it's wednesday december 21, 2016. it's the winter solstice. and we have the least amount of light i think is the wi to say it. it's the same length of day as 24 hours. "squawk" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc. thank you to the producer force that graphic. this is the sweater of the month. i'm andrew ross sorkin along with kayla tausche. getting so lows to hitting 20,000. the dow looking like it may open off down a little bit. may get harder to get to the 20,000 mark. nasdaq looking to open up briefly. s&p 500 up slightly as well.

overnight in asia. let's show you what's going on in the world across the globe. looking at the hang seng and shanghai up, the nikkei down a bit. european equities now also a bit of a -- there we go. a mixed picture. dax looking up. everything else down. a quick look at the dollar. should we go on a trip? >> i'd like to get rid of the boards and have you on camera is what i think i would like. these are less important than how you're -- >> you want to go back to the sweater of the month. it's the holiday cheer. >> do you wear the same sweater every month? >> no, i wear different sweaters. >> he has zweaters, too. >> zipper sweaters. yeah. >> mrs. sorkin was not awake this morning. we have you to thank for this. i could be --

>> i did not consult anybody. >> i'm curious about the navy sweater with the black tie. >> no. it's a navy tie, too. >> is it coming across as black? >> in person it is. >> andrew -- >> that's not good. >> anybody who knows andrew would know it would be blue. i'm surprised that you don't know he would never, ever, ever -- >> what? >> you wouldn't mess that up. if you're going to do this. >> i'm going to try to do it. >> that's my whole point. it's not somebody else doing it, it's you doing it. >> it's a holiday thing. i'm taking the next two days off before christmas. >> you'll be here tomorrow. >> because you think the dow will hit 20,000. >> you'll be called in here to wear the hat. those boards work. the euro has moderated. the ten-year moderated a bit. not going straight to wherever. the terminal point of those things. >> i think we should go to

paris. >> that's a good idea. or wait until it gets to parody. >> the airlines, hotel companies, they have flexibility to be elastic in pricing. >> 9% since election day for the averages, something like over 15% or 16% for the year. that's the kind of year that i wish we could have every year. >> we all do. >> do the rule of 72 on 15% or 16%. your money is doubling in four, five years. i don't know. i should have done it before i said it. >> it's early. >> it is. >> i love that we have the fire going. >> there is a question of whether the printing of the hats jinxed getting to 20,000. >> it's "sports illustrated" type top. that's true. sooner or later, if it's going to -- the cream rises. it will happen. earnings could get better.

we have some guys we'll talk to in a second. look. >> we have the fire. >> the you'ule log. >> feels warmer in here. >> do you think we could start a business where we sell a sweater of the month? >> i'm going to say no. i don't think you could get that off the ground. >> we have a big platform here. and the animation ready. >> deal book, billions. >> sweater of the month club. >> your column. eight things going on already. >> you have to keep thinking. he's a portfolio. >> he is. like a pool. that's not a bad idea. >> look at you. bring that over. excuse me for a second. throw that over here. throw it on to the set. >> get ready. >> here we go. we are ready. but this may jinx it by showing it on the air. >> as rick santelli calls it y

2ok. >> green might have been better. red state. that's why it's happening. >> among the top stories, we are watching oil prices this morning. new api data out yesterday showed crude stockpiles dropped by 4.4 million barrels last week. that's more than analysts were expecting. crude firming up a bit. up about half a percent. november existi ining home s are out at 10:00 a.m. eastern. after rising in october, sales are expected to have dropped last month. accenture, paychex and winnebago report before the bell. after the bell, bed bath & beyond, micron and red hat. >> perfect. >> in europe, banco monte dei paschi shares are getting slammed. well off lows after italy's

parliament approved a debt increase for eventual bank aid. shares are currently down 6%. the oldest bank warning liquidity will dry out ifn 4 months instead of the 11 months it earlier reported. the swiss competition commission has fined several banks accusing them of rigs interest rates. jpmorgan received the largest fine, $33 million after regulators said it operated a cartel with the royal bank of scotland, with the aim of influencing the swiss fra franc libor levels back in 2008 and 2009. other banks fined included deutsche bank, citi group, barclays, society general and

credit suisse. ford will close its plant a week for maintenance in kansas. the plant makes a very important and popular f-150 pickup truck. also ford transit vans. the move comes as rival gm plans to close five u.s. plants which mostly makes sedans which have seen a slowdown in sales. so scary. >> what i'm about to tell su scary. i agree. a manhunt underway in germany for the driver of a truck that killed 12 people when it slammed into a berlin christmas market. the german authorities released a pakistani asylum seeker because of lack of evidence. a police official said we have the wrong man and therefore the true perpetrator is at large and

can cause further damage. isis has claimed responsibility for the attack. >> the first guy, someone said it looked like the guy who was driving. >> right. doesn't instill confidence. >> no. so you hahave videos all over. isis did claim responsibility. they said it was isis inspired, is that full responsibility? >> isis inspired is different than isis. >> the publications of isis and al qaeda had been writing about potential truck or vehicular attacks this holiday season when people are congregated in the way they were at that christmas marke market. >> never is good to go to the political implications when people are still in the hospital. the political implications for merkel are huge.

if there was a -- supposedly there's not nearly as many people at any of the market did -- christmas market celebrations in germany. they were empty yesterday. god forbid this guy comes back. back to the markets here. equity markets, bond markets. bond closing at a record high. the 17th time since the november presidential elections. up nearly 9% over that time. now just 25 points away from 20,000. joining us is lou breen and steve reese. we can ask the question a lot of different ways, how much of this have we paid for already, lou, and things have to go right to justify it now and even further. >> we're up about 9% from the

election, 120% analyzed rate. by next year in november i bet we won't be 120% higher than we are now. i would say we've gone faster than we need to. we rallied on hope, that changes to the business structure will help companies, but not rallying yet on fact. we have to get the guy in office and see how it works. i always look at how we get along with others. any sort of upset on trade deals because of the globalization of the trade deals that could make the economy stumble when you think you're trying to do something good. maybe bring business production back here but that doesn't happen one day to the next. like when reagan took over, there was morning in america but i think people pushed the snooze

bar and rolled over because the next 18 months we were stagnant, then in '82 we took off. just because the idea sounds good, doesn't mean the execution will be there right away. >> hope. yeah. there does seem to be hope. maybe the first lady doesn't own stocks. that's not what she was talking about in terms of the hopelessness. did you see this, steven has five ideas to help clients optimize equity portfolios. it goes one through six, which is weird. did you -- >> i didn't catch the sixth part. >> we might have added a sixth one. >> maybe we should make that 5b. i was going with the five. did you see this? there's five things, there's six of them. >> everyone is questioning post the run what do they do with u.s. equity exposure, we still see upside. the market has had a good run. a lot of that is justified given

the earnings picture next year. we're confident in 8%, 9% growth. that does not assume the trump policy changes. you go through the tax plan, repatriation, that's 8%, 9% on top of that core 8%, 9% we're modeling. >> over what period of time? 12 months, maybe 24. it's a question mark when the tax policies get passed, if they're effective. you have to be prepared for volatility. think about maybe not selling the u.s. but adding short-term u.s. protection. volatility is at an all-time low. you can buy attractive short-term protection looking at march putting protecting you down on the s&p 500, which will let you sleep better at night. >> we're basically talking about stability here in the u.s. and the expectation for domestic policy. is there a chance that hawkishness towards china, uncertainty in russia could come

to bear at some point next year in the markets in a way we didn't expect? >> sure, you could be expecting some kind of upset, the degree of it is the important thing. europe itself has lots of different stumbling blocks along the way from the italian election to the netherlands election to france, germany in the fall. as far as china goes, the strength of the dollar with china and other emerging markets is a very important factor. one thing is the huge amount, the increase of about 7 trillion in dollar denominated debt that has nothing to do with the u.s. it's agreements between non-u.s. entities and it's huge. if you think back to what happened in the taper tantrum back in 2013, a lot of that was because of the dollar denominated debt, people being offsides, not being able to compensate for the strength of the dollar and the rise in the

long-end rates. those sorts of things, with china, that's the thing that jumps out at me. as the -- foreign relations in jen general through trade, relations. that jumps out as the first potential stumbling block. >> i see a lot of -- you are covering both sides here. you say you are comfortable with buying large cap and broad market, but make sure you have small caps and you're comfortable, you have the highest conviction in the u.s. domestic market but make sure you go to europe because of more potential in europe. >> we have had a positive view on large cap. from here small caps do -- >> why? more mature? is that the end stage of -- >> you are getting more cyclical exposure through financials which we like, the earnings growth in small cap next year could be north of 20%.

there's a good story next year. it's had a huge run. you need to be careful in terms of your entry level. don't count out the non-u.s. expo chore level. look at europe, sentiment is quite poor there. a lot of risk. evaluations look cheap as well. >> did you go to that football game, lou? >> i didn't. it wasn't as bad as it was supposed to get. we were supposed to get to negative 16 on sunday. it was mildly negative. this morning it was balmy, almost 20 degrease out there. and i saw we could get rain on christmas. the polar vortex, which hit wildly -- >> what did we used to call it when it was really cold? >> we used to call it cold. >> i know. that's when you stay home and watch it on the big screen. i like to see the guys with the bare arms and stuff, they're out

there. the ground frozen. wow. wow. that's not us. >> that is not us. >> happy holidays. >> happy holidays. like the sweater, andrew. >> thank you. you're just being nice. >> the shirt? >> the shirt is nice as well. >> we're business casual as well. >> the obama administration putting a freeze on drilling in certain parts of atlantic and arctic ocean. >> reporter: the president is taking advantage of the outer continental shelf lands act. look at this map, the area impacted here is north of alaska. this is the beaufort sea and this action being taken in conjunction with the canadians,

also affecting the chukchi sea. also along the atlantic ocean. the trenches they say are ecologically sensitive and important for commercial fishing. they generate a lot of that commercial fishing off shore. a lot of those areas will be protected. obama administration officials said yesterday they believe this action under the 1953 law would be difficult for the incoming trump administration to roll back because the 1953 law doesn't include the provision for an incoming president to roll back a previous president's actions. presumably with republicans in control of capitol hill, the house, senate, white house, they could pass a new law superseding the 1953 law, that would sake tom time and the obama administration arguing that in the arctic areas commercial oil

