good morning, markets shrugging off and key earnings are on today's agenda. breaking overnight, an optimistic bank of japan leaves interest rates unchanged and the details and the outlook straight ahead. plus, rise of the robot. mark cuban goes public with a high-tech investment advice for president-elect donald trump. it's tuesday, december 20th, 2016. "worldwide exchange" begins right now. good morning and welcome to worldwide exchange on cnbc.

i'm sarah isaac. yesterday we did see slight gains not exuberance as 0.2% for the s&p and the nasdaq was the best performer just up shy of 0.5%. as we look at the markets right now. we are expecting a positive open, altbbeit it a small one. let's look at the ten-year treasury note which, of course, at the highs last thursday, i think it was, hit 2.64%. we remain below that level, but, of course, elevated since before the fed meeting and we are close to 2.6% on the ten-year note and the same is really true down the curve. we've hit the peaks on thursday, but still certainly significantly elevated from where we've been one week or one month at the moment. now to developments overseas which investors will be watching closely today. in berlin, germany, 12 people

were killed and 48 injured by the truck that drove into the christmas market yesterday. authorities are now calling the incident a deliberate attack. german chancellor angela merkel speaking right now about the incident. we'll bring you the headlines from those comments as we get them out of germany. and then another geopolitical news that we are watching. a gunman shot and killed the russian ambassador to turkey at a photo exhibition in the turkish capital ankara yesterday. speaking at an art exhibit when a man wearing a suit and tie came in and fired several shots at him. european equities brushing off some of the geopolitical concerns. they are actually near their highs of the year in terms of the euro stocks which looks that broader continental move. italy and spain continue to be strong, but, of course, that haunting image of the gunman firing at the russian ambassador to turkey on a lot of the front pages, including "the new york times" which is a tough sort of

editorial call to make. a disturbing image but caught on video and on camera. >> i think we've spoken a lot how we learned with hindsight how markets have shrugged off political risk. the real tragedy that markets are able to shrug off these terrorist attacks and the reaction, of course, in general, have been pretty muted over the last 4 hours. some people pointing to the fact that the swiss rally against the euro but general markets -- >> hard to figure out what it will mean economically and what it will mean politically heading into an election year. not to say there isn't going to be an impact. we will have an election in germany next year. >> the bigger issue here is what happens between russia and turkey. does russia elevate its response probably not in turkey directly, but in syria as a bit of a proxy for this attack on its -- the murder of its ambassador to turkey. the one that has more risk to proliferate in terms of response

is the potential russian response. we'll have to focus on that and, of course, very sad day yesterday both of those situations. switching gears, though, now to overnight news from japan. the bank of japan issuing a policy decision as expected the central bank held rates steady and maintained its pledge to guide short-term rates at 0.1%. and the government ten-year bond yield at 10%. offered a more upbeat view of japan's economy and novembrecov moderately. and then in terms of the press conference from the governor koroda was pretty dubbish and that had allowed the yen to, the dollar to rise quite significantly against the yen. 0.8%. that's why as we look at the markets right now. the nikkei is stronger than the rest of asia and the curaeps moves for you. 0.8% move for the yen.

that came more from the c commentary. >> better growth outlook. when was the last time we heard that from the growth of japan. 1.5% growth expected through fiscal year ending april. that was better than a little more than 1% than they previously expected. >> the fact that he cited the weaker yen being a good thing. they're not going to step away from this yet. actually, but the interesting there it might have more to do with donald trump and the higher yields we've seen since then. the japanese yen was 13% stronger for the year and since then weakened 10%. thank you, trump. as for the broader market picture here. let's check out where oil prices are trading. a bit stronger this morning. wti flashed up and brent 55.22. up a little bit higher. and prices under some pressure. as for gold on the back of that currency move that we have seen where the dollar actually strengthened a bit again yesterday. gold is down about 0.75.

it has had a brutal few weeks as you can see by that ugly chart after a strong open to the year. the dollar intdex for the year on the whole is up which is not enormous when you consider all the factors and because of things you just mentioned that you strengthened for a lot of the year. when we think about how big the dollar index run has been post-election. when you see the whole year, 4% when it's on a different monetary policy to many of the other developed economies. it's run up a lot in the short term but having declined for big chunks of the year. >> you have to take into account last year's rise, as well. up sharply last year and that is factoring in the fact that the fed is the first mover. so, you have a strong dollar on top of an already stronger dollar and that is selling a lot of pain for corporate america. i agree with you, though, so do a lot of wall street forecasters that there is more room to run in this dollar trade.

