♪ live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box." i'm andrew ross sorkin along with joe kernen, and melissa lee. joining us for the hour, joseph is here. anybody ever call you joseph? >> my mom. >> i don't want to compete with this joe. >> i don't mind it. i'm good. if you want to call me joseph, it's fine. no joey. >> kibosh on joey. >> he's a liquidator, also. >> can we call you the liquidator? >> let's tell you what's going on. the setup as we begin the last trading day of the year. the dow is up 13% year over year. the s&p 500 is higher by 10%.

the nasdaq is about 8%. 8.5%. quarter to date. the dow is the biggest winner up more than 8% thus far. we'll see if one more day gets you further. >> let's check on where the futures are pointing in terms of our march to 20,000 on the dow jones industrial average. we are higher here. the dow could add about 36 points at the hope. nasdaq could add 11. s&p could add 5. since the election, s&p up 5%. in asia, hang seng up by 1%. this is turning this index positive for 2016. shanghai posting some gains. over in europe, taking a look at the equity picture over there. red arrows across the board. the most interesting trade overnight is in the reuro. rallied 1.6% against the dollar before paring gains here. as for crude prices a check on

that. wti and brent crude posting modest gains in today's session. >> we have a strategy session -- oh. no. we have two analysts coming up. we'll talk about the overall markets in a second. just before we get to stocks to watch and terranova is here. the lead story about snap, the instant gratification that each generation seems to -- we ramp it up for each generation. i think we're all subject to it. i was reading this today. u.s. stocks slip yesterday as the post-election rally continued to fade. so it's continuing to fade. you know how much -- let's say the high is 19,960. we're at 19,819. we're down 0.7 of a percent from the highest levels we've been.

that doesn't even count as a -- continuing to fade? that's not even starting to fade. that's background noise. >> that's from a newspaper you like. >> i know. >> there's another good one here. you have to see this. down here. obama issued a dramatic response on the front page. >> yes. >> editorial, there's a reason for the president's timid response and for not doing it -- it's weird, to go in the same paper from a dramatic response to russia to a completely timid response. just depends on whether you're editorializing -- >> it was dramatic. >> for being so timid. >> no, it was dramatic in that we all are talking about it. people might have an opinion of it being timid or -- >> you know what the coolest thing -- >> or being aggressive. >> you've seen "homeland." they closed down a couple of waterfront spy houses. there are places like that. where the russians are hanging

out. >> yes. >> in these nice digs. >> maryland. >> in maryland. >> crazy. >> on long island. >> just like "homeland." >> a huge mansion on long island is now availability. >> the one in germany where we were, homeland. you remember this? >> yeah. >> okay. >> let's -- we have breaking news for you. >> yeah. >> in the last half hour, russian news agencies reporting that russia plans to expel 35 u.s. diplomats and ban u.s. staff from using a warehouse in moscow. this comes in retaliation for washington's sanctions. john harwood joins us. he has the latest. john? >> this is an incredible story because it's dramatic and timid at the same time. got that? >> i think it's true. i think you're right, john. >> look, russia is promising a retaliation. this is something that the administration anticipated. they said that they didn't want to retaliate in october, after

they named russia as participating in this hack because they didn't want to, a, look like they're interfering with the election themselves, the obama administration, and, "b," be provocative in terms of russia. now that the election is over, that they have reached this conclusion, the consensus of intelligence agencies, they've taken the action. what they did is they identified a couple of individuals and firms, added them to their list of sanctioned individuals and companies, so they can't access the u.s. financial system. but they also expelled 35 diplomats. it's the first mass expulsion of diplomats in 15 years in the united states. they closed two compounds. one in new york, one in centerville, maryland which by the end of the weekend they'll -- access will be denied. and they heightened the

attention to this issue by releasing forensic data that gives ip addresses, methods of operation by the gru, and makes it easier for companies which have been victimized by hacking in the past to prevent themselves from being victimized again. now, the question will be, what is the incoming trump administration response likely to be? how will that evolve? you saw a statement from donald trump last night who has resisted the conclusion. he's refused to accept the idea that russia was behind this. he said, well, it's time to move on. nevertheless, in the interest of the country, i'm going to accept a briefing from intelligence officials. this is -- has the potential for -- depending on his reaction to tshit, putting him at odds w the various intelligence agencies he'll be overseeing as president, and heightens the potential squeeze from republicans in congress, lindsey

graham and john mccain who said last night they'll seek tougher sanctions. we don't know how this will affect the relationship between donald trump and vladimir putin and donald trump and his party, not to mention the democrats. >> it's kind of fascinating, as you were saying, john. watching the machinations of intelligence agencies. there was a tweet from a russian intelligence agency. they get into us, know how to push our buttons. it's almost like they had to live here, lies leathis tweet, see this. >> you've seen "homeland." look. there it is. that's low. they got a picture of a little duckling, okay? then they say president obama -- as everybody, including the united states, people would be

glad to see the end of this hapless administration. it's low, but just sticking it in. >> it upsets me that you're enjoying this -- >> you're enjoying that tweet on the air. >> i'm showing you that's how going back and forth. i'm not enjoying it. >> i think you're enjoying it. >> sounds like it to me. >> all i'm saying -- it's -- you know, to actually take russia's side in anything, i would never do that, absolutely. but to get to the point, dissatisfaction with the current state department and current administration, to get to that point is telling. i'm not the only one that -- we're part of -- we weren't part of -- for three days we've mentioned the settlements probably a thousand times while a cease-fire is happening in syria with no input from john kerry. right? even though we've -- john -- >> but, joe, the --

>> andrew has this blank look on his face. >> the issue you're pointing to creates such uncertainty over the congressional reaction. you just said a moment ago i would never take the side of russia against the united state states. >> exactly. >> a lot of people in congress think that's unthinkable. however given the reaction of donald trump, the fact that his business have had involvements with russians, donald trump junior or eric trump said russians are a disproportionate number of our assets, this will heighten the issue of why that donald trump seemed friendlier to russia than almost every other politician? mitt romney four years ago, the republican party for decades what is behind this? >> i guess -- >> by fueling that -- >> i know, but you can look at

it like it's almost like what do we expect when our foreign policy towards russia and other places has been so fekless and lacking in leadership for a number of years, and finally this comes about. it's almost like what do we expect after waiting so long to take any type of action, warning them. we'll do this we have the red line here. we'll do this. we never -- no one believes us. >> well, the -- >> we never follow through. >> the concern that you cited is exactly one that was reflected in statements yesterday from paul ryan, mitch o'connew'conne graham. they say russia is not our friends. they are trying to undermine american interests. donald trump has not gotten. there unless he gets there he'll have a continuing and escalating

issue within within and within his own party. the prospect of a bipartisan investigation of the election hack what russia did, and as matthew dowd who was george w. bush's strategy tweeted the other day, what did the trump team know and when did they know it? we don't nknow if they knew anything. but you had, you know, indications of things like roger stone, the adviser to donald trump saying something big will drop on john podesta before that happened. all that stuff. don't know what it means, but they'll find out. that's potentially a challenge. >> there are people, john, on the left that never -- the never -- that's on the right. #notmypresident. people have taken step by step approaches to wanting to delegitimize the entire

election. this plays into their hands. both sides will make political -- >> that's the argument that the trump team has made. spicer was making that on the transition call yesterday. >> the e-mails that came out, it wasn't anything made up. just showing -- just all things that podesta was sending things -- >> but that's a different issue. >> i know. and the dnc stuff, too with what happened with bernie sanders, it was just all stuff that happened. coming out is one thing -- >> but that's a different issue from russia's interference with the election. >> no. >> we learned that -- >> they stole our mail. they stole our mail. it's e against international la. i have another great american here, terranova. >> the question becomes what happens next. the market believes that not much happens next. if you look at foreign policy playing out on twitter, then that's the reality of what's going on here. yet twitter can't rally, that's a conversation for later in the

hour. truth be told,highs. >> doesn't matter. oil matters to russia. >> it's more than that, inflows, over 500 million this month. that's the largest inflow since march of 2014 you could say because we believe president-elect trump will be a trend to the russians. >> yes. >> you don't think that's got anything to do with it? >> that might be the case. but from a perspective of the markets, if the last 24 hours, theseei policy tweets that were being fired back and forth were going to be a concern to money managers, we wouldn't see some of the results in the marketplace we're seeing now. i think it's a lot to do about nothing as it relates to the markets itself. that. this is not going to be settled on market considerations. this is an issue of national security. that's where the american political system is going to adjudicate this and decide how we go.

>> you could find out that the russians actually did have a significant involvement in this, by the way, there's already a view that they did, but that donald trump could decide that they did, or acknowledge it or whatever will happen. and still nothing -- still he takes no action. >> sure. >> that's actually just as likely as anything else. >> the ramifications tof cou s d be nothing. >> then people could call that timid or feckless. >> everything has been feckless. >> then it goes back to twitter. >> i don't think the ramifications of this will be nothing. i defer to you guys on the market impact. but i believe that this is a significant issue in political and national security terms, and there will going to be republicans who matter, who -- >> john, i'm not saying matter in terms of -- that it's possible that we find out all of this detail and still the new

administration decides to bring no additional action. that's what i'm suggesting. >> yes. and i think that in itself will be a problem. >> right. >> when you have the two largest nuclear superpowers, you probably don't want a horrif horrifically awful relationship. you don't want another cold war. we talked to iran, the left said that's a great idea. talk to our enemies. we talk to cuba. if we go down and deal with them economically, our ends will be easier to achieve if we're talking to them. but then if you intimate better relations with russia, you have to think crimea, aleppo, everything else, but probably a better idea if we're not totally at odds with the other biggest nuclear superpower in the world. there are things that russia could do and in conjunction with us in terms of isis and other things. suddenly -- you wanted -- you

loved the reset that hillary did. you loved that. that was going to be a great reset. how did that work? now we can get a real reset -- >> you're not convinced that the russians were involved in the election. >> i know they hacked some e-mails. >> you do. >> i don't think it had much to do with the outcome, no. do you? >> possibly. >> okay. all right. >> possibly. >> that's convenient. >> if cuba or iran interfered in a major way with u.s. elections -- >> but we talk to our enemy. >> you would do nothing? >> no, i'm not saying do anything. there need to be consequences. we should probably out-putin on being a 100 billionaire. we should out all of his buddies for the financial larges they've accrued over. there there's a lot of tough things we can do to shame the russians. right now, they're just tweeting little easter ducklings, which,

you know, doesn't help. any way. we'll get back to the markets. >> that's what we see. >> thanks, harwood. when you have the glasses on, does it mean serious issues or -- you just -- didn't put the contacts in. >> that it? okay. could be anything. chris retzler is here, and gina. gina, you and chris are a bit in opposition here. i'll tell you what i mean. gina, you think a lot of this has been a momentum trade. it's gone maybe a little bit too far. we shouldn't be surprised because there are still policy risks that could -- that may not work out. you think that we're just in a slow period here with -- between the holidays maybe. and that the big, fat pitches are coming in for policy and what we can do. you don't think it's nearly as unjustified, do you? >> i think we could see a selloff in early january.