and gas drilling there is not ecologic ecological. they say there are some leases that have been sold up there to date, and those are inactive because of the economics of the expensive drilling in that area. they say for now they won't block the big oil companies from doing anything they want to do now. this is more with the future in mind, protecting those areas from future exploration. we'll have to wait and see what the trump administration does with it much. >> can we go back to what the trump administration can or cannot do. that is the bebait of the morning. has the president put in place something that cannot be done retroactively by the president? does it require congress? a number of constitutional lawyers on both sides are coming out. to me it's unclear. i thought you might have a better perspective. >> not necessarily. the obama folks yesterday said

on this call they feel the law they're using here, this 1953 law has a provision which allows the president to unilaterally withdraw large tracts of the ocean from exploration. they say it does not have an action to rescind a previous president's actions, so once it's done you can't undue it under this law. so how republicans could pass a new law which would take precedence over that and give the president that authority and allow donald trump to do that. that would take months and years for congress to get around to doing that. and the question is if they're thinking about that since president obama says it is not economical to do that right now. there could be a legal dispute here. we could see lawsuits filed. this could be one of those things that goes up to the supreme court. the obama administration seems confident in the short-term that this would prevent the trump

administration from doing anything to rescind it any time soon. they are under a lot of pressure, the obama team, from environmentals who want to make a lot of this permanent while they can before the new administration comes in. >> $50 oil, no one wants to go there now. >> that's right. >> and who wants to be working on a rig up in the arctic? who are those people? >> trying to create jobs. >> very, very tough guys there. >> you've seen the deadliest catch. you see how cold it is? >> tough work. >> you're sitting in here with your sweater, your yule log warming you. >> i'm liking it. >> a 1953 law. net neutrality was a 1932 law. love these old laws. coming up, earnings movers in focus.

fa fedex shares falling and nike rising, an analyst's play after the break. governor has declared a winter weather emergency... 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.

generosity is its oyou can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues. don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. welcome back. fedex reporting profit that missed expectations, while revenue just beat estimates.

let's take more about the shipping giant and whether the stock is a buy right now. we have scott with us. mixed numbers, market didn't like it. >> no, off a bit after hours. it was -- they had forewarned back or foreshadowed back on the first quarter call, fiscal first quarter call that ground was probably at its best for margins in that quarter. a little bit of slide. just invested a lot in calendar '16 and infrastructure and building out the ground capacity. that's carrying some aren't depreciation. >> you think it's a cost story on their side, it's an operational issue that is fedex specific, nothing we should take away in a larger sense. we always use them as a bellwether for the economy, for other shippers, e-commerce, all of it. >> on them, yes, it is company specific. they maintained their guidance for the fiscal year ending in may.

that was reassuring. yes. i do think it's a lot of expense impact. what they said on the call and what we've been tracking is that e-commerce has been robust in this peak season. that will come through as expected. >> what about the margin compression? >> margin compression will persist into the january, february, march quarter as they get the hubs opened and properly staffed. >> what do you think the stock is worth? >> i think there's a lot of yip side to it. maybe comes down today. >> so you buy today? >> i would. if it goes into the 180s, that's nice. >> always volatile on earnings day. usually indicated down, then many times closed up the same day. closed off an all-time high. one of the best performers in the market. 1 98, indicated 194 or

something. >> 193 last night was the last i saw. it is volatile. >> always. weird. they don't give a lot of guidance either. >> they don't. there's some blank stuff. >> so the analysts have to actually -- when analysts have to do it themselves. they are never close. they need the companies to tell them what to earn to be in the ballpark. i'm sorry. i meant other guys. i meant those other analysts, your peers. >> exactly. there's a lot of us, we kind of figure it out as we go. up 37% or so this year. >> 37? >> 37. >> so down $3. >> 3, 4, 5. if we see the 180, people will use that . >> any tea leaves you see as to how the holiday season will be?

>> they indicated that service levels were strong. they're proud of that they culled a few accounts and got nice yield in the quarter, 4%. price disciplined. also to be able to do that, that must mean demand is robust. they did mention in the express segment that one significant customer had some volume they expected. >> any guesses? >> we'll pass on that answer. something that slipped from this quarter just reported into the next. they wouldn't give magnitude but that could be upside. a bit of cushion going forward. >> u.p.s., you like it still? >> i do. i like them both. >> if you could invest in one or the other what do you do? >> it's a tough one. maybe see what fedex does today and take opportunity there. >> scott, thank you. nike beating estimates with sales rising 6% in the second quarter. the stock rose more than 5%

after the report but moderated after management said future orders grew 2% on a constant currency basis including a 4% contraction in north america. executives went to great lengths to tell investors that the number is not a good snapshot since they heavily depend on ads. >> we saw stabilization in numbers, beat on the bottom line and the top line and reaffirmed a stable pipeline in which the hyper adapt 1.0 the self-lacing shoe, the back to the future shoe, is one part of many new

shoes coming down the pipeline. >> if futures are no longer a good snapshot of north america, how do you size up the potential for growth and how well they are doing here against competitors? >> i think it's really important to note that nike's comp store sales, a direct reflection of the retail business, comp store sales in north america were up 10% in the quarter. that's one of the best results across the entire retail landscape. that shows you the strength they're talking about when discussing futures are not a good reflection upon their business. >> talking about momentum coming into the fiscal second half which we're in right now. the stock is down -- >> terrible. >> 16% this year. addidas up 62% this year. clearly competition is on their heels. >> they actually addressed that. competition in their view makes everyone elevate their game. it's one reason why they have gone back to the drawing board.

focused more on signature basketball shoes. last year they had a couple challenges with two different styles of signature basketball. they have gone back, and they've seen results in sell-through. you combine that with the launch of a new signature basketball athlete in paul george, you have what they believe is enthusiasm for an improvement, meaningful acceleration in the basketball business going into the back half of this year. basketball is back. it's a phrase nike uses, and i believe it. >> the apparel, they've done so much to diversify away from shoes. now shoes are all that still matters. that's all you talked about. >> apparel is a piece of the business. they talk about it. at the end of the day, shoes are the bigger market. that market continues s ts to . >> i don't want self-driving cars, but i want self-lacing

shoes. >> you wear shoes without laces, so that's self-lacing. >> did we put a man on the mroo? >> supposedliment. >> we can't have shoes that tie themselves? >> it finally is here. it's magic, technology. >> how does it work? >> how does it work? >> you put the shoe on. press a button, boom. >> you press a button. >> it automatically sees it and does it. >> i wanted them now. >> like a suction. >> but they're expensive the. >> $720. >> whoa. wow. okay. let me rethink this. >> we can't let i go without asking about trade. this company was the face of the transpacific partnership. how much volatility does 2017 bring. >> nike has preelection, p pre this whole cycle and nike was talking about localized

manufacturering. these companies have the ability or had the ability to start to bring manufacturing back to domestic locations. they had already gone down that path. nike signed a deal with apollo to bring back some manufacturing back to the united states and apparel specifically. so, nike is womell positioned t do this. >> we're learning a lot more about that. next time bring in some of those self lacing shoes. >> do they wear out like normal shoes? >> they do. >> if i buy them for my son, is his foot still growing? i would wait? >> wait. at that price point. >> when do you think they come down to a price point more manageable? >> as the technology scales. you'll see in the coming years, a year or two, more moderate price points for that technology. they talked about this -- >> will that be in a $100 sneaker in three years? >> probably not.

we're still seeing the te technolo technology -- >> what do you think the cost is for them. >> probably making a lower margin for that shoe. the cost has to be 500, 600 bucks. >> we need to put some money, throw some money at this. bring down costs. it's important. you can get a 50-inch tv for $400 now. did you see that? we can't get a sneaker? a sneaker costs more than tv? >> if you think this is cool, wait until you see the rest of the adaptive technology that they are rolling out. where the shoe does adjust to your size as you run and your foot swells. >> come on. >> this is the technology that nike is launching. >> maybe that's what you get for your son as his foot grows. >> matt, appreciate it. banco monte dei paschi shares on a wild wide. trading had been suspended down after the bank warned liquidity would dry out in four months

instead of 191 months previously forecast. in the last half hour, italy's parliament approved a debt increase for eventual bank aid and the stock briefly turned positive. now down 5%. quite a volatile morning. sort of a proxy for the government in italy as we watch it closely. when we come back, it's the holiday home stretch for retailers but not late to stock up on consumer focused portfolio picks. and a look at yesterday's 5 s&p 500 winners and loses. >> merry christmas! >> merry christmas!

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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

♪ ♪ welcome back to "squawk box." we are officially in the home stretch of the holiday shopping season with a few days left until christmas. don't know if you guys have any gifts yet. >> i finished most of mine before thanksgiving. >> joseph is still working on it. >> one gift to buy. i'm done. >> that's the way to do it. >> since its jewelry, it's literally one. easy. >> with a look at what's working

in the retail sector and how joseph might be helping them. susan joins us. i know you get your gifts early in the season. let's go through the winners and losers in your mind. >> it's interesting. we went into the holiday season thinking that it would be a good holiday with inventory lean out there. we've seen the mall very promotional. most of the coverage is up year over year. i think you have to still pick the winners and losers. it's a market share gain story. i like the ones that have company specific initiatives like chicos. they have a huge cost cutting initiative. that will drive the bottom line without worrying about the top line. >> you can't see it, we'll put that stock up. was do you think that stock is worth? >> i think right now a price target of 17 bucks. they have a huge cost cutting initiative. that could potentially over the

next few years double their earnings power. if that happens it could be worth more. >> you like american eagle outfitters. everyone these days. a lot of analysts have talked about them. what's the story there? >> right now we have a market perform. we did downgrade it a few weeks ago. the reason is the teen industry is so competitive this holiday season. seeing american eagle get aggressive, going after that market share. aber co eercrombie responding. in general american eagle is the better one out there. >> what about abercrombie? why can't these guys get their act together? >> i think they're still getting hurt from historical brand image issues. it's hard to get that customer back in the door. the holster brand is doing better. the abercrombie brand is still struggling from brand images that have been around for a decade. >> when is this a steal?

if they can make it work, it's a great deal right now, right? >> i don't know if that's the case. last quarter we saw the street numbers basically get cut in half for the company. so i think the question is with all the structural shifts going on in the industry, we saw arrow go bankrupt, which one will be the survivors. >> a stock i think you think has downside and joseph likes to wear this stuff, i know when he does his yoga, lululemon. >> yeah. we have a market perform recently. >> you do. >> after the recent quarter. >> you do. >> yep. mm-hmm. valuation now is fairly valued. i'm a little bit negative given the athletic trends seem to be peaking out there. the consumer wants more fashion infused technical wear they can play in. i think it's fairly valued.

