>> i like invidia. i'm still long but the next one is amd. >> i agree with that. >> i haven't dropped a name for a while, caa, best home building stock out. >> jetblue, we forgot about it. >> wow. >> new initiatives, new high company. >> good stuff. thanks. >> love you guys. >> see you tonight at 6:00. "power" starts now. thank you, scott. i am brian sullivan. and breaking news from turkey, a russian diplomat shot earlier today has died. u.s. condemning the attack. turkey is a member of nato. the question is, what will russia do if anything to retaliate? the big long. a man who nailed the big short during the financial crisis now says he's as long as he can be in one sector. that sector name coming up. and you're going to hear from a ceo of palo alto networks, down this year, but a big time turn around coming as the cyberwars heat up? we're going to find out as

"power lunch" on a monday begins right now. i'm michelle caruso-cabrera. here's what else is happening at this hour. trading is back to normal following a technical glitch that suspended all trading. french court finding imf chief christine la guard guilty. and stocks pushing higher as we head deep near the average. the dow is about 120 points away from the dow 20,000 mark. we begin with breaking news out of turkey that brian told you about, some of the images are graphic. russia's foreign ministry announcing that the russian ambassador to turkey was assassinated in ankara today. the dow falling 50 points on that news, though it has recovered some ground. the ruble also falling against the dollar. we're monitoring the situation. we're going to bring you the details as it developed. there is the russian ruble.

the ruble weakening. let's bring in bill browder, a man with a lot of experience doing business in putin's russia. bill, great to have you here. your initial thoughts on this assassination, what appears to be an assassination in ankara, turkey, and what it means, why the dow would fall in response to that? >> russia is sitting in the middle of a powder keg in the middle east. turkey is involved in syria. we're involved in syria. and it is -- it throws everything up into the air. we should all remember that it wasn't long ago that turkey shot down a russian plane and put the two countries at the foot of war. they found a way to kind of come back to the cable and friends of sorts, but i'm sure that there will be a lot of pressure on putin and his people to have some type of tough response.

depending who did it and how it is done, might put everything into play in this part of the world. >> tell me if i'm being an overly dramatic tv anchor when i ask you the following question. this happens and you get this real kind of franz ferdinand fear feel about whether this is an event that can trigger something much bigger. am i overstating it? >> i don't think we know any information yet. the information has just come out in the last hour or so. until we know who do it and why they did it and so on, i don't think we can overdramatize what has happened. what we shouldn't forget, though, turkey is sitting in the middle of a powder keg now, right there with russia, next to syria, and there is a big mess in that part of the world where anything could happen. and so it is all the worst came to the worst, who knows. i think it is way too early to start. >> we know you're not living and

working in russia anymore. forced to flee the nation a couple of years ago and your attorney and former partner was beaten to death in a russian jail. so obviously you got a long and very difficult history with that nation. but we know that russia is a country that likes to saber rattle when the economy starts to go downhill. you don't live there anymore, tell us what you know about the state of the russian economy? >> well, so the russian economy is basically a one commodity economy, an oil country. when oil prices were high, they could live very comfortably and people could enjoy their standard of living. but oil prices have collapsed, that's created a real problem. and what you have to understand about putin is he's been running a cleptocracy. they have been taking money from the country over the last 17 years and it is a horrendous situation now where people are

grumbling about the economy, the oil prices are down, and he can't have people be mad at him about that. that's the normal reaction, you get mad at your leader for not fixing things. he wanted to make people mad at other people, outside of his country. so that's when they started a war with ukraine, when they took over crimea, popularity ratings went from 60 to 88%. then they made this crazy mistake of shooting down a passenger plane with 288 innocent people on board from the malaysian aircraft. they shot it down and all of a sudden, europe was in a position where they were forced to do something quite dramatic and posed very serious sanctions on russia and those sanctions have created more economic hardship and putin -- >> go ahead. >> what do you think is russia's response to what happened in ankara? >> well, we don't know their response until we know what the facts are.

if this was a turkish government assassination of a russian ambassador, then, of course, the response will be dramatic. if this was a terrorist incident, the response will probably be relatively contained. until we have more information, it is impossible to predict. >> let me follow up on that bill. as somebody that knows the country, the reason i was asking my previous question is, you know, if russia is starting to slide economically, they're more likely to do things around the world to distract from their own domestic problems. what do you believe will be the response in the kremlin today? what are people telling putin, if anybody is telling putin anything right now? >> what you should understand is that the russians are already at war in two countries. at war in ukraine, at war in syria, at war because the economy is bad. and they will continue to be at war and starting other conflicts in other places in the world as long as the economy is not good.

and so what is happening today i think is absolutely premature for anyone to talk about until we know the facts. but you can be pretty well assured that anything that makes them look weak, they're going to act out on. that's how he does stuff. he's the strong man, he's the nationalist, he wants to be seen as tough by his people. >> on that note, what do you make of donald trump, president-elect donald trump choosing rex tillerson to be his secretary of state, provided he gets through confirmation, based in some part because of his relationships around the world, including the fact he negotiated deals with putin on behalf of exxonmobil? >> well, i think that it all -- it is all initially very good for putin to have guys who have said nice things about him come into power in the united states. and i'm sure you're going to see some type of what we have already seen several times before, a reset with russia. seems like every new president wants to come and they think they're all the charmingest guys

in the world. and then what i'm sure you're going to see is that russia goes back to their old ways, and donald trump and rex tillerson, if he's the secretary of state, will end up having to deal with a belligerent russia the same way that bush and obama did. >> the reset and staring into his eyes and seeing his soul, all those famous moments from the two past presidents. we'll see what happens now under president-elect donald trump. thank you for calling in. we appreciate it. >> thank you. nbc's richard engel will join us from istanbul in a few minutes, get us the latest on the situation in turkey. >> let's get the latest on the markets and head back to bob pisani. >> we have a little problem. we're in a trendless market right now. we can deal with an up and down market but trendless is hard to deal with. look at financials. remember how strong goldman was, chase, bank of america? they stopped moving about wednesday last week and the market has been drifting around ever since. it is not just that.

other groups like materials and industrials have also stopped going up, some of the big material names are weak today. there has been reports that china's iron ore is down a bit. stocks growing there. so there may be some fundamental reasons here. even other groups like steel and aluminum stocks like alcoa have been weak. here's what's going on. the sector laggards, remember materials financials, energy, they were big movers in the month of november. they haven't done anything for the last five days, trending to the down side. meantime, if you look at the sector leadership, it is eh, telecoms, that's a small group. that's in the going to move anything. tech is not doing too much. health care utilities, flat. we need some leadership, some new leadership and we are not getting it right now. here's where the rally is so far. this is what happened since trump won the election. financials, industrials, materials, they power the market in the month of november. in early december, rotations into some of the consumer names. and utility names. that is what we talked about. that was very healthy.

in the last week or so, forget it, we're wandering around here, one day one group is up, the next day another. it is very difficult to string together a series of consecutive leadership days around any individual sector. we need a new catalyst right now. the optimists are in control of the market, but running hard against the pragmatists now. back to you. >> bob, pisani, bob, thank you very much. if you read the book or saw the movie the big short, you know who steve iceman is. one of the leading guys who saw it coming and structured some of the trades. steve carell played him in the movie. now one of the big shorts is going big time long. here is what he said on "squawk box" this morning. >> what i think is going to happen is the financial system is going to be at least partially deregulated, i think over the next couple of years there will be more leverage. and this will be a gold maze of investing in financial stocks. >> you would be very long right now financial stocks? >> as long as i could be. >> as long as -- is that what you are? >> that's what i am.