so many big banks coming out with a parody call and euro goes down to one to one dollar. we are only 3.5%, 1 m% away fro that. >> pick and choose your holidays so easily now. >> tokyo, europe. the uk. >> now to a development out of china. the country has returned a u.s. underwater drone that a chinese naval vessel seized last week. china defense ministry said it returned after friendly talks with the united states. backlash from president-elect trump who has taken a tough line with china. the pentagon has issued a statement saying the u.s. acknowledges the return of the drone, it was inconsistent with international law and standards of professional conduct between navies at sea. now to today's economic agenda. light day ahead with no expected data, but several companies are reporting earnings. carnival, carmax, darden

restaurants and general mills and blackberry out before the opening bell . fedex and nike. we're starting to get the first names that are reporting and commentary post-election. so, that will be interesting. joining us now with three things to watch come fedex reports today islandon dowdy. >> $2.90 a share on revenue of $15 billion. beyond those numbers here are the three things you want to watch. first, ecommerce. investors want to see how the carrier is handling a major surge in holiday volume as more people are shopping online and how much market share fedex continues to take from rival ups. means more revenue, fedex has been investing to handle capacity, which could put pressure on its ground business. second trump's impact. shares at an all-time high last week enjoying the boost from the post-election rally. but the president-elect's victory raised questions over

the u.s.'s trade policies. you want to listen for any comments that management has as the ceo warns that withdrawing from trade agreements from nafta could be catastrophic. the benefit from lower fuel prices. lower jet fuels help reduce costs but also pulls in less revenue from fuel surcharges. despite a 40% decrease in the u.s. gulf prices the past nine months, some analysts believe that the benefit has likely run its course. taking a look at the stock. fedex shares are up 22% in the last three months. back to you. >> shrugging off some of those trade concerns. a french court has found christine legarde guilty of criminal negligence for a government payout made eight years ago. it was a surprise, but despite the ruling, lagarde will not face any fine or jailtime. she will remain at her post at the imf. lagarde spoke about that

movement and came after the executive board at the imf met late last night and determined they were going to back her. here is the managing director's response. >> i am not satisfy would it. but there's a point in time when one has to just stop, turn the page and move on and continue to work with those who have put their trust in me. so, i'm very happy to not appeal this decision and to focus all my attention, all my time, all my efforts, all my energy and inneimy enthusiasm to my head of the imf. >> she was disappointed with that verdict that came out of france earlier that day. widely seen, i can tell you from my reporting inside the imf as sort of politically motivated. it was an unusual circumstance. 12 parliament aryans had to

decide on two different counts. one they called her out on negligence. no punishment seen as a way to appease people politically to get at this. but the imf did decide to back her. she will stay on as her role and they praised her leadership. she has boosted the credibility of the imf from a lot from her predecessor. former french leader before her. but, clearly -- >> how long has she got left? >> she just started her second term. it's five years and she just started it this year. >> two years ago before restarting that term someone to throw her hat in for the french presidential election and she decided to stick on at the imf but partly because of domestic political pressures on her. but this is a proliferation of that, but it's not mattering too much. >> she can certainly fight back this. the question is, what is going to be the role? we were talking about this yesterday on "squawk on the

street" with jim kramer. global institutions and global elite is in a tough spot and it's been a bad year when it comes to brexit who she and the imf came out against. the 2016 election never took a stance on trump, but firmly took a stance towards globalization and free trade. the populism movement and global economic coordination and this is something that the imf preaches with her at the helm and what is the future of institutions like this after the year we just had. >> on that topic today also makes me even more excited about it this year because it is going to be interesting to see what the tone is at the world economic forum because these are the exact people that got most of these things wrong over the last year. we'll see in january. to u.s. politics. apple ceo tim cook is defending his meeting with president-elect trump. he is one of many ceos who sat down with trump. according to reports he took an