>> susan, great to see you. happy holidays. >> happy holidays. >> joseph, are you still wearing your lulu with the special pockets. >> when you do this with the yoga -- >> downward facing dog? >> yeah. i don't want to -- i make that as a joke. i'm not doing it today. >> do you know the demographic you're in that analysts have termed -- >> no i've never done yoga ever. i know it's hard, you sweat. >> mammals. middle aged men in lycra. >> that's a good one. >> you don't do it anymore. did you have a mat. >> >> we own a mat in our house. it goes unused. we also have a roller that go e inusinus unused. >> a roller -- >> like styrofoam. >> coming up, the trump

transition -- you always get me to do it. i'm not doing it this time. wilbur ross expected to spearhead a tougher trade policy. details are next. cold.

in political news, a trump transition spokesman said the president-elect is planning to put his commerce secretary pick, wilbur ross n charge of his get tough trade policy. trump is interviewing candidates to be the u.s. trade representative and does not plan to merge that position with the commerce department. the spokesman said that most trade policy decisions would be steered by ross. trump is expected to push to renegotiate multilateral trade deals and take a stuffer stance on chinese trade practices. wilbur ross, long-time and frequent guest on "squawk box," a private sector guy, a free trade guy. when we had him on, he's eloquent in describing the type of free trade he's talking about. there was no problem with him explaining how you can be

tougher on -- when you're getting from them, when you're getting unfair treatment from them, it's only natural you become tougher. it doesn't mean you're a protectionist if you do that. >> if you get the deal. >> you would be -- as far as allaying some fears about trump's rhetoric, if wilbur ross was spearheading it, wouldn't you feel more comfortable he would be doing things -- >> i do feel more comfortable. >> okay. >> we'll be together a long time and i've been trigger you -- >> is the bite tougher than the bark? >> will the tweets cancel out whatever wilbur ross is trying to do? >> tweets. i don't tweet. i don't like reading tweets or tweeting. coming up, oil supply in focus following last month's agreement by producers to cut output for the first time in years a closer look at where

crude is headed. the dow within striking distance of 20,000. >> boy that escalated quickly. really got out of hand fast. will the trump rally pile through the milestone or will the bears take control? >> i immediately regret this decision. we'll talk strategy after the break. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.

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the energy information administration or the eia will roll out its report on crude inventories later this morning. expected to decline this week indicating that over-global supply could be starting to shrink. joining us now to talk about crude, u.s. oil and gas leader and managing partner. welcome. >> great to be here. >> are expectations too high for what this could do for the oil market if we see supplies decline. >> i think the big story for 2017, there's three things. the resilience of shale, how much production there is in the world and supply, technology, and the war for talent. all those are going to be related and put a lot of pressure on price. >> what about the opec deal and the deal with the non-opec

producing countries? >> so, you know, they agreed to, what? about 1.2 million barrels a day of cut in opec. certainly that's void the markets and people are excited about it. the question is how sustainable is that. are they really going to stay on that target? it's going to take about six months for that to really start hitting the supply. >> and hit the supply in what way? in exactly at the mark? >> i doubt it. i mean, you have to remember the shale producers are going to have to have a big role in this. we like to think of the shale putting a lid on price. they're not a swing producer, but they could keep a lid on price because of how quickly they react to market price signals. >> is shale -- it's difficult sometimes. and i mean, we have the technology to do it now. is it easier than going up in the freezing arctic and doing it up there? >> absolutely. >> it is.

okay. and how much -- is it boundless shale here? would there ever be a reason to -- i'm alluding to what the president -- would you ever want to go up there? >> in the lifetime we care about, our time frame, i think there is an abundance of shale. and people are saying there could be a trillion barrels that's recoverable. i mean, that is astonishing. i think it's taken the globe by surprise. >> then we'd never have to go up there. how much is that oil up there to get out in the arctic? $100 a barrel? >> it's pretty expensive. >> why even bother yesterday? no one's going up there anyway, are they? >> i think a lot of that is pretty symbolic. >> really? it's interesting. so shale is tough, but easier than that. >> absolutely. >> what about the consumer? because the companies have not enjoyed this period of sustained low prices, but the consumer has. >> yeah. >> even if they haven't realized it. now prices are up 11% over the last year. >> low oil prices have been a huge dividend to the consumer.

i think the president even said in his last year's state of the union address is about $700 in your pocket. so that's been a big dividend. i think low energy prices will continue for the consumer. and i think oil prices are going to stay in that band between $55 to $65. >> so you don't think that some places in the midwest where prices are rising 50 cents per gallon that we'll see that come out of the economy in other places? >> i don't think so. i think there is an abundance of supply. the world has changed. we've moved from scarce commodity to an abundant commodity. and the investing community and the business community has internalized that. >> appreciate you coming in this morning. >> great. when we return, the dow closing just 25 tiny points away from 20,000. we got the hat ready to go. we're going to talk strategy. >> what are you going to wear tomorrow? >> i'm going to wear the red hat. maybe a red sweater.

>> you're going to be here tomorrow. >> i was going to take the day off, but bob -- i'm sorry. bob dahl is going to join us after the break. and we spoke to platinum portfolio louis navellier last week but he has a new stock pick this morning to take advantage of the surging dollar. we want to tell you about that trade straight ahead. "squawk" returns in a minute.

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the trump rally. the dow notching its 17th record close since last month's election. dow 20,000 now closer than ever before. where you need to be putting the money to work now. guest host bob dahl will be here to help us navigate those markets.

nike's big rebound. the company's earnings giving investors something to cheer about. ♪ a look at the dow component's latest quarter and where they stand against under armour. we go under the hood and find out the names that could benefit from donald trump's plan to create jobs. as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen and kayla tausche. the numbers at this hour as we're ready to potentially hit 20,000. the dow looks it would open down

17.5 points. s&p 500 off about a point and a half. we'll see if that's a minor pullback on the way to 20,000 or something else. also take a quick check on currencies at this hour. we talked last hour about whether we should make a run for paris about now. >> maybe the uk. 1.23. >> we're almost parity on the euro. nike set to give the dow a boost this morning. the athletic footwear maker beat on the top and bottom line. helped by strong results in europe and china. we'll have more on nike's quarter later on this hour. fedex shares going in the opposite direction. missed estimates by 10 cents with quarterly profit of $2.80 a share. it did see higher volume but profit margins were down. we'll get the snapshot from the housing market later on this morning. existing home sales for november. those are out at 10:00 eastern time. consensus forecasts call for a 1.1% drop. that comes a a 2% rise in

october. we're watching prices of oil this morning. new api data out late yesterday showing that u.s. crude stockpiles dropped last week. that's more than 2.5 million barrel decrease analysts were expecting. we'll get inventory data later this morning. we were at 17,500 like six weeks ago. we have been moving steadily toward dow 20,000. at one point coming within 13 dow points of that key milestone in yesterday's session. volatility continuing to fall. the vix seeing its fourth negative session. i think we had one 100-point down day since the election, i think. joining us now is jonathan golib. and our guest host this morning is bob dahl. the dow is not as relevant as

the s&p. long ago someone decided we would use base ten. i don't know why. it works pretty well. but that's only 20,000 if significant at all. it does take on a psychological view. >> there is a big difference between the dow and s&p. the dow has a huge weight in banks and industrials. it's -- it doesn't have any google and facebook which have been underperforming. it doesn't have any of the bond proxies. so if you are buying into this rally, the dow is a much better index in terms of -- you know, if you want to know whether this rally has legs, we'll see it do better than than the s&p. normally it's a silly index, but right now it's a better gauge of the sentiment. >> in previous big numbers like this we dance around for awhile. >> that doesn't matter. >> it is psychological. so you think we go through it before the end of the year?

>> yeah. i mean, whether we go through the end of the year or beginning of the year, i think this run that we've had is going to keep plowing straight through to 2017. i think interest rates are going to go higher. we saw in the last few weeks consumer confidence, business confidence is up. and there's no reason that this doesn't continue. >> with interest rates, we always hear how they move to their terminal point. why aren't they moving more right now if all this is happening? maybe the idea we immediately go back to 3% or 4% on the 10-year. maybe all these global forces that we were so football saying, say it's going to be a low interest rate environment for a long time. what if all those forces are still in effect. we don't immediately go much higher. >> first to your point. we're up 120 basis points since july. so the market seeing that this disinflationary stagnation that everyone was obsessed with over the last five years is really shifting. we have a 4.5% unemployment

rate. wages are beginning to go up. all that pushes interest rates higher. for everybody who thinks that higher interest rates are in some way the devil, you're talking about bailing out people who couldn't afford to retire because they couldn't get an income on their money. and now we're seeing a much better situation. >> maybe not higher interest rates. but at least the higher dollar for companies will take a little bit of the air out of this. >> a little bit. but if you -- there's two sides of that. so first for every 10% move in the dollar, you have a 1% move in earnings. so we lost half a percent in earnings. however, when the dollar is stronger, foreigners flood the u.s. with capital trying to take advantage of the stronger dollar. they buy u.s. stocks and bonds. that pushes prices higher. >> what about gdp, not just earnings? >> it's a modest negative. no question about it. >> so bob, at every point you lower the corporate tax rate

adds a buck and a half to the s&p 500 earnings. i think that's why, you know, i don't own a lot of stocks but i think we should go to zero then. >> not a bad idea. >> think about that. if we went from 35 to zero, we'd add like $60 to the s&p earnings. should be trading at about 30,000 on the dow. >> that analysis assumes there's no change in the deductions, et cetera, et cetera. how tax neutral will this be? revenue neutral is a question. will the conservative republicans allow the tax cut without broadening -- >> do you think there's voodoo economics? there's got to be some. maybe it doesn't make up for everything. >> even if it's revenue neutral, it will be a plus to economic growth because you take away -- >> then you get more taxes with economic growth. how does that not raise revenue? >> it does. >> people say dynamic scoring is voodoo economics. >> it's just the real world.