it may be exaggerated as far as how much tax loss or tax gain selling will occur in january. those are the fat pitches. we spend a lot of time in small cap companies. we think that's the opportunities out there. the dislocations, inefficiencies. in small cap investing you have to focus in on mid management. if you can find good managers, that's the opportunity. we have been in a great time of enthusiasm post-election. we're looking for the timing of these fiscal changes, what is the order of them occurring. a lot of good things are coming. deregulation, potential repatriation. that all flows into a better economy. better stock market for buybacks, m&a. >> small caps would benefit from tax reform, small caps are most insulated from a stronger u.s. dollar, but overlay the sectors you like within small caps. >> certainly financials have

done well here in the last five, six weeks. technology is where we spend a lot of time. we expect, as the money comes back in, there will be -- >> gina, you don't like anything trump is doing. the impact of trump's tariff on china will hurt u.s. businesses. the impact of trump's tax cut also have a limited impact on earnings. the impact of trump's individual policy will help higher wage earners. you even bring up his war on the media and journalists, also introducing uncertainty in the market. you must have hated this rally for the last month and a half. >> i think a lot of people are drinking a lot of kool-aide. i think the markets -- >> i like this one. andrew likes what you're saying. >> i think it's possibly real. >> the markets have basically looked at all the potential

positives from what could happen out of policy and discounted all of the negative risks. right now we are priced to perfection. so one of the challenges you have is you have a trump administration that basically has to come in and executed almost immediately on some things that i think will be challenging to execute on. the likelihood of a trump stumble is the more likely outcome at the beginning of the year. because you know that he's not going to be able to push everything through immediately. those are things that take time. the only benefit he benefits from is the economic momentum going into 2017 has been positive. that only takes you so far. expectations for earnings in 2017 are in double digit territory. we have to contend with the realities of that in combination with a whole lot of unknowns now about what policy will turn out to be. we know what has been promised there are several competing

versions of these policies that could be out there. the point that i tend to drive home is that the concept of deregulation being business friendly, tax cuts, while they may help small caps, i would agree with that, if you look at effective tax rates, effective corporate tax rates, they are down below 20%. at about 18% on average for the united states. a lot of that low-hanging fruit got picked a long time ago. deregulation. low-hanging fruit picked a long time ago. i don't think you'll get as much juice out of that playbook as people think. that's priced into the market. >> gina, it's joe. i think we live in a world where we're all worried about 2008. right now you're kind of classifying the environment as bei one that we certainly could have a correction. one born in november and i would argue that is not even walking right now as of age. but reflecting back upon 2016,

and thinking about the improvement in the credit markets, improvement in oil, profit margins turning once again, you're suggesting a correction but are you suggesting that the investor sitting at home treats that correction as if it's 2008 all over again otherwise they sit back if it's not, watch it unfold and watch the market recover into the end of the year? >> not necessarily. i'm not playing it out to that degree. i'm saying we've gone too far too fast. the potential for a pullback is certainly there. but i think when -- the way that pullback gains momentum is if you see a number of stumbles in terms of the incoming administration getting everybody -- getting the cabinet approved, and getting going. the process of getting these unknowns into -- to becoming known, that's going to take months. so it's going to take a while before the market really knows what direction we're headed in. up until that point, you can

depend on positive economic momentum. yeah, we could drift up. >> okay. great. chris, thank you, gina, thank you. joe, stick around. i will -- i'm not going anywhere. i'm talking to you. okay. >> i thought you were talking to yourself. >> confusion at the beginning of the show. >> you call me joseph a lot of time. usually when you're in a good mood. >> when i'm in a good mood, joe when i'm not -- >> no, you don't call me anything. >> coming up, winners and losers in the energy market. clear view's kevin book joins us next.

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download the xfinity tv app today. a committee of opec producers will meet next month to discuss production levels. kevin book joins us now. everybody says it's inevitable, somebody will cheat what do you think? >> it's inevitable, somebody will cheat. >> all right. >> you get until january 21st to believe your hope for outcomes then come verge back to reality. historically opec goes past the targets, but it will take a big cut to make a big difference.

then there's a myth of ropec, russi russia and opec. will this be the time? we don't think so. you will get high supply levels back into the market, but whether opec has compliance, going into may, maybe a second cut. a second cut could change the market. that could be enough forever another leg of optimism. >> you say it's inevitable they'll cheat and then a second level of optimism because they cut again after they already cheated? >> no. i'm not saying they're going to cut. i'm saying they could cut. to balance the market they will need a second cut. so the question will be whether or not they do it. if you have what opec always does, it doesn't always happen right away. these data are lagging. they're imputed, estimated. they show up and negotiated. the cuts are off of levels they agree upon by the target number

they pick. it's a political discussion for a market to take seriously. >>. >> a year ago it was the banking institutions that had a significant lone exposure. do you believe we're past the worst right now? >> i think the systemic risk falls away. there are producers at the top of the tank. they're not the mass serive one. $50 a barrel is a lifeline to producers. they can break even, make money. they also think about a lid on prices. >> what kinds of gains are you anticipating for oil? let's low in nat gas, since that was a top performing commodity of 2016. >> let's think about it in terms of sustainable break even prices. crude probably has a lid on

prices going into the first half. if there's a second cut, yes, more strength to crude going into the second half. for natural gas, you have seasonal strength, cold weather and a thin trading day spikes price. you have growth despite a reduction in overall production of oil and associated crude what you have net is still a long gas market. for that reason not a lot of room for upside. >> have to leave it there. happy new year. the new york police department is taking extra precautions around the new year's eve celebration in times square to protect against truck attacks. 65 large sanitation trucks will be filled with sand and placed in strategic positions to block attacks and in addition there's going to be another 100 smaller blocker vehicles around. the nearly 2 million visitors expected in times square will notice some heavily armed police

teams, bomb sniffing dogs, helicopters and bag searches. coast guard and police vessels will patrol the waterways surrounding manhattan. the extra precautions come as a result of two recent deadly truck attacks in europe. a live report from sometimes square at the bottom of the hour. new year's eve is expected to be a big night for uber. the ride hailing company predicting it will hit more than 15 million rides. they suggest check up front the fares you will get and plan around busiest time, 12 midnight and 3:00 p.m. >> it no longer says surge pricing or the multiple. it just tells you the price. now it estimates by giving you

the price, but it doesn't tell you what the regular price is. it looks to be the regular price. this is truth in advertising. they tell you what it is, which is better than when they don't tell you. nonetheless. coming up, i think you say zytol. this is fascinating. i'm so excited about this. it's a natural sweetener used as a preventive treatment for upper respiratory irritation and oral hygiene. we will talk about the science of this project with something called clear. i use this, that's why we will talk about. i have not gotten a cold in a long time as a result of this. we'll talk about it in a second. as we head to a break, a look at the s&p 500 winners and losers. >> it was wonderful. bravo. >> love that. >> was great. >> wasn't bad. >> parts were not very good. >> could have been a lot better. >> i didn't really like it. >> was pretty terrible. >> it was bad. >> it was awful.

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welcome back to "squawk box." i'm joe kernen along with and drive ro andrew ross sorkin and melissa lee, joining us also is joe terranova. u.s. equity futures at this hour, like the "journal" says, this rally, continuing to fade.

any way, today it might get back to 33 points or so. we're not far from all the-time hi all-time highs on any of the averages. not unushlg to not see conviction. we'll talk to you about what to expect when we are get back in earnest on next tuesday. that will be very interesting. leading up to the inauguration and everything else. looking at treasury yields, which have also moderated on their move, which most people think is going to get up to 3% next year with the fed having more than one hike. suddenly, that has been fading. if you want to call it a rally in yields, i don't know if you call it that. the bonds are rallying. yields are coming down. also, did you see some currencies? the euro almost hit 107 yesterday. i don't know why it had this weird spike. did you see that. >> some people say it could be a

fat finger trade. >> 1.5%. >> whdon't you mean full figure finger? >> maybe the russians hacked -- >> yes, larger finger trade. >> full finger trade. >> fat is -- >> we'll move on to a different topic around -- you're sick. >> yes. >> you have the flu or something. >> it's been working on me. >> we'll talk about this. watch out over here. billionaire microsoft founder bill gates is warning we're vulnerable to a flu epidemic. gates said too much regulation could stop the world from reacting to diseases that spread quickly like the flu. he cited regulatory and liability issues. a nice segue to our next segment. it is flu season. our next guest says the virus may threaten more than your immune system. it's having a major impact on productivity. nate jones is the founder of

clear. we don't do infomercials here, sponsorships or endorsements. >> but -- >> i wanted him to come on. i don't know him. we don't know each other. this man may have changed my life. i used to get sick -- i may get sick next week, i don't wanted to overstate the situation. every year i would get colds constantly. upper respiratory, i would have to go and get antibiotics. all of that. it's been about 7 1/2 months, which for me is like a really long time to not be sick at all. what happened in that time -- this is where you may think i'm a quack -- i started taking your stuff, which is basically saline water with some yylitol, basically sugar, i spray it up my nose, once before the show, once before i go toe sleep, and

zilch. so we decided to have nate on the show. i tell people i do this. they think i'm crazy. what's in here that might be helping me? >> there's a number of things. there's salts in there, but the xylitol is a big thing. when you use saline spray, it's isotonic, so it will get your nose moist, your snot layer moist for a time. there's a 10% solution of xylitol in there, so it will allow the mucus layer of your noise to attract more viruses, dander, pollen, get them washed out more naturally. the way your body is meant to be cleaned. >> how many times a day do you use this? >> once in the morning, once at night. >> you look so much healthier. >> i feel healthier.

the whole thing is crazy that i'm just squirting this stuff up my nose. i tell people i'm squirting stuff up my nose. they get nervous. and then i say it's the shiger. th sugar. and dentists use it. >> dentists use it, they recommend it it's sugar but different than the sugars we eat. most bacteria that live in our mouth, our body, upper airway, they live on six carbon sugars, even the sugars in most sugar-free chewing gum are six carbon sugars. >> and i tell people this is not like afrin. is there anything bad in here for me? i think anything working for me could be a problem. i have read some stuff, if you take too much of this, not this product, but if you were to ingest 50 milligrams of this a day in rats -- i think if you ingest anything in rat there's a amount, you could get cancer.

there have been certain things on that tell me about that. >> there was one study done in australia, where they said it was cancer, but that's been disproven numerous times. if you eat a lot of it, like joe said, you will get diarrhea. you have to eat a lot of it. >> this is in sugar-free gum as well. >> yeah. if you go into a health food store, almost all of the sugar you buy has xylitol in it. >> does anybody else do this? >> we have the patents on putting it in the nose. >> how did you do that? >> my dad did. i was working on oil rigs. kids were having recurrent ear infections, he got on this new thing called the internet back in the '90s, pub med. he saw all these dental research where kids using xylitol chewing

game, they were not only getting cavities but also getting less ear infections. they were looking at these bacteria that live in your upper airway that cause these upper respiratory problems, but it keeps them from adhering to the tissue. >> you do this preventively, if joe does this now, he will get better or -- >> he should. the whole process of if you understand the biology of it is bacteria or a virus gets inside your tissue, inside a cell. replicates inside there, that cell bursts, that bacteria spreads. when that bacteria bursts and spreads, they have to attach to other tissue and repeat that process. what xylitol does is break that process up. >> he's already sick. >> that's because he's not using our product. >> i use -- i use -- i had -- this is an m.i.t. scientist here. you ask the questions. >> you don't have any -- any fda -- >> this is not an fda thing.