>> all right, let's bring in gabriela santos at jpmorgan funds and brian bellski, chief investment strategist at bmo capital markets. you liked the financials for a while. many of them have moved, 20, 30, 40% in just one month. have we stolen all the gains from tomorrow yesterday? >> no way. first of all, merry christmas. second of all, we put out a piece on friday talking about according to our work that the s&p 500 financials still have about 33% to go in terms of reaching any kind of fair value when you look at book values. book values are real right now. we talk about tangible book for several years. but the book values are real in financials. there is three major parts. number one, we're here to proclaim that the 15-year bull market and compliance is over. it has been stifling for 15 years, not just since the great recession. as we start to worry about being right instead of being wrong, we

think the economy and the stock market goes higher. point number two, remember, financials go, so go the market. the bull markets since 2009 has not been led by financials, it has been let by other areas and we think there is gross underperformance of financials to get caught up on. >> brian, let me -- first, merry christmas to you as well. >> thank you, brian. >> the average bank and financial stock i'm looking at on a screen of 100, small regional bank to bank of america, citigroup, up 25% in 90 days. many of them are up even more. what is going to be -- aside from the compliance ending what is going to be the catalyst that gives us the second leg higher? >> well, it is all about the economy, right? 25% is awesome. but, remember, the stock market has tripled since 2009 and financials have not played a big part of it. this is all about credibility and confidence as the economy

continues. anybody can buy financials because of interest rates going up. but that's the key thing, it is frosting on the cake. the cake part of financials is all about asset gathering. and economies to scale. that's why the big banks in particular with things like asset management and wealth management are going to be the big winners over the next three to five years in our view. >> gabriela, you're here from brian, both backing up the truck on financials. if you want to pour any cold water on this or are you getting in the tub? >> we're not ready to pour cold water on financials either. >> sfdisappointed. we like when stocks go up. >> we have been talking about financials all year, actually. about cyclicals generally speaking and financials in particular. and i think beyond compliance, regulation, all of that, it is about the growth of credit, finally, right? it is finally families being willing to take on more credit and banks being willing to lend again. that's just the beginning of the story. >> doing more of the very basic business, which many people

believe have been constrained, not doing as many loans. so we have said for a long time, banks were trading below book, because nobody believed the book. do we believe the book now? has the economy gotten better? is the economy getting better? oil loans don't look as bad as they use ed to. you can going to even more. >> we would agree. the economy went through a slowdown. only 1% growth. we think of fundamentals as being pretty solid, on the consumer side and the economy is rebounding. the story of financials and that link to the economy very much is still solid. >> should we take a flyer with some of the beaten up european banks? they have not performed. >> the reality is for the european financial sector, a little trickier, right? they have to deal with negative interest rates, u.s. banks have rising rates. slow, but rising. and number two, the european banks are still a few years behind in terms of regulatory,

all of that. i think it is still a u.s. story. >> it doesn't bother you that you are deep in consensus, everybody from what i can tell thinks the financials are the best place to be right now. >> well, we have been there or a couple of years. we're early, number one. number two, i don't think theme matically people understand stocks at all anymore. we're momentum chasers. to be a fundamental invest, i think a lot of people don't understand that. as we have been going around the country talking to our institutional clients, we believe most of our clients are underweight, still fearful. at the end of the day, we still think financials are the best position from a fundamental perspective to continue to garner. remember, we haven't seen the great rotation. >> i get it. i get it. >> i don't mind being consensus because most clients are underperforming. >> got it. >> brian, joyeux noel.

>> michelle could do it in ten languages. >> no no. let's move on to china. an underwater u.s. drone, how to improve your portfolio straight ahead here on "power lunch."

everybody is now following a developing story on a firm called platinum partners. that hedge fund's ceo was

arrested today, along with six others. let's get to andrea day with more on the details. >> investigators say this all worked like a classic ponzi scheme and when the money dried up, the executives panicked and tried to book flights to leave the country. many investors as you said were left high and dry, according to the indictment. one wrote many, many e-mails to the firm. i want to read you one. he says, quote, i reached the end of my rope, we have more than 6 million tied up in ppva. and ppco, those are two of the funds that premium partners had. i don't know who is in charge. but i know it is unacceptable. here is what the u.s. attorney said moments ago. >> today, we're announcing the arrest of seven individuals, associated with new york based hedge fund called platinum partners. the defendant, mark nordlick, the founder and chief investment officer and co-defendant david levy, are both charged together

with three other co-defendants with carrying out a $1 billion scheme that defrauded platinum's investors. >> and, according to the s.e.c., the firm lied about their assets. that's how they brought in new investors. they paid back their favorite investors first. and there were plenty of e-mails according to investigators that were sent out among the firm and they called it when they were reaching the end of the rope and the money was drying up, they called it, quote, hail mary time. a lot of these people will be arraigned later today. for now, back to you. >> thank you very much, andrea day. more on that breaking news out of turkey. to richard engel live in istanbul. we don't know a lot except that the ambassador is dead and we have been showing these very dramatic photos of the alleged attacker. what more can you tell us? >> well, we know quite a bit more at this stage. this was an assassination. the russian ambassador to turkey has been assassinated.

andre karlov. the russian ministry confirmed his death and russian officials in this country confirming it as well. the ambassador was speaking at an event at an art exhibit and a few minutes into his prepared remarks, a man who looked like a security guard, wearing a black suit, and a tie, white shirt, clean shaven, standing behind him, pulled out a pistol and then opened fire into the ambassador's back. the ambassador dropped to the ground. then the gunman started to shout. first in arabic, than transitioning into turkish. and we know a lot about the motivation based on what the gunman was saying. there were journalists in the room. this was an on camera event. this was a high profile opening of an art exhibit and that's when he started shouting, allahu akbar, saying he is -- we are those who pledged allegiance to

mohammad and the jihad and transitioning to turkish saying this was in response to aleppo in response to russian aggression in syria, and said that those who have been responsible for the cruelty in syria will pay a heavy price. then he was shot and killed by security officials on the scene. >> richard, i know you're in turkey all the time. there has been increasing protests or voices being raised about russia's involvement in syria. can you give us a little bit on the russian attitude in the country of turkey generally? >> there is a lot of anger in this country toward russia. a lot of anger across the muslim world right now, especially because aleppo has fallen and the city is just at its final phases as there have been attempts to evacuate the few people who are still in the city, some gunmen, some civilians, some orphans. and really horrific images

coming out of aleppo over the last several days. there have been angry protests with people who want russia to stop. want the syrian government to stop. russia, however, has not. there is a meeting tomorrow in moscow with foreign ministers and defense ministers meeting to discuss the situation in syria, and no doubt this assassination of their ambassador will be front and center of the remarks. there are also numerous reports in this country that the gunman was, himself, a police officer who was not on duty at the time. and if you look at the video, he clearly knew how to handle himself, how to handle the weapon, he was calm, he aimed his weapon and opened fire, many times. >> the photos, we're showing them over and over again are incredibly dramatic. thanks so much. joining us from istanbul, turkey. up next, back to the markets, the dow eyeing 20,000. not getting much closer to hitting it, but certainly eyeing

it. "power lunch" will be right back.

all right, welcome back. time for the good, the bad and the ugly. in today's trade, first, to the good. allied world assurance, awh, up after announcing it will be bought by fairfax financial for nearly $5 billion in cash. on to the bad, mattel, toymaker, that stock down more than 1%, few days ago, remember, piper jaffray cutting estimates for

the entire toy space. and downright ugly day for mosaic, it is one of the worst performers in the s&p 500 along with sia financial. a little deal going on in the fertilizer space. has the stocks lower. >> little smelly? bad joke. thanks, brian. up next, potentially market moving comments from janet yellen. she's about to take the stage in baltimore. we'll bring you her comments when "power lunch" returns.