>> i don't want to trigger you. >> no, no. look. i'm going to say this on dynamic scoring. it is possible -- no -- >> i didn't think we were going to talk politics today. >> it is possible that as a function of this, the economy improves somewhat but the question is does it actually make up for the rest of it. that's -- this is the real question. >> the one thing we know is you cut back on regulation, no question it pushes straight into economic growth. there's no dynamic scoring. there's no -- it's not a political question. if you cut back on regulation, you're going to push the economy forward. that's probably the easiest question of all. we have no idea to your point on tax neutrality, we estimate that there'll be about 8% benefit to the s&p. but we assume that there'll be half of this is going to be done, will be offset and half won't be. >> yeah. but your main point and i agree with you is we're moving from secular stagnation, monetary ease and stimulus to a world

which has a little better growth, a little more inflation, interest rates are going up, not going down. earnings have a tail wind. this is a better world for equities. >> you're also assuming that this factors present in the rest of the world that we said 2% is pretty good compared to everybody else, that assumes is we can't change with the rest of the world. but we can here. >> without question. >> we can drag the rest of the world out of secular stagnation? >> to some degree we'll -- >> there's only zerp in japan right now. >> some of the -- >> we know this whole nationalism thing is not just about the u.s. >> the real upside to this whole, you know, this market reflation that we're seeing going on may be that we pull ourselves out of this crazy zero interest rate policy. and bail out the central banks

from dumb policy in the first place. talk about what's the low hanging fruit. the banking sector can't make money with zero interest rates. it doesn't matter whether you're deutsch bank or citi bank. >> they've got different ways to make money. >> trading at negative interest rates have been cut in half. so that part of the story is changing too. thankfully because they were mistakes as you insinuated. >> that's why brand damage is so important. because wells fargo becomes the joke, that they have different ways -- if you make up accounts, you can -- right? and then charge fees for them? >> another way to do it. >> you just get creative. >> remember they didn't make any money doing it. >> they didn't. i know. the brand damage they got for what they did was really awful. so we talked earlier, small caps versus big caps. >> yes. add to that value over growth

and cyclical -- >> value over growth. but only a little growth. yeah, stay domestic but go to europe. stay with the big caps but own some small caps. that's all you guys, though. huh? >> fully invested, high beta, low cap, cyclicals, and value. market's going up. >> wow. never heard that. >> i don't know. rainy day? >> and we'll get them. >> and there's going to be pullbacks. wouldn't you want a little bit -- >> little range on pullbacks. >> when you look at the relative valuations, looks pretty good. >> what's the -- to the extent there is a pullback and

everybody is waiting for that pullback, you think "a" they shouldn't be waiting for it. >> i'm not smart enough to depict an outlook. this is not going to be until '18. two, we've got the pro growth so far. when is the protection of trump going to show up? three, people are assuming these tax cuts but they're forgetting it's tax reform as much as it is tax cuts which i think is going to take some wind out of the sails a bit. >> what is the chance there's no protectionist trump? the fact he says i need to make this work, i have a lot to get done going this way. and we'll just leave this -- >> that's sort of always been -- >> well, then what's he going to say to certain people in his base? >> he'll renegotiate some trade deals. he'll make some immigration reform. that will take to his base. he'll create some growth for more jobs.

>> but he's been tweeting about the fact that china didn't ask permission to devalue their currency. he's been very critical outwardly. >> and he will continue to do that. but -- that's exactly what it is. will he put forward legislation on this? >> but will there be a day with something where they will react to it in some way and then all of a sudden there'll be pandemonium? >> first of all, this guy has a rhetorical style that's going to from time to time disrupt the market. but if you want to say the one thing -- look at where the vix has traded. what the market is saying is -- the market's saying the tweets are not the return here. so to answer your question before, leaving money on the sideline to play the dip -- >> is just a mistake? >> i think is absolutely a mistake. and i've seen investors say is this getting ahead of itself. we need more clarity. by the time you get clarity on

tax deals and whether or not there will be protections and there will be some of that, i think this thing is already smoked. >> i don't want to sound like the ugly american, but china needs us more than we need them. and trump knows that. >> and if there is a nuclear oblivion, you might as well be long because you'd be dead anyway and so will everybody else. you can't prepare for it. so why go to cash? >> and always be a dip you can buy if there's a nuclear war. >> if you are the one cockroach that has survived that. >> why go to cash if you're dead? just stay long, andrew. jonathan, thank you. bob will be with us assuming we make it through the rest of the show. coming up, are small caps the place to be in 2017? the russell 2000 is up. forget about the dow. this is up 21%. and it's on pace for its fourth positive year in just five. we're going to get some names that might work for your portfolio. we'll talk about it later.

nike's rebound. we'll talk about the quart and find out how the dow component is fairing against under armour and talk about the pricey self-lacing sneakers. "squawk" returns in a moment. generosity is its own form of power.

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of hodges capital management. craig, with a run like the russell has seen, i mean, it's hard to see how it can keep going at that pace. what do you see? >> it's been remarkably strong. the russell's been in the first part of the year boosted by kind of the flight to safety of all things and small caps. if there is such a thing. recently it's been boosted quite a bit by the overweighting of financials that the russell seems to have. i'm a little bit like the guests -- your previous guest. this market is telling us something. and if there's one -- probably the biggest beneficiary of lower regulation and the biggest beneficiary of tax rates going from corporate tax rates go from upper 30s and down to 15 or 20 are small caps. i think it's what the market is telling you is that's who's going to benefit the most. >> it's the companies for which that roll back will be the most

material and meaningful for them. normally you would think of a run in the russell as something early in a bull market. but it is a leading indicator. what does that tell you about how much longer this bull market could last? >> it tells you that it could last quite a bit longer. and, you know, there are parts of the market that are very overdone and extended. but that's what's interesting about this market. and stock pickers like we are at hodges capital, there's just as many on the opposite side that are undervalued and left behind. that's the game, that's the trick. kind of gravitating towards the things that have moved too much and into the things that had a lot of upside. and are maybe being forgotten by the market. >> you have three specific small cap picks. i just want to highlight those quickly. forterr which was a recent ipo.

then you have jcpenney which is obviously in turnaround mode right now. but it is a key season for the retailers. the question is whether they got inventory right, vendor financing right. at what stage of the turnaround they're in. what do you feel is so optimistic about jcpenney here? >> penney looks good to us. the previous administration if you will just wrecked the company. and the new group is basically fixing those problems. they're going to close on their land deal in fris khouw here. they'll do about a billion ebida this year. and that's probably $1.70 in earnings. that could easily trade 20.

that would be a double from here. at least a double. one thing people aren't talking about as far as business right now, because christmas falls on a sunday, there's actually two extra shopping days a friday and a saturday this year opposed to last year. so i think results are going to be a little bit better. granted they're in a tough industry. but they're taking share from macy's. taking share from kohl's. they're doing all the right things. i think with their sephora and appliances they're bringing in more traffic. it's a fairly easy turnaround for them. you're not having to have a gigantic turnaround in sales. more or less fixing the problems. >> granted that is a hometown stock for you coming from dallas. jcpenney based nearby outside the city. bob, i want to ask you about small caps. because you were just telling us how incredibly bullish you are on the market. would you bet on small caps? >> absolutely.

my portfolios are down cap biased. >> down cap biased? >> we'll meet more. it's partly u.s. is going to have faster growth than the rest of twhoerld. smaller cap stocks will have a much bigger benefit to the tax packages being suggested. >> craig, you also have some tax loss candidates. because you think that they have been sold down more by harvesting and could see a bump. i have to squ you, have you ever had go go internet that works? >> that's a good question. it's a frustrating service. we met with the company recently. you're going to see they have a new technology. it's going to be a much, much better user experience. you'll start seeing that. i think the news flow gets better. stock comes from almost 30 down to i guess 9 or 10 where it is now. >> why'd it come down so much?

they're making money. >> was that your tweet about it? >> i tweeted. i'm surprised there hasn't been a class action lawsuit for this company given there are so many that try to log on, pay, and ultimately don't get the service that they pay far. >> they have those issues but like i mentioned there's new technology coming. the stocks come from mid-20s down to 9. at this point, spending so much money to build out the infrastructure, at&t looked at getting in this business for about a year and said, you know what? it's not worth it to them. i think there's now high barriers of entry. and they've got the market share. they've got a -- over 50% market share. and that's growing. you're right. the service isn't great. >> have you ever seen reviews on the better business bureau? this is a company with real problems. >> and that's not even talking about the security of it. >> this is a not insignificant

problem company. >> a conversation for another day perhaps. but we appreciate you weighing in on the markets this morning. craig hodges from hodges capital. coming up, the search for the driver of the truck which slammed into that berlin christmas market intensifying. they are apparently looking for a guy that there's some i.d. left in that truck, if you can believe that. "squawk box" will be right back. oh yeah...no. at cognizant, we're helping today's leading manufacturers make things that think and do, automatically. imagine that. a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready. because we're helping leading companies lead with digital. yeah, chevy was great in that. who played the wife? beverly d'angelo! juliette lewis costarred as the daughter. oh, i think it was um... chris columbus was the director...

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welcome back to "squawk box." the manhunt is under way for the search for the man who slammed into a christmas market. authorities are now seeking a tunisian suspect. a pakistani asylum seeker was suspected in that originally. isis has claimed responsibility for the attack. there's been some question whether it's isis inspired or whether true isis attack, if you will, and what those -- whether those things have bled together at this point. >> i don't know why -- supposedly there's some i.d. left in this car of this tunisian man. but it was a hijacked truck. it wasn't rented so i don't understand what the i.d. -- i don't know. >> maybe somebody else's. >> yeah. >> we hope we find this suspect very soon. coming up on "squawk box,"

kicking the tires on the auto sector. what you can expect in 2017. and then nike's big rebound. a closer look at the dow component and rival under armour. then why bob doll sees for 2017. and take a look at the futures. we'll be right back. what's crit? 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

♪ among the stories front and center this morning, mortgage applications rising 2.5% last week according to new figures from the mortgage bankers association. purchase applications and refinance activity increased. jumped 13 basis points to 4.4% the highest since may of 2014. joe, say excuse you. >> that's my stomach. no, actually, i feel like i got a cavity here and the guys -- >> hell of a sound track. >> thanks, guys. what time is it? it's 7:30. they're working early. >> no sleeping in.

all right. >> this is not a union job. >> no. >> well, nintendo's first supermario smartphone users, the game is free to try but it costs 9d$.9 if you want to keep it. only 8% of those -- >> oh, excuse me. whoa. i don't remember eating that. let's tell you what's wrong with twitter. because they're losing their chief technical officer. you want me to keep going? i can do it. >> did i not warn you about chipotle? >> we'll tell you about that story later. >> as 2016 draws to a close, cnbc is breaking out the 2017 playbook looking at ways you can make money in the coming year. this hour we're hitting the road with the autos. here is phil lebeau.

