private equity. >> erin? >> i'm watch iing the retailers. i want to be long the stocks that i think have overperformed going into december and i think you want to wait for this trade. >> good having you this year. happy new year. thanks to you as well. power starts now. >> thanks. "power lunch" starts now. i'm brian sullivan. here's what's on your thursday menu. we're going to break out your 2017 stock pickers playbook. big new investment ideas just for you and plus, what just happened to housing that has not happened in two and a half years and what one big drug company did that could draw a presidential tweet. we'll explain as "power lunch" starts right now. >> i'm melissa lee. honda is recall 650,000 honda

odyssey mini vans over an issue with the backseat. inventories fell and stocks are mixed on the second to last trading day of the year. the dow is hovering around break eve. one bit of statistical trivia. the dow's point move at session high today, 44.76 points. almost the same as a point move at session low. 44.74. the last time they finished the day the same. 1989. more on today's action. bob pisani is live on the floor of the new york stock exchange. >> we talk about the lack of leadership, the lack of volume. those still apply today. but i want to point out we have seen notable weakness in the banks now. this is the second day in a row. goldman, jpmorgan, those are dow components. goldman sachs is probably 28 points to the downside because it's such a high priced stock and the dow, goldman was 244 yesterday.

237. jpmorgan was 87 a couple of days ago, now, it's 85. bank of america was 23 a couple of days ago, now, 21. citigroup was 61, almost 62 two or three days ago. not a big trend yet, but keeping my eye on this. let's look at the marks, where we are. still the overall position right now, the markets slightly to the down side. there's the bank etf and that's been down two days in a row. volume is hire today than you would pecht on a seasonably light day. the banks are what you want to keep an eye on. overall, still no leadership and no bids in the market overall. i would not stock volume is seasonally weak. however, bond etf volume is seasonably strong. still below normal, but stronger than you would expect this week. we've noted the fact that stocks versus bonds for the quarter, roughly even here, so s&p, biggest etf for stocks up almost 4%. the big bond etf, almost down 4%.

so if you have an even portfolio, you're basely flat for the quarter. a number of people who have been talking about pension rebalancing. art's been talking about this all week and i think see strong flows into bond etfs. that suggests there is something to the pension rebalancing idea. there's the agg. the largest bond idea oult there. the they have been higher than you would expect from normal seasonal movements. the s&p 500, i know we tend to obsess about small moves in the markets towards the end of the year, we are less than 1% from an historic high. we hit just two weeks ago. everyone should bear that in mind. guy, back to you. >> bob, we'll see you in a bit. thank you very much, buddy. let's bring in jerry. and doug gordon, senior portfolio manager of russell investments. we forget because we've had a nice end of the year. overall, they have done well. we forget this january was the worst january for the stock market ever.

do you anticipate that kind volatility going into next year? >> actually, not really. think about the people that probably held off selling some stocks at year end 2016 because they feel to be a better tax rate next year. that might need a week or so to get through. the biggest change next year is the fact that people are not positioned for better economy, for better valuations and for a better positive investment environment. got to get started and started soon. this rally we had after the election, all that did was jolt people's attention back to the idea that risk assets are okay to in. it's time to get position there again. >> so, jerry, you know what this is. this is prediction time. this is where we force everybody to come out with firm predictions and bring you on a year from now and say, hey, you were right and wrong. what is your prediction for the dow or the s&p for all of next year? will it be a good year for

equities? >> 15% or petter. there's no question in my mind as investors start focusing on $140 of s&p earnings, they're going to be willing to pay 18 times for that. that gets you well over 2500 on the s&p, which is a good move. that's not that big of a deal. given where we are in the cycle. >> 18% return in 2017. 15% return in a single year isn't a big deal? sounds like a big deal to me. >> that's because we spent ten years post financial crisis slow -- plus years. >> so, doug, i'm curious. you're a little bit more cautious. on the markets here. i would venture to guess 15% in your view is basically never going to happen next year. why do you like, why do you like developed markets outside the u.s. more than u.s. markets?

>> yeah, first, melissa, i agree with you that i think 15 might be a challenge. it's not outside of possible thety. it's just not in our central scenario. i think a case where we're looking forward to a more challenged return environment, a lure return that puts an imperative on portfolios to find other sources to meet their long-term investment goals. we like u.s. developed markets because we think certainly the monetary environment outside the united states is more attractive. we think also that the strong dollar is going to provide a benefit where you've got actions both on the domestic side with fiscal possibilities in the united states that's going to strengthen the u.s. dollar. then the policy outside the u.s. is going to make the opportunity and valuations there to help reach a goal. move them more towards their risk return goals. >> what sorts of markets are you thinking about when you say nondeveloped markets? is that europe? >> certainly europe as well as

japan. i think japan is certainly one of the markets we think from a fully hedged perspective. b obviously with the comments about the dollar strength. that makes sense and one of the places we'd like to look as well. on the other spot that certainly catches our eye from a valuation perspective is em. that strong dollar concerns us there and puts a priority on looking at em not from a size fits all perspective, thinking about nations that have current account deficits. and puts a premium on active management. >> up there and trying to take any way. it's the time to be jolly, but what could go wrong? this happens, i'm going to have to -- so, two things there.

no question, people aren't positioned where their optimism. still takes a good deal of time we think a good number of years before people have matched the reality with their portfolio position. but your best question, which is basically what's the downside risk for next year, not being china, europe, middle east, think of it not being places focused on for a good three to five years. if one comes is going to be in a place, even in the united states or some bank or financial situation, some type of meltdown that's unforseeable today. that's really the only scenario on our horizon. those are always there. it's just very likely that we discounted that type of downside. >> doug, your biggest risk quickly. >> yeah, i think the it's dollar strength, capacity constraints

inside the united states. from inflation in the wake side. >> doug and jerry, guys we appreciate your views. we'll see you soon. >> happy new year. >> now to a news alert in the bond market. seven year notes up for auction and professors said kelly break out your red pen and grade this for us. >> we don't need a red pen today. a very solid auction. 28 billion seven year notes, the last of the year. fielded the dutch auction, 2.84. right at 228.5 price spectacular. if we lack at the bid to cover 2.54. 64% above average. 19% on direct, well above the 12%. that affects the best since august of 2014, so the grade is

an a minus for the final 28 billion of 88 billion in supply for 2016. selling, back to you. >> thank you very much. $500,000 a year. to treat a rare kid's disease. did one drug company just put a target on its back? we'll explain. but first, just how high will rates go in the new year and is now your last chance to lock in. find out. "power lunch" will be right back. ck be nimble, jacke qu ja knoed ovea candlestick onto t shag carpin ...and his pts ignited into flames, causing m to , drop and roll. luckily jack rently had geico help him with renters iuran. causand now has new nts red from banana repuovisit geim

welcome back. the 30-year mortgage rate hitting its highest level since april of 2014. that jump is starting to impact home buyers. let's bring in diana olick. so, rates are still very, very low historically, but they have crept up. are you seeing any indication that this is impacting potential buyers? >> we are. we just saw it in the november pending home sales. a lot of people say, okay, they went from about 3.5% to the 30-year fixed to 4.25%, that's not that big of a jump, but today's buyer is on on the margin because home prices are rising that ooempb the small jump affected buyers. recording how many people signed contracts in november, so their out shopping and we saw the number drop 2.5%. it was expected to rise. that was the jump in mortgage rates, post election. in november. so, yes, we are seeing the impact. >> so, there's two sides to