hi, everybody. i'm sue herera, here is your cnbc news update for this hour. as we have been telling you, a gunman opened fire on russia's ambassador to turkey at a photo exhibition in ankara. shouting don't forget about aleppo. russia's foreign ministry says the ambassador was killed and called it a terrorist attack. turkish tv says police have shot and killed the gunman who was a turkish policeman. the u.s. state department condemned the act. north carolina's governor elect roy cooper announcing that legislators will hold a special session to repeal the law known as hb-2, which limits protections for lgbt people.

hb-2 requires transgender people to use restrooms corresponding with the sex on their birth certificates in public buildings. a fire hazard has prompted the recall of nearly half a million portable air conditioners. the recall involves three models of the lg air conditioners which were sold from february of 2011 through august of 2016. and speaking of 2016, there is the word of the year, yes, according to merriam-webster, it is is surreal. lookups of the word spiking after a number of major events worldwide beginning with the brussels terror attacks in march and ending with the u.s. presidential election in november. that's the news update this hour. brian, back to you. >> i would say that was a surreal hit but perfectly normal and great. >> i do think that's a very appropriate word for the year. >> and also get out 2016. start over. sue, thank you. >> okay. fed chair janet yellen about to take the stage at the

university of maryland, baltimore. steve liesman has more. >> the fed chair has some positive comments on the job market. she says the u.s. is the strongest job market in nearly a decade. and that job creation is steady, while wage growth is picking up. and she tells the new graduates of the university of baltimore that the layoff rate is low and job openings are up and recent economic gains have raised living standards that doesn't mean we're without economic challenges and here is a couple that she tells the graduates, one, slow economic growth, and the second, very important one, disappointing productivity. she makes, by the way, no comment on monetary policy. does point out that technology and globalization have increased demand for college degrees. here is a nice, fun, college fact. she says the gap between the pay -- key to economic success and the gap between the pay of -- college degree or high school diploma was 20% in 1980. it is 70% now.

so there is a lot of reasons to stay in school. the other thing she tells folks is you only get these benefits of a college degree if you get one. she cites a study that says you don't get all that good stuff if you only are in college for three years. have to get the degree to get all the good stuff that comes with the degree. >> need the credits on paper. >> exactly. >> steve liesman. we saw yields move slightly higher. breaking news on boeing. to phil lebeau. >> boeing out with an announcement, the boeing commercial airplanes division and a note from outgoing ceo bca ray conner and the incoming ceo of bca, kevin mccallister saying they expect to have further cost reductions in 2017. that includes voluntary layoffs and effort to reduce 10% of the managers and executives in bca and then if they do not hit the targets that they're forecasting in terms of cost cutting in 2017, there may be involuntary layoffs. we don't know specifically what they are targeting, aside from

the 10% of the layoffs coming from executives and managers and bca. so further cost reductions for boeing commercial airplanes coming up in 2017. back to you. >> why do you think they're doing this? does this have anything to do with the pressure they're seeing from president-elect donald trump or is this above and beyond that? >> no, they have been doing this on a pretty regular basis over the last several years, this is about them realizing they had the big peak in orders, now trying to execute on the deliveries, but there is going to be further efforts to streamline the cost when it comes to those deliveries. this does not have anything to do with president-elect trump and some of his comments. >> okay, terrific. thanks, fill. now to the bond market. rick santelli is tracking the action at the cme. yields rose slightly. >> i would like to know what kind of atopic microscope they all have. maybe a half a basis point or so. but much to do about very little basis points. the real story i continue to

think is you look at one week chart of tens, an upward drift. see the right side, a hiccup. that's because friday's close, a whisker under 260, highest yield close since september. now, if you look at boons, different animal. no upside bias here. they close down 7 basis points today. this is key. this is policy relative value trade. it isn't correlating very well. let's look at really cool chart. 20-year chart between tens and boons. not shrinking to a year to date chart. now shrinking again to november 1st. what a wild move we had. now, let's look at the dollar index from november 1st of this year. see how well they correlate? let me tell you what janet yellen is doing may be uncomfortable for some of the markets in states, but the real uncomfort factor is in europe. back to you. >> you bet, rick, thanks so much. stocks continue to post modest gains, but averages well off their best levels.

let's bring in liz ann saunders. good to see you. >> how are you? >> big story, we had steve iceman on this morning. he is -- says he is as long as he possibly can be on the financials because he thinks financial -- they're going to roll back regulation, and it is going to be much more profitable to be a bank. are you in on that trade as well? is that what you're trying to tell clients to do or is this too much? >> the 11 sectors within the s&p 500, only two on which we have an overweight recommendation and one is financials. the other is technology. i would say first time in 2016, that's a painful call, but the right call in the latter part. i think this notion that too much is happening in a short period of time, you go through consolidation phases, but eight years of underperformance in a sector that would participate with a bull market has not. and leverage ratios are down, net interest margins rising.

it continues to be one of our favorites. >> have you been able to model out or done any official modeling on how much more earnings power they could get or do you really wait to see what they actually do in washington and just know it will be better than what it has been? >> i think you have to wait to see. we don't publish earnings forecasts at the seconder level. it is not something we would do anyway. i think analysts that i look at and i pay attention to haven't started to truly quantify the impact. you're seeing that a little bit more on the tax cut, on the corporate side and more fundamental tax reform. that's starting to filter more broadly into s&p earnings, especially for those companies that right now pay a higher net effect of tax rate. but i think you're seeing it less on the regulatory front because there are so many uncertainties about how to quantify that. >> i'm surprised to hear you say you have two sectors your overweight, financials and tech. i'm curious why tech. but considering the big run that so many stocks have had in the market, there is higher expectations about a more

growing economy. why is it that there are so few sectors that capitalize on that? >> we have two sectors on which we have underforum recommendation as well. that he telecom and utilities. it is a cyclical bias on the upside, defensive bias on the downside. all the other sectors are market weight. that's not to say -- you have a fairly constructive view. but we're sort of barbelling that sector recommendation with cyclical on the buy side and defense on the underperform side. >> it is brian. is this the beginning of some giant global reflation trade? >> i think there are signs that we are in a reflationary environment. that helps to explain why bond yields and stock prices have been highly correlated, which isn't always the case. oftentimes over the long history the correlation tends to be more negative than positive. you're coming out of a

deflationary environment, or in the case of the u.s., a disinflationary environment, and yields start to go up from an incredibly low base, which tends to happen when you're in a deflationary environment, you go through a period in the early stages of that where bond yields and stock prices tend to rise because the move up in the yields doesn't start to choke off growth, it is coming up from a low base. >> if you're under 40 or 45, you probably never invested in a global reflationary environment. so, liz ann, what tends to happen? >> well, really if you look at long-term correlations between stock prices and bond yields, like ten year rolling correlation, there is only three periods and we're in the third one right now where you had that high correlation, positi positive correlation in the bond yield. we're in a third one of those periods and in that environment,

consistent with what i talked to michelle about a moment ago, cyclicals tend to do better and to the extent it represents stronger growth, value characteristics tend to perform better because when growth becomes more ample, easier to find, that's when you want to focus more on the value of those companies. when growth is more dear and more constrained broadly in a nominal level, that's when you want to invest in growth stocks. we think the characteristics of value and i say that importantly because you may find value in growth sectors, but the character ins of value i think is where they want to focus their attention. >> last week, chinese seized an underwater drone. today there is the assassination of the russian ambassador in turkey. both of those days lead to 50 point move lower in the dow jones industrial average. not huge moves. but raising the sense that once again there is headline risk, geopolitical risk in the market. how do you deal with that in a