>> reporter: buckle up and get ready for the auto industry to hit the gas on new technology in the next year. that will drive three big stories behind the wheel in 2017. first, new autonomous drive systems means more of us taking our hands off the wheel. tesla and gm will roll out features next year where more cars will do the driving for short periods of time. stress drivers remain in control. a fully autonomous drive car, we're still years of seeing that expand beyond limited testing. second in 2017 we'll find out if america embraces lower priced electric cars. the chevy bolt with a range over 200 miles will be sold all of next year. starting on the west coast. meanwhile tesla's model 3 is scheduled to be delivered late in 2017. let's see if there are strong

sales for two models that will be priced under $40,000. third, america's love affair with trucks and suvs will stay red hot in 2017. right now almost 60% of the vehicles sold are trucks and suvs. that will continue next year especially if gas prices stay in check. and if the economy remains strong, we could see record auto sales next year. and the one question i get from a lot of investors is will we finally see the auto stocks truly join the rest of the market in terms of moving higher. we've seen a bit of a movement in the last month, guys, but overall when you look at dow 10,000 to 20,000, the automakers have not been involved. yes some of the auto industry stocks have been involved, but generally speaking a lot of people are waiting for investor enthusiasm to kick in. >> okay, phil. stick around with us. joining us now for more on what we can expect in the auto industry next year, paul

ingracia. do you agree mostly with what you heard with phil there? are those the big trends, paul? or are there other ones? >> i think the one thing we have to consider as well is the soft state of the market. general motors is closing some i think five factories next month to remove inventory. volvo is putting on buyer discounts. and so what they're doing is saying, you know, you don't have to make payments until march. there's a lot of this stuff snowballing. so obviously the weakness in the market is one thing holding back auto stocks even though the yields are pretty darn good. >> how's that -- i don't know, paul, whether we've ever talked about tesla. with you. you know, how would you characterize your view? is that eventually -- are the -- i think if mercedes and bmw and

some of the big guys decide they're going to try this, that that could be some tough competition without a lot -- if there wasn't any government subsidies. or do you think this guy is so amazing and the technology is so good that they've got a head start? >> well, i guess the answer is yes. i think more competition could be a challenge for them. but look at the other side of that. honestly, if electric carsubiqu move in with a great established brand name in this space. more electric cars could -- with a bigger charging network and a bigger charging infrastructure actually could help them. and, you know, one of the more interesting things is henry payne who is the car critic for the news had a column about the new chevy bolt. he said surprisingly, you know, this car has incredible performance. what it really could do is

change the electric car appeal from just the green ease to the performance enthusiasts. which would be a breakthrough if that happened. >> i'm curious. when i talk with people on wall street about the auto stocks and lack of enthusiasm, i hear one theme over and over. there is no confidence that the managements of the different companies can happened l a downturn in the auto cycle or a recession if it hits two, three, four years from now. that historically these guys have shown no ability to manage profitability and therefore people are not going to have any interest in these stocks until they can show that. what do you think? >> i think that's exactly right. look, i mean, phil, for years i remember from covering the auto industry back in the discharge ages of the 1980s and senior executives would say we can't wait for the next recession to get here. so we can get through it.

you know, with the gulf war it basically really hurt those. so, you know, this is a big thing hanging over their head. on the other hand this company has done a lot to clean up their performance. until they do it, improve it, they're going to have some skepticism on wall street. again, despite the sweet yields. yielding 5%. so gm is in a similar situation. but the credibility issue is the issue. >> you know, we've always talked about trucks and suvs too. we had someone say because of shale we're almost permanently at $50 to $65 a barrel. so that makes me wonder. would there be reason to ever try to wean the public off of those bigger vehicles. if you don't go from green to

performance, why go green at all at that point then? it just seems like if you don't go performance, there'd be no other reason to go that wa i. >> it's a good question, joe. does anybody remember what a sedan is? because they can't sell sedans anymore. and it's interesting because, you know, we have small families and an aging population. we have empty nesters. you think people would be flocking back to sedans. but in fact, people like the versatility of big vehicles. i mean, you know, after our segment here, i'm heading up to the airport in ft. myers, florida, to pick up family coming in from new york. and they have luggage and all that sort of thing. so the old small sedan or family sedan is not going to cut it for me. >> i see sedans occasionally, paul. and they're usually buicks and go 20 miles an hour. i'm not kidding.

there's like five cars in front of me and it's going 20. it's kind of cute. my parents actually had one too. but it's always a buick. they're hot somewhere, aren't they? people like them in europe. >> china. big in china. >> got me a buick. really? okay. >> and that's another issue for the auto industry. china this year, these companies have significant operations in china. and done very well there. but how is the trump administration going to do with china? are there going to be trade tensions and other tensions with china? so that's one of the big uncertainties, i think, when they mention they can't warm to these stocks. could really hurt these companies. also the nafta issue. what is a new administration going to do on nafta? there's a lot of uncertainty out there. >> all right. paul, thanks. phil lebeau, thanks. if we don't see you, paul, happy

holidays and merry christmas. >> same here. >> autos are important. we talk about those. you know what we haven't talked about is -- you want to just once again say you were right about -- you know, should we book that guy? mike lindell? my pillow. >> my pillow. i've been using the my pillow. let me tell you, using it the past week, unbelievable. it's not feathery. >> so much better. >> it somehow holds your head perfectly -- >> you're discovering this, but i told you -- >> i know you did. you see it on an infomercial. >> what do you do with the free pillow you get? >> i would use two pillows and put the my pillow on top. you don't have to flip it. it doesn't get too hot or too cold. it is just nice. >> it's not hard. >> it takes a little -- you have to get used to it. it's not normal. it doesn't just feel like a

pillow you'd lie on in a hotel or something. >> are you sure you're not getting kickbacks? >> i'm not. but this my pillow thing is a real thing. i've been telling people all week how it's really been mind blowing. >> there you have it. >> and you're going to try it. you know, i wear a onesie now. you're going to try that too. >> yes. coming up, nike and under armour, fierce rifles on and off -- >> no feet. >> but the door in back. >> we'll talk about it when we come back.

welcome back to "squawk box." nike beating estimates this quarter but rivals like adidas and under armour are catching up on the giant. we're going to compare the companies and the stock. joining us now stan pose r. good morning to both of you guys. we're going to talk my pillows in a second. you have some important information to impart to the viewers about this. but let's talk about nike and under armour and adidas. and let's just start with if you had a hundred dollars or $10,000

or a million dollars to invest in one of these companies, which one do you put the money in? >> i would put it in under armour. i think the global growth opportunity it has is unparalleled. no doubt that nike's a great company. has been a great company for decades. but the growth trajectory that under armour is on, not to mention i think 2016 has been a year where there's been a lot of turbulence that it's overcome with the sporting goods bankruptcies, that they're still working through. i think that once investors can still focus on it's got a good growth trajectory, it'll start to go -- >> where do you think the stock goes? what's a fair price for that stock right now? >> $44 is my price target. >> i think i'm around $42. i agree with camilo on under armour on how strong it is. i like them in the longer term. i think nike had a hiccup last

year and i think they bottomed. and i think that's going to work in the near term and long-term. i like both of these companies very much, but i think nike is not a complacent company nor is under armour. i think that's really what's made nike the winner it is. >> we talked about trade in the last hour. how do you think trade is going to impact both of these companies? >> you tell me where the policy checks out. >> to the extent that you have to map out where you think these stock prices go and what they're worth, what is your math on trade policy over the next 18 months and sort of how have you gauged both of the different positions? >> i see the red hat here. so i think it's pretty poignant. the fact is that both the companies are working to improve their production in their lead times within that obviously entails manufacturing. i was at he under armour facility a month ago, took a

tour of their center. i'm sure nike's got an impressive manufacturing. >> you think there's more at under armour than at nike. >> not necessarily more. but for a company of its size, it's making leaps and bounds to make it more competitive with nike head-to-head. >> i think the consumer is so well informed these days and the amount of information you have to get to that consumer quickly, product, just responding. that you have to do that. if you're nike or under armour or anybody, you have to be quick. >> do you think they're in the same business? the reason i ask you this, they are obviously in the same business. but nike is ultimately being driven as a footwear company. that's where -- and arguably, under armour wants to be a footwear company but is an apparel company. does it matter? >> i don't think it's matters. i think what you're seeing with the opportunity in under armour is nike -- you know, the kid who

is wearing under armour at a little league game and you see the kids are head to toe under armour, when he changes, he's putting on his jordans. so under armour has the opportunity to get to that sort of cool factor of wearing it off field. and it hasn't gotten there yet. and for me, that's the longer term opportunity. it doesn't matter to me if it's a footwear company or apparel company. >> what does that take, by the way? because by the way, nike is probably the only one that's ever really grabbed that. >> but they grabbed the mantel with the spike lee ad which was inspirational in the mid-80s. you know, you can't pound it on somebody. it has to be found. and i think it will evolve into that once they do it. to let it be discovered that way. >> you don't think misty

copeland or steph curry brings the same panache? >> i think with him those are game shoes. they're not the way jordan or the air force one and things like that have become iconic fashion shoes at nike. >> that's the evolution of the brand, right? in the kid is wearing jordans more often than not. but also under armour apparel in that. and last year was the first year we saw this, nike's signature basketball business took a huge hit because of the offset of steph curry and under armour's basketball shoe. that shows there are cracks in the armor. >> where does adidas fit into all this? >> adidas has stepped into this in a big way. i think nike about 18 months ago probably didn't take adidas as seriously as they should have taken them. i disagree with kr rks amilo about the basketball shoes. i think those shoes were

overcooked and too expensive and the consumer responded negatively to that. i think it was their own issue. i don't think it had to do with steph curry's shoe or anything else. wasn't helped by that. but as far as adidas goes, adidas has a history of getting complacent. build and build and build then take a deep breath and say we figured it all out. we're not sure where they're at in all that. we hear ticks it may be headed there. >> adi has been a real threat. >> i like that he calls it adi. >> but you have to go back to 2009 for the last time adidas took share from nike. maybe two shoes in the market that were relevant. it took nike two years before they came back on a share recapture trend. we're only about 15 months into this cycle and the amount of shoes and the amount of silos ai dee las has working on them -- >> we're going a different

topic. my pillow. we had the ceo on. i tried it and thought it was the greatest thing to happen to my sleeping for the past week. you came on and said you have something even better. >> well, for instance, i find that these pillows whether it's a my pillow or not which i like more than a normal pillow is there's this new technology that has sort of a cooling gel around it on a pillow and they also have a mattress pad with it. i find that really good. >> what's the name of the company? >> it's from sleepies. >> you have no stake in it. >> no. it makes me sleep better. i bought it there when i bought a new mattress. >> it's a cooling pillow. it stays cool automatically. then different weights the same way the my pillow does. >> where do you buy a shirt with different colored buttons? >> right around the corner. >> have you ever gotten one like that? >> i don't own one like that yet. i have shirts that have a

different colored button at the bottom. >> i wanted to wake people up. >> did you know you were wearing a shirt with different colors? >> my fiance picks it out. you should see my socks. they're all colored. >> any underwear stuff you want to share? >> not particularly. but thank you for asking. >> little flair for the holidays. thank you, guys, for your counsel on shoes and perhaps more importantly pillows. >> my pleasure. >> thank you. >> i will be wearing that soon. and i think we should do a pillow challenge now on "squawk." >> this is true pillow talk. >> touche. coming up when we return, stocks to watch at the open this morning as we slowly inch towards 20,000. at the top of the hour, the latest read on investor sentiment. charles rotblut will be with us.