>> it isn't. in order to -- >> do you have anything that says that proves that this is actually effective or just -- >> that's why i said i could be a quack. >> that's what i mean. >> what i do use? flonase? >> totally different. >> phenomenal for mre. >> that's totally different. >> is that a steroid? >> yes. >> you're saying the mucus layer stays longer, is thinner -- >> moist. >> screams out more pathogens. >> that's correct. >> the thing with flonase -- >> nothing nancy tha fancy in h. >> nothing fancy. >> i wanted people to know -- i give it to my kids, too. i hope this is all good. >> just because you're using flo flshgs

nase, those are drugs, the drugs, the steroids, anti histamines, decongestants, all of these drugs -- they do do their job. but their job is actually to shut down the immune system. stop your body from producing mucu mucus, everything you breathe in goes down to the legs. >> i want you to try this i'm going to do this on the air. >> people have done that. they don't need to see you do that.

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stocks to watch this morning, qualcomm striking a global licensing deal. the chinese smartphonemaker, mezu backing outs of a patent dispute. amazon, walmart and jet.com have been hit by a $50 million lawsuit by rap group dmc, they

accuse the groups of trading on their name without permission. apple reportedly plans to start making iphones for the indian market in bangalore. production will begin in april. data sold 2.5 million iphones in india from 2015 to september of this year, a rise of more than 50% from the previous year. amazon has been awarded a patent for a giant flying warehouse that acts as a launchpad for drones to deliver items within minutes. we sort of laugh at this stuff. but these guys have been out front the whole time. the airborne fulfillment centers would fly at around 45,000 feet and could provide a base for delivery drones. regulatory approval for such a plan expected to be quite complex. the patent filing was awarded in april but had not been

circulated until this week. >> the last couple of years we laughed at amazon about their spending, the new initiatives, but think continue to create diversified businesses to make the model better and insulate it from e-commerce. you can do that when you have no competition. they really have no competition right flou. that right now. >> really futuristic. it's like minus 50 up there. there's no oxygen. >> drones. >> how do they get the drones to go inside the warehouse compartment. >> a little space, and just deliver my x-clear. it will come down in the mail. it is true, i get it by amazon, too. >> saline solution with sugar. >> it changed my life. people need to know about these things. >> when they trust drugs, they use placebos, half the people get better on the placebo, half on the trucks. >> i'm telling you, it's seven,

eight months. >> how much do these cost? >> i don't know. i buy it by the four-pack, on amazon. >> i'm worried you had too much. >> coming up, more of today's biggest movers. coming up, it's the final trading day this c is trelg ov00 les pehour. toinevery llisecond matters. both oe trac w of caom virtuallyredlswa raywhere. hare cticalformation y brakes a get war confmed, danieyou need to cool your brakes. unrstoodbrake ask 2 cl. giving them the it heed to spee& precisio es. causno o k &ikesk 2 clat&t.

welcome back to "squawk box." tomorrow night one minute before midnight, the new year's eve ball will begin its descent on a roof high above times square. the ball is lit by 32,000 phillips rebel l.e.d. lights. the phillips ceo joins us now from the roof where the ball has dropped. good morning. >> good morning, how are you? >> so we were talking about the light bulbs which there are so many of them. this whole thing was redesigned in 2007, is that right? so we're talking all l.e.d.s. >> yeah. for the hundredth anniversary of the ball, we equipped it with the l.e.d.s ten years ago. we're celebrating that anniversary today. >> people talk about how energy efficient this is. i read and tell me if this is

wrong. that just the equivalent of energy for two stoves or two ovens? >> yeah. two ovens in someone's home. it's actually 88% more energy efficient than the older technology. and longer lasting. and one of the things that really astounds me is if the ball were lit 24/7 using the older technology, you'd need to replace the lighting in 40 days. with l.e.d., 24/7 it could last three and a half years. so energy efficient, longer lasting, and absolutely beautiful. >> and it can change colors which is different than -- >> yes. >> -- historically. how much energy -- in the old days, what kind of light bulbs were used and did they have to physically change them out. >> yeah. we used to use hall jogen. the technology has advanced so much. the innovation is amazing. not only energy efficiency, but

more features. it's not just turning lights on and off. you can change colors, temperatures, dynamic color control. it's really fun. >> amy, we're going to thank you. we're all going to stay up at least until midnight. at least until midnight on saturday. to watch all the light bulbs and the ball come down. appreciate it. very much. >> thanks a lot. >> maybe they'll be wi-fi enabled bulbs in the future. >> theoretically they could have kept the bulbs for many, many years. joe, thank you. our time is up. happy new year. >> healthy and happy new year. coming up, u.s. retaliating against russia for interfering with the election in november. and former michael mcfaul will join us. "squawk box" will be right back.

a developing story. russia is rejecting u.s. diplomats. details stragts ahead. the dow and s&p up double digits. we'll break down the biggest winners straight ahead. plus we're going to take you inside mark zuckerberg's home and introduce you to his friend jarvis. the facebook ceo showing off his new a.i. system as the second hour of "squawk box" begins now. ♪ live from the beating heart of business, this is "squawk box." >> welcome back to "squawk box"

right here on cnbc. i'm andrew ross sorkin with joe kernen and melissa lee. our guest host this morning is ed keon. we'll hear from him on the markets in a bit. first a quick check on the futures. they are looking up this morning. the dow looking to open up higher. the s&p 500 looking to open up about five higher. nasdaq up 10.5 points. let's take a quick look in europe now also. we are not keying off what's happening there. in the news this morning, during the week that ended wednesday. according to data firm lipper. at the same time investors pulled $775 million from taxable bond funds. not much movement for crude oil prices this morning. but for the year, quite a different story. wti crude had registered a gain of 45% in 2016. its biggest one-year surge since

2009. troubled italian bank monte dei paschi plans to issue to boost its liquidity. the debt sales would be supported by guarantees. >> and italy is, like, a little better than the bank here i guess. right? our top story this morning, news agencies saying russia plans to expel 35 u.s. diplomats and refuse u.s. from using a warehouse in moscow. this comes in retaliation for washington's sanctions. john harwood joins us now with more. and it all kind of sounds like a -- what's that guy's name? writes those novels, john? it's a lot of intrigue. >> reporter: jean le carr?

>> yeah. it's a lot of cloak and dagger. someone yesterday said it was more like mad magazine. spy versus spy which was kind of -- >> reporter: could be that. it'll be interesting to see if moscow follows through on those plans you mentioned. what we saw was sergey lavrov's recommendation they close the two facilities and eject the diplomats. rather than announcing the actions themselves, they say that's been suggested. that gives them wiggle room as a way of interacting with the president-elect donald trump and saying, well, we are not going to respond in this way. and that might be part of a diplomatic dance between those two, but we're going to have to see. what we know now is that the obama administration has issued a response to the election hack and to what they say is a years' long pattern of aggressive

behavior, intimidation of american diplomats in moscow that's ongoing by both naming individuals and companies that were associated with the gru, the russian military intelligence that is preventing them from interacting with the u.s. financial system. and then secondarily, expelling 35 diplomats, closing two facilities. one in new york. one on the maryland eastern shore that can be used for dual purposes. both recreation and intelligence gathering. they've also -- the u.s. officials have -- released forensic data, ip addresses, methods of operation by the russian hackers as a way of arming u.s. companies and other entities against the potential for additional hacking. we do know that donald trump put out a statement last night saying he would accept an intelligence briefing. donald trump the president-elect has declined to accept the consensus of u.s. intelligence

agencies that russia is behind this. don't know if that will change after he gets a briefing, but we do know that republicans on capitol hill including john mccain, lindsay graham, mitch mcconnell have said we're going to investigate what the russians did. where that investigation will go, how much of a problem that will be, if any for donald trump we're going to have to see. but there are a lot of unknowns in this circumstance. and the obama administration is making sure before they leave, they've also got an intelligence report assembling all of what they know that's going to come out early next year. and they are going to do their part to make sure that donald trump and the russians are held accountable for what happened. >> okay, john. we're going to talk more about this. thank you. joining us now olga olinker, senior adviser and director at the center for strategic and

international studies. and it's great to see you. one of the things that i am not familiar with the term, escalation dominance, there's some thought that you start with sort of in a piecemeal fashion with retribution steps like this. then you wait to see what e the other side does but you want to keep some of your ammo dry, i guess. so if it does escalating with you're able to do that. was this a punitive first step? or the beginning of what could be a long process of back and forth between the u.s. and russia? >> so i think the obama administration wanted to respond in a way that sent clear signals to russia that actions to affect u.s. elections would not go unpunished. so that's what they're trying to do with these steps. and the russians -- and also to respond to the harassment of u.s. diplomats which i think you

have to look at as a bit of a separate issue. the russians as news reports said, the response that the foreign ministry is recommending is a direct tit for tat. you closed a couple of facilities, we're going to do the same thing. so in principle, that would close it down at least for the time being. i think the question is what happens going forward and what the trump administration decides to do and whether the russians do anything else that could be construed as interference. perhaps not in u.s. elections since we don't have any coming up. but in european elections and how europeans respond. >> so they're not going to expel 34 or -- they're going to expel twa exactly 35. it seems almost -- when you read about it, it's we understand. but i don't know. this is how grownup countries act with one another. go ahead. >> it's exactly how grownup countries act.