model portfolio? do you recommend people have something that is black swan-like whether it is gold, or some kind of safety trade? >> well, we are a big proponent of broadly diversified portfolios, inclusive of alternative assets in things like gold. we're not recommending a significant position in gold, but it can provide some of that diversification. we're still optimistic that this is an ongoing secular bull market. but i think this environment, to the point you made, crisis events or potentially the risks associated with this sort of progrowth agenda protectionism and tariffs move up the rank, you want to be a bit more cautious taas it relates to discipline. using rebalancing and making sure you are not letting greed take over your emotional state. and you want to not only have that diversified approach, but pair back the big winners as they happen, force yourself to do what we know we're supposed to do, which is, you know, buy

into weakness and sell into strength. we're not pessimistic by any means but you want to have that slightly cautious approach to optimism. >> disciplined about it. thank you. >> good to see you. with russian hacking and that 1 billion user yahoo! breach making headlines, cybersecurity is on everybody's mind. so up next, the ceo of one of the world's leading cybersecurity firms joins us to talk about what really can be done to protect your information. palo alto networks ceo up next. ♪ guyhey nicole, happening here?

this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. a winter weather emergency... governor has declared announcer: soon, insurance companies won't pay for damages, that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims, into one focused on prevention with predictive analytics... helping them proactively protect the things that matter most. get ready. because we're helping leading companies lead with digital. we're drowning in information.

where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. welcome back. more china news today, the chinese government promising to return an underwater u.s. naval drone it seized last week. donald trump saying the move saying let them keep it. how do rising tensions between the u.s. and china impact your

portfolio? let's get to seema mody, here on set with more. >> sharp rhetoric by both sides. trump bears no sense of how to lead a superpower. the big concern here for wall street is that so many american firms for a long time had benefitted from stable relations between china and the united states. and that any setback or retaliation that we see could hurt some big companies that either do business in china or lie heavily on their consumer. companies like walmart, according to facts that deride over $50 billion in revenue from china over the past 12 months, that proposed tariff by the president-elect could hurt walmart's bottom line and result in driving up u.s. retail prices of chinese made goods. but the sector with the highest exposure to china is the tech sector. with half of u.s. imports from china being electronics, by value, the asian giant is the source of three-quarters of mobile phones and 93% of tablets

or laptops shipped into the u.s. that according to capital economics. semiconductor companies, marvel, texas instruments, maximum integrated, sandisk reported a significant portion of their revenue in china. also keep a close eye on the automakers, the german names, bmw, volkswagen, which city points out makes more than 20% of their revenue from the world's second largest economy. still too early to say whether you should china proof your portfolio. the question is whether words will turn into action. but we can say that china cares very deeply about the south china sea issue. so will geopolitical tensions result in economic consequences? that's the question. >> we'll watch. >> we will. >> thank you. >> thanks, guys. seemingly every day you hear about a major cyberattack or hack from 1 billion yahoo! users to central banks even. the hackers are getting bigger, bader and bolder. what can be done? joining us for a "power lunch" exclusive, mark mclaughlin, ceo of palo alto net works.

we got russia in the news today for a variety of reason. we're reading about the alleged russian hacks, reading about yahoo!. every single day, is it getting harder to protect critical date why and information or are the cybercriminals simply getting more headlines? >> i think it is both. it is getting harder in sense that we have more and more of our life is digital in nature and the very productivity that comes from the digital technologies is a very thing that allows you to attack them in the first place. we're taking data, adding it all together in the cloud and creating billions of new end points with the internet of things, as ways to get at it. the bad guys take advantage of that. >> how does it happen? take us through how 1 billion users, billion users, have their information hacked. that's got to be something on enterprise side. somebody has gotten something very -- it is not a fishing scam, right? how does that happen? >> what happens usually is the bad guys will figure out how to social engineer somebody on the

inside who has the proper credentials to go anywhere they want. >> social engineer? turn an employee? >> it is interesting. this is one of the things that consumers should be doing to protect themselves, be careful what you put out about your professional and personal connections. that's being pieced together. if you knew i was a ceo of palo alto network and tried to go out on to the social media, and social engineer and be about who i am, who do i know who are my friends, what are my interests, the bad guys are doing that, piece together that information, and then launch an attack that -- >> i see. so they're not actually turning an employee into a spy on their behalf. they're mimicking that person's -- they're learning that person's information and mimicking them online in order to access information? did i understand that correctly? >> right. maybe i get an e-mail from somebody else in the company, not a real e-mail, but looks like one about a topic they know i'm interested in. and a open it. and now the malware is on my

system. they're looking for highly credentialed employees inside companies that allow people to get access -- >> how do you protect yourself from that? we get -- how many e-mails do you get in a day? i get hundreds. nobody picks up the phone anymore. we're constantly on the phone. that sounds impossible to deal with. >> we have to deal with it. it is a real issue for society. three things on that, one is use the most advanced technology you possibly can. second thing is continually do education about what those attacks look like. you don't click on those links. if they look suspicious, they probably are. and have processes in place to say we never wire money out without two people saying it is okay, for example. that's a scam that most companies fall for all the time. it is a combination. >> just quickly, last week, we had the trump tech titan meeting and we noticed the ceo of palinteer, a semimaybe competitor to you, was in the

room. how did you feel when you saw that? >> they're not a competitor to us. they are in the big data analytics space and wee do prevention oriented technology to stop the hacks you're talking about. i think it is good that the trump administration is reaching out to the tech industry. there is a lot of issues and anxiety with the tech community. it would be great if we can get over some of those things and move forward. >> trump said that at the beginning of the meeting the president-elect said you can't believe how much tech ceos called and wanted to be here. with are you one of them? >> i didn't make that call. happy to assist. i've been working with the government for a-long time in some advisory roles and would be happy to do that in the future if it is useful. >> mark mclaughlin, thank you for taking time. we appreciate it. five top analyst call on the stocks you need to know about. street talk is next. stay with us.

♪ come on, wake up!!! come on, why ya sleepin'? come on! what time is it? it's go time. come on. let's go, let's go, let's go. woooo hoooo!! yeah!! i feel like i went to bed an hour ago. i'll make the cocoa. get a great offer on the car of your grown-up dreams at the mercedes-benz winter event. it's the look on their faces that make it all worthwhile. thank you santa!!! now lease the 2017 c300 for $389 a month at your local mercedes-benz dealer.

why don't we dig into the analyst chatter and find opportunities for you. we got four. four stock picks and calls on names you need to know about. >> first stock, united technologies. credit suisse upgraded it. increasing the price target to