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winnebago reported quarterly profit of 42 cents a share. that's above estimates. the revenue also beating forecasts. winnebago's quarter was driven by strength in its towable products segment. stock's up 5%. coming up, will today be the day for dow 20,000? we'll talk markets and investor sentiment after the break. and later, the housing market in 2017. we break out the playbook on real estate. "squawk box" will be right back. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.

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riding the record rally. dow 20,000 closer than ever before. market strategy and a check on investor sentiment straight ahead. just do it. shares of nike rising after the athletic wear giant beats the street. plus we're opening up cnbc's housing playbook. what's ahead for 2017. as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box."

>> that was willie, i think, wasn't it? welcome back to "squawk box" here on cnbc. joe kernen along with andrew ross sorkin and kayla tausche. mixed most of the session. that's flat. that certainly does not say that we're not going to see 20,000 today just being down six or so. indicated on the dow down less than a half point on the s&p. treasury yield moderated a little recently. we're not above 2.6%. take a quick look on the 10-year. 2.555%. does that go on and on? i don't know. do you know? >> i don't know. maybe it has one of those bars above the fives that repeats. >> bob doll must be good with math. does that keep going the 555? >> up up up up? >> no, does it --

>> oh, forever. why not? >> now it's 557. >> okay. so we're good. among our top stories today, time is running out for italy's third largest lender. bank de monte bounced back after the plan to borrow $20 million to support the country's weak banking system. earlier this morning, bmps says it liquidity would dry out -- making a last ditch effort to rise capital and avoid a state bailout. shares turned positive briefly. now they are negative once again. u.s. crude stockpiles dropped by 4.1 million barrels last week. more than the 2.5 million barrel decrease analysts were expecting. we'll get official inventory data later this morning. oil prices meanwhile are

slightly firmer. wti is at $53.59 brent slightly above $55. mortgage applications rising 25% in the latest week, this despite higher rates across the board. stocks to watch this morning. nike beating estimates on the o top and bottom lines. recently helped by -- lower than expected revenue. the company calls the quarter, quote, disappointing citing a shortfall in accessories. as the trump rally continues to roll on, investors are feeling more optimistic according to the latest data from the american association of individual investors. and bullish sentiment is now above 40% for the fifth consecutive week. joining us now with more on investor sentiment, charles rotblut. our guest host bob doll is also

still with us. where have we been recently, bob, let's put it in perspective. is that really worrisome now in terms of sentiment getting too bullish or in the doldrums because we haven't gone anywhere in two years and are now getting back to normal? i'm sorry, charles? >> oh, i'm sorry. i thought you were speaking to bob. >> no. he doesn't know. >> sorry about that. right now sentiment is about 44%. so it's above average. we're still in the typical range, but when -- a few weeks ago we hit 49% which is above the typical range. that's usually a fair signal. whenever you have too high, we tend to see the markets underperform. about a 2.7% gain for the s&p 500 over the next six months. >> i wonder if there's ever any exception to those things.

there's some powerful things happening, it seems like since the election. and i wonder if investor sentiment could get even more positive before we see what you'd normally think would be a top. >> yeah, it's possible. depends on what's going to happen. when i asked our members about the rally, some of them thought it really reflected trump's potential changes. others thought stock prices had risen too far too fast. some are taking a wait and see approach. so it's very mixed. unlike other bull markets, we're not really seeing this excessive market. but there's still a large portion of individual investors who are really more cautious. and i think for a lot of investors, they want to see revenue growth and earnings growth to really support these stock prices. >> so bearish sentiment went up, too, right? >> it did. what we're seeing is neutral

sentiment fall. a bit more polarization going on right now. bear sum it's about average. about 32%. a little bit above average, but not meaningfully so. but you're definitely seeing this split between people who are infused and people who are more cautious. it's about valuations. >> is this all you look at? or you use any of the other sentiment indicators? put call, all that stuff, is it confirm whag you're seeing in terms of sentiment? i mean, it would make sense that sooner or later people are going to feel more positive. >> i do keep an eye on some of those indicators. not closely. i also watch the ici's fund flows. those have turned positive. recently flows into mutual funds. whereas they've been negative throughout much of the year. we have seen that shift there as well. >> okay. so -- i mean, if we see negative sentiment continue to climb along with positive, maybe that buys some more time. but when negative can be a good

thing to watch as well. when that goes down to 10 or 15 or 20 that's really bearish, isn't it? >> you know -- exactly. when you see it falling too low. but what's interesting, what we've really seen in terms of correlation or links is when it gets to high we see the markets underperform. when it's too low, we see the markets outperform. it's not really negative. it's bullish sentiment. although if that gets too low, we do tend to see the market underperforming as well. >> okay. all right. all right. seems like we're starting to see a little bit of a white flag. but nothing maybe too serious yet. thank you, charles. appreciate it. >> sure. happy holidays. >> you too. in the meantime let's get a few stock picks. louis navellier joining us. we just spoke to louis last week but we're bringing him back because he's making a change to his platinum portfolio picks this morning. what you got?

>> we sold edward sciences. we have it under management. but it has a currency headwind. we put in oclr. i can never pronounce the name. it makes the networks faster where they control -- you have a 4k tv, you need fast stuff. >> let's talk about that stock now trading at $9.10. where do you think it goes? >> well, 59.9 next quarter. their earnings are supposed to be up. so that should double next year. it better. i own a lot of it. >> and what happened in the past week? >> just normal consolidation. we had this incredible turbulence in tech after the election.

you're going to get a lot of analyst downgrades in the new year because of the dollar. i don't think this company is going to be that affected by the dollar. >> i know we talked about individual equities with you a lot, but what's your take just on the broad rally at this point? continued rally? >> unfortunately it was a short rally. and we have to back here. you had the stocks were the worst earnings rally. i think caterpillar is the flagship. you have a company that has a negative sales for four quarters in a row. at least their asian sales turned up. they have beaten the analyst estimates. they're not going to have positive results until 2018. so i think the market is grossly overreacted. it was either devalue or small cap. we're going to go into earnings season and it's going to be time for earnings to do their thing again. >> this gentleman over here said he didn't want to hold cash. he just wanted to be all in. right? am i wrong? >> we'll get a pullback. >> he's suggesting -- are you

suggesting something more than that? >> we're at a strong time of year. it's lock and load time. especially for the small caps. >> after the turn of the year we'll get a pullback. >> is that a function of tax? >> too far too fast. >> analysts don't revise down during the holidays. it's un-american. then they'll be distracted between christmas and new year's. okay? so in january they'll start revising earnings down for some of the multinationals to have a currency headwind. the strong dollar does hurt the s&p. you want to be domestic. you want to be small cap. and you have to go into earnings season locked and loaded every time. >> this is not buy on the room or sell on the news. buy now, sell on the inauguration because all of a sudden you got to do stuff. >> yeah. there's -- look. on the big picture in the political thing, there is going to be some wind out of the

sales. it's not that easy. want to grow the economy and it starts the day after the inauguration. it's going to take time. >> right. but you're still saying you've got to be all in. it doesn't matter. >> at the moment, it's a very seasonally strong period. one of the strongest periods in the career. >> we melted out. >> you suggest we're going to melt out through april. >> yeah. there'll be pullbacks. i expect a pullback mid-february or so. buybacks are still pretty good. the market's still shrinking. now we have a cheerleader for america a but it takes time to do this stuff. talk to senator schumer. he's supposed to cooperate with him because he's got 25 democratic seats to defend in two years. >> i know you don't buy mutual funds, but you'd be a russell 2000 person before you're an s&p 500 person. >> actually, i have all my money

in mutual funds that i manage. it's good for me with clients. >> thank you. great to see you. happy holidays. when we return, the greenback is on a tear hitting a 14-year high. can king dollar keep its crown? plus the health of the housing market. we talk to a real estate expert about what to expect in the year ahead. and later, the material sector surging since the election. we'll tell you which stocks are getting that trump bump. stay tuned. today, i am helping people work better... and also feel better. i am helping hospitals personalize treatments using billions of data points. and working with medtronic to predict the highs and lows of diabetes, hours in advance. and i am working with orreco to use biomarker data to boost the performance of athletes. hello, my name is watson.