every tree. are people more reluctant put their homes on the market because they're being put off by this jump in mortgage rates? >> absolutely. think about it. say i mean, everybody and their brother refied twice during the last couple years, so say you have a mortgage rate around 3%, 3.25 and you're looking at not only spending more to move up to that bigger, fancier home, but you're going to go to 4, 4.5%. even if you can afford it, emotionally, you got to think about it. not only am i paying more for the house, but much more in interest and some are saying you know what, if i'm going to pay that much more, why not take the extra cash that i might have had to buy the new house, renovate, add on to the house i have and you know, maybe do that instead of moving up. we are hearing from real estate agents already that some people are deciding to stay put because they don't want to lose their great rate. and that's a problem because we have so low inventory already

and hurting the market and will hurt anytime the spring. it will push prices higher. >> you've said that home prices are rising. fast. are we in bubble territory yet? >> bubble is a strong word to use. bubble is only a bubble when you're looking back on the bubble. that's what the experkts say. you can't know until you're in a bubble until it's over. that said, there are some local markets in bubble territory. you look at denver and seattle. even portland, oregon, where you're seeing double digit home price gains and you've got to wonder, can people really afford that. now, yes, they're moving out of san francisco, moving to these areas. do they have great salaries, great jobs, maybe they can, but it's pushing prices really far past the affordability level. i would not say we have a national bubble by any stretch some would argue that if the economy is improving and jobs are improving, then we can afford higher prices in housing. dr. schiller said a couple of

weeks ago at a con i was in, that yes, the index has xeeed what it did during the peak and for twos it has reached a new peak, but affordably is still the same as what it was before in mid 2000, so he believe that is home prices are kind of in lip with where they should be. >> stick around. bring in aaron. senior economist with zillow. great to have you with us. diana was talking about the impact of rising or jump in mortgage rates at the end of the year on buyers. you're also predicting them 2017, buyers are going to have to prepare to cover the increased cost to the home builders of building these new homes. >> that's right. building a home has become very expensive and if you think back historically, new homes actually a very important part of the new home buyer market. these were modest homes that were access bable if for first time homeowner, families starting out. with co.s kind of really going up sharply, in part due to

regulation, that's really no longer the case. >> diana, i'm curious how this shakes out in your view because wages are rising for the people who build the homes. wages are rising across the board in the economy and that is good in terms of people being able to afford the homes. >> right, but if you ask any homebuilder, they'll tell you one quarter of the cost of building of a new home is in regulation. whether they're state, federal, local and we're talking a lot about deregulation in the trump administration, but it may not trickle down that quickly to the home builders, so in order to make a profit, they have to build the more expensive homes. those are not the homes we need. we need the entry level homes and the homebuilders are not there. >> aaron, you say to diana's point, millennials will continue to be b a driving force. >> look at the home ownership rate. it has declined over the past decade or so to kind of rates we haven't seen since the mid

1960s. there are a lot of people sitting on b the sidelines of the housing market renting. that are waiting to get into the home buying market. if you look at over the past year already, over half of first time home buyers according to our data, were ma len yals. a lot of them are sitting on the sidelines waiting to buy their first home. >> you know, this is an incredibly important point you're bringing up because there's been this point that they're different. they're all going to live in apartments or their mom's basements. they're not going to drive cars. we know that history kugts that's not true. you get sick of being in your mom's basement. you want to have children. the it's the big generation in the history of the united states. could demographics. >> howard: tog a boom? >> that's right. survey after survey shows that kind of despite what you know, we're hearing and despite the trends that really blew up in the recession, they want to buy homes. they value home ownership. the independence of not being

tied to a rental or landlord. and they want to buy homes. a lot of things have gotten in the way of that. for those that graduated into the recession, the labor market was a big barrier. saving up for a down payment is a big challenge, but they are trickling on to the housing market. whether or not that's going to drive the housing market to ten, 15-year highs, that will be seen. but a lot of them are eager to buy and are slowly going to be buying over the next couple of years. >> thanks so much. >> i would argue this. just one last thing is that remember, we have one million more single family rental homes in the market today than we did before, so when we talk about a main yals, but when they want to have children and move to the nice school district, they can do that easier now in a single family rental home. investors bought in the right neighborhoods and schools

looking toward that, so i don't think we're going to see some kind of huge boom. >> some of those investors will begin to off load those assets over the next couple of years. >> they're not so far. they're really not. we're seeing them put more into it. look at black stone talk about doing an i prkpo. >> you know better than anybody. renting while oftentimes, maybe a better economic bargain, as a homeowner, i wish i could call somebody, yo, the heater is broken. renting can get annoying. >> it can. you can't afford it. student loan debt. big down appointments. high fico scores. not saying they don't want to buy. >> interest only arms again. just bring those back. everything will be fine. >> i'm kidding, people. kidding. >> thank you very much.

>> thank you. >> one big bio tech just did something that might lead to the eyre of a certain president-elect and potentially even a tweet. the name, the news behind it, straight ahead.

when tamara wasdiagnosed with c, her father -who is a doctor- searched t world for place to help save his ughter'life. st. ju! sí, mi amor. we created a treatment at st. jude ildren's research hospi just for tamara... onthat canelp ve we created a treatment at st. jude ildren's kids like r everywhe. includnear you. i ve st. jude. me too and so do parenteverywhere. give thas fothe healthy kids iyour life. dona now at stjude.org me too and so do parenteverywhere. orhop ere you see e st. jude log one bio tech analyst is raising the red flag. meg is here with that story.

>> so, this drug called spinraza was approved just before christmas. it's a really exciting drug. it treats spinal muscular atrophy. it is swrus defing. there has been nothing to treat this until now. the leading genetic cause of death for infants. it's been shown to really make a difference. the pricing information came out. it's a rare disease, often these price tags are very high. in year one, the pricing because you take multiple doses up front, will be about $750,000 for the first year. after that, about $375,000 a year. for maintenance. today, jeff at -- put out a note on this. say quote, the pricing decision likely to invite a storm of criticism including presidential tweets f since donald trump made comments to time magazine about drug price, people have been holding their breath about who he's going to target.

this price tag did come in a little higher, biogen could be the focus here. i reached out to one of the biggest pharmacy benefits managers, which negotiated drug prass, they say while cost is high, it's not unusual. thai exciting to see a life changing innovation like this for a disease that really needs it. but they say it's imperative in order to pay for these things. but it's really fascinating to see that jeff, even while raising his price target because the price was higher and should go out better, this could raise a red flag. >> you raise a price target in to 20 17, saying that because he expected resistance from payers, 2017 numbers will be b lower. then higher in 2020 resulting in that $2 bump in his price target. if jeff is right and there is political attention focused here, that's a huge risk for any company, whether or not people believe they deserve it.