$125 from $108. at $110 now. on friday, barclays restated its equal rating on the stock. stock lagged for the past two years. but the analyst says after doing heavy lifting when it comes to the economcompany, they're goin start moving again. >> has united technologies been in the news recently for something? i'm just trying to -- >> ceo was on with jim. the second stock bristol-myers, upgraded to a buy. they see the pharma sector fundamentals weakening a bit. analyst concerned about what changes may happen to medicare and medicaid under the new administration. still like bristol-myers for a couple of reasons. even after the disaster of the october drug trial, the company can recover in other areas. plus, they like the stock's valuation saying it trades well below the average of other biph. they cut merck to underperform and say advi is the best idea overall. >> next up, costco, citigroup

upgraded to a buy. the long-term positives is changing the membership format and e-commerce initiatives. analyst says u.s. tax changes are likely to favor costco's affluent customers. $164, higher by 2% after this call. >> i know you're a manhattanite. have you ever been in a costco? >> i have been. >> what do you think? i just joined in. i walked in, i was so overwhelmed. i almost turned around. it was so much. >> everything is so big. you can't buy a little bit of anything. you have to buy a lot. >> i bought a 70 foot christmas tree, fantastic. $12. the final stock is your small cap call of the day. s a israel based chip company. a strong buy rating on tcm and $25 target. still trading at 10 1/2 times

next year's earnings and he says this is the time to capitalize on the continual net profit margin. about 30% upside on tsem, tower semiconductor. the force was with disney this weekend. the "star wars" spin-off "rogue one" cleaned up at the holiday box office. nobody saw anything else. we'll bring you the numbers an how much and how much it took in. >> did you see it? >> i did not. i would like to. >> me too. >> that's next.

welcome back to "power lunch." i'm michelle caruso-cabrera. here is what we're watching at this hour. stocks higher again today, once again the dow getting close to 20,000. we're about 100 points away. okay, so that number is key. we're about to tell you about another number that may be even more important to your money. and then houses or hotels? which is a better place for your money in 2017? plus, another huge opening weekend for "star wars" movie. can the jedi continue to save dizsney from espn's troubles.

>> a check on the markets and the money now as michelle said, just shy, down 19,900. dow up 46 points now. we're off our highs of the day. the nasdaq and the s&p in the green. disney is doing its part to try to help push the dow a little closer to 20k on the back of the big "rogue one" movie release. more on disney coming up. lennar beat on earnings. a good day for cancer related stocks. clovis oncology getting approval for a new ovarian cancer drug and loxo also unveiling a cancer treatment. back to the markets. the s&p 500 is now up a cool 10% so far this year. but now the question is, where will we be one year from today. dominic chu is making

guarantees. i'm kidding. >> as a former mutual fund industry professional, i've learned to stay away from the g word. the markets could be going higher. but how much higher could they really go? not much further if you look at what wall street strategists think of. right now on cnbc.com, logon, we have a great story up, we polled 13 different wall street strategists and figured out what their year end forecasts are. we summarized them all. the median forecast, we have a 2325 s&p 500 by the end of the year. you're talking maybe 3% upside from current levels. projected out from this year, out to where we are, see a flat line. on the low end, 2280, the middle of the range where wells fargo thinks we could end. flat for the year. on the high end, rbc's jonathan

gallub, a 25% rise from here. these are guys trying to project out a year, they don't know when is going to happen, but if they are correct, we're not going much further. >> your next guest would beg to differ with any of the more optimistic outlooks out there. because the chief market strategist with ab is predicting that the s&p 500 will end 2017 below where it is right now. how dare you? welcome to the program. why do you have a -- you're not super negative. why are you not optimistic? it seems like so many others are. >> the timing is critical. there has to be a path. fairly bullish over the next three to six months, easy compares, strong confidence. capital spending is starting to pick up. the real critical issue, will the monetary policy turn toward tightening and if it does, it is hard to see multiple expansion. if you get multiple contraction

in the second half of next year, markets could end lower. >> okay. what would be the primary drag on the s&p 500? maybe that the red hot financials turn around and pull us down just as the crab is trying to crawl out of the pot? >> this is going to be really interesting. i do think as we move into the second half of next year, it will continue to be both the bond proxies, which are going to react very poorly in the environment of rising rates, combined with some of the cyclicals that will as you pointed out start to discount the end of the cycle. >> how closely are you going to watch what is happening in washington in terms of tax reform and the way it actually happens? we know generally and i think most people believe perhaps rightly that there is going to be some kind of tax reform. but how important are the details to you in terms of what sectors you buy or don't buy?

>> i think it is a rather mild impact, and the reason is that taxes tend to have a low multiplier effect in terms of just stimulating the real economy. i think the much bigger issue to watch, when it comes to taxes is going to be confidence. the increase in the small business confidence, corporate confidence as it comes to capital spending, to the extent lower taxes stimulate that, that's a much bigger deal and much more important for longer horizon investors. >> talking about immediately being able to expense investments instead of having to spread it out over, say, 20 years. that could drive a lot of investment, no? >> absolutely. so things like that could be the next big dream, if you will. the next big area which -- where you've seen undervinvestment in 2016, which could come back and drive sector differences. >> that could drive some stocks higher, though. that important.

>> i think it is, yes. >> thanks so much. >> thank you. >> next guest says forget the approach of dow 20,000. a bigger milestone already happened. the german dax crossed 11,000 recently. 11,426. here to explain is jamie cox. good to have you here. why is this number more important than dow 20,000? >> they're both just a number. german dax has been an outperformer among the three indices. the dax, the s&p 500 and the s&p, dow jones industrial average. but this year it hasn't been. this year it has been awful. after volkswagen had its trouble, lowering of interest rates in the e considcb, you ha terrible time getting the dax to outperform the indices in the

u.s., which just happened on 12/7 where the dax outperformed. there is a couple of reasons why. >> so what. tell me. >> we start fod see some settlements come through with volkswagen. you see that stock participate. you have the euro reaching parity. you have the u.s. dollar, which rising, so export market in germany is very favorable. so you start to see the export driven stocks like adidas and others do extremely well this year. and that is showing up in the index. you also have the utility sector which is decimated because of the nuclear pact that was signed by merkel, overturned by the german court. it is leading that index higher, which is something we need to have happen and it is happening as we watch. >> to underline, is this a symbol of something bigger? you told me all the reasons of why it has gotten there. but is this a signal that people should move into the german

market or the european market? is it telling us something bigger? >> the dax is a proxy for the european markets as a whole. if you look at people's port foale yes ovliallio folio -- you would say that the allocation to europe is something that is warranted at this time. and with the dax going up, you can substantiate that claim. i think that people would be very wise to, you know, allocate more money to their international -- >> i hear that. i'm an american. i invest in dollars. and the dollar is getting stronger. i'm going to buy something priced in euros and even if it goes up, we tell you we get parity, it means the euro could go down. even as the stocks go up, i could use money if the currency which i bought starts to fall, right? what is the off set? >> you're assuming the off set

is one to one. if the stocks go up more than the currency conversion, you would make money. >> i get that. do you hedge it? do you not worry about that? >> i don't think you should hedge it, no. there is no reason to hedge that. i think that if you were to look at the underperformance of the dax, look at this year, 4% less than the s&p 500, i think the differential is justified to be unhitched. >> what about france? what about spain? >> i don't know france. i like germany better. >> this isn't about all europens. you suggested that you should be increase an allocation to internationally, right? what else? >> japan is an obvious choice. they are really being a player under very much underinvested by investors the last couple of years. that's the other place people should be looking. germany, japan, very good spot. >> got it. their currency is weaker as well. thank you. >> thank you. >> let's turn to that breaking news out of turkey. a quick warning. some of the images we are about

to show are graphic. russia's ambassador to turkey shot and killed in a crowded museum in ankara today. the gunman reportedly shouted don't forget aleppo, don't forget syria in arabic before killing the ambassador. police killed the gunman. let's bring in retired four star general barry mccaffrey. what do you believe russia's response to this will be? what do you believe russia's response to this should be, especially given that turkey is a member of nato? >> well, such complex phenomenon in the middle east. first of all, of course, it is a tragedy for the diplomatic service of all of the countries to see an ambassador gunned down in public like that. russia has been on the wrong side from the start. they're backing the assad regime, a mass murderer who will never be reconciled with his