so the folks getting expelled are intelligence operatives. and everybody knows that there are intelligence operatives in your country. it's a response to what has been a sustained pattern of u.s. diplomats. it's a pattern of harassment that's reminiscent -- actually, the way the soviet union traded dissidents during the world war. where people follow you on the street. where people are looking at your children when they're at school. you come home and the door's off its hinges. and you can't do a lot about it. so the united states is not going to start harassing russian diplomats. so what the united states can do, it can expel intelligence operatives. but if russia sees its intelligence operatives are being expelled, it's not going to admit it's had a pattern of harassment. so the usual response is to throw out the equivalent number of diplomats. but everyone sent their message and over time, you know, new diplomats will come in and some

of them will also be intelligence operatives. but, you know, a lot of international relations is sign signaling. >> and you can change your name in your papers too, right? >> i think they'll notice it's the same people, yeah. >> financially can -- do any of these sanctions actually have any bite to them? >> i think the question is what happens to firms that have anything to do with russian intelligence agencies and whether they should be careful. i think that's going to be something to watch from a financial standpoint. that sanctions the easy response is they don't operate in the united states. but of course they operate in the united states. we've just seen they operate in the united states. so what happens to anybody foreign or domestic who works with them? the new executive order provides a good bit of lee way there. it makes clear the interference

with election is the question that any actions that amount to that that are trying to affect u.s. elections are definitely on a list of things we're going to act in response to. >> we don't have to wait long for january 20th. then we're going to see -- is vlad still coming? is that invitation still open? i wonder if he immediately backs out of all of these things and reverses them, i don't know he has the ability to do that. because members of his own party are -- >> yeah. no, i think it's going to be very interesting. the coalition of folks in congress nervous about russia is certainly bipartisan. i think he'll have to decide whether he wants to challenge that and for how long. in terms of he could lift all of them and then not singling out the ones on the intelligence operatives. you know, he surely isn't going to invite the same 35 people

back into the country. who knows. >> thank you. >> thank you. coming up when we return, it is the last trading day of 2016. we're going to get some market predictions for the year ahead next. plus the largest percentage of young people are living with their parents since 1941. chief economist is going to tell us what this means for the housing market. and later, what do zuckerberg and tony stark have in common? one word. jarvis. we'll get into that in a moment. retirietedes annever get tid of it. eped to retire aru tire rered rererent th e trade. i'm in vtss a invest with e*tradts whvests can instate d ve in vests... not in sts. signp at etrade.cod get to x ndred doars.

welcome back to "squawk box." futures right now are indicated positive. positive open today. up 40 points for the dow. we need about 180 points. on the dow to get to 20,000. no indication that that is in the cards with probably a part-time staff of big investors around. not really. not really the week when things like that happen. but believe me, it'll be tuesday of 2017 before you know it. you thought 2016 went slow. >> usually by the end of the year i'm thinking what a fast year. i can -- >> it's only 1/39 of your life though.

>> everything usually feels fast. >> wait until you -- now, ask ed. >> am i wrong? did this year feel fast? >> went very fast. >> very fast. >> how about you? >> moderately fast. there's been a lot of news. >> any news how fast it felt? >> some of the days were long, but the year went by pretty quick. >> it's like you have breakfast every hour which is what makes -- i take naps now. a week is like a day and i take a couple of naps and i'm here. i'm always here. let's get to the markets and introduce all of our guests here. kevin cummins from nat west markets. our guest host here ed keon sticks with us. guys, good to have you with us. kevin, i'm going to start with you. you think gdp growth, closer to 2% in 2017. >> for the current year looks like we've gone through another

lackluster gdp growth for 2016. i am a little bit more optimistic in 2017. and we think that in the wake of the election the -- kind of the policy mix transition in 2017 is likely to set up for a better year as the year progresses into 2018 we'll get closer to 3% growth. so things are on the upswing. >> ed, you're also optimistic. did you ratchet up after the election? >> yes. we think we're going to get more pro-growth policy, so i would expect the end of next year we start to see evidence of that in gdp numbers. and if we get what i think we're going to get, 2018 should be pretty good real gdp growth and also get higher inflation. nominal gdp will rise as well. >> right. and you're seeing 8% to 10% gains in the stock market? >> i think you'll see earnings growth in the high single digits and that along with a couple

percent yield will be there. >> have you incorporated the pro-growth sort of things that could happen next year like tax cuts? >> yeah, we boosted our gdp growth for next year marginally. we'll have to see the details that come out. there's not all that much clarity exactly what we're going to get. it seems like we're going to get some -- i mentioned some pro-growth policies on the corporate side. maybe some individual taxes. there's talk about some infrastructure spending. less regulation i think is probably one of the bigger -- potentially even bigger things than the fiscal stimulus in what we mentioned. so, you know, we'll see the details later in the year most likely. before we start to actually get some of the benefits of those. but i think into 2018,side say the risk pointed to the upside. we're already close to 3% there. >> i kept wanting to see the

proof, but markets move away ahead of anything. which sectors, which are the sectors that will see the most upside to this? >> well, we're still void the financials. i'm going to stick with that through the year. drift higher over the course of the year. we've already seen a pretty good move there. >> but it's mostly on the rise in rates. >> rise in rates, lower regulatory -- >> with the booster of potential deregulation. >> yes. >> uh-huh. and which other -- i mean swb there room in your portfolio, for instance, for bonds, for utilities, for telecom? >> we always have multiple as t assets in a portfolio. but within that portfolio, we're overweight stocks. i'm looking to add more money internationally next year especially in the hedge currency basis. we haven't made that trade in a big way so far. >> in terms of the fed? it's funny because the fed seems to -- i don't want to say take a

back seat, but a little bit of a back seat compared to some of the fiscal stimulus we could have next year. is the fed a major factor in your analysis? >> not so much for 2017, i don't think. the fed, we think, is going to hike rates twice next year. the latest set of fomc dots had three hikes in there. but we think, you know, things like the dollar and if the dollar continues to strengthen, maybe that gets some of the work for the fed out of the way for next year. but it certainly now the president-elect has certainly been surrounding himself with people who are more hawkish. i think the fed is probably going to continue with slow move higher in rates. i think in 2018, you're going to see markets are going to have to catch up i think with the expectation that rates are going

to go higher. i mean, there's a lot of talk about following a more rules' based approach to policy. there's talk of the likes of john taylor perhaps taking over the helm. right now if you look at rate should be above 3%. i think there's a lot of room to run there. rates are going to go higher in 2018. >> all right. thanks, kevin. >> thanks. >> ed's going to stick around. >> fascinating. coming up when we return, twitter ceo jack dorsey is asking confuusers of the site f help. we'll discuss. and shares down 30% this year despite president-elect trump's use of the service. modern communication device he calls it. you're watching "squawk box" here on cnbc. nsurcepany

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welcome back to "squawk box." we're going to read our horoscopes in just a minute on tv. but in the meantime, let's talk twitter. twitter may be finally adding an edit button. i know that's your favorite word. button. ceo jack dorsey is at least considering the idea. bravo. dorsey taking to twitter yesterday to ask users what the company can do to, quote, improve or create in 2017.

requests flooding social media for a bookmark button. improved reporting options for bullying, and the edit button for tweets. dorsey responding to a few of the requests asking users more detailed questions and later saying twitter is thinking a lot about the edit button. you wanted that button -- >> i think it's nice for existing users. i think it's lame. it's not going to help the stock price go back up. >> it's not all about the market. sometimes it's about the customer. >> but twitter has to think about that! twitter has to think about that. >> what will the edit button do? >> how often have you written a tweet -- >> written? >> written is tweet, decided you haven't loved it or misspelled something or the punctuation is off or something is off -- >> couldn't you get rid of it. >> the only way is to delete it and then put a new one up. i think when you do that, by the way, it doesn't -- i think it goes to all your followers but i think it gets punched down the

list. there's all sorts of things about pipt it's better if you could just edit it. >> i don't know how the whole thing works that well. when i answer someone, do all my followers see it? >> if you put a period in front of their name, yes. if not, no. >> there's times i answer things and no one says anything. then other time ifs i do it a different way, i get a million. i don't know how the thing works. i really don't want to, though, andrew. i might be like kelly evans. >> you might pull the plug? >> i might pull the plug on all social media. >> you blocked most of your followers. >> if i don't know what they're saying, if there's the slightest chance it's negative i block them. then i follow -- i try to keep it under a hundred of the people i follow. i don't like following people either. >> there you have it. >> joe and i are about the same. >> okay. >> like, you know, i like personal relationships. >> get on the phone with each other. >> exactly.

>> that's what's quaint about you, joe. >> thank you. amazon and jet.com have been hit by rap group run-dmc. the items include hats, glass, t-shirts, and wallets. >> they can't do that. coming up, mortgage rates are rising and expected to head higher next year. we're going to debate the impact on the housing market next. first, though, as we head to break take a look at u.s. equity futures. still higher across the board. stay tuned. you're watching the last show from this studio and the last show of 2016 on "squawk box" on cnbc.

♪ welcome back to "squawk box." futures right now are indicated higher across the board here. this is just out, breaks news. vladimir putin says russia will not expel anyone in response to the u.s. sanctions. this coming from a russian news agency. putin says u.s. sanctions is

another step to undermine relations and regrets that the obama administration is ending its term in such a way. >> because medvedev had on his page a similar sentiment. >> oh really? >> yeah. that the obama administration started wanting to improve relations, ending on a low note. >> sour note. >> and really defining the relationship possibly -- new relationship with the trump administration possibly. saying we're not going to retaliate, we'll wait. >> they're playing us and playing the obama administration and trump administration. but if they expel those 35 guys, who are they going to harass? who are they going to break into their house. did you hear some of those things they do? that's frightening. you come home and your door is off the hinges. >> that's "homeland" stuff. >> or someone is watching your kids at school. that is frightening to be harassed that way. these diplomats are brave, patriotic people. it's not like, yeah, give me

ambassador sh ambassadorship. >> the question is they're not diplomats, they're spies. >> whatever. spies are people too, andrew. >> spies are people too. got to make some t-shirts. among the other stories front and center at this hour, just one economic report today to finish out 2016. the chicago purchasing managers index. i know you've all been waiting for these numbers. coming out at 9:45 eastern time. it's expected to remain well into expansion territory. many think it will pull back from last month's levels. uber predicting it will give more than 15 million rides in 450 cities tomorrow night. that would be triple last year's levels. the question is whether they can make a profit doing it. qualcomm stock to watch this morning in trading. chip maker has settled a dispute with chinese phone maker mazu. qualcomm had sued in many countries. saying the new agreement settles all outstanding disputes.

the new york police department is taking extra precautions around the new year's eve celebration in times square to protect against truck attacks. 65 large sanitation trucks filled with sand will be placed to block attacks in addition to 100 smaller blocker vehicles. the nearly 2 million visitors expected in times square may notice heavily armed police teams, bomb sniffing dogs, and bag searches. they will also patrol the waterways surrounding manhattan. they come as a result of the two deadly truck attacks in europe this year. >> have that done that before with the trucks? >> they've been doing it from front of trump tower. >> i mean in -- >> oh in times square. i'm not sure. >> in response. >> of course. i just didn't know if they've been ahead of the curve. >> i've seen them do it in the past. maybe not as big as now. now to housing where rising mortgage rates are starting to impact potential buyers.