apple message board to argue that the only way to influence the incoming president is to engage with him. cook quote "i never found being on the sideline a successful place to be. you don't change things by yelling, you change things by showing everyone why your way is the best way." i think that sounds sensible to me. dallas mavericks owner mark cuban has some advice. the outspoken entrepreneur who did publicly back hillary clinton said he wants trump to invest $100 billion in jump starting the national robotics industry. according to cuban, china is far outspending the u.s. in robotics. he argue physical the u.s. hopes to maintain economic independence, trump should be spending $100 billion from the $1 trillion he has pledged to rebuild american infrastructure on robots. well, cuban did have that famous photo-op after the election. trump's chief adviser. unclear how that is going to play for trump's whole bringing

american manufacturing jobs back to america and keeping plants here. because one of the big threats is, of course, ai technology, robots. >> but at the same time -- >> who knows. maybe they'll be open. they seem to be taking advice from different sides. >> from all sides. in other political news, we're learning more about president-elect trump's dinner last weekend a spokesperson for slim says it was a very korncor dinner. he pledged to build a wall on the u.s. southern border and make mexico pay for it. he's also threatened to get rid of joint trade deal and imposed punitive tariffs on mexican-made goods. still to come uber in trouble. the ride sharing app on pace for an unprecedented loss. we have the numbers straight ahead. stay tuned to "worldwide exchange." we will be right back.

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stream all your entertainment! anywhere! anytime! can we lose the 'all'. there's no cbs and we don't have a ton of sports. anywhere, any... let's lose the 'anywhere, anytime' too. you can't download on-the-go, there's no dvr, yada yada yada. stream some stuff! somewhere! sometimes! you totally nailed that buddy. simple. don't let directv now limit your entertainment. only xfinity gives you more to stream to any screen. welcome back to "worldwide exchange." good morning to you if you're just waking up. we are pointing higher, only slightly. about 0.1%. each of the indices that's like 20 points for the dow. yesterday we did see gains 0.2% for the dow and the nasdaq was the best performer up 0.4%. let's have a look at oil because oil remains an important factor. at about 40% wti this year.

one forgets the depths we hit early in the year. that january/december transition and the heights we reached relative to that earlier in the year were ending or starting today pretty much flat. 52.1 for and that's why energy remains the best performing sector year to date. uber continues to lose money despite growing sales. reports say that the ride-sharing company lost at least $800 million in the third quarter, not including items such as taxes and the sale of its business. uber disclosing those numbers in a call with investors last week. reports say the loss was due to partly heavy spending on promotions including cash incentives to recruit new drivers and invest in businesses such as self-driving cars and food delivery. in global news a court in shanghai found two chinese firms

to pay bmw. one company's chinese name translates as german bmw group holdings limited and it registered the trademark bmn. the second company a fashion firm used the trademark on products and changed the logo over time to more closely to resemble bmw. six or seven years since i've been to china. when i did go the first time pretty similar knock-off type products were available. i think things have changed a little bit. smartphones bran s brands that pretty similar. >> could you tell the difference? >> i didn't buy one. i imagine it's changed since then. the u.s. justice department has reportedly asked credit suisse to pay between $5 billion and $7 billion over its toxic sales security. reuters says the bank is

resisting settling for that amount. u.s. attorney general loretta lynch met with credit suisse's ceo last week. credit suisse is also defending itself against lawsuits by the new york and new jersey attorney general over similar claims. you reached out and didn't get a response on that. >> the bank declined to comment. i mean, the interesting thing we've also had a story from certain reports that deutsche bank could be close to settling. if this did happen this week two banks now being reported that that could happen. progress. >> depends on how far away the settlement is from the headline number. >> depends on how big it is. pretty confident it will be less than 14. anything less than 7 for deutsche bank would be a win from here. >> it feels like they want to get this done before the end of the year. >> before the change of administration, as well. a key investor in monte paschi said it will go ahead with a purchase of bad loans from the lender.

yesterday morning monte paschi said it was rethinking its $1.5 billion investment unhappy of a bridge loan the bank had secured. shares closing down 11% on that news. will seek parliamentary and starting with a light bailout of the ips flat, up, 0.75%. a few stocks for you to be watching today. biogenhas named its chief commercial officer as its new ceo ending a five -- did i -- vounatsons to replace the previous ceo. he joined the company earlier this year from merck and the newly named ceo was asked about all the takeover speculation surroundediing the company. >> i heard about that before coming and before joining biogen and this did not stop me.