people. it is a shiite, most of the world's muslims as you know are sunni. so russia has been in a bizarre situation of armed aggression in the middle east on the side of the shiite minority. turkey is a sunni nation. even though the nation, a nation has tried some -- i think russia increasinglywading into deep water. >> what kind of ripple effects do you think it might have, general? >> well, you know, the turks are headed toward muslim identity. they have been a secular state. they're increasingly allied with sunni muslim interests. this is not a good situation. i don't think the russians have any practical military ability to threaten turkey at all. russian military is actually small, not very functional. they have special forces that

are first rate, but i don't see any threat by the russians to turkey. but it will intensify the complicated situation that the rugs a russians are in the middle east. will bring attention to what i think in the long-term was a strategic mistake by the russians to alli themselves with assad. he's an experienced diplomat. somewhat surprising. the russians are pretty good security on their diplomatic service. they haven't had another ambassador assassinated since 1927 as far as i know. this is unusual and the turkish special police did kill the assailant who apparently was a turkish policeman. >> yeah. >> security guard. there are some reports saying maybe he was a member of the group trying to guard the ambassador. >> turkey's interior minister

confirmed he was a member of the riot police of ankara. >> yeah. well, of course, here is another complication. erdogan sacked huge numbers of the senior officials of both the police and the armed forces. so their security institutions now are, again, becoming much more unstable and effective than they would have been a year or two ago. >> well, general, at least for a few days this will take aleppo, the issue of aleppo itself perhaps off the headlines because we'll focus on the shooter and the dead russian ambassador. longer term, though, let's get back to aleppo, humanitarian crisis. humanitarian disaster we will look back on in history and probably all ask how did the world allow this to happen. what is the fix, if anything, for aleppo, for syria? >> the assassination of the ambassador is a footnote.

the larger issue is a half million dead in syria. much of tit the brutality of th regime, backed by the revolutionary guard troops and lebanese shiite militias. so that situation is going to intensify, get worse. i would probably take issue with the world allowed it to happen. i think we could intervene without question in six months and bring peace to that troubled land. we have to do it with a massive nato or u.s. military intervention. there is absolutely no stomach politically for any of that. we're looking at the layout of intense brutality among warring muslim factions throughout the middle east. that's going to go on until it is resolved by bloodshed in the coming 20 years and until national boundaries rearrange

themselves to fit these factionses which despise each other. >> general, to what degree can we look back at the moment when president obama said that syria could not cross the red line and then when it did, when assad did, with chemical weapons and the world didn't respond, france left its jets on the runway, the uk voted against any kind of intervention, president obama back tracked, our allies were quite negative. how much of what we're seeing today still harkens back to that moment where maybe he said something during that press conference that he didn't really mean? >> well, you know, as a lieutenant in the army, i remember my first -- telling me don't ever threaten anybody publicly. just say you'll take action. so i think that was a terrible mistake by the president at the time to make that statement. but, look, at the end of the day, again, we could have intervened at that point if it

had been a pinprick tomahawk attack on some chemical facilities. wouldn't have changed anything. if we made a meaningful military intervention, it would have involved us in another ground war in the middle east. there is no political support for that among the american people or the europeans. >> i wonder if it emboldened russia when they saw no action. >> i think sadly you're probably correct. i think there is an increasing sense that the u.s. will not use military responses, that we're leading from behind that we're backing away from nato commitments. we took all of our forces essentially out of nato almost completely. i think to some extent you're right. we have emboldened the russians who are a third world country in many ways with a gnp less than that of italy. we're not talking about nazi

germany 1939. this is a relatively weak country. >> has nato been xlcompletely neutered? >> there is a lot of argument that would be a correct statement. the french, the germans, the brits, who were the central point of the ground offense of nato have largely disarmed. we had 12 german divisions in central europe with heavy armor, 25 years ago, and now that superb military is gone. so i think the russians do think they can get away with provocations and might miscalculate and do something where we would fight. we with fight for poland in my own view. so we're in a tricky situation. no credible u.s. military power in europe. and the french, the brits and the germans have largely -- >> it was a campaign issue as i

recall. we discussed how much members of nato had been doing. thank you. appreciate it. houses or hotels? it is not just a question for monopoly. the question we're asking is, if you bet on one, which should it be? plus, volcano and video. two things that tend together to produce an amazing outcome. we have that outcome. coming up.

the holidays are in full swing and a record number of americans are expected to travel this season. that can be good news for lodging and leisure stocks. but who might the ultimate winners and losers in the space be? let's bring in thomas alan and robin farley. we'll start with you. why do you think that hilton, your top pick, is such a good bet for our viewers' money? >> sure. hilton is only buy rated name in the lodging space now. that's because they're doing an interesting transaction, splitting the real estate away from the operating company. so that's going to create value for shareholders. a little different from what marriott and some of the other operators are doing now. >> okay. and you've got a sell on choice hotels. we won't get into that. let's just focus on hilton. is this all more people traveling and willing to spend more money story or something else a little dealer than that? >> well, the stocks have started to behave -- in general since the election with the idea that

business travel may pick up again and that's really the driver of all of the lodging names. i should say the hilton marriott, those lodging names. the idea that the business travel will recover and if there is more infrastructure spending and the economy gets better, that will drive revenue next year. hilton is the best we it play that. in addition to the macro improvement that the market is factoring into the names is the spinout of the real estate holdings. you'll have the real estate under hilton hotels and hilton brands that operate them as two separate companies. >> you guys have been upgrading your outlook for the entire secretary e sector, right? >> i think we raise our forecast, the same store sales. we have a more balanced view, like robin does too.

one has to -- there are cyclical drivers for the industry. as a firm, morgan stanley expects gdp growth to accelerate. there is still a lot of risk for the industry. rising supply growth, an incremental demand destruction from air bnb. the hotel brands are trying to fight the travel agencies and discount more to gain those rooms. so we think it will decelerate. we do like certain names like hilton and marriott that are growing units. we have a more balanced view overall. >> it is still going to go up. but not as fast as it was before. >> exactly. so revpar around 3% in 2016. we expect it to come down around 1.5%, 2% next year and go to flat growth in 2018. in that environment, you have to remember that cost inflation is still around 2%, 3%, 4%. those hotel owners are going to

see contracting margins and so we like the hotel asset-like. >> quickly, air bnb, i first spot i go is air bnb. i don't go to the hotel or the expedia. i like the experience. is it simply still a super nichy thing or a long-term viable threat to the growth of the hotel industry. >> i think for leisure travel, we're seeing clearly as an alternative to a lot of other leisure travel. for names like hilton and marriott, 75%, 85% of profits come from business travel. i don't know if we'll see air bnb make as much headway in business travel. i think business travel, people are looking for consistency you get with brands and certain service levels and room service and -- >> the points, probably. >> we have done two 4,000 person surveys on air bnb and accommodation usage. and we found in the past two

year, air bnb has gone to one in eight people to one in five people in just two years. we found that half of the usage has been cannibalizing traditional hotels. we think it is about 1 percentage annual drag. we see it as a threat across the board. >> interesting data points. >> thomas, thank you. robin, thank you. disney rising today after strong opening weekend for "rogue one". can the movie studio continue to carry the company? espn struggles. great pictures of a volcano erupting. look at that. we'll show you them again next on "power lunch." we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person,

on what matters to you. morgan stanley.

amazing video of a volcano erupting in mexico over the weekend. so-called fire volcano, which you never want to be near one of those, erupted twice, sending layoff w lava and ash 500 feet into the air. it is one of more than 3,000 volcanos in mexico, but only 14 are considered active. that's about 13 more than you need in one country. >> i've seen the one in puebla going. it is cool. you drive around mexico city and there is a plume of smoke coming

out of it. big drop in ipos this year. will a new president open the floodgates in 2017? the last oil trades of the day crossing. final numbers when "power lunch" returns.