truly chief economist. and we had a discussion, ralph, about whether you do -- you wish you did the 30 year. do you do a seven year, ten year or something like that. what are we seeing? if people decided wow rates are going up i should do this. if i was going to do it, people need to do it now. >> we've seen a lot of volatility week to week. sometimes it's up. sometimes it's down. that's a natural reaction when rates rise. people aren't sure whether to buy. i think other indicators are perhaps more interesting to look at when it coms to the effects of mortgage rates. we've seen pending home sales drop yet. that may be the first time we're seeing a true effect from the new administration. home sales down a little bit. they had been charging up towards the end of the year. down a little bit. maybe overreaction from a surprise election by president-elect trump.

but we do think 2017 is going to be a solid year for the housing market. >> millennials are messing things up still, ralph. 40% of young americans are living with their parents or siblings. the largest percentage in 75 years. they need wi-fi. that's all i can figure. parents can afford wi-fi. they need wi-fi. they can't -- where are they going to go? >> they use the same netflix account. >> they can't live at starbucks. you can't sleeve there, can you, on your mac airbook or whatever they're playing with? huh? that's the problem. >> it's a big -- you know, it's a big story right now. and, you know, the reason it's a big story is that there's 75 million of them. right? and if you look at 40% living with mom and dad or a close relative, that's over 30 million millennials. that's the population of nearly new york and l.a. combined waiting to move out on their own from their households. we're not super concerned about

that at the moment. we think that means there's a lot of potential energy in the housing market that could be released over the next two to three years. we think it's an economic factor. including rents and wages. those things aren't very conducive to helping young people get out on their own. but also demographics. millennials are a very large group of individuals. and in fact, the largest subsector of millennials are between the ages of 20 and 24. that's not an age you expect most people to go out into households of their own quite yet. it is 75 year lows. it is something we keep a close eye on. >> so can people get mortgages? low rates, but you had to have, like, perfect credit and things like that. is that loosening up? how do we loosen that up? what do we need to do? >> it's loosened up a little bit over the last four or five years. certainly credit got very, very

tight. you know, we really need individuals especially young persons to be able to save up for a down payment. that's the thing -- that's the biggest challenge they're telling us right now. >> if you get a low rate if you put more down, too, right? we heard about that yesterday. >> yeah. it's less risk to lenders. if you can put more down, typically get a lower rate. approving their credit score. you know, many of them are starting to come to age during the recession, probably opened up credit cards, ran up a bit of debt. on top of that are student loans which don't help we think in the long run it's beneficial. but short run, it's not helping. there are head winds for millennials to get them out of the basement. hopefully buy a home. that's the interesting thing we've done. they tell us they want to buy a home. 83% say they're going to do it some day but not for a couple years yet. >> you get some points for one

of those man buns. you know what i mean? one of those -- >> off the mortgage. >> yeah. or ink. >> the bigger the bun, the lower the rate. >> i never thought i'd hear you say that. >> what? >> the bigger the bun -- or ink maybe. what are those boards? the hover boards. are those still popular with them? >> the real hover boards where the batteries were exploding a year ago? >> they aren't like back to the future we don't have those yet? >> no. >> because kanye used one in an airport or something. >> ralph, thank you. thank you. happy new year. >> thank you, guys. >> expecting them to fly off the shelves. >> i see some of the most bizarre -- i mean, i've seen where you shave it all. >> when are you hanging out with the man bun? >> in at club in jersey. >> club in jersey. >> sounds hot. when we return, remember fang -- >> hang out at the club.

the nightclub in jersey. >> yeah. >> true bridge and tunnel. the other way. i got it. >> go to the nightclubs in jersey. that's why i'm sick. i'm out all night. >> hoboken. >> anyway, facebook amazon netflix parent company alphabet all slumping after the election. we're talking tech under trump. that's next. "squawk box" will be right back.

welcome back to "squawk box." the futures right now haven't -- now we're up 40. 44 points. to get to 20,000 if you're keeping track, we need about 180 points. no indication that that will happen today or that it's that important since the s&p may be more important number to follow anyway. but we are watching it. we have the hats ready to go. we need 180 points. you have yours here today? >> i don't have mine. >> i thought it was bad luck to have them around, to touch them. >> just don't put them on. don't put them on. >> the nasdaq's up 11 and the s&p indicated up 6. mylan is launching a generic version of a pill to treat adhd. it's made by a unit of johnson &

johnson. mylan has more than 240 pending new drug applications with the fda which could represent $95 billion in annual sales. and lockheed martin is winning a $450 million contract from the pentagon. it modifies a previous contract. it's been a wild ride for tech since the election particularly for the fang stocks. alphabet all slumping immediately following president-elect trump's victory. can they stage a comeback in 2017? joining us now ed lee. ed, you would have thought that with the notion there's going to be more growth, there's going to be repatriation tax holiday or relief of some sort that these stocks would have gone up as well. >> yeah. the market reaction was a sort of a head scratcher there. whatever these policies that the trump administration is going to

put in place, lower taxes, rellation reform, repatriation holiday, all that kind of stuff. tech companies are going to benefit. they're definitely going to benefit for them so they're going to have something. i think if you take a deeper read, though, it's going to be the fact that facebook, google, amazon is going to have to come from overseas. right? that's where, you know, there's a bigger question mark in terms of how trade is going to sort of work out under the new administration. >> right. i mean, the snap ipo is coming. you think that sort of sucks the oxygen out of the room when it comes to investment dollars in the space. reluctance to get back into a facebook knowing that snap -- >> snap is the definite sort of factor for the facebook investor. if you're in facebook, may want to move out in terms of what snap might offer to you. i saw you talking earlier, they're hitting the millennial segment. that's a huge part of their

audience. it's an audience facebook is still trying to wrangle back so to speak. so i think that's an opportunity for an investor if you want to get into it. that's where growth is coming from for these start-ups for a snap company whereas for a facebook, they're kind of tapped out in the u.s. people who have -- who want facebook in the u.s. already have it. they're going to have to find growth overseas. and that's just harder to do. >> i know this isn't on the list, but if snap goes public successfully, when do we finally see uber do something? >> so i think snap is a good indicator. it's a bellwether potentially. even though these are different companies or different areas. >> waiting forever saying they never want to go public. but now we keep hearing that they're not making money still even with china out of their hair. >> yeah. that's a problem. because they're subsidizing because they're in this sort of, you know, subsidy war with lyft and other rival things. the economics are weird, i think, right? so even after if they win, if they sort of somehow create a

m monopoly -- >> you make it seem they're bad. >> they are. but are they going to raise margins -- >> there's always going to be cap in every market. can only raise so much. >> if and when they go public and they file one, the risk fact ser going to be super long. >> what's the chance that uber buys lyft in 2017? prediction. >> i'm not going to make that prediction. i think it's a good strategy if you're uber. >> in china they decided enough with this. we need to have monopoly otherwise it doesn't work. >> di di won that won. they got something out of it. >> that's what i'm saying. do you say to yourself in the u.s. we're the equivalent of di di. >> but they're not the equivalent of that in the u.s. di di is so much more dominant in china than uber is in the u.s. >> so pick off lyft and juno and

everybody else. >> right. then figure a way to market dominance. and then raise prices or figure out a way. >> if you think they raise prices the whole model comes undone? >> i don't think you're going to get the margin you're supposed to get. they'll raise prices slightly or do better with uber pool which is really how they really make more money. and i think people -- they have to indoctrinate people to use it. there's a lot of risk factors for that going forward. >> quickly, ces next week. vr, ai all that stuff? >> you'll see more drones. ia still driven by the big companies. apple, amazon, google. it's a hard thing to figure out. it's not something you're necessarily going to see a ton of start-ups doin' o their own. >> what's this ipad siri upgrade business about? >> well, so -- you know what? there's google home build device

and amazon echo. i think there's a way for app toll get into the market by upgrading siri. >> but always be through a phone device. you don't think they're going to have a purpose-built mike in your house? >> i'm sure they're thinking about it, but i don't know if that's necessarily to market. they feel they have a million devices in people's homes. take advantage of what's there. >> this is a serious question. we complain about siri constantly. >> it doesn't work that well. >> does it deserve the bad rep it gets? because siri relative to echo, relative to google home or the google version, part of me wonders whether we have been with siri so long and try to ask it relatively sophisticated questions. the echo doesn't do a lot of sophisticated stuff. it just tells you i don't know. but that seems better than siri which says it doesn't understand you. >> right. or google home which does

generally a better job with open ended questions because they're mining from google search. google has a wealth of natural search and they adapted it to the google home device. yeah, i think apple has always had high expectations. both from investor standpoint and consumer standpoint. i think we've been used to -- >> what's the best service at the moment? >> right now i think the amazon echo is the best sort of natural language ai system out there. it's not perfect by any means, but it does more of what it purports to do than the other systems. >> okay. >> ed, thank you. >> sure. >> thanks, ed. how you feel joseph about siri? >> about to cough. oh, about siri. no. i only use it to dictate e-mails and the stuff she comes up with, it's like, those two words would never be next to each other. i said something so obvious. it's like, what's wrong with you? i give up. i don't like her. coming up when we return, talking about siri and all this stuff it gets better. facebook ceo mark zuckerberg

raised the curtain on a device he's been working on all year. we have a look at the virtual assistant. that's next here on cnbc. don'le! use u've g a lot cheering to do! geyouread ckth.et sinus relief...with vicks nex. x. theongestion, essure clear your head, medici.

anything with a screen is a tv. stream 130 live channels. plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. welcome back to "squawk box." 70% of new year's resolutions were broken by the end. mark zuckerberg bucked that trend. the facebook chief's off hours experiment can open the door and

recognize visitors. why you may never see it on store shelves, it might be the foundation for other facebook products. joining us right now is the senior writer at fast company. recently spent some time with zuckerberg and jarvis. tell us all about it. >> so, yeah. jarvis is the -- well, morgan freeman is the voice of jarvis. it's in mark zuckerberg's home. it is zuck's way of as you said sort of controlling music and tendering on and off the lights and even teaching his young daughter mandarin. >> how much better is it than the amazon echo, for example, or google home service, or siri? >> i think it's probably not a fair comparison to say one is better than the other. i mean, even zuckerberg said he would like to sort of advance, you know, the state of home ai

assistance to be able to do things like some linguistic nuance. maybe telling the system to do something like he said he wants to play adele or play something like adele. those are similar phrases. but the system has to be able to tell the difference. i don't think the systems like alexa or google assistant can do that. >> he did this all by himself? he didn't use any other help within the facebook complex, if you will? >> well, what he did was he used existing facebook ai tools like voice and speech recognition, facial recognition, things like that. that's the way facebook engineers always do things. they have existing sort of library of tools and they're able to kind of cobble together new things based on what's already been built.