we will not comment on speculation, but the mission in life now is to set a strategy and to have a plan and to execute on this plan. and this is my mission and this is what we are going to work on. in other news the uk lloyds banking group is buying bank of america banking business for about $2.4 billion. the unit has about 5 million customers and a loan portfolio and tried to sell mbna. >> expected. >> little share movement there. >> novartis buying u.s.-based n encore vision. developing a treatment for far sightedness that affects 80% of people over the age of 45. still to come here on "worldwide exchange" fighting words from the head of the f-35

program and details on a red phone call between obama and putin. we're back in just a couple of minutes. don't go anywhere. eforyx

welcome back to "worldwide exchange." the head of the pentagon program is fighting back. after last week you'll recall trump tweeted the f-35 program and cost is out of control but air force lieutenant general

bogdon said that's not true and he would welcome the opportunity to sit down with president-elect trump and his administration to address the concerns. speaking to reporters, he said the f-35 program has dramatically improved and is different since back in 2011." in other political news, we're learning more about what president obama said to russian president putin on the so-called red phone on october 31st. amid questions and concerns in the campaign. it connects moscow to washington is used to communicate in moments of crisis. nbc news reports that part of the message sent over the red phone included "international law including the law for armed conflict applies to actions in cyberspace. we will hold russia to those standards." at that time at least one of obama senior advisors wanted the president to threaten putin saying messing with the u.s. vote would be an act of war but

obama did not issue such a specific warning. president obama is preparing to ban off-shore drilling and expected to block the selling of drilling rights in most of the arctic and part of the atlantic. the move could come as soon as today. obama will purportedly use a provision in the 1953 law that was only used sparingly for coral reefs and marine sanctuaries, though president-elect trump, you would think, could roll back any executive orders especially on this. this morning's top stories and the global markets. things are looking up. dow still 100 points away from 20,000. we also have the stories trending on social, including a fantasy league for fans of "the bachelor." it's a miracle. you're watching "worldwide exchange." we'll be right back.

good morning. breaking overnight the bank of japan raises its economic outlook complete details and market reaction ahead. trouble in the fast lane. uber on pace for an unprecedented loss. the latest on the ride sharing apps numbers. we'll tell you how you can now bet on "the bachelor." tuesday december 20th "worldwide exchange" continues right now. good morning.

welcome back to "worldwide exchange." i'm sara eisen. >> i thought you would say it would never be possible for me to be on "the bachelor" because you're married. >> i can play fantasy sports on "the bachelor." game changer. first, let's check in on the global markets after another mini rally for stocks yesterday on low volume. kept the dow a little more than 100 points away from 20k. we're strong again this morning, though. we'll see if we can get there in today's trade. the dow futures right now up about 36 points. 37 points there. s&p futures are up 6. and the rotation around industries continues with telecom outperforming and real estate, as well, going positive for the year which leads only the health care sector and the s&p negative in 2016. what's influencing the markets right now. breaking market news overnight. the bank of japan issuing a

policy decision as expected. the central bank holding interest rates steady maintained its pledge to guide short-term rates at 0.1. but the good news is the bank of japan offered a more upbeat view of japan's economy than it predicted back in november saying it is recovering moderately. now expects 1.5% growth rather than 1.3% growth. karoda also used the word positive monetary easing in terms of his easing saying there is plenty of evidence to continue, plenty of evidence suggesting it is continuing powerful monetary easing. completely separate from the federal reserve there. >> but maintained a dubbish start. the yen is weakening. >> the yen is weakening and that is helping stocks including japan. let's have a look at the dollar board just quickly showing the weakening yen 0.8%. quite a big move south for the yen.

excuse me. and 1.18 is where we stand on the dollar/yen pair at the moment. european equities. they have for the large part managed to shrug off those terrible attacks in germany that we'll come to a bit later. all the markets in the green territory which is just below flat, but not big gains today at this hour. broader markets, let's have a look at oil. wti up pretty much flat today, but significant from the lows we hit in december and january. 52 on wti and why energy is the best performing sector year to date. treasury note just off the highs we hit last thursday at the back of the fed rate hike decision. we hit 2.64% then and just below 2.64% today. gold prices to round things off this a little bit softer. investors are also paying close attention to some

geopolitical news. in berlin, germany, 12 people were killed and 48 injured by the truck that drove into a christmas market last night. authorities are now calling the incident a deliberate attack. german chancellor angela merkel speaking in just the past half hour. she says the attack may have been perpetrated by a migrant. no conclusion there. merkel said this would be especially dispicable to many germans who are working to help refuge refugees. urging the german public not to give into fear. she said the whole nation is united in mourning and she is heading down to the site of the accident today. >> she is, indeed. she said germany, though, should not be paralyzed by terror and try to maintain the position that germany is safe today and safe moving forward. that this is a one attack. development out of china. the country has returned an underwater drone that they