i'm sue herera. electoral college delegates across the country are gathering to cast their votes for president. donald trump won the electoral college with 306 votes to hillary clinton's 232. the electors are expected to formally elect trump as president. an uber driver in michigan arrested for stabbing a customer. according to police, jacob allman picked up a can couple from a holiday party saturday night. the man tapped on the window of the vehicle to alert the driver that they were getting in. but almon got upset because he felt the riders disrespected his vehicle and he stabbed the man multiple times. fortunately the man did survive. prince harry and the duke and duchess of cambridge attending a christmas party for their mental health charity heads together. they chatted with supporters. north carolina state university has a five-year, $1.3

million grant to study needle reception on christmas trees. the goal is to produce trees with less needle loss, which apparently is the number one complaint consumers have about real christmas trees. that's the news update this hour. back to you, brian. do you have a real tree, fake tree? >> real tree and i keep it watered. >> i do too. >> i believe the needles fall off. >> the tree was minding its own business, roots in the ground you take a chainsaw, what do you think is going to happen to the poor thing. >> i would like fewer needles on the ground. >> a national hash tag movement banning christmas trees. >> oh, bah humbug. >> michaels with a plastic tree. thank you very much, sue. we're about 90 minutes away from the closing bell. the dow still about 100 points from dow 20,000. the dow is 100 points from 20,000. merry christmas. >> whole week of it so far. >> oil trading closing for the day, slightly higher as well. >> fewer than 100 companies went

public this year. that's a big drop from 2015. 2017 going to change all that. bob pisani is the new york stock exchange. bob. >> hello, michelle. after far fewer ipos went public, issuers are hoping for a roaring comeback in 2017. there is reasons to be optimistic. historic highs from the stock market, second, a business friendly administration with the stated goals, less regulation and lower taxes. any reduction in taxes and regulation would be a major plus for ipos because it would increase the public valuation of the company. several ipo sectors could be very hot in 2017. here is three i chose. year of the tech unicorn, limited partner schaapships loor reasons to cash out. energy companies, there are only two energy ip oxs in 2016, but with oil stabilizing between $50 and $60, many shale based oil

companies that could be profitable. and maybe saudi aramco, trillion dollar listing. finally, small banks, innovative companies, a spread between what they lend and how much money they have to pay on deposits. that yield curve is steepening. many small banks, private banks, more profitable and more likely to go public in 2017. as with 2016, michelle is right, only about 100 ipos, far fewer than 2015. look at the good news here, average return on a 2016 ipo, almost 27%. that's according to renaissance capital. so there were fewer ipos. those that went public made money for the investors. who do we care about? the issuers or the investors? i'll root for the investors any day. 2017, let's discuss more, is it going to bring good news to the ipo market or is the slowdown going to spill into the new year. let's bring in somebody from the aforementioned renaissance capital, kathleen smith, ipo etf

manager and founder of renaissance. good to have you here. >> good to be here. >> you heard all the reasons that bob laid out that 2017 could be better. you expect it to be? could it get much worse? >> i think the way to characterize the ipo market is it has been the best of times, and the worst of times. the best of times for the ipo investor. returns as bob said 26% for the year. very good on your average ipo, 2016. but the worst of time for issuers, very slow issuance period. but we know that we need these strong returns to get the ipo issuance engine going. we expect fully that given the strong returns we had, we will see it in the issuance activity in 2017. >> i suspected low interest rates kept a lot of the companies from going public because they could get money elsewhere because so many investors in the world were desperate for yield, willing to give them private capital, so they weren't forced to go into the public markets. with interest rates rising, is that going to push some of the

unicorns out there finally in. >> we expect the change in the interest rate expectations and then also which has created excess funding in the private market. and then also the reconciliation of excess valuations in the private market and believe it or not, the public ipo investor has been a fairly rational beast and has -- >> we also, kathy, had companies that have just turned out to be, well, not what we thought they were. theranos and others, everyone keeps asking, what is uber going to go public? uber is losing over a billion dollars every year. you've got at some point be making money back for people to be interested. is there also, in addition to the problems michelle laid out, a dearth of good candidates? think there is a lost got of go companies out there waiting to go public? >> they're worth a lot of money. >> more than what the public market would give them. >> exactly. >> you know, my house is always the nicest one on the block when i try to list it, right?

what about vice, blue apron? we're going to see chobani, air bnb? >> we're looking at snapchat, we think that will be a bellwether important ipo in the first quarter. spotify looks like it is ready to go. there are big companies and when we get to this point in the cycle where there is a lot of companies think they're worth a lot and a lot of money chasing too few, we also get a lot of me too stories. i saw another ride sharing company, i never heard of its name -- >> via, juneau, lyft. >> we get to -- >> the race to the bottom in pricing. >> that's a signal to you. >> it says we'll have a lot of choice. you do want the unique companies, but there are a lot of me too companies at this stage in the psychole that we're seeing. so we have to be -- >> you think snap, now snapchat's corporate name, is going to be better received than twitter? which had been a disaster as a public company? >> it is hard to know how it goes.

there is a lot of enthusiasm for snap thinking it is a unique property and the valuation to start, it will be the second most highly valued tech ipo after facebook, above where twitter was. so the expectation is high for the company and its ability to garner ad revenue. >> thanks for coming in, kathy. >> thank you. >> we're watching 2017. >> do you use snapchat? >> a little bit. >> it is fun. >> twitter is not -- twitter is mad. snapchat is -- >> angry. >> angry. >> all right. get a pulse check now on america's wealthy. exclusive results for the cnbc millionaires survey on everything from donald trump to holiday shopping. here now to do that is the guy who talks about this kind of stuff, robert frank, the wealthy super happy or really happy in. >> they're fairly happy. but with some conditions, millionaire investors there, putting more money into stocks now. they're holding back on the holiday spending. cnbc millionaire survey found that 43% of millionaires polled voted for clinton and 42% trump. that marked a huge swing from

the spring survey. trump captured nearly all of the undecided millionaire voters over the last few months. with the trump win, nearly half of the millionaires say the economy will be stronger in 2017, way up from the spring when only 30% said the economy would be stronger. 62% of millionaires say he will be good for their investments. that's a huge sign. most say the s&p will be up between 5% and 10% next year. nearly half say their personal assets will also be up next year. one big reason, lower taxes. 43% of them expect a tax cut. among those, 40% say they'll put that extra money into stocks. a third say what they're not doing is blowing all that extra cash on holiday gifts. 75% of millionaires plan to spend less than 2500 this season and 81% are spending the same as last year. dems, they're stingy.

nearly a third of republicans plan to spend 2500 of those worth. >> they're cutting back on friends and family? >> yes. and men will spend twice as much on their spouses as women. you want to be this christmas is the female spouse of a 5 million plus republican. that's when you'll have a good christmas. >> best presents. >> isn't that true all the time? forget the political party, just basically -- >> the 5 million part. >> or a kept man of a rich woman. >> yes. absolutely. >> honey, i'd leakike a ferrari this year. i'll get a hot wheels car. >> thank you, guys. will higher mortgage rates push home buyers back into the arms of the creative mortgage products? that is next. 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. because when you really, really want to be there... but you can't. (cheering) at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready. because we're helping leading companies lead with digital.

hey!nicole. i just wanted to think your support team for walking me through my first options trade. well, we're all about educating people on options strategies. i won't let this accomplishment go to my head. get help on options trading with thinkorswim, only at td ameritrade.