>> could i have $50? >> no. >> 20. >> no. what are you going to do for it? is. >> here's the point. >> we're going to give you the bottom line. >> i wonder if the way that trump negotiates will change the way drugs are priced because maybe the strategy becomes you know what, the president-elect or president is going to come down, let's, you start much higher than even you previously thought you might, then if you get the call, if you don't get the call, just charge more. if you get the call, bring it down. you look like they cut the price. the president looks like he's gotten a win and you got what you wanted in the first place. >> that's a really interesting theory and kind of echoes what we see or what is whispered about what is happening with pharmacy benefits managers. what mi lynn brought to the floor was the idea that they benefit from higher price, then get a bigger cut. this is the list price we're talking about here.

there will be discounts paid, this idea they're being driven up by the system is something that's happening a lot. >> also benefitting from this. licensing partner. they will also krau the eyre of a presidential tweet. >> it's possible. biogen is really the one commercializing the drug and making the pricing decisions but they benefit from the pricing. >> yesterday on street talk, we highlighted avxs, which is a competitor. not yet, if it's approved and there was a note out that the spinraza pricing may be good if it's approved because it may help boost their pricing, so a lot of players involved. >> what we see over and over again, prices instead of bringing down prices -- >> still wouldn't loan me $20. >> ais >> i might lend it. >> on deck. the unemployment rate is down, but millions of working age americans are still out of the workforce. why? how do we get them reengaged and back to work? discussion on that ahead.

plus, eagle update. those baby eagles we showed you yesterday still have not hatched. we are going to take you live to the nest. >> it's like watching dow 2000. >> these eagles are born, it would be un-american. don't go anywhere. "power lunch", always with an eagle on its shoulder, is back after this. what with the g zeorse? i'm ss, yi to figure out this complex trade so brought in myomfort pony. well you could get support from tnkorswim's in-app chat soou so what about my motivionameerkat?

in-app chat on thinkorswim. only at td aritrade.

here's your cnbc news update. amazon has won a patent for a flying warehouse. they hope it will act as a launch pad for drones that can make deliveries within minutes. amazon's filing says it would float at 45,000 feet. alabama authorities are warning the public about a texting scam involving fake death threats. victims are told they must e-mail a hot mail account with the personal mag or be killed. researchers from the university of liverpool say art may reveal early signs of

cognitive decline. the study looked at famous works and noticed differences in their brush strokes before and after they were diagnosed with parkinson's and al sooimzers. this one is rare, too, a rare one born at the westchester zoo this week. the part of a program to boost the numbers of this endangered species. and that's the cnbc news update. back to you. >> thank you. brought a smile even to brian's face. >> my favorite animal. >> why? >> what's not to like. they're tall, they have big ears. they're perky. >> look at those ears. that thing is gorgeous. >> he is cute. forget the eagles. >> thank you, contessa market flash. >> hello, guys. we are looking at shares of mobile life surging today. the stock near session highs,

this on news that the sxaen teaming up with a niua gags service. shares have tumbled. shares down 10%. year to date. brian. >> see you in a bit. thank you. president-elect trump announcing sprint and one web will bring 8,000 jobs back to the united states. we know about sprint. who exactly is one web? josh is here to take a closer look at this new company. >> brian, my dad actually asked me that very same question. in fact, one web is a start up that has raised a ton of money and boasts an extremely ambitious goal. it wants to build a massive network of satellites that deliver high speed internet service in rural and emerging markets, greg wiler, company's founder, was on b cnbc this

morning talking about the 3,000 new hires he's going to be making over next four years. >> these are going to be very high-tech, highly skilled manufacturing engineering jobs, really right at the cusp of highly skilled manufacturing and engineering. >> and where will they be based? >> all across america. we have a broad supplier base. in florida, a lot of jobs in florida. a lot of jobs in arizona. maryland. virginia. and of course, california. and many of the different states in smaller numbers. >> he plans on launching 900 satellite, each way weighs 285 pounds and will operate about 750 miles above the earth. prototypes will launch next year. now, oneweb's idea of internet satellite access is an old one. in the 1990s, a number of companies pursued this same goal and perhaps most famous was

teledesic backed by bill gates. but only one of its sal lights was launched and that dream died, but wiler says that is all in the past. today, the technology is now available to create a truly successful consolation of internet beaming satellites. he is certainly convinced a lot of investors. oneweb has already raised $1.7 billion, including one billion from soft bank. >> we're still awaiting a few key appointments, but will the president-elect face an approval battle in congress? let's bring in a man who's gone through it himself. carlos gutierrez is president of the stonebridge group. mr. secretary, great to have you with us again. who will sail through? who won't? >> well, you know, i think there are a couple of picks that haven't been talked a lot about.

i think tom price will have a tough hearing. you know, he is the man who knows the afford bable care act more than anyone else and his job is to repeal it, so i think that will be a continue ver sl hearing. perhaps jeff sessions. because of some of the declarations he's made in the past, although i don't think he will have a problem then of course a lot of discussion around rex tillerson because he's done business with russia. which i think is a pretty feeble reason to not nominate him, to not confirm him, i think those are the three that are probably attract the most controversy. >> so, it almost sounds like you think that the democrats will maybe throw up roadblocks against these people, even though there are real concerns in your view for these candidates. >> i think someone like tom price, the democrats may decide to focus on him.

and put all their powder behind him because he's taking away or his job will be the to take away one of president obama's legacies. one of his biggest achievements, obama care, so i think that will be a focus and i think that's where they may rally together. and it's the type of issue where they feel comfort bable in confronting it. >> i want switch gears an talk about the president-elect's announcement yesterday after the close about these jobs he's quote unquote saving o from leaving here in the united states or bringing back to the united states. 5,000 with sprint. 3,000 with this new start up company, oneweb. if you were ceo still, mr. secretary, would you rethink moving any jobs outside the united states right now? >> well, i think what's happening and this is the influence of a president. these are matters that are being discussed in a board room these days and i would assume that plans are being put on hold.

the president's calls to ceos and his announcement yesterday, i think it was symbolically important and it creates momentum around the idea that jobs are coming back or u.s. companies will invest, but ultimately, it will be tax reform. regulatory reform that really brings investment back to the u.s., our start ups are flat. we need to grow the number of start ups. it's all about new businesses that will become large businesses in the future. that's what's really going to attract investment. >> so you think these are the conversations really happening ng the board rooms now. in other words, across the country, they're saying we don't want to be on the other end of the phone call. let's stay out of the headlines right now. >> i would be surprised if some weren't asking the question, do we want to be b the subject of a tweet. i think it's a natural discussion to have. i think that's the power of the influence of a president, even a president-elect.

