recent si

bias. historically there's almost zero long-term correlation between the dollar and u.s. stocks and i'll point to the 1995 to 2000 period where stocks and the dollar rallied strongly together. when it comes to interest rates, again, they are in a much longer cycle. we've been in a 35-year bear market for interest rates. we've seen evidence maybe that's reversing. when you think about a rising interest rate environment, there have been periods of time when interest rates rise together and fall together. in the late '40s and early '50s they rose together. again, people need to take a step back, look at the bigger picture, but i don't think higher rates and dollar are as much of a headwind as some people may make them out to be. >> jonathan, you say interest rates at this point may be reversing that 35-year bull market and bonds. what do you think we're looking at in terms of the ten-year treasury yield in the near term and further out into next year? >> yeah, so it's interesting this year, we actually made a

low in the ten year below last year's low around 132 and last week traded above last year's high at 2.5%. if we were to close above 2.5% on the ten year, that would be a bullish outside year for interest rates and the first one that's happened since the bear market and yields started in 1981. so i think 2.5% is a big level as we head into the end of the year as support for rates. on the up side, i think everyone's eyeing 3%. that probably makes sense to us over the next couple months. >> so you don't think at this point in the short-term people are betting too hard against treasury? seems data suggests that. >> that's certainly a valid point. if you look at positioning, it's getting extreme. you could see a bounce in bond prices, pull back in yields, but i think if this is the inflection from a 35-year bull market and bonds, one of the hallmarks is that you'll see oversold conditions and bonds remain that way. you'll see people say it's gone

too far and will kind of purr cyst. you know, short term we could see a pull back in yields, but you could make the case we're at a pretty big inflection form here. >> not too many of us have seen a three-decade market turn trend too often. thanks so much, appreciate it. >> thank you. and take a look at where we are on the markets right here. the dow holding up to gains this morning up 58 points, fuelled by utx and disney. microsoft also is a big leader. and we are just about 100 points away from dow 20,000. can we hit it today for the first time ever? stay with cnbc. also moments from now we'll be speaking with aol cofounder steve case. that's on "squawk alley" with the s&p 500 up .3 of a%. stay with us.

u.s. prosecutors have charged platinum prosecutor ceo and six other executives with security fraud. the alleged fraud totaling about a billion dollars. others charged includes the firms co. cio david levy and the signature fund. robert capers will be holding a

news conference at 11:30 eastern to give further details. we'll watch for that in the next half hour or so, mike, but here we go. and this is a big one. >> it actually is. u.s. prosecutors, criminal charges. it's a wider ranging potential set of charges, it seems like, than maybe we thought. >> flashbacks, bernie madoff. >> many flashbacks to bernie madoff. all right, is a tax cut for million flairs ahead? well, most voted for hillary, more than two-thirds are looking forward to investing in the market. robert, good morning. >> good morning, sarah. millionaire investors were evenly split in the election, but nearly two-thirds say donald trump will be good for their investments. the survey found 42% of millionaires polled voted for clinton and that's versus 32 for trump. he captured nearly all the undecided millionaire voters.

this also squares with the exit polls that show that trump and clinton got about equal votes for those making $250,000 or more a year in income. with that trump win, nearly half of millionaires say the economy will be stronger in 2017. that's way up from the spring when only 30% said the economy would be stronger. 62% of millionaires say trump will be good for their investments, and most say the s&p will be up between 5% and 10% next year. nearly half say their personal assets will also increase next year. one big reason, of course, lower taxes. those were $5 million or more, 43% of those folks expect a tax cut and among those 40% say they'll invest those proceeds in stocks, a third in savings. more than half of millionaires say the deficit is likely to increase next year and the most important issue for trump is health care, foreign policy, and government spending.

millionaires forecast the economy and investing driven largely by their politics. democrats were nearly twice as likely to say the economy will be weaker next year. guys, back over to you. >> optimism about taxes would have been held if it was a trump win and dems took the senate. >> that's right, a different equation. seems millionaires are like the rest of us in the sense of good polit politics. just a quick note, nyse's arca platform will require suspension of trading. we're checking that out, we'll let you know if we find anything further. we're hearing, though, it involves a software update that's being rolled back. >> those glitchy software updates. dow is up 62 points. less than 100 points away from the dow 20,000 and we'll send it to you, carl, to pick up the coverage for "squawk alley." >> thank you very much, sarah and michael. good morning, it's 8:00 a.m. at apple headquarters out west, 11:00 a.m. on wall street, and