interest rates are rising. taking mortgage rates with them. so home buyers perhaps starting to look for lower rates by once again turning to creative

mortgage products. diana olick has that story. diana? >> yeah, because those rising rates are pricing some buyers out of the housing market. but there is a way to get some of those borrows back in. and, yes, it was the villain of the housing crash, but the adjustmentable rate mortgage is a good option for some people. the average rate on the 30-year fixed mortgage today is around 4.25%, a full percentage point higher than a five-year arm. still, barely 6% of mortgage applications today are for arms, compare that to 35% during the housing boom. but today's arm is not the arm of old. it is far safer, new regulations that protect lenders and borrowers, no longer allowing interest only arms, negative amore tization arms, crazy low teaser rates. so for most loans, you now have to pay principle along with interest and the lender has to underwrite the borrower for the full length of the arm.

arms can be fixed for five, seven, ten, 15 years. there are some interest only products, but they're not common and they are more expensive. today's lending standards are strict across the board, but qualifying for an arm isn't really any harder. arms can work for you if you're not planning on owning the home for a long time, the wild card, of course, here is deregulation. this morning on lennar's conference call, stewart miller said the mortgage market remains tight, but could open up if the trump administration deregulates the banks. back to you. >> all right, thank you very much. as the home building stocks rise today anyway, let's got the next move with trading nation team. that's dennis and ari. nice move today on some of the home builders here. do you have a longer term expectation for the group, think it is worth investing in still? >> i do think it is worth investing in. i look at the pe for a stock like kbh, around 13, still below

a lot of what we see in the s&p 500 and a lot of the lower volatility stocks. based on that, that's a single stock you could buy, i like the xhb, index, that will get you exposure to the broader market. the reason i like that is because it is with everything that is going on in the market place now, i don't think the rise in mortgage rates is going to outweigh the rise in confidence. so we feel that getting exposure to that and all the land that they own and all the investors that we speak to are predominantly looking at real assets these days. >> i like that point of view. we forget rates are rising. maybe because things are getting better, that would mitigate the difference. let's strip out the emotion. you look at the technicals own the charts. what are you seeing on the home builders? >> based on the charts, they look okay, they look good, they don't look great here. i think they do participate in a rising market tape over the coming months. we think equities continue to rally. i would not be betting against

them. however, charting the ishares ticker, itb, relative to the s&p 500, give some mixed signals here. on a relative basis, the etf is back to the lower end of its range and it is oversold. so this could be where it is setting up for a bounce, however, the lower relative highs over the past few years does indicate a more questionable long-term trend. i think market weight exposure is warranted, but we would not call this a top pick. >> all right. thank you very much. for more trading nation, you can head to our website, tradingnation.cnbc.com. we're following a developing story out of germany now. german police say at least one person is dead, several others injured after a truck plowed into a crowd close to the christmas markets in berlin. what isn't clear is if this was an accident or an intentional act. more details as they become available. we'll bring them to you. the tale of two disneys. you have the espn reportedly

losing subscribers, but you also have the movie studio which keeps churning out block busters like "rogue one." which will lead the way for the stock? we're going to dig into disney next. for an entry into an upside breakout, some traders use buy stop limit orders placed above a re si resistance levels. if a stock closes below the stock price one day, then opens far above the limit price, the trader will not buy the stock.

disney shares are higher after strong opening for the movie "rogue one" and merrill lynch added the stock to the list. julia boorstin joins us with a look at what the latest "star wars" blockbuster means. >> reporter: the key take away is that disney's lucas film can successfully spin off stand aloin "star wars" fillsms. rogue one grossed $155 million in north america and globally

brought in over $290 million before its open in china and south korea. disney shares have moved higher in part because merrill lynch added disney to the u.s. one list reiterating buy rating. jp morgan with overweight rating on the stock projected 600 million plus in studio profits for disney on the film. analyst writing this impressive opening weekend performance of the first spin-off film solidifies it as a major franchise with great longevity. now we will have to see how the film holds up against sing, passengers and a slew of other holiday films. even without rogue one disney has six of the top ten films of the year if you include

carryover from star wars the force awakens 2015 debut. plenty of films to watch. >> thank you very much. despite the concerns raised on behalf of espn can blockbusters like rogue one and other movies coming out help the stock move? let's bring in barton crocket. the stocks moving today. i understand what a massive hit rogue one is. is the movie studio at disney, however, no matter how big rogue one is, big enough to move the disney needle? >> i think that the studio is maybe a quarter or so. i think that the studio is operating at a very high level right now. and i think our concern is it's hard to see how it gets much better than this. they have added nearly $2 billion over the past years as they have gone on the run from

"frozen" to multiple "star wars" movies. >> that is a good problem. things are so good they can't get gooder. >> that's a great thing. it can't get better but that doesn't argue that you will have impressive earnings growth. i think you will see flat earnings this year and high single digiteps growth after that. i think the consensus is arguably a little over or shy this year. i think you have to be worried about people getting too you foric. there is not a lot of growth in cable network. the studio is a a peak level. you have over half of the company not growing much. a lot of growth i think come in theme parks but is hard to get enough to get high single digit. >> are you ultimately saying and correct me if i'm wrong that what drives the stock is what is happening with espn? >> mathematically that is true.

you could also get tax. disney is positioned if trump pulls in lower corporate tax rates disney would benefit a lot from that. that would be the one thing i could see. the core fundamentals is hard to get over espn and cable networks. >> barton, we will leave it there. we appreciate it. thank you. we are going to get more details on developing story out of germany. power lunch will be right back. what's the value of capital? 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

♪ ♪ ♪ how else do you think he gets around so fast? take the reins this holiday and get the mercedes-benz you've always wanted during the winter event. now lease the 2017 gle350 for $579 a month at your local mercedes-benz dealer. i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) i won't. incr...think it wouldotection in a pwork, but it does.dn't... it's called always discreet for bladder leaks, the super... ...absorbent core turns liquid to gel. i know i'm wearing it but no one else will. always discreet for bladder leaks.

welcome back. we have breaking news still developing out of berlin. a police spokesperson telling nbc news as well as numerous wire services that a truck plowed into a berlin christmas market located in the center of town. there are reports of fatalities and a number of injuries. we don't have firm numbers on those yet. nbc is working to confirm that. the video that you are looking at right now is live from aptn from the scene. it is a still very active situation. it is very chaotic. police are investigating. we do not know and the berlin police are not ruling out that this was a deliberate attack. they are also not ruling out that it may be an accident. once again, a truck has plowed into a berlin christmas market in the center of town. there are reports of fatalities and there are reports of

multiple injuries. we will monitor the situation and keep watching this live feed for you. >> sue herera, thank you very much. turkey is the other big story. we are wondering what is happening in germany. the assassination of russian ambassador to turkey. they have sensed recovered. this is the photo of the alleged gunman there. it happened in an art gallery. take a look at the turkish currency that was stumbling. the chart shows you the dollar. it's getting hit very hard. this has already been a terrible year because of rising interest rates in the united states which means you are far less interested. plus the actions led to a lot of

investors feeling uncomfortable. >> there are headlines from the turkish president crossing. he gave a video message and sent his condolences to vladimir putin and family of slain ambassador andre, karlov. >> "closing bell" spepicks up coverage right now. i'm kelly evans at the new york stock exchange. >> i'm bill griffith, stocks off the highs. dow is up 35 points still in the green as investors buy into the tech and the real estate sectors so far. they have been lagging lately. we have two stock pickers who tell us which home builders they think looks most attractive. >> financials led the market rally since the election. the hedge fund portfolio manager who bet against the housing