that's what zuckerberg did. >> so you've seen it in action. and you said it's not fair in comparison to look at the other services out there. but when you think about what's possible now as a function of what he's created, how do you see it getting integrated into any -- relative to the other services even though i recognize you don't want to compare it. >> well, i think -- again, i don't think it would be fair to say it's a leapfrog ahead. what zuckerberg said he would like at a minimum to be able to advance the state of the art again through something like additional linguistic nuance. and facebook has a history of publishing things that they've -- research that they've done. and i think he would like -- he told me when i was at his house working on my fast company exclusive that he would like it if other companies were able to integrate the advances he did

like both him and his wife are able to say things to jarvis and it can tell the difference between whether her musical preferences and his or which room they're in even if they don't say what room they're in. >> so it's a lot smarter in actuality. we like to say all the devices are somehow ai. i guess on certain levels they are. but true ai would continuously learn, correct? make itself smart. so is this closer to a true ai home assistant? sort of a glimpse into the future? >> yeah. i mean, i think that was one of the things he really tried to achieve was getting it to learn over time, you know, like he talked to me about how he was first working on it. understand the difference between phrases different people might use. for example, he would call the living room the living room and his wife would call it the family room. so those are small differences, but, you know, he wanted the system to learn on its own those

differences rather than just sort of programming specific differences. and again, i use the example earlier of, like, the adele situation where she has a song called "someone like you" whereas -- >> so you've been in mark's house. what's the biggest surprise inside the house? i don't know if you were in the bathroom and went through -- you know, people go through the medicine cabinet. >> no. >> i want to know. what was the big surprise for you? >> it looked like a normal home. it was beautiful and in a wonderful neighborhood. but, you know, in a lot of ways it was like a house that the rest of us would have. >> fair enough. we wish you a happy new year. and morgan freeman is powering the voice of this thing? >> that's exactly right. yeah. so there's actually science that proves we find morgan freeman's voice compelling. so i think if you've got -- >> he did play god. it's fascinating they would do

that. does it always sound exactly like him for each phrase? >> i think that he recorded some scripts. >> and then they put them back. okay. daniel, thank you. appreciate it. great to see you. >> thank you very much. >> congratulations on the piece. coming up, this morning's top stories including what russian president putin is saying to american leaders about u.s. sanctions and moscow's response. it's the final hour now in our current home. cue the countdown to our big move to our new home. mewhno big deal.

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russia retaliates. former u.s. ambassador to russia michael mcfaul joins us to weigh in on this morning's big news. the countdown is on. it's the final trading day of 2016. we'll talk strategy for the economy and politics. plus celebrity realtor dolly lenz has her outlook. and we will take a minute to look back on the best and worst moments of they have year on "squawk box." the last hour of the last "squawk box" of the year starts right now. ♪

live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin. also along with melissa lee. i'm along with both of you. >> along. >> we're all along. >> we're along with each other. we're less than 90 minutes away from the opening bell on wall street. the futures have been adding to their gains. keep saying that. have to be 180 points. >> the trump rally resumes. >> yeah. the one that was continuing to fade. down 0.7 point from it's all-time high. let's check out the dollar this morning which has been -- actually, that rally has faded even more than the averages. 1.05 now on the euro. actually the dollar is doing okay. but there we have those. and then i think 2.48% or so on

the 10-year. right? below 2.5% earlier. let's get everybody caught up on what is the big geopolitical story to end this year. russian president vladimir putin saying russia will not expel anyone in response to u.s. sanctions. he sees u.s. sanctions as another step to undermine relations and regrets the obama administration is ending its term in such a way. puth season also congratulated trump and obama on the new year and invited children to a holiday celebration at the kremlin. yesterday the white house imposed sanctions on the intelligence service. and 35 diplomats were expelled from the united states. we're going to speak to michael mcfaul in a couple of minutes. he's the normer ambassador to russia. i'm sure he's going to argue he's taking the high road in all of this. i'm not sure what the high road is. >> i don't know. thinking about it, once again, it seems smart.

you know, it seems like out-maneuvered again. >> clever. >> yeah. i'm not expelling anybody. you know, got a wait a couple of weeks. why even bother? you can't escalate when -- you know, have you ever been in an argument with a significant other and they don't argue back? it's horrible. because then you can't -- because i got more. and i'm ready. >> but you can't. can't unload it. >> the pr move is classic. he's a crafty guy. >> it seems very, very calculated. lavrov proposed expelling 35. and then putin said we're not going to expel anybody and then invite the children of the u.s. diplomats to the kremlin. >> if it was 35 there, they

won't do 34, 36, exactly 35. now he says -- >> we're going to talk to a russian expert in a bit. as we head into 2017, here's a look at how wall street has performed year to date. energy soaring 24% thanks to a surge in oil price. finance up 19%. health care sliding the most, down 4%. real estate down about 1%. staples up. 3% but the sector is still lagging. as for specific winners and losers, up the most 37%. nvidia leads the charge up a whopping 238%. it's also the top performer in the nasdaq. drug maker endo international is the biggest loser on the s&p. for more on the broader markets, let's bring in our guest.

and our guest host sticks with us. randy, i'll kick it off with you. you think the trump rally is going to last longer. how much longer? >> i think it is going to last longer. this is the longest rally following a presidential election in u.s. history. there's been five other rallies when the market's been up about 5%. four of those four ended up with another 10% rally over the next six months. there's a lot of animal spirits. there's a lot of goodwi will ou in the market place. out of the bond market i think it's going to continue for some while. now, i have to say that i think the economy's not going to grow as fast as everybody thinks. so at some point, there will be a pullback. if you look at the market today, consumption's strong. the consumer's spending money. unemployment's already at a pretty all-time low. you know, you say how much can gdp really grow? i think gdp's going to grow. it's going to grow faster under the administration. i'm bullish on stocks.

there's even going to be some by the end of the year. we'll look for assets to make a pullback. but i think gdp is going to come in more at the 3% range. it's tough to generate as much -- >> randy, did you say up to 10% the first six months you think it's going to be a front end loaded year? >> absolutely. with a lot of expectations, animal spirits driving the market. then it's all going to come back to economic data and the reality of earnings and where that market's going to be. >> you say 8% to 10%, ed. did you also see this as sort of the continuation of the animal spirits? so it's going to be -- the gains are going to be in the first half of 2017? >> it's always difficult to predict exactly when it's going to happen. but you focus on the fundamentals, but i think earnings growth is going to be quite strong. we're going to have the drag from the oil prices will be gone. you'll see financial earnings rebound because of the different policies. since the earnings will drive the story and if earnings are up, say, 6%, 7%, 8% that's the

kind of return to get out of investing in stocks. >> are you worried, though, about -- about the stronger u.s. dollar. i mean, that was truly a spike in the fourth quarter. i don't think many people expected the dollar index to go up to 14-year highs. so isn't that a shock for earnings and will that ding the earnings of multinationals to the extent it will prize investors to the downside? randy? >> well, i don't disagree that there's some other negative forces out there. so the dollar for sure and also in fiscal policy. but also on the monetary policy. i think we're going to have stronger earnings. but i'm not as bullish on some of the others because again we're going to have higher labor costs, higher cost of capital. all of which will dampen the earnings growth. but again, i'm in that 8% to 10% earnings growth as well. and some inflation coming in mid-year. >> the higher dollar will definitely put a crimp on

earnings. that might be why some of the technology stocks have underperformed a bit. if you look at it overall, we've had our earnings recession. now we're in a rebound phase. i think that rebound will continue throughout 2017. >> randy, do you stick with the sectors that had worked in 2016? >> well, i think for the first part of the year you do. i think a lot of the sectors that work will continue to run. i still like financials early. but i think as you get later into the year again, i think we will really start to see some inflation kicking in. and some of that inflation really favors some hard assets. things like bond proxies like real estate investment trusts that got hurt. i think will come back in favor as you get into the second and third quarter of '17. >> and bonds as well? >> you know, listen. on the bond part, it's tricky. i think there's a lot of opportunities out in the bond market particularly when you start looking globally. if you look globally, started returning double digits this year. again, opportunities are out there. you just have to be careful when

you're going through that interest rate adjustment period. >> thank you, randy anderson. ed is sticking around. the new york police department is taking extra precautions around new year's eve celebrations in times square to protect against truck attacks. 65 large sanitation trucks filled with sand will be placed at strategic positions to block attacks. that's in addition to a hundred other smaller blocker vehicles. 2 million visitors expected in times kwar may notice heavily armed police teams, bomb sniffing dogs, helicopters, and bag searches. also patrolling the waterways inman hat ton. the precautions come as a result of two deadly attacks in europe this year. michael mcfaul, former ambassador to russia weighs in on the obama administration's new sanctions next. and then luke messer joins us. and then realtor to the stars

dolly lenz is here. "squawk box" will be right back. coming up, it's the final trading day of the year. the dow's last chance to top 20,000 before 2017. are you confident in your investments? are you looking for new opportunities for the new year? our strategy session is just a few minutes away. "squawk box" will be right back.

welcome back to "squawk box." russian president vladimir putin announcing in the last hour he will not expel anyone from russian response to new u.s. sanctions. joining us now is former u.s. ambassador to russia michael mcfaul. he's currently the chairman of the freeman international studies at stanford university. good morning. what do you make of what vladimir putin has done this morning? >> well, it's unusual. usually in one of these instances, there's a tit for tat response. and even foreign minister lavrov already had had put together the names of diplomats to expel. but obviously president putin has decided he's going to wait and deal with the next guy. and just in a matter of weeks. you know, so this is different and he's putting his bets on

president trump. >> let's go backwards for one moment which is to say did you think that the response by the obama administration was appropriate given the intelligence that we have? >> well, better some response than no response. so when i first saw the news, i thought it was appropriate, yes. and i thought it was necessary. especially given that the next president, president-elect trump has been so dismissive of the intelligence. i think most importantly what the obama administration did yesterday was to assign direct attribution with overwhelming evidence with who interfered in our election process. so would i like to see more? probably so. but i was pleased with the outcome. >> play this out though. how do you imagine the russian/u.s. relationship is going to bear itself out in a trump administration at the same time we may have inquiries and investigations that may come up with additional intelligence

that will be public about potential involvement or more than potential involvement in terms of what russia did during our elections? >> well, first of all, i hope there will be additional information. i'm glad you raised that. this is not enough. i still have a hundred different questions about what happened and how the obama administration responded to the intelligence that they received in realtime during the election. so i still think we need a bipartisan independent commission to look at this. and having said that, of course it will complicate matters. in terms of the detaunt that president-elect trump has promised. but that's how it should be. this was an egregious -- in my view -- meddling in the sovereign affairs of the united states. we can't just think of it as a bump in the road and move on. we have to deal with it seriously. especially to begin to talk about resilience. so that the next presidential election does not have the same