seized in the south china sea last week. it returned the drone after friendly talks with the u.s. the event triggered a backlash from president-elect trump who has taken a tough line with china. the pentagon has issued a statement saying that although the u.s. acknowledges the return of the drone, the incident was inconsistent with international law and standards of professional conduct between navies at sea. a light day ahead, no economic data on the agenda but several companies reporting earnings. car max, carnival, dardem restaurants, general mills, blackberry there, as well. after the close, we'll hear from two big bellwethers. i'll cover the nike news and the call. >> what are we expecting? >> they're expecting pretty downbeat forecast and outlook from nike. the stock actually has really lagged behind. it has not participated in the dow 20,000 move or the dash. it's down more than 20% this year. been a slow down in north

america. attributed to the rise of adidas taking market share and global sluggishness and off of its innovation gain nat has it been on the past few years. not giving a good sense of what is going forward. the whole future orders projections that look out six months ahead. pretty much flat last quarter and the xaemp is saying not a good way to measure demand any more because so much going on online. >> can we draw from lulu's numbers. >> double-digit growth. >> good news for nike or not really? >> a little bit. the whole idea that it's not dead. so strong even with slow downs, for instance. >> did nike do abcs. >> that is lulu branded item. they have other athletic wear that might be comfortable. in other corporate news uber

continues to lose money, despite growing its sales. the ride sharing company lost at least $800 million in the third quarter. not including items such as taxes and the sale of its china business. revenue rising to $1.7 billion. uber disclosing the number in a call with investors last week. the loss was partly due to heavy spending on promotions including cash incentives to promote new drivers and investing in businesses like self-driving cars and food delivery. like a flood of new startps trying to take their market share. >> still completely dominant. >> completely dominant, but you have to adjust your pricing accordingly. >> they also had this major software upgrade, i don't know if you noticed, very technical. very hard to pinpoint where your car is. i find the new upgrade not so friendly. >> i'm not sure i have gotten the new upgrade. >> i'm surprised. new information from the financial sector. the u.s. justice department has reportedly asked credit suisse to pay between $5 billion and $7

billion to settle its probe over the sale of toxic mortgage securities before the financial crisis. reuters says the bank is resisting settling for that amount. loretta lynch met with credit suisse ceo last week. a solution could come as early as this week. defending itself against lawsuits over similar claims. we've reached out to the bank. they've made no comment at this point. certainly no confirmation that they or deutsche bank have also been rumored to possibly reach a settlement this week. no confirmation of that this week. we'll keep an eye. we're also watching news out of the italian banking center. now says it will go ahead with the purchase of bad loans from thelender. yesterday morning the bank said that the bailout fund elante rethinking that the bank had secured shares shares closing

down 11% on that news. seek parliamentary approval to bail out bmps and you can see shares are up less than 1%, but coming back a little bit from yesterday's one fall. >> you nailed the pronunciation at the top of that and why did you change to the letters at the end? >> because i didn't want to have to do it again. some top trending stories. bachelor nation finally has its own fantasy league. finally. abc and espn teaming up for an official gaming experience. for the upcoming season of "the bachelor." every week players will challenge family and friends to make a decision and the recipient of the final rose. enter in a contest to win a trip to l.a., disneyland and tick

toots the taping of "the bachelorette." >> you're so excited about this. i can tell. >> forget the incentive. everyone who already watches the bachelor already does this. >> i tried. i tried for the bachelor. i didn't enjoy it. but i will try again. >> the guy who they have as the bachelor is a recurring character on these series and he's very compelling. >> so unbelievably false. because you really believe it's true love. >> it's true love. 100%. don't question it. >> when does it start? >> january. soon. >> exciting. sort of. the golden globes red carpet is coming to twitter. the social media platform will live stream the two hour golden globe preshow. celebrity content from twitter and the live video feed from the actual red carpet. golden globes, how much do people like them versus oscars? >> it's a solid number two. >> yeah.