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. welcome back to "squawk box." futures right now are mostly flat. we're down about five and change on the dow. we're just 25 points from 20,000. just over 25 points. the s&p is down less than half a point and the nasdaq down just over a point. down 1.15. >> percent. >> no. points. >> oh. in tech news, another executive at twitter db this keeps happening over there.

executive leaving. also leaving the firm to join graylock partners. last month chief operating officer left the company. the company of course has been streamlining its organizational structure, so it says. more are now reporting directly to jack dorsey. kayla is our resident expert. so what do you think is really happening here? >> well, i think that jack dorsey has plans to continue running this company. turnarounds going. >> going. >> disputes, you know, that it's going well versus poorly. but there's only so much stock you can compensate with when the stock is so far down. meanwhile the dollar is on a tear touching on 14-year highs after yellen's remarks of reinforcing the possibility of rate hikes happening faster in the year ahead. joining us no eric valoria, bob

doll is still here as well. eric, do you think that the dollar's rise was pent up demand, that it was driven by some external force like a selloff in bonds? or do you think this is a sustainable trajectory going forward? >> well, if we look at the dollar's rise as a whole, overall bottomed out in 2011. the strengthening in the u.s. dollar has been a trend that's been going on for about five and a half years. on average these cycles last between five to seven years. so we would say that the dollar still has a little bit more resume to run. the recent strength we've seen in the dollar really had to do with an adjustment in market expectations that the fed would raise interest rates and the fed could continue to raise interest rates. monetary policy having a huge impact. >> sure. we were having a debate earlier in the show about what the net effect of a stronger dollar is. because you have capital coming into the u.s. to invest when you

have a stronger dollar. but you also have a bite taken out of gdp. how do you see it shaking out? >> overall we see gdp growth as reasonably steady. you know, solid enough for the fed to continue to resume interest rate hikes. and when we look at the drivers of currency markets and specifically the u.s. dollar, there are a lot of different factors. but the actual unexpected monetary policy action, we see as the key driver. and as the fed continues to raise interest rates so long as they do that while other central banks are either keeping rates very low or maybe easing further, then we think the dollar could continue to rise. >> we are getting a lot of help from other countries and from political tumult. i mean, angela merkel will be facing re-election later this year. we were talking this morning about how unstable the ground is that she is standing on. but you also have elections in france, the netherlands, and now scotland is saying that it wants to have its own referendum if

the uk loses access to the single market. sop that's what pushed the pound even weaker this week. how much is the dollar getting helped by everybody else out there? >> well, in general when there's uncertainty and we had a good amount of political uncertainty in 2016, but when you see uncertainty more broadly and markets tend to be a little bit more cautious, there's more of a reduction in risk sentiment. that actually tends to be more supportive of the u.s. dollar. at least as it relates to the risk sensitive currencies. we would say if there are more market jitters, then that could help the dollar to strengthen versus -- maybe not versus the more safe haven currencies such as the franc or the yen. those currencies could be more resilient actually in the case of uncertainty. >> bob, how are you playing currencies or are you? >> agree on the dollar strength. large cap u.s. equity manager tells me what to own.

says be careful of the multinationals. relative economic growth favoring the u.s. and relative interest rate differentials up at the u.s., flattish elsewhere says you've got to think dollar strength is good news for the domestic companies and not to be great for multinationals. >> but that's been the story for quite some time. >> as long as the dollar keeps going up, it will be the story. >> how many references do you think we will hear to the strong dollar come next earnings season when people are reporting the quarter we're in right now? >> i think the multinationals will use it as a legitimate excuse why their line is strucking to grow. >> don't you think if you're a multinational and you woke up on november 9th and thought about the policies that would come to bear under president-elect trump that you would start to hedge pretty quickly? i mean, how quickly can companies actually react to the changes like that? >> companies can react somewhat quickly. i guess it depends what kinds of policies they have in place.

we have a great risk management group that helps companies to manage those types of exposures. so it really depends on what your exposure is. >> we'll leave it there for now. eric, thank you. coming up, this morning's top stories including another attempt to repeal north carolina's controversial bathroom bill and what it could mean for the tarheel state's business reputation. stay tuned. we'll be right back. coming up, the dow within striking distance of 20,000. >> boy, that escalated quickly. i mean, that really got out of hand fast. >> will the trump rally power through the mile snoen or will bears take control and spoil the party? >> i immediately regret this decision. >> we'll talk strategy after the break.

welcome back to "squawk box." some stocks to watch this morning, a mixed quarter for fedex. earnings fell short while revenue coming in slight ahead of forecast. profit margins were lower than a year ago. amgen raises dividend. the biotech company's dividend will be paid on march 8th to shareholders a record as of february 15th.

invensense being bought by tdk for $1.3 billion. they are a chip maker key supplier for apple and samsung. and stanley black & decker are selling part of its business to a swiss security firm. the price tag $725 million in cash. gopro setting aside $7 million to cover layoffs and other restructuring. it said it cut 15% of its workforce. and monster beverage upgraded to buy from hold. u.s. centric companies like monster will benefit from tax reform and avoid most of the effects from a stronger dollar. coming up, raising the roof. we're going to open the 2017 cnbc housing playbook and talk to a real estate expert about how his expectations under president-elect trump is going to go. you're watching "squawk box"

here on cnbc.

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welcome back to "squawk box." here's what's making headlines this morning. anheuser-busch selling its controlling stake in africa's largest bottler of coca-cola products. the buyer is none other than coca-cola itself. the deal is worth nearly $3.2 billion and was the final sale of assets in order to win approval of its deal to buy rival beer brewer s.a.b. miller. the national association of realtors out with existing home sales for november. economists are looking for a 1.1% drop following october's 2% gain. mortgage applications rose 25% last week. the mortgage bankers association says the average 30-year mortgage rate jumped 13 basis points to 4.41%.

that's the highest in two and a half years though historically it's still pretty low. as 2016 draws to a close, cnbc is breaking out the 2017 playbook for real estate. looking for ways to make money in the new year this hour were we're going to focus on real estate. here is diana olick. >> reporter: the housing market was on a tear this year. sales and construction surging ahead. but 2017, we'll see big changes. home sales will slow. don't get me wrong, there is plenty of demand for homes, but listings continue to drop and mortgage rates are starting to rise. younger potential buyers may want to get out of those pricey rentals but with affordability weakening, they may just not have the means. mortgage rates will rise. mortgage rates spiked after the presidential election and the gains will continue albeit at a more moderate pace.

job growth is fueling the rates but will not be enough to counter the higher costs. especially for first-time buyers of getting a loan. on the other hand, if the president-elect does make a big move into banking deregulation. it could get easier to get a mortgage. mortgage is more expensive but more available. home prices will cool. the spike in mortgage rates has already made homes more expensive for buyers. some may have to come down a bit if they want that offer. pushing prices higher far faster than income growth. they're unlikely to drop, but the gains should shrink. if only that were true for rents which continue to push through the roof. now, a little bright side on the rental side. that is the luxury rental side in cities like here in d.c. and even san francisco. we're starting to see those high-end rents come down a bit because of more supply coming onto the market. if you're in the middle of the rental market, though, you're

still paying an awful lot. back to you guys. >> okay. diana stay with us. let's bring in rick shagra. good morning. >> good morning. >> so you want to agree with her? disagree with her? >> i'm not sure it's ever really a smart idea to disagree with diana, but i think she may be a little bit more pessimistic than i am about 2017. i think wage growth, job creation, household formation, and actually a little bit more activity than we've seen in recent years from the home builders all make for a somewhat positive 2017. although not massive growth, just marginal growth. >> do a little map, if you will, of the united states. where do you think the winners and losers are going to be? >> i think you're going to see some slowing in some of the markets that have been the hottest for the last couple of years.

we're talking to you from coastal california. those numbers have been going through the roof in terms of prices. i think we'll see some cooling there. i think the south and the southeast are going to be very strong. we're about to release a report from our ten-x research folks that show florida really getting hot in terms of the housing market. and some of the markets that really got slaughtered during the downturn, places like phoenix and las vegas should be coming back as well. >> hey, rick. what do you think the implications of the potential privatization of fannie and freddie will be? >> that's a trillion dollar question. and i don't think we're going to see privatization in a hurry. i think everybody needs to kind of take a deep breath and a step back. after being in conservatorship for eight years, there's an awful lot to unwind before we untether either of those organizations. and we haven't seen any plans in

terms of how that would work spp it one entity that is combined. do we keep both entities? is it a private relationship? strictly private? and whatever is done has to be done extremely carefully and thoughtfully. so if you -- >> if i could jump in here and ask a question. >> yeah, diana. go ahead. >> yeah. if i could just ask a question though. you're in the auction business. you talk to investors a lot. we're seeing a lot of optimism in the rental market. talking about a possible ipo in 2017. do you still feel that the single family rental market, that that play we saw during the foreclosure crisis is still a solid and robust one and that we are going to see these young people once they get that mortgage, that they'll get into new homes or that they'll still go after single family rentals? >> that's a really good question, diana. i do believe the single family

rental space is here to stay. we've seen really unusually strong growth over the last few years. since 2009 we've got from 11 million rental units to about 17 million across the country. the numbers will probably slow but i think as a category, it will remain strong. what's interesting, though, is everybody expects that it's the millennials moving into these houses. in fact, it's really generation x-ers who are taking those homes and renting them. they're the group that really got hit the hardest during the foreclosure crisis. right now the lowest homeownership crisis. that's a fairly solid market. we're seeing a lot of activity from small and mid-size investors. >> mortgage interest tax deduction. what do you think is going to really happen? >> i'd be surprised if the mortgage interest tax deduction went away entirely, would not at

all be surprised if we saw new caps on it, more limits on it. and maybe something actually that made it more useful for tax filers who don't itemize their taxes. but that's something that dr. carson talked about a bit when he was campaigning for president. but it has to be part of a broader tax reform in order for it to work. >> okay. rick sharga, happy holidays. great to see you. >> thank you. now to politics. north carolina is trying to repeal the controversial bathroom bill for the third time. scott cohn joins us live from raleigh. >> reporter: good morning. this not a done deal yet, by any means. the bill as you'll recall actually started with proponents when the city of charlotte passed a law that added protections for lbgt people. the legislature said charlotte overstepped and that led to this

law and the backlash has been huge against the so-called bathroom bill that limits transgender use of public bathrooms. the ncaa and acc canceled tournaments here. relocated the nba all-star game. bruce springsteen canceled a concert. in all, some estimate as high as $600 billion in lost business to the state of north carolina. and on election night, roy cooper was elected governor, narrowly, the only non-incumbent to be elected across the country. a rare democratic win on election night. and now there is talk that hb-2 could be repealed before he takes office. a lot of things have to take place. the city of charlotte, their city council meeting right now to repeal their protections that led to the bill and it's not clear that that's been repealed far enough. the state legislature will meet

in special session about 90 minutes from now. so if the bill is repealed, again a big if, what does this mean to north carolina's competitiveness? take a look at our results for top state for business ranking. remember that north carolina finished a respectable fifth overall despite hb-2. but in the key category of quality of life, 30th place. and it was because in the metric of inexclusiveness which takes these into account, a four out of a possible 50 points. if the bill is repealed, the state will still be one of only five states in the country without any statewide protections for lbgt people. that could hurt in an environment where businesses are looking to attract the widest possible workforce. and while governor-elect roy cooper has promised to bring in some protections and reinstate some protections in this state, one of the other things this state legislature has done is drastically reduce the powers of

the democratic governor from this republican state legislature. again, they meet in an hour and a half. and we really don't know yet what's going to happen today. but a lot of eyes on the competitiveness situation. the state that we're such a battleground on election night. remains a battle ground today. guys? >> great to see you. when we come back, one sector up more than 6%. we'll tell you what it is and the biggest stock winners and losers this year. stay tuned. you're watching "squawk box" right here on cnbc.