but again, i think eventually, this will all need to evolve into real tax reform because companies have to stay competitive. and it will be the numbers that drive the decisions. but right now, sure. i'm sure there are a lot of people talking about it and maybe putting some plans on hold, waiting to see if tax reform does happen. and perhaps, their numbers look better with tax reform and importantly, with regulatory reform. >> right. mr. secretary, thanks so much for joining us. appreciate it. happy new year. >> some news on the jobs b front. initial jobless claims, it's just a latest sign the labor market son fairly solid footing. millions of people still are not in the workforce. many of them in prime working age. here's a question. how do we get them reengaged? do we need to? let's bring in jimmy, policy

analyst at the american enterprise institute, where they have been writing about this. it's a very sensitive topic. it's easy to get caught in the trap of somebody thinking you're lazy and don't want to work. that's not the case. although i'm sure it's true in some parts of this country. we're talking about getting everybody who can work and wants to work, back into the workforce. how do we do that? >> listen, i think sort of culturally, you want there to be an expectation. that if you can work and may not be your first choice job, it may not be the job you envision, you may have gotten hurt at your last job and can't do that kind of job anymore, but you need to do another job. that expectation, we cannot let that erode. we should strengthen it. we have to make sure we havesies to help it work. making sure jobs may better. helping people. that's a perfect example. there should be an expectations that if where you are, there are no jobs, you might want to think

about moving to where the jobs are and government might have a role in helping subsidize that move, but that should be an expectation. you need to do what it takes as you mepgsed, the prime age, much lower than many other advanced economies. >> ironically, you wrote about how americans are on the move less and less, baugh but back to the main topic, how about this. do workers owe america? we've heard a lot if the last number of years about what america owes to its people and the government probably does owe manager to its peemt, but we owe something to the government as well. america the nation is a two way street. is it not? jfk alluded to that. what do american workers owe the country? >> i think what a worker owes america is working. if you don't have a job, you need to look for a job. there's a role in government helping you along that way. listen, we've had all this sort

of nostalgia, from 1950s and '60s and that kind of economy. that's not coming back. at the same time, we can't just assume all the robots are going to take all the jobs. we need to have, you've probably had people on the show talk about universal basic income. what some folks call their post work agenda. i don't think that's where we need to go and maybe we'll go there some day, i don't think so. so i think we need to look at today, the economy. trying to make sure there are jobs and good paying jobs. for all americans, but the same point, you have to look for the job, you have to be willing to take that apprenticeship, do the extra training or maybe move somewhere to where the b jobs are. that's what you owe the rest of us. >> yeah, we talk and this robot thing a few times. we may be on different sides of the aisle on this one, pu again, we'll stick to the topic. the moving thing. is huge. because as i wrote a number of years ago, there's no mobility. there wasn't during the financial crisis because you can't sell your house.

what are your options? abandon your home and destroy your credit or stay put and hope for a job that's probably never going to come back. what can we do with 5.5 million jobs this this country to match up jobs? should the government provide an incentive to say hey, guy in michigan, there's a job b for you in phoenix and we're going to help you get there? melissa's shaking her head. >> no, you get the job, get paid. >> how do you get to phoenix? >> for some, it's hard to make that move. as part of an unemployment package, i think relocation subsidies could be part of that. at the same time, we have to make sure that we have you know, a lot of these high productivity, great economy cities, where housing is very expensive. we need to make sure that housing is less expensive. the president's economic adviser has done nice work on that. in my career, i have a big family. seven kids. i've moved like five, six times. it's hard. not easy. sfl back up. you have seven kids?

>> i haven't called home today, so i think it's still seven. >> is there a chance it's eight? >> you never know. >> merry christmas apparently at your household. >> that's the headline of this interview. >> you're to the point where you've got more kids than let r letters in your last name. being a greek is hard to do. >> we all have to have goals and aspirations and maybe that's mine. >> there's still time. >> i would say eight is enough. jimmy made our day. happy new year e, year, year. to you and your family. >> thank you. happy new year. >> all right. >> lot of kids. >> i have two and that's a lot. >> i have none and that's -- >> too many. >> knock out loss a little over a year ago, but tomorrow, she's set to make her big comeback. we'll talk to the man make iing happen and ask him about being a

business man in a trump world. that's straight ahead.

all right, welcome back. if you've been wondering where the dow 2000 graphics are, it's because the market tanked yesterday. down triple digits. down again today. so the dow is down about 30 points or so. volume has been light. matt, i think obviously, we've been talking about it for a couple of week, i think there was some optimism that we would hit it by year's end. that was before yesterday. yesterday, the breath was terrible. volume was terrible. what did yesterday's action tell you about the near term future of the equity market? >> still trying to recover from the thought of having seven children. >> you and me both, brother. >> but seriously, one of the things is that the 20,000 level,

you know, it would be great for headlines, especially for the individual trader as we move into the new year, but we're getting very extended on a technical basis. also our valuations are stretched. we're kind of at an interesting point as we move into the new year. ipg we're building up some things here where some of the crowded trades like the being short the bond market, being long the bank stocks and the russell 2000, thipgs like that. may be under some near term pressure as we move into the new year. not just for a couple of weeks, but maybe six weeks to two months. >> these are just technical reasons, matt? >> yeah, well, it's a couple of things. first of all, we have the dollar that's very overbought. very overloved and very oversorry, overlong. overloved, i should say, the bond market, overhated, ov

overshorted and over -- gosh, sorry. >> you get your mind off the seven kids. >> it's the seven kids thing. >> seven-year bond action. jimmy's got seven kids. it's lucky seven. >> goodness gracious. >> it's all right, man. why do you say these are unloved or overloved? on one metrics are you looking at to say maybe the bond market out of whack? >> what we have with the dollar, and the cot data shows the futures traders are very, very long. long the dollar. and we have the smart money, the commercial, they are very, very short the dollar. shortest they've been in a while and so they're betting the thing is going to go down. same thipg with the bond market. the smart money commercial, the largest long position and they're betting bond prices will go up and bond yields will go

down. the biggest position in over ten years. and these are the kind of situations, these kind of sentiment and positioning readings that e we get at tradeable turning points in the market. when i say trade bable, i don't mean 1 to 2 p% moves over a week or so. usually that move in the 5 to 7 to 8 to 10% over 4 to 6 to 8 weeks. when you have that at the beginning of the year, it can be good idea to edge, especially now, if you want to hedge in the options market. putting on and buying some puts or calls in the bond market can be very inexpensive and a nice way to hold on over the long-term, but still protect yourself at the beginning of the year. >> jimmy's b seven kid, seven year bond option and the dow is on pace for its seventh year up. lu lucky seven, hope it's a great year for you. >> you, too, go, virginia tech. >> favored by seven. >> we got big news for all your

ufc fans out there. got that story next.

tomorrow night, rhonda

rousey returns to the ring. she has not fought since her loss more than a year ago. let's bring in dana white, president of the ultimate fighting championship. great to have you on cnbc. i love the stuff you do with -- somebody is listening. just want to point that out. >> thank you. >> we talk about sort of the male stars. this irish kid has been getting a will the of attention. conor macgregor r. >> i have. >> what does rhonda rousey mean for the ufc financial? >> she's very important. attendance on friday night is the highest attended fight ever in las vegas for us. and you know, she kills it on pay per view. she is a megastar globally. >> reporter: important to the company. >> you're one of these ceos that leads a multibillion dollar operation hands on. i've seen you on the podiums,

you're talking to these star, conor is is b probably the biggest star right now. seems to be tough the deal with in negotiating room. how do you deal, how are the female stars different than the males? easier to deal with? is it a different world? >> con nor mcgregor has his little thing, he's a little tough to deal with, but he's worth it. at the end of the day, he'll step up an fight anybody, anywhere, anytime. rhonda is the same way. rhonda is probably the easiest athlete that i've ever dealt with. when you talk about a partner, i look at these guys like partner. rhonda is the best partner i've ever had. >> what makes her so? >> first of all, this whole thing that's going on with her right now, she cut a deal with me where she doesn't want want to do media the week of the fight leading up to it and i a i greeed. >> why? you want the media. that's kind of the whole thing. >> right. what this woman has done in the

last three or four year, not only for this brand for the sport and women in general in the fighting world and in all of sport, rhonda rousey has worked very hard, anything i ask of her, she would do. so finally, she came to me and asked me for a favor, i owe it to her, so i did it. >> what's the future of the ufc your growth. i don't know if you watched a lot of cnbc, but talk about companies that go from 100 a year in sales to 5 billion a year. we talk about it all the time. you guys have grown on a level that would compare to the best companies in the world. what's left for you and the ufc to do? where do you grow? >> thank you. our rights are up in 2017. our television rights. and i think we're the only sport who's rights are up until 2021 or '22 or something like that. plus, russia is a massive market for us. there's tons of talent coming out of russia.