>> yeah, people love it. >> that includes tv. >> so good in "the crown." >> outstanding stuff. mark zuckerberg introducing the world to his virtual butler, jarvis. creating him in his spare time over the course of 100 hours. that's all it took him. he can turn on lights, recognize visitors, decide whether to open the front door. zuckerberg sort of played down the idea that this was a new facebook product. maybe they'll use it. but he's saying only designed at this point only for his own home. >> i'm sure it will be rolled out later. everybody is doing this now. you have siri sort of similar, google. >> google -- >> they're all doing it. we'll see which one wins out. still to come, today's must-reads. but as we head to break check out the trading picture in europe this morning.

little bit of strength for france. germany and the uk pretty much flat. stay tuned, you're watching "worldwide exchange."

welcome back to "worldwide exchange." my pick is actually not in the papers. it is janet yellen the fed chairman mid-year commencement speech yesterday afternoon at the university of baltimore. yellen talked about the labor

market telling it was a fall commencement and looking that best labor market in nearly a decade and, also, the fact that they have a degree helps. yellen saying, "economists are not certain about many things, but we are quite certain that a college diploma or an advance degree is key to economic success. those with a college degree are more likely to find a job, keep a job and have higher job satisfaction." the advantage in earnings for college graduates is also there. annual earnings last year were 70% higher than those with only a high school diploma. the facts are there. she cited a number of figures in that, which we actually see in the unemployment report that we get monthly and, so, it was just sort of interesting to hear the fed chair not going to monetary policy, but go into some of the dynamics that work at the labor market and education. she also said it is because of globalization and in part reducing the need for lower

skill workers and more demand for high-skilled workers which is another sort of conversation that's out there right now. >> i wonder if she enjoys that type of address as opposed to facing reporters grilling her like orour dear steve liesman picking up on every single word. >> congress grilling her in her testimony. i don't think they took q and a after the commencement address. my pick today in "the times" in london. it's titled moderates will be the force for change in 2017. it's a sort of review of 2016. and saying that, you know, populism the year of the strong man has been at the top this year and how that might change next year. in 2016 those on the political margins have become main stream and the moderate feels as if they have been edged out. not entirely comfortable with their new establishment status.

the right wingers on both sides of the atlantic who are now the snowflake generation melting at the slightest hint of criticism. that means the liberals are the insurgents who can define the battlegrounds of 2017. >> that's heavy. >> both sides of the atlantic reviewed saying the big winner of the year is vladimir putin and saying that next year can be as quick as a year transition and see it come back to the four. of course, that is -- >> what causes that? >> if they can define the politics of identity, she says. rather than just going back to the traditional economic liberal arguments that they've used for the last sort of 10, 20 years. so, we'll see if she's right. but good summary of what's been happening around the world this year. when we come back, rich clarida will join us with his thoughts on the markets as we head into 2017. but, a bit of market trivia for you. what is the only s&p sector right now that is negative year to date? here's a hint, i already

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welcome back to "worldwide exchange." what is the only negative sector in the s&p year to date, the answer, of course, health care. real estate turning positive yesterday to be 10 out of 11 sectors positive. just the one negative sector energy. up significantly as oil prices have raised 40%. a look at your wall street set up right now. another positive start to the session. dow futures are up double digits right now after another little rally yesterday. they're up 35 points. s&p futures are up about 6. can the momentum keep going? here now to discuss the markets, rich, global strategic adviser at pimco. what is driving this continual rally up in stocks and do you expect it to continue through

the end of the year and into next, rich? >> some optimism about the economy. we'll get some tax cuts next year, probably some infrastructure. i think some selective deregulation and i think markets are responding to that, obviously. a big change in psychology and confidence since the election. that's for sure. in terms of next year, i think it will depend upon some timing and details. it will take some time to pass tax reform and even longer time to pass infrastruck xhr. next year will be about putting in place trumponomics but the impact on the economy will be later. >> one thing that has been pretty surprising about this rally, particularly given late in the cycle is how low volatility has been and we saw it fall for the third session in a row yesterday. does the low volatility or a sense of complacency out there?