welcome back to "squawk box." the futures right now, take a look at where they are trading at this hour. they had been in the red throughout the morning. they're still there. they're off the lows of the morning, but we will see, of course, how they are set to open in less than an hour's time. and how much benefit they'll get from nike which reported earnings and good earnings at that after the bell last night. take a look where the dollar is. we recently mentioned it hit a 14-year high. currently the euro has firmed up a little bit as has the pound. but dollar/yen looking at 117.23 right now. stocks to watch, a couple of them. accenture beat the street on the bottom line. revenue was slightly shy of estimates. consulting firm is cutting its fiscal 2017 outlook due to the stronger negative effect from the rising u.s. dollar.

and winnebago earnings and revenue topped consensus. strength in the rv maker's towable product section. i think those are the smaller ones that you kind of drag around. right? those are -- you don't drive them. >> you don't drag them around. >> you tow them around. then you get out of your car -- >> it's not the vehicle you're sitting in and driving. they're transportable. >> okay. they're not as big or as luxurious as the ones you're driving around, right? i like the ones where you can widen them out when you park. have you seen them, sorkin? you've seen them right? bands and stuff that don't fly, they drive those luxury -- not necessarily winnebagos. get marcus on. he could tell us. then procter & gamble downgraded to hold.

as well as possible cost inflation. pandora's chief operating officer is leaving the online music company following a transition period. the departure comes amid ongoing buyout rumors involving sirius xm. they added a lot of stocks to watch. i got two more to go. bear with me. microsoft was awarded a $927 million contract by the defense department. and amazon was hit by a strike in its german warehouses in a dispute over pay and working conditions. strike scheduled to run until december 24th. germany represents amazon's second largest market after the u.s. the company employs 11,000 full-time warehouse workers as well as thousands of seasonal employees in germany. for more on the broader markets and our quest to make you a little bit of money, this morning we continue our monthly sectornomics series.

landon downey joins us now. >> reporter: before the election materials were an average performer of about 7%. since trump was voted into office, rallied up an additional 7% and out performing the s&p. so which stocks are enjoying a bump from trump? nucor and international paper leading the pack. both up about 21%. fertilizer manufacturer cf industries up a close 19%. and these stocks trumping others as expecting steel and other commodities to benefit from increased u.s. infrastructure spending in a trump presidency. however, the market has not rewarded new mining. the stock down about 12% since election day. and shares of the gold miner have tracked the precious metal throughout the year rallying ahead of the sitting on traits and falling as investors sort out of gold in favor of other ek with ities.

international flavors also down. 7% and 4% respectively. with the big unknown, what happens if the president-elect follows through on heavy tariffs to china? china is one of the biggest consumers of commodities. back over to you. >> thank you. for more on the materials sector, let's bring in jonas oxgard. you can probably -- what works for chemicals probably works for other things. how long you been covering this sector? >> about two years. >> finally. so you were smart. you got in there at the bottom. you got in when no one else wanted it. probably they couldn't find anyone. you were there so they hired you. >> and here we go. >> right? happy days are here again, aren't they? >> it looks pretty good. doesn't it? >> i think it does. >> i'm not a smart mine.

it seems like everything is aligning. except you just heard landon talk about the possibility of something happening with china. but i think the positives outweigh that, don't you think? >> the china always is complicated, right? the big question is whether china will oppose countertariffs. latin america is a bigger issue for the kemal sector at least. >> yeah. but in general inflation, infrastructure, and, you know, building out all kinds of things that use chemicals and concrete and all these things, isn't that sort of the cycle that we're in right now? wouldn't you say here at least in this country. >> so the u.s. is clearly helping. but the chemicals i think are held more by the global factors. crude price going up, that's a massive boost to the petro chemical names. china cracking down on industries for environmental pollution. that has a massive impact as

well. and the rise in the commodities. china consuming more copper, steel, et cetera. that is helping as well. >> do you help cover the fertilizer business too? >> i do. >> that's got to be hitting on a lot of cylinders too. >> it is. i saw cf there up 19% since the election. now, that is -- as much as i love to give credit to trump for that, can't really do that i'm afraid. >> i think the democrats have more fertilizer, actually. don't you think, bob, in general? there was a lot more fertilizer production there? an it's still quite a bit being manufactured, andrew. >> and it stinks. >> yeah. >> don't -- no. >> i'm triggering you. >> it's a safe place. >> usually safe. been safe all day long. that was a joke about the fertilizer. i'm sorry.

>> the cf rally is because of ammonia prices have gone up. those got up because they bottomed. they had to go somewhere. so once that happens, well, something has to eventually give. and it did. in this case it was once again china who actually really caused the rally. china shut down production and prices starting to recover. then cf prices just basically go straight with nitrogen. >> how much of a headwind is questionable emerging market growth and the strength in the dollar, something we've been talking about all morning? >> the strength in the u.s. dollar doesn't actually hurt the chemical companies all that badly. some of the specialty chemicals, they do get hurt because they export a decent amount from e the u.s. but the commodity names, they are insulated. the emerging market, that seemed to be a huge concern last year. lindell, dow, they started this year pretty low place. that was -- majority of that was fear of the emerging market

growth slowing to a stand still. that hit all the commodities. since then that fear has basically dissipated. that's been a pretty good rally for both those stocks. and others. >> jonas, thank you. good to see you. kayla's going to read this, but i can't help myself. just the bill clinton stuff. like, if you prevail -- if your selling point is that you prevailed against the fbi, doesn't that mean -- have you ever had to prevail against the fbi? i've never had to prevail against the fbi because i was never in a position that -- doesn't that naturally mean that you've done something they're looking into? >> i'll just say the word empathy. gracious winner. i'm going to go with gracious winner. >> i'm trying. jim webb is a democrat. you know, bill clinton also said you want to see a landslide, a landslide was in 1992. do you remember what his popular

vote was? percentage? >> why don't you tell me, joseph? >> 43%. >> you hear that commercial music? >> i'm sorry. 43% is a landslide? >> empathy, gracious. >> maybe not from nothing. >> when we return on "squawk box," jim cramer live from the new york stock exchange. we'll get his take on today's top stories. but first, as we remain on dow 20,000 watch, here's a look at the winners and losers since the blue chip average hit 10,000 in october 2009. united health care higher by 555%. it wasn't in the dow then, but still worth looking at. goldman sachs has only seen its shares rise by 25% in that time. of course it captures the financial crisis as well. what a long strange trip it's been. you're watching "squawk box" on cnbc.

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you've got to ensure that you do things right, environment included. learn how you can save at pge.com/save together, we're building a better california. let's get down to the new york stock exchange. jim cramer joins us now. and may not be today, but it is at least big numbers are kind of cool, aren't they, jim? one thing it does, it does make all the papers front page and

everything else. and people that may not be watching as closely, they hear about it and i don't know whether that ends up being good long term or not because it does probably boost sentiment a little bit, maybe gets too positive. >> well, look, joe, we have suffered through a period where frankly stocks have become antidiluvian, dinosaurs, nobody seemed to care. dow 20,000, if we could just get people to say, hey, look at that stock, that's interesting, that would change things. dow 20,000 round number big deal. but the fact is we have been in decline as a nation of people who want to own individual stocks, with the exception of facebook, amazon, netflix, alphabet and now nvidia. and i think that maybe any attention that makes it so we look at companies as real companies that maybe have top line growth with stocks attached to them, i don't know, i like that. >> if you -- would you buy nike and fed ex? neither? one or the other? those are the two big reports.

>> nike -- you have to question nike's growth company status. if the stock were at 60 you would sell it, at 55 you would sell it here maybe argue for a bounce. i wasn't crazy about the conference call. fed ex did everything to say we're spending like mad and you have to have faith in us. so i actually do have faith in them. fed ex take at face value, he has to spend to keep up with e-commerce and a few customers obviously there's one where there's a strike in germany f that goes below 1.90, i like it. >> all right, jim. got to go. see you in a couple minutes and later this morning on "squawk alley" don't miss robert shiller. he will join the team at the nyse at 11:00 eastern. stay tuned, "squawk box" coming right back. (fans cheering) because when you really,

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welcome back to "squawk box." our guest host this morning has been bob dowell of new veen. anything you didn't say you thought you should get off your chest? >> we talked about alpha, this is a stock picker's marngt. the differential sector p performance this year has opened up big time from before. >> we hear that once a year it's a stock picker's market. >> i think when value does better than growth, when small does better than big, when

cyclicals do better than defensive, that's usually -- and interest rates move up, that's usually environment for the stock picker. >> you want to tell us what you're picking? >> i got five pair of stocks here. >> and you have one minute. so let's see if you can do it. >> express scripts if you like the down and out. technology vmware mastercard, consumer, cbs, walmart. i love the airlines ual and delta. and financials got to own something, i'll give you three, citi corp., bank of america, state street if you're conservative. >> not -- >> prefer multinationals than -- >> did you tell us about mckesson and express scripts like years ago? you know they're cheap, you know what that means? >> i started by saying that's the controversy -- >> they done well or come down? >> yeah, they've come down. like most health care they've underperformed. >> happy holidays, my friend.

>> just saying. >> happy holidays, kayla. >> happy holidays. >> i will see you tomorrow. >> maybe not. >> but maybe. >> let's talk about i'm predicting you're going to be here tomorrow. >> i'm supposed to go on a little vacation. >> i know you are, but if we hit 20,000, you need to be -- would you not come in if it hit 20,000? >> i'm going to walk around new york city. >> don't put it on. all right. make sure you join us tomorrow for the big celebration. no, we'll see. "squawk on the street" is next. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is off. 20 e leasive points, premarket suggests it might be a touch farther from the open. we have nike and fed ex earn, some slight losses in europe and oil