we're going into russia and deeper into china in 2017. >> looking global for growth in the ufc. it was a real pleasure to have you on cnbc. good luck with the fight. happy new year. see you again i hope. >> thank you. >> still ahead, the new normal for doing business in 2017 plus, citi's top market strategist looks into his crystal ball. "power lunch" is back in two. ie so i can take my tradiplatform . u know that thinkorswim seamlelyyncs acro all youdevices. the mark's hot. sync yr plfo on any device with inkorswim. only at td ameritrade.

welcome to the second hour of "power lunch." i'm melissa lee. two hours left. here's what we're watching. stocks struggling once again. is this rally fading? maybe not. the art of the deal with president-elect trump, the balancing agent ceos in a trump world. two more trading days ch it's been a rock oing year. >> let eets's check out some of the moves. gold miners, they are on the

move and check out the primary etf that tracks them. the gdx gold mine nor etf. up %. on pace for its best day since november 15th. down about 1% today. hitting new lows. not seen in three years. meantime, the defense contractor awarded a new deal by the us navy. the it is worth nearly $300 million. shares up about 15%. more now on the trading action this hour. bob pisani rejoining us from the floor of the new york stock exchange. and bob, for what, two week, it was 20k. that appears to have gone away. i did not mean to run. we will, but are turning our attention to 2017. i want to point out here, keep an eye on the banks because this slow, slow last two or three

days morgan stanley, bank of america, goldman sachs is 244. yesterday, 237. today. that's a lot of air out of that part of the dow. biggest stock in the dow. part of this might be due to bond yields here we were 260 just a short while ago. here's your ten year. down below 2.5. that's one reason i think banks are under a little bit of pressure. elsewhere, there's a bunch of other stocks. not a big deal, but you want to keep an eye on your nike, boeing. united health, unh. intel as well. all down b about 1% so far. again, the big problem, no real leadership to take the place of the banks and industrials that were the prior leaders. >> thank you. the s&p 500 down slightly today, but it's been a strong year for the index, up nearly 10%. the s&p also on pace for its fourth up year in the last five, so what can we expect in 2017? chief strategist at citi,

current target on the s&p 500. for 2017 is 2425. tobias, great to have you with us. >> happy holidays. >> happy new year. along with the price target, what do you see for s&p earnings and within that, are you factoring in any sofrt tax relief? >> we raised our estimate to $21 last year. up from 29. overall, if you think about the earnings, b about 9%, 3% of that or a third will be the energy sector having a better year than it had this year. particularly the first half of the year, then call another two or three percentage points in the fourth quarter and lastly, some kind of mod underlying growth. we don't think we're swing iing for the fences here either. zpl i'm wondering, when you take a look back at 2016, citi was

under where we are now in the s&p 50 in terms of its year in target. in 2017, did you adjust for that? >> i think part was the election itself and the kind of sense that animal spirits will get released as taxes come down, as regulatory relief comes about. we've seen some evidence of that. if you go through the optimism index, in terms of businesses kind of getting a little bit more excited about this. again, we get a lot of interesting pushback on the elections and i tell people put political partisanship aside. what are the policies. and it's clearly more progrowth, probusiness and markets reacted to it. it's not irrational. some of the pullback you're seeing here i think is also some rational. i was hearing too many people say the last couple of week, comments like keep buy, we'll get santa claus rally. anybody wants to take profits,

we'll take profits next year. things like that. and to me, i think we had the santa claus rally. he came early. it's a unique year. >> it's a big deal, tobias. very, very big deal. in terms of sectors, which will lead us to your target in 2017? >> we sill continue to like financials. energy. a lot of pushback on that. investors they they've missed the boat on it. yields are like i to move higher if you combine a stronger economy. and poernlly, some bigger deficits that need to be funded. not just in the u.s., but around the world as you're starting to see countries move away. froms so, that pushes up yields and that supports the banks and diversified financial stocks. with regards to energy, we think prices are going up into the low 60s and that should push up the price as well. what i'm most intreetreeged by,

over, we'll wait for another day. the pain tray tends to be in places where investors don't want to go. >> got breaking news. thank you tobias, citigroup. john? >> helds, we just heard from the treasury that the obama administration has issued a new set of sanctions and punishments to russia in part for the cyber hacking of the u.s. election. a number of individuals including some tied to the gru, the russian military intelligence organization and data firms that participate with them, have been added to the sanctions list. we also have word that two intelligence compounds in the united states that are controlled with by russia are being shut down and 35 diplomats are being expelled. this is being said as a response to harassment of u.s. diplomats in russia. don't know if that harassment is related to the election hack,

but in any case, strong sanctions against both individuals and enter theties tied to the gru related to the election hack and the expulsion of 35 diplomats and the closing of two diplomatic compounds that were used for intelligence. that's what we've got so far from the treasury. we'll be watching for more information about it. >> so, to be clear, john, this is for the treatment, the harassment of diplomat officials. how to you separate the hacking incident versus the harassment of diplomats? >> don't know if they're connected. >> don't know. >> fascinating developments. john, thank you. jo harwood. >> the russia ben stock market is closed due to the time difference, but there's a couple of etfs. biggest is russia etf. the rsx. it's up right now, so no real reaction in the ek wii thety markets. still, we'll see what happens

when the russian equity market reopens overnight. rick, by the way, you probably heard those headlines. i wonder if this is why we might be seeing a big bid in some of the gold miners. >> well, you know, anything is possible, but i think it really is more year end events. there's something to be said for disruptions in global order over the last several day to a week and marks are thin and the dollar is giving back. anything is possible. if you look at the seven-year intraday, the spike dropped, but if you look at two-day chart, you can see the remnants of the drop yesterday on that chart. we've had two good auctions, rates are coming dunn. could be early rebalancing.

it could be that the options had mutual funds in there. if you look at a two week chart after tens, remember that congestion in the mid 240s, well, here we are and it's going to be hard to breakthrough on the current volume levels and finally, the dollar index was the last to give it up. it made a new spike yesterday that gave us a fresh 14-year high, but none the less, it has reversed to some extent. although the reversal and context of how far it's come not only year to date, but off the lows, still stellar 2016. >> here's what's coming up, how the ceo is going navigate. five elections to watch in 2017. and how to trade them. plus, last minute money move. and one well-known tech giant

getting slammed, losing almost half its value. what is going wrong? all that and more coming up on "power lunch." only at&t fers you your live channels and dvr you devices, data-fr. it's enrtainment. youray.