vulnerabilities. >> so help us think this through. we were talking about the front page of "the wall street journal" versus the headline of their op-ed this morning. "the wall street journal" news story called it dramatic. in term os they have response, the obama administration's response. their editorial this morning called it a timid response. how do you consider it? >> it all depends on compared to what. compared to what president-elect trump just said 48 hours ago when he said we just need to get over it and forget about it? it's dramatic. compared to, you know, what they could have done and let's be clear, we still don't have any knowledge about the covert operations that they had promised and they said they would do. but obviously they could have sanctioned more people. i think they understand -- the obama administration understands that this is late in the day. they're not going to start a

cyber war just three weeks, a couple of weeks before they exit the white house. but they did want to make clear that there needed to be a response. and that they were attributing who did this very clearly in the people they sanctioned. >> all right. paint -- to the degree you could paint a rosy picture, what is the potential in terms of people say, okay, if trump is in office, potentially there's a way to create a good -- a much better relationship with russia theiss meaningful and that actually works. is that plausible in your mind and what does that look like? >> oh, absolutely. it's very plausible. i think it's probable. given what president-elect trump has said and given what president putin had said. i expect a honeymoon period for sure. what i worry about is that the objective of his policy so far towards russia, that is the goal of his policy is better relations with russia. that's not a policy. in fact, i don't believe you

should ever have good relations with any country as the policy objective. rather, you should set out objectives that you seek to achieve. security objectives, economic objectives. and then the means to achieve those objectives are things like engagement, getting along, those are the means to get along. that should be established. right now i feel that that is backwards. >> how do you think we did -- you weren't ambassador the entire obama administration but from 2012 to 2014. i mean, what grade would you give the obama administration in its dealings with russia over the last eight ambassadambassado ambassador? >> well, i was at the white house before in moscow. to quote president trump, we did some really big deals. we got the star treaty done -- >> the reset wasn't as positive an event as we hoped it would have been, i don't think, right?

>> but with all due respect, you're making exactly the mistake i just said we shouldn't do. >> okay. >> the goal of u.s. foreign policy should be outcomes that the president decides are security and economic objectives. we got the new star treaty done. we got tougher sanctions -- okay. you don't want to hear the outcomes. but they were significant outcomes. and then putin himself decided he wasn't interested in it anymore. it takes two to tango. you can't tell him what to do. >> some of the outcomes might be in the eye of the beholder for the foreign policy outcomes achieved by the obama administration. might be in the eye of the beholder. >> i think the new treaty was a great outcome. i think the sanctions on iran was a great outcome. and then something happened that -- >> okay. >> okay. >> you were part of the administration that is why we're here, where we are right now. and maybe that might in some way, you know, color your

comments. have you med brad freeman? >> yes, i know brad well. >> he's a great guy. >> he's a great guy. >> yeah. all right. excellent. i just wondered. he's a good man. thank you, mr. ambassador. >> thank you. coming up when we return, your playbook for the new economy in the trump administration. we'll talk about it when we return. and later, a fan favorite. we've got a recap of the best and worst moments of "squawk box" in 2016. let's keep a freeze frame on that hat of yours, joseph. we'll be back in just a moment. y gawhat yot re th bad boy ia ing plfo wver i go. i n takey you owhat rswim th seamlessly syncs acros ing alalur devicesright?takey oh, so my custom studies will gwith me?

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♪ welcome back to "squawk box" on cnbc. it looks like we're going to close out the last trading session of 2016 on an up note. we've got green arrows across the board. the dow looking out about 40 at the open. nasdaq up about 11. taking a look at the action in overseas in europe. fractional moves to the green with spain trading lower right now. okay. it is the last trading day of 2016. so cnbc's breaking out the 2017 playbook looking at ways you can make some money in the coming year. this hour steve leisman's got a

look at what to expect from the economy. >> reporter: predictions for the economy in 2017 depends chiefly on how much president-elect donald trump's ambitious agenda gets through the republican congress. all of that leads to one easy prediction for 2017. we're about to see a whole lot more stock and bond market volatility when it comes to economic policy than we've seen in the past. congress leaks like a sieve and everyone likes to talk. the chance of one or another becoming law goes up and down. it goes without saying that congress will become at least as important at moving if not the whole market than certain parts of it like banking stocks when it comes to repealing or replacing dodd/frank. second prediction, the fed will hike at least twice but likely three times. depending upon how quickly new fiscal programs get put in place. and the final prediction? growth will accelerate to the 2.5% to 3% range. but sustained growth north of 3%

will likely allude the next president at least for next year. steve leisman, cnbc business news. and coming up, policy priorities for the trump administration. we're going to talk to luke messer chairman of the republican committee. talking about tax reform and the budget and the latest news about u.s. sanctions on russia over the election hacking and other issues. as we head to break, here's a look at the best performing sectors in the s&p 500 this year. "squawk box" will be right back.

♪ i don't know if that -- the mike's picking that up. >> i think it is. >> welcome back to "squawk box." in the headlines this morning -- we're moving on tuesday. but we're still here for another half hour. and they're fixing something -- >> what did you eat last night? >> right. that's right.

beano before, quiet after. remember that stuff? that's their slogan. beano before, quiet after. >> you mean pull out of my memory? >> yes. >> there are some beano cushions that are coal activated. >> no. that's ridiculous. >> i swear on my life. there are coal activated that are great gifts for that someone. share of cabela's are under pressure. hunting, fishing, and outdoor gear got a second request from ftc about its planned $4.5 billion sale to bass pro. bass pro shops. but cabela's still expects the deal to be cleared during the first half of 2017. that's where -- you know what? next time instead of like on a rainy weekend when we go to bed

bath & beyond and browse, let's go to cabela's next time. and look at all the stuff they have. there's one out in pennsylvania not that far from here. >> do they have those vaporizers. >> they've got more cool stuff. hunting gear, camping stuff, fishing, outdoor -- >> you need more than an afternoon though. cabela's is a vast place. >> i thought you like to look at the brita water containers. >> 20% coupon. >> we spend most of the time in the duvet section. what? >> the way you say it, it doesn't sound right. >> everyone needs something heavy -- a heavy duvet. >> i agree with that. 2016 was not a banner year for -- >> always helps. >> it does. >> even in the summer, that's the problem. the summer you want the weight but it's too hot. >> hotel rooms, you know

sometimes they just have that really light thing. i'm insecure all night long. i'm like, am i protected? am i safe? >> from what? >> banner '16 -- 2016 was not a banner year for initial public offerings. we are totally simpatico on that. heavy duvets. according to reuters, data company going public raised about 649 billion this year. that's down from 2017's total of 873 billion. and the sharper image brand is changing hands again. iconix brand group is selling the rights to the brand to a company called 360 group for $100 million. sharper image was once a staple of shopping malls and nose hair clippers. but it went out of business -- or ear as the case may be. went out of business in 2008 before being resurrected as an online shop and licensed brand.

>> didn't we have somebody from sharper image come on the show since 2008? >> since 2008? >> maybe not. >> iconix bought it back in 2011. >> where did i get that decanter for you? >> yeah. what a crappy trade that was for me. >> gave me a blender. >> it was like the top of the line -- >> like ice crushing -- >> what was it called? it's like a cuisinart thing. >> it's like the rolls-royce of blenders. >> and you gave him the decanter. >> it's not a decanter. >> it's an aireater. joining us now is representative luke messer of indiana. congressman, it's good to see you. >> good to see you. hard to follow all that conversation. >> i know it. hopefully you've -- you knew what to expect when you agreed

to come on here. >> you have actually been in the running for maybe doing something with the trump administration. so you've been around -- you've probably been to trump tower. do you have some insight to what the first hundred days looks like? what's the first ten days look like for taxes? >> we're going to come out of the gate with regulatory relief trying to pass the midnight rules act. the obama administration has put about $700 billion of regulatory burden on this economy over the last eight years. it's an enormous tax on the economy and on the american people. we're going to work on some of that regulatory relief. i think you'll see us come out with efforts to repeal obamacare through reconciliation. and then the tax package, too, in the first quarter to half of this year it's enormously important that we try to get this tax code back under control. and once we get past those small topics, we'll be working on things like infrastructure and

border security and a whole lot of other things as well. >> so this act, right, it gives congress the authority to reject some of these rules if they have an economic impact -- they all have an economic impact of a hundred million. that's just for starters, i think. right? >> that's what the reins act does. >> how quickly could that become law? >> well, i mean, it's going to require a little cooperation in the senate as well. this is an idea that's been floating out there for about a decade. i think one thing that's different about president donald trump is he's not somebody who spent his whole lifetime thinking about what he would do when he came into office. and he has said that if we can get the reins act to him, he would sign it into law which would not only be important for rolling back what's happened in the obama administration, but really important for restoring the voice of the people. getting congress back in a place where when these enormous regulations are passed, the people have a voice in whether they get finalized. i think we have many efforts through the congressional review

act to roll back regulations that can happen because it doesn't require 60 votes in the senate. and you'll see those regulatory efforts individually piece by piece with individual bills happen in the beginning months of this new administration. and i think you could see a dozen or more major regulatory regimes roll back. >> what's the latest thinking with you and your peers on repe repeali repeal and replace. >> is there a plan in force that won't backfire on pulling the rug out from under the people that maybe have benefitted? >> well, we have campaigned and promised for six years-plus, now that we would repeal and replace obamacare. now we have a chance to do it. it will start with repeal of the law that will happen i think in the first few weeks of january.

i think it's important to note to your listeners out there that this will happen over time. the obamacare law changed the health care markets. changed the health insurance market. and it can't be undone overnight. so there'll be some horizon, a year or so out there before any existing plans are removed. i think it's also important to note as you alluded to that there were some winners in the obamacare legislation. i mean, folks that pre-existing conditions, folks in transition in their early 20s who were able to stay on their parents' plans. i think any plan we put forward will keep some of the positive aspects of the law like that. but the bottom line is obamacare by and large has been a disaster. it has deductibles that make it virtually meaningless even if you have the insurance and it's been an enormous job killer. small businesses have not been able to grow because of the burdens placed under that law. >> all right, congressman.

happy new year. we've got to run but good seeing you. and you wrote a book. what's it called? >> "hoosier heart." all about being a hoosier. it's an exciting time. >> all right. we'll see you later. thank you. >> thanks. we got to go, but an update, joseph. we've been talking about the x-clean. rick santelli sent this to me. xilotol is terrible for the dogs. if you have it spill on the ground -- >> no. >> which also makes me anxious because if it can hurt the dog, what about me? >> exactly. >> we're going to talk more about this. >> i liken you more to a cat than a dog. >> i'm really a dog person than a cat person. >> are you sure? you don't have one? >> he's saying you are like a cat. digestivbalance?d help wi