>> we think of the world being stable, but to some extent insecure. it has been at low level. usually an indicator but next year we'll see more volatility. the markets are expected. a transition a new fed chairman and what will be in the tax. >> have you been surprised, rich, about the sort of persistence of the optimism of policies next year and the lactof factoring in some of the bigger risks around geopolitics, security, trade and other issues that we still have giant questionmarks over? >> yeah, you know, i think that's an interesting point. the markets do seem to be saying right now that they're betting that some of the concerns that they might have had, in particular, about a trade war and those sorts of things potentially, you know, currency devaluation by china. they are not putting as much weight on right now. but, obviously --

>> is that a mistake? >> but i think right now this is all about speculating what next year will look like. i think once we get into the inauguration and we'll see the markets in place, markets will have to calibrate that next year. >> which way do bonds go from here? clearly, we've seen a sharp increase in terms of a rise and steeping of the yield curve pricing and some of the rate hikes. if we get three hikes next year, is there more for that to come or is that priced in? >> not quite priced in. i think the markets are pricing in two hikes next year, not three. yes, we have had a big increase in rates, but basically ten-year yields are more or less where they were a year ago. 2.5% roughly with inflation above 2. not a high interest rate right now. obviously, if we continue to get growth in the economy or rebound in growth and those fed hikes that you mentioned, we could get, you know, upward adjustment in rates, as well. but, certainly, not going back to the levels that we saw in

earlier periods. >> what type of growth are you looking at for next year? >> you know, our view next year is perhaps a bit of a pickup from this year, sara. i think growth in the u.s. will be a bit under 2% in 2016. so, we could see growth next year in the low 2s. but, as i said, most of the impact of trumponomics will impact in 2018 and beyond. >> are we still late psychotool be doing these reforms, the stimulus side of things. is it potentially going to cause much more inflation than perhaps people are expecting in a kind of dangerous stagplation kind of way? >> i think that is certainy potentially a concern. i think a real question right now in terms of the stage of the cycle is, you know, the productivity side of the economy. productivity has been disappointing now for a number of years. and, in particular, that's going

to be relevant in terms of the inflationary impact that we've seen. so far inflation is below the feds desired level and pickup in wages and finally for the other issue the exact nature of the way this tax package is put together. you had paul ryan and mcconnell talking about it being deficit neutral and less of an impact than if it is not deficit neutral. >> we have been talking a lot about u.s. markets because u.s. policies look like they are about to change drastically. what about emerging markets. can you dip in with the feds raising rates now maybe more regularly? >> i think emerging markets tend to, you know, you need to be cautious in emerging markets in the early stages of fed rate hike cycles. here the key will be a gradual fed and also the key will be, you know, the issues involving u.s., u.s. trade. i think there are opportunities in emerging markets, in particular, those that are on the commodity side of things for

the stabilization of commodity prices. i think there are select opportunities, but you need to be cautious given the upper movement in rates. >> rich, finally in terms of risk sentiment going into the end of the year and next year. basically optimistic, but things have gone too fast in the short term? >> what i would say, there is an old saying. i'm from missouri. show me. i'm actually from illinois, but it's a neighboring state. i think as we get through the holidays. as we get into the next year and actually see the team in place and actually see the contours of the legislation, i think we'll have a better sense next year. so, i think the repricing so far makes sense and i think, you know, it is factoring in some of what we are likely to get. but, again, next year will be a year of legislation, not necessarily a stimulus. >> the show-me country. thank you. the show me country and congress. only about a minute left. what are you watching today?

>> nike. >> nike. after the bell. fedex also after the bell post-election commentary on the world and on the economy. that does it for us here on "worldwide exchange." happy holidays. "squawk box" is next.

good morning, the dow inching closer to 20,000 and attention now turning to earnings. a couple big names out today. fedex, general mills and dow component nike. breaking overnight the bank of japan holding rates steady and offering an upbeat view on the economy. plus, mexican billionaire carlos slim met with president-elect trump. his impressions straight ahead. it's tuesday, december 20th, 2016. "squawk box" begins right now.

>> announcer: live from new york where business never sleeps, this is "squab box." good morning, welcome to "squawk box" right here on cnbc. we're going to start this morning with several developments overseas which investors will watch closely today. in berlin, germany, 12 people were killed and at least 48 have been injured by a truck that drove into a christmas market yesterday. speaking in the last hour, german chancellor angela merkel said, "we must assume it was a terrorist attack. it would be especially hard to bear if it were confirmed that the person who committed the act was a migrant in germany and she urged the german people not to give into fear." in other geopolitical news, a gunman shot and killed a russian ambassador to turkey at a photo exhibition at the turkish capital in ankara yesterday. the ambassador was speaking at an art exhibit when a man wearing a suit and tie fired several shots. a