they're going to be bringing 5,000 jobs back to the united

states. bringing them back and i want to thank them and also, oneweb, a new company, is going to be hiring 3,000 people, so that's very exciting. >> that was of course president-elect trump talking about bringing jobs back to america. today, trump also tweeting his administration is going to follow two simple rules. buy american, hire american. we've seen a lot of wheeling an dealing with trump and a few big ceos since the election, so how should xexecutives negotiate an deal with a rather yushl command unusual commander in chief? former co or office depot as well as a cnbc contributor. we've talked a lot about this in the past, but let's make it super practical. we've got a lot of high level executives that watch cnbc. they're in a prift meeting with

us. what would be the top one or two trick or traits that you would impart on corporate leaders to use when and if they have to deal with donald trump. >> first one is don't try to relitigate the past. most major corporate titans did not vote for trump. not even two-thirds voted for him. about two-thirds voted for hillary. maybe 25% of ceos but that's the past. in fact, they have many common interests and should work on that. secondly, they shouldn't go out there and try to counter fire with fire. don't get into mud slinging with him. you saw what happened with the apprentice efforts at the republican primaries, go in there with a constructive attitude, do your homework. reagan's 11th commandment, never attack another republican or another ceo. in this case, trump doesn't believe in that an he loves competition. if you take a look at the great models, the headlines with

sprint, with how ford has responded and i think how we've seen jimmy of ibm respond. 25,000 jobs they want to bring into the country and of course united technologies and lockheed martin have done a good job, and boeing, of making their case. don't come back at him with insult, you're not going to win. the aeroo space spri, 95% of the jobs they produce are manufactured here in the country. it's a huge export and probably one of the few sectors where we command global -- not getting caught up. or relying on trade associations. too often, we have seen ceo os going for collective action. we've had a 700% increase by

trade associations in the last 25 years and 80% of ceos say they're frustrated. >> let's bring in steven. steve. >> no i think jeff's right. government has been part of the equation for business leaders for ever. we've got laws coming out of congress. we've had the regulatory machine coming at us, the ju sector making decisions. this is very, very simple. the president-elect ran on a message. to create jobs in america, make america great again. he called out companies that were moving jobs. he has done so since the campaign has been finished. it's refreshing as a ceo, i know where he stands. don't move jobs out of america. if you're thinking about creating them, do them here and you know what, you'd have to be a fool as a ceo today to do anything else, but it's a very simple thing and it's a great message. >> how much pressure do you with stand in order to remain on the good side of the u.s.

government, on the good side of the president, but also live up to your duty to shareholders to run your business as efficiently as you can in terms of the decision this to keep jobs here as opposed to moving them overseas, which is what you might have done had there not be this pressure. >> that's a great point, but you have many constituents as a ceo. your customer, employee, owners, communities an you have to balance all of that and make sure that you're making the best decision across all of the constituents. so, in this case, you know, bring jobs home. that's the message here and that is balanced against negative pr if you don't, which can hit your top line. so i think it pays out in this case to follow what the president-elect is saying. create jobs in america and grow your business here. >> to what steve just said, i think you'll agree on this, too. is that while we know where donald trump stands as president on this, he's not an idealog.

if you don't like those, i've got others. he's pretty flexible. he's a pragmatist. he's not driven by general conservative principles. he sees a hybridized world and it isn't the world of adam smith or milton freeman or any of these theorist riss. gl got to leave it there. thank you. happy new year. jeff and steve. >> back to the headline we broke in the past 15 minutes. the u.s. announcing new sanctions against russia. let's bring in white house reporter for politico, also a cnbc contributor. we brought you on to talk about something else about filling the roles in the final cabinet positions, but can't ignore this russia news. 20 something day, maybe longer, until the inauguration. and now this. can we read politics into this move? >> this has politics written all over it. obama has about 20 days left until the inauguration and he's making international headlines.

the question is, is how much is this actually related to the hacking that allegedly happened against the dnc, which sways the elections or is this just throwing punches at russia. the interesting thing is this morning on the daily phone call that president-elect trump's spokesperson has with the press, they said listen, if there is evidence, we want to see it. if there's evidence of hacking, show us. so it just seems like the president obama is is really moving it forward saying he's going to fire back on russia and he's protecting the democratic party. this is his legacy at stake. >> maybe a little last minute jab at russia ahead of the incoming trump administration. let's rotate now to why you were actually here in the first place, which is filling the few remaining cabinet positions that are there. what are you hearing down in d.c.? are we going to get an hispanic on the cabinet?

>> there's a really strong push to have more diversity in the cabinet. only three positions left. there's veteran affair, secretary of agriculture and u.s. trade and right now, the trump team is scrambling to find a hispanic for the agriculture post. there's been a lot of meetings in the past few days with a cuban america and b was undersecretary for the department of agory cull under bush. we met with alan maldonado, a mexican america and heavily involved in a vineyards company. a lieutenant governor of california. and it's interesting because generally, the transition team has been tight lipped about what jobs the actual candidates might be up for. the people meeting with trump, but when it comes to the possible his tannic candidates, they've been saying jovida, who met with trump yesterday, she's in the running for the u.s. trade or the other day, marono,

they were eyes her for agriculture. i'm hearing from inside the transition that trump is really taking this seriously, despite all of the allegation, all of the very hard rhetoric against mexican americans. it's kind of interesting to see this reversal of stance. >> have a happy new year. we'll see you on the other side of the calendar. thanks very much. >> one of the world's best known exhumer electronic brand, but this week, it's seen half its value evaporate. and just a few days left until we close out 2016. we have some clever last minute money moves that could cut your tax bill. "power lunch", back in two.

actions and sanctions against russia, just imposed minutes ago by the obama administration. the administration closing two russian compounds down around washington, d.c. and expelling 35 diplomats rather. it has to do with concerns and claims over hacking around the

united states election. the president coming out with a a couple of comments saying the u.s. will quote continue to take a variety of actions at a time and a place of our choosing, some of it will not be publicized. hes these action rs not the sum total of the response to russia's aggressive activity. so there you go. the president's statements on alleged cyber hacking issues. what the administration believes is an effort to undermine the process, pr pretty tough sancti. the expumgs of 35 diplomats, diplomats, around the new, john harwood rushing to a camera. we have him now where hopefully, he has more details for us. >> i just spoke with an administration official who indicated in response to the question melissa and i were discussing, that the harassment of u.s. diplomats in moscow is

entirely separate from the cyber hamm hack, but the administration group groups it together in a set of aggressive behaviors on the part of the russian government, so the anxiouses announceded today involved both of these thing, which aren't the same. one u is the interference in the election. the cyber hack. and you've got individuals associate wd the gru added to a list of sanctions, which prevents them from travel, from using the u.s. financial system. we also have the closure of the two compounds in the united states. the expulsion of 35 diplomats related to the aggressive harassment of u.s. diplomats in moscow and the totality as well as brian just alluded to, to

what -- some actions will not be is disclosed. don't know if that's happened yesterday or is due to happen, but all of that represents the u.s. response. we have not heard from the republican leadership yet. but chuck schumer, the democratic incoming democratic senate leader, put out a statement praising the administration's actions saying that we need to hit russia and hit them hard and also saying that the incoming trump administration should not think about weakening these sanctions in any way. so, that then puts the ball in the court of the incoming trump administration and donald trump has said the president-elect has said repeatedly, that he is not persuaded or accepted the idea that russia did this and was asked about it last night whether russia should be sanctioned, which some senators say they should be. he said, well, it's complicated all our lives and put us in a a place where we don't know what's