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welcome back to "squawk box." smart home technology gaining traction worldwide with some 80 million devices shipped in 2016. so will 2017 be the year of the smart home? diana olick joins us with more. >> reporter: this was the year for smart technology. meet my new nest thermostat. it was part of the package when i had my air system replaced. more companies are incorporated

smart home tech into their upgrade packages. whether you're replacing the furnace or the alarm system or whatever. now, in 2016, 80 million smart home devices were delivered worldwide. a 64% increase from 2015 and that's all according to a new market. that's your nests, smart door locks, smart doorbells. and a big chunk was personal home assistance. like google home, alexa. wynn hotels set it will install alexa in each home suite. like comcast buying smaller home tech companies and alarm.com as well expanding their offerings. the focus for 2017, though, will be educating the consumer, lowering the price, and enhancing security to prevent cyber attacks. there will be improvements in the technology, of course. but company wills have to push consumers because so far most consumers don't ask for it. they expect the smart home tech

from their new construction from the home builders. but they don't seem to care if it's in the older homes. you ask if it's a selling point. believe it or not, they say not so much. >> thank you. for more on real estate in 2017, let's bring in real estate broker dolly lenz, our favorite. nice to see you. >> how are you? happy new year. >> so give us some predictions here. >> well, russians are already in. we closed our first russian deal -- we haven't done one in six years. closed our first russian deal this week. that's just since the election. >> the trump effect. >> the trump effect. so that's big because i'm already having dinner with russians saying i want to be back in the market. what can i buy, what's good, what's not good. they really like the waldorf historia. i said nothing is going to be good there with a view. but it's about brand. >> what's the minimum price point? >> for the buyers?

the deal we just closed was $12 million. but they're in every point of the deal. i think waldorf will be in the small millions. maybe for you, joe. >> the president won't stay there anymore because it's bugged already. the russians don't need -- it's already done. the listening devices are already in. >> exactly. so they don't have to hack. >> don't have to do anything over at the waldorf. it's prehacked. >> by the chinese. >> yes. >> because it was sold to the chinese. >> yes. >> right. if they can hack the chinese, it will be interesting. the chinese are in in a big way. they went from buying individual apartments 25 years ago to buying blocks of apartments. now they're the biggest equity participants in many deals. >> so much of your business and the real estate market in new york city is based on the financial services industry and bonus season. >> yes. >> so how do you imagine this is all going to play out given the year we've had and especially the last two or three months.

>> the good news about bonus season is people who had their money tied up for years because it was all locked in, you know, got stock instead of money, that money should be coming out now. and it should be -- >> you're saying for the past three or four years. >> exactly. it should be at a high level because the banks are all doing so well. right? kp ept the last couple of days. that's the good news. the bad news is i think bonuses are down. all across the board. hedge funds and everywhere except my son's hedge fund. everywhere else it's all great. >> there had been some softness in the market especially at the premium tiers. >> no question. it's oversupply. by the way, the supply is so underreported. so if you look at any data about how many apartments are on the market. it's so not true. what a developer will do is put down two or three apartments on the market in a building when there's 200 apartments -- >> so there's shadow supply.

>> huge shadow supply. >> are we seeing softness behind -- >> it's more location generated. so it's mid-town billionaires row. it's wall street. >> that's soft, you're saying? >> very soft. >> so you're seeing the four seasons. this building with that building. so much midtown. now we're seeing a little softness upper west, upper east. what about this new second avenue subway that's supposed to be hot, hot, hot. it's supposed to increase values around there. >> i guess it was the big surprise here. >> that it's actually going to work. >> yeah. it was a pretty station, but -- >> what about all the smart home stuff we're talking about? >> i think that's great. buyers are looking at things and saying if it doesn't have this, how much is it going to cost to retrofit it to get this and they're factoring that into their bids. that is a big push. >> dolly, great to see you.

happy new year. >> thank you. and thank you for the tip about the xylitol. >> if i get a cold, i will tell everybody. you know, if it works, it works. if it doesn't, it doesn't. >> when you get back. >> from being sick. >> from your call after the two weeks off. >> thanks, dolly. >> thank you. when we return, this morning's biggest movers. stocks to watch is next. and look at the futures as we head into the final trading session of the year. "squawk box" will be right back. ♪ seya next ye. season, art new trition. wieas starng at 19 aonth,

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time now for your kensho stat of the day. what are the best performing retailers in the final week of the year?

welcome back to "squawk box." take a look at stocks to watch this morning. mylan is higher after launching a generic version of concerta drug for adhd. you see mylan up 2% there. nvidia also gaining in premarket trade. it is higher by about 1.5%. the stock is the best gainer in nasdaq. tumbled 7% wednesday after citron research share says it should be at $90 a share. but nvidia rebounded 2% and they're higher again this morning.

coming up, a perennial fan favorite. we're going to take a look back at the best and worst moments of "squawk box" if there were any bad moments. >> so cute. >> that's coming up right after the break. today, ahelping pele . i amelpingpilsale eatmts today, ahelping pele . ing biions of pnts. predict thehs and ls of dia hours in advanc today, ahelping pele . d i am working wh orreco use biomarker da boost e performance athlete heo, my name is waon woing together, can outtnk athin wanto pamore to ste returns. paying try heo, my name is waon i wa my tax software t char mat the last second. there isotng i cano th an extra $. id no one ever. fileour taxes for free with edit karmaax.

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♪ little billy joel. as 2016 comes to a close, let's take a look back at some of the highlights and the bloopers, maybe a few from this year. >> good morning everybody. welcome to "squawk box." this is cnbc. >> good morning. we're kicking off friday. >> ahh. >> hi. [ laughter ] >> you don't want an audience. >> hernia. >> i didn't know that either. >> from sleeping wrong, right? so you said. not the trapeze above the -- >> no, actually from grabbing a towel off the back of a door. >> the dow now down -- one more time, the down -- one more time. one more time. one more time. excuse me. plus, bernard -- crude

realities -- excuse me. exprize -- donald trump -- sorry. plus -- plus excuse me. is this -- one more time. one more time. sorry. sorry. i can't do this. >> the worst television i have ever seen unbearable. >> do that again? >> take a chance. joe is. >> the day is national hug a news person day. wow, i'm getting a little bit excited from you. >> oh, welcome back to "squawk box." >> fabio by the way stops by every day around this time and has been for over a year. >> with the hair. >> flip the hair. >> goes like this. we kind of like it. >> but he's our daily visitor. >> he is. we might have to interview him one morning. >> i'm sorry, i don't understand this. >> we did it. we brought sexy back to "squawk

box." >> welcome back to starbucks -- sorry, "squawk box." joe threw out the first pitch at a cincinnati reds game this week. >> let's hear it for joe kernen. >> thanks so much for watching, i'm ricardo sandoval. we'll see you tomorrow. >> sounds ridiculous when i say it like that, but when you hear it it sounds -- >> what does that mean? >> i came here to see becky, i guess i get to talk to you guys. >> william h. macy joins us this morning. >> they looked around and started giggling and i was like what's so funny? >> i think my flip phone is going off. >> run, run! >> any advice you have? >> when you show your hands -- >> you're going to accuse me -- that's a donald trump thing. >> the pricest pair of melons -- i'm watching you looking at me talking about melons and i know

what -- >> you have been embarrassed enough for both of us. >> i'm not really embarrassed for you. i'm embarrassed for me. >> because you're sitting there. >> is it 9:00 yet? >> it's our very own joseph richard kernen. >> i decided i would bake you a cake or two. >> that's from martha. >> make a wish. >> i don't like things -- >> we lucked out. we're still here. you guys, where's andrew today? >> i went on a big food marathon. ♪ not as good a visual for tv. >> it's horrifying but you can't turn your eyes away. >> well, that's the point, right? >> these are my feet right now. >> do i need to see your feet? >> there are people who like your feet. >> i'm going to be -- >> what? >> yeah. >> that sounds disgusting.

>> whole place is going like -- >> i want to have a shirley temple drink like that. i want to put that out there. >> you're very honest. you know, you have no embarrassment -- >> i tell him all the time to be himself. >> don't be yourself. there he is again. there he is again. er eric. [ laughter ] >> okay. shut up. just sayin'. my god. i'm pregnant. >> and becky's off today. becky's off today for a very good reason because over the weekend, yes, the baby has arrived. kaylie is the name. 8 pounds, 5 ounces, momma and baby all doing well. should i put it on? >> yeah. >> you look great. >> this is nice. >> that's ridiculous. >> you think it's worth it -- yeah, never mind. >> get out of jail free card. we got to go. >> i could have gone that way. >> go, go. >> are we ready to sign-off yet?

>> well, sure, go for it. >> there you go. >> that was pretty good. >> those guys do an awesome job always. >> what people don't know is you were the star of that one long stretch -- that was this morning when you had to do the -- >> oh, stop it. >> the cold open to the show. but he did -- finally it was great when it finally -- how about you didn't know you had eaten -- see, i don't like eating. did you know you had done it that many times? those were all different things. you love to -- >> love to eat. >> dean did that. does it every year. >> awesome. >> editor ryan cross also helped put that together. and we should also mention that this is going to be our last show at this studio chr, which don't know there's a lot of staff around, a lot of folding --

>> we are moving on up. >> we are moving up. tuesday we'll be at our new home at the nasdaq at times square joining -- >> yeah. i believe we've already tested out the new set. we used it last night on fast. it's an awesome new -- >> and times square new year's celebration -- >> there will still be confetti on the ground and the taco bell stand will be open -- >> you were lying about that. >> there's a 24 hour starbucks right across the street. >> right across the street. music to your ears. >> in nine months we'll have our own on the first floor. >> we'll be down stairs. >> but in the meantime our casa su casa. >> oh, yeah, your house is our house. okay. ed, thank you. happy new year. >> happy new year to you. great to be here the last show of the year. >> think of all the news events this year. >> what a year? >> every year -- you will see every year is better than the last, right, ed? >> every year keeps going up is better than the last. >> kids do things and -- you know that.

you don't look back and say, gosh, i wish it was 2009 again or something like that, do you? >> not '09. definitely not '09. thank you, melissa. thank you. >> yeah. >> thank you. >> folks, happy new year. have a great weekend. make sure you join us on tuesday. have a wonderful, wonderful new year. "squawk on the street" begins right now. ♪ good morning and welcome to "squawk on the street." i'm david faber along with sara eisen, wilfred frost and mike santoli. we're live from the new york stock exchange on this last trading day of the year. jim and carl are off today. i think everybody will be back on tuesday. let's give you a look at futures here. >> not me. >> not you. all right. eisen's out but everybody else is back. there we are. looking for an up open this morning. european markets have tended towards looking positive, as you see right there. you know, not obviously huge