going on. obama administration is saying they do. u.s. intelligence says that, so this drama is going to continue to play out. >> i believe, john, correct me if i'm wrong, this is really the first time we've seen the president use expanded powers that came under an executive action in 2015, which gives the president more authority to impose sanctions and penalties in tof a cyber attack. >> he's been imposing penalties on russia over the seizure of crimea. and that hass continued for the last two years. this expapds on that and clearly, the deteriorating relationship between this administration and russia has had many manifestations to it and now, the question's going to be what happen to that relationship under president-elect trump. he's give b ben it every indication he wants to have a

close and friend relation with vladimir putin, but that comes with political complication, especially given the historic sa stance of the republican party especially with strong skeptics of actions. >> broadly, this is the latest step by the current setting president to say i'm still here. just moved 100 acres under seas to protect from drill ng the atlantic. he's urging the epa to finalize requirements sooner. urging people the to enroll in obama care before it gets repealed. how much of this is let's make sure this gets done before i'm out of here. >> yes, although i would put this in a different category. this involves a live fire with u.s. election, which we all saw play out u just a few months ago and that was a trigger. that in the view of the

administration, justified this response. it's a little bit different from the ongoing process of trying to shore up obama care as he prepares to leave office or take steps to preserve some of his environmental objectives, that sort of thing. >> john, thank you. john harwood, reporting for us from washington. more "power lunch" straight ahead. the infamous traitor. and i know ahing or two about trading so i trade with*trade, where true traders trade on a trademarked trade platform that has all th.. i won't. get off the computer traitor! annon soun mobility is very importanto me. that'whi use e*tradmobi. i' all my mobile deves,y so it suits my mobile lifestyle anitps minvements en when i'm fullbilon the move. gn up at eade.coanget up to six hured dolls.

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for a free quote today. liberty stands with you™. liberty mutual insurance. breaking new, the united states imposing sanctions against russia over its cyber harassment. joining us now is bill grouder, who lived in russia for number of years. he joins us on late notice by phone. we appreciate this. your reaction to the sanctions and expumgs of diplomats. >> i think it's probably too little too late. you know, the russians have effectively pulled off a major international political coup and expelling a few diplomats isn't going to change anything and nor will it prevent future things like this. happening again. i think that everybody knew for

a long time ha the russians were hacking have known before the election happened, so this is something that should have happened a long time ago and if they had done it earlier before the election, they may have stopped the interference with our domestic political affairs. >> this is something that could not have been unknown to u.s. cyber officials. why do you think bill that there's such a reaction and outrage now u? i understand the issues around the election, but the question i would have is knowing about russian security, why would the u.s. demand before to prevent this from happening? >> that is the trillion dollar question. it's remarkable given what was going on. to put a few people on the sanctions list is not a commensurate response to the

gravity of what's happened here. the you know, this is not a partisan issue. dupt matter what side you're on. have the russians interfere in your domestic political process and hacking us and using the information to get whatever candidate they want elected. should be dealt with in a more severe way than sending out 35 diplomats. the easy thing is to send out 35 u.s. diplomats, everybody replaces them and it's all back to normal. >> does this get reversed come january 20th? >> well, we don't know. it's kind of a tricky issue for the president-elect. on one hand, he said openly, yesterday, why don't everyone just get beyond this. he said he wants a better relationship with russia, but it would be awfully suspect if these people are accused of helping him get elected, all of a sudden, he reversing the

sanctions. that doesn't look good either. the it's a catch 22 for him, so mabt get reversed, but doesn't really matter. they've got an unlimited supply of diplomats where they can restock in their post. i don't think the u.s. government is saying they can't have diplomats in america. they're sending out 35 involved in the episode. >> house speaker paul ryan coming out, suggesting that we've had failed foreign policy the last eight years. you are an american, but have live lived in russia and now, england for a number of years. you've lived outside the united states. you see the international view. do you believe that the global view as you see it is one of a weaker america? >> there's been a withdrawing of american interest abroad and that's led to a vacuum in a lot of places. we can see in syria, that russia, iran and turkey were having meetings without the united states in the last couple of weeks to decide what the fate

of syria was. gave him a great opportunity to go further, so i do believe we're sort of in a mess right now. in terms of you know, sometimes by not doing something, you create more trouble than by doing something and america has always projected power and in the last eight year, we haven't and as a result, a lot of things are happening without our say so. >> bill, dow jones is reporting citing facts that the russian foreign ministry on the sanctions says they're counterproductive and will harm restoration of bilateral ties what effect could these have on the united states? >> i don't think these will have any impact in the median term. i've been personally involved in sanctions in russia against human rights violators. the russian government being

implemented. the russians huffed and u puffed and jumped up and down. the answer is nothing like that happened. they make these noises ef time something does anything to call them out. i think there's nothing to fear in terms of their reaction to these sanctions. >> this may be out of your wheel house, but do you think the u.s. should be more concerned about a retaliatory cyber attack? >> i think the u.s. should always be concerned about cyber ta aks and the fact all this has happened and there hasn't been cape bable toy stop it is a a grave concern and should concern every american that a foreign power can come in and decide who they want elected. >> what do we do longer term? assuming that donald trump when he comes in, may adopt a different policy stance with russia? was it just a measure of waiting

out putin or do you believe that the if russian, we saw putin leave, then come back. do you believe that the russian political hierchy has placements with the cult of personality, such as putin is just a matter of waiting this out? >> well f waer going to try to wait it out, it's going to be a long wait. this man is not contending on leaving anytime soon. he's change the rules any he can to stay in power. the moment we see putin gone is going to be the when he dies of natural causes and they cart him out of the kremlin that way. he's there if for a very long time. and i would also caution anybody on thinking that we're going to have warm relations with russia because of trump. he may have that intention, but is a natural adversary, not an ally, of the united states and whatever nonsense he's poutingspouting about being friends, he's going to mess us

around, as he has the last two presidents who also had the same intention. he messed around george bush and president obama and he messed them around with good intentions from both. so i don't think we're going to have a long honeymoon period with russia even if that's what president-elect trump's intentions are. >> bill browder, we appreciate you joining us on short notice. thank you very much. >> thank you. have a good day. >> "power lunch" back on this developing story. right after this short break. stick around.

welcome back. leaders weighing in on the sanctions. hampton pearson is in washington, d.c. with details. sfwl yeah, brian, from house speaker paul ryan, a really strongly worded statement about those obama administration sanctions issued today against russia in essence, speaker saying as far as the obama administration is concerned, it's too little too late. quoting now, russia does not share america's interests. it in fact consistently sought to undermine them while today's action is overdue, it is an appropriate way to end eight

years of failed policy with russia and it serves as a prime example of this administration's ineffective foreign policy that has left america weaker in the eyes of the world. strong statement from house speaker paul ryan. and really underscores a lot of the points you're making in the previous segment. the relationship with russia is complex. it tends to be more adversarial in the long run and that the incoming administration is going to have to deal with this. we have president-elect trump of course, who is hoping to start off with russia, but this is an issue squarely in the eyes of that wrrks he, president-elect trump, has raised doubts about -- while there is a great feel on capitol hill for some type of bipartisan -- house speaker paul ryan, speaking out on the obama administration

saying he was against the russians today, saying too little too late. >> thank you. hampton hampton pearson in washington. tim is managing partner, cnbc contributor. tim, by the way, also lived in russia. manage ld money from russia. great to have you on. especially today. what's your take of what's happen snd. >> not a bit surprised. i think it is an outstanding administration trying to do what it can to at least try to cement whatever legacy they had on this part of the world. i would argue there has been some absurd perception of putin in this country over the last six months certainly since our elections that really is totally miscalculating just who this guy is. so -- >> in what way? >> first of all, when you see polls that say putin's popularity is soaring against the republican party, not necessarily the officials in office, but those who are voters, just tells yous that people are buying into at least a different concept of look,

putin's russia is one of nationalism. very much like what was elected here, so in that regard, i think there have been some strange and unfortunate parallels going on. it's not surprising that we are retaliating against russia. i think it's clear that this administration is treating russia very differently than the new administration might. by the way, not sure that what has happened just as paul ryan said in the last eight year, has been the right way to treat russia, so it's a long way of saying i'm not surprised by today's actions. i also think that the relationship between the trump administration and putden is not one that russia really knows exactly how it's going to handle. if i talk to my american friends and people know that have their running businesses, they tell me that the predict bability of the administration that is leving office now on some level is more comforting to russia than trump in in power. do with that what you want, but i'm not so sure this has always

been about we want trump in power. it's about destabilization and that's really the key and i think clearly -- look what we're talking about now. >> so, the asunlgs that relations will be better because the president-elect has basically said that. that may not be true. that's not believed. >> i tell you what, to the extent that mr. trump has less interest in defending the interests possibility of nato or thing he's articulated he's going to take a fresh look at, i think the relationship in the region and whether it's dry krooi mee area, ukraine, things that led to the severe sanctions, the spear of influence that russia has been fighting for is something this new administration is not going care as much about and whether that's right or wrong, i think it will lead to russia feeling more comfort bable if the u.s. is not push opg their back door. >> we mentioned the it was a hot trade. rsx is up more than 44%.

the ruble is the best performing world currency. what's your outlook for 2017? >> $60 rent, the russian economy is doing quite well. the most recent budget rates, people forget that russia allowed its currency to flow freely and ruble depreciated 100%. oil producing nation and still an oil producing economy. russia breaks even when the ruble is at 65 and b probably $60 rent. i think $60, it's a trickle down effect inning in russian oil and gas companies. whether it's lukoy or ogspy, these are names that people know about, but i think you have to start thinking about second derivative trades. it's been the consumer name, names like magnet or x 5 or

cellar names that trade in new york. these are names that i think if russia's economy is under 40i6 oil, it will continue to grow. it won't be a god send and by the way, let's be clear. i think russia suffers from dutch disease and that is not going to help them in the long run, but a trade, the ruble now, is still very cheap to its parody. >> you mentioned your friends in russia who have businesses. they have sort of a devil you know mentality when it comes to the current administration being comfortable with where they stand versus the unknown of f a trump administration. you have those same reservati s reservations? >> i think that this administration, the incoming administration, the trump administration, will be probably much more tactical. and much less idea logical. rex tillerson, who's done a lot of business in russia, so, look at the response of the stock market today. especially for you know, a

russian market that's outperformed just about every other market in the world this year. i think you're sighing the resilience, it means russia has a long way to go higher. >> tim, thanks so much. see you tonight. see you tonight. up next, back to the markets. power lunch is back in two. tts. tod th on the track with the help of at&t, redull rang can share critical information abouevery inch of thcar from virally ywhere. akes are getting warm. confirmed, danieyou ne to coolour brak. undetoodbrake as back 2 clicks. giving them the agagity toave eedat&t. sn. because no onene ♪ ♪ t to $2500 custer cash on select 2for thesrms.odels see yourexus dler.

welcome back to power lunch. we are keeping a close eye on etfs that track russian stocks. they don't seem oo be moving on breaking news on the united states expelling russian diplomats. also worth pointing out that russia is on track to be the best performing major global market in 2016 up about 51% and some strategists say russia could be a favorite destination in 2017 on the prospect of rising oil prices, a friendly relationship between trump and president putin. hsbc says russia is the cleanest play in emerging markets in 2017. that doesn't factor in today's news. we will have to see if the cyber related sanctions change the story. >> we'll bring you more as the story develops. let's head back to the markets and look into our crystal ball

for small business. kate rogers has got more. >> main street is feeling more optimistic post election hoping a donald trump presidency ushers in four years of business friendly policies. >> first deregulation. >> small businesses cheered at the recent halting at the department of labor's overtime rule. trump ran on promises of deregulation and small businesses are hoping for more including joint employer rules under national labor relations board and policies under environmental protection agency. say good bye to the employer mandate. with trump promising major changes it is unlikely the mandate stays in place. the rule which requires businesswise 50 or more full timers to offer health insurance has been cited as an impediment to job growth. the federal minimum wage stays unchanged. trump said he was open to the idea of a higher federal minimum

wage. his nomination of fast food executive for labor secretary and republicans in control of congress mean a hike in the federal minimum from current $7.25 seems unlikely. expect more action at the state and local level to raise pay for low wage workers. one thing is for sure the idea of deregulation under a new administration does have main street feeling more optimistic. the latest survey from the national federation of independent business found sentiment soaring. whether or not that feeling remains or not remains to be seen. >> you are pounding the pavement talking to people that run old friends of mine who happen to run small businesses in new jersey. what are you hearing from them? you are in their faces every day in a nice way. >> in a nice friendly way. they have high hopes for a trump administration. the idea of deregulation does have them feeling good. regulations are always a top issue.

another huge issue number one health care and the rising cost of health care. 70% said that was their biggest hurdle to job growth and expansion. not only are we talking about employer mandate. certainly -- >> which was huge. i believe that the letters that people got about obama care price hikes in october had probably more to do with turning the election. thank you for being in small businesses faces all year. power lunch will be right back. i'm crazy stssed trying to wfigure out this complex trade so i brought in my comfort py, isn't that right warn?l. well, yocould get support fr thinkorswim's in-app chat. with a live person r from screthe app,tly isn't that right warn?l. so you don't need a comft pony. oh, so what about my motitional meerkat? in-app chat on thinkorswim. onl.

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welcome back. if you are just joining us your top story right now new sanctions and the expulsion of 35 russian diplomats by the obama administration. it has to do with claims of hacking around the election. the president saying that the sanctions are not the sum total of what will happen. he said some things basically that the united states will do including a variety of actions will not be publicized. he says a report to congress in coming days will basically outline russia's efforts to interfere in our elections as well as malicious cyber activity related to our election cycle in previous elections. you have heard comments from paul ryan and other gop leaders. the dow is up eight points not responding to this but it is just the ramping up. >> we have heard from the russian foreign minister saying this will threaten bilateral

relations and getting a quote from russian news agency saying that the decision to expel the diplomats are the -- a story to monitor as we head into the close. thanks for watching. >> i'm sure "closing bell" will pick up this developing story and they begin right now. welcome to "closing bell." i'm kelly evans. >> and i'm bill griffith. we are following the russian story. we will get to that in a moment. no dow 20,000 today. we will talk about so-called end of year window dressing and other factors that might be keeping the industrial average away from 20 k at least for now. amazon come up with a space age idea to get packages delivered to your front door faster flying warehouses with fleets of drones. we will discuss where