>> united health followed by goldman. i think the exchanges are going away. >> i say jpmorgan. >> okay. >> i think cat will be the worst. the valuation there, way, way ahead of itself. >> josh, a thought? >> i would not be surprised to see jpmorgan heading to 100. >> okay. >> happy new year. >> happy new year, scott. >> thank you for watching. "power" starts now. i'm melissa lee. here's what's on your final "power lunch" menu. russia retaliates about the may not be in the way you expected. we're live in moscow. inside the home of tomorrow today. we'll tell you about one of the hottest housing trends for 2017. final mystery chart of the year, can you name it? it is the worst performing dow stock in 2016. if you've been paying attention, i'm sure you know what it is. if not, stick around. "power lunch" starts right now. >> happy almost new year. i'm brian sullivan. here's what else is happening at

this hour. business activity in the midwest slowed just a bit in december. this after hitting a two-year high, however. the chicago pmi falling three points. parts of new england are digging out from over a foot of snow following a powerful nor'easter. some parts of maine may have gotten nearly two feet. down on wall street, stocks on pace to close out a good year in the red. right now the dow, the nasdaq and s&p all slightly lower. however, who knows what may happen in the final three hours. we have got a big couple of hours coming your way on "power lunch." but, we kick things off with a developing story on apple. the stock moving lower on reports the company is planning to cut iphone production by 10% next year. this coming from the japanese firm nikkei citing data from suppliers. they say phone sales are sluggish. let's bring in colin gillis. when i heard this story, the easy way to read it is, wow,

maybe they need to slow down production as the report indicated. but i wonder if nikkei is sourcing their asia suppliers and maybe iphone production will be moving elsewhere. do you have a take on this story? >> correct, you always need to take supply chain data with a grain of salt. tim cook stresses this point. but that doesn't neglect the fact that we're coming into the weak part of apple's seasonal cycle. the problem with the company in our view is that they remain so dependent on iphone for revenue, like 68% of total sales, as the sustainability of demand doesn't continue to 2017, people wait for the next versions of the iphone to come out, particularly with the 8, may somebody demand that gets pushed forward, that you see a weak first half of 2017. there is an extra week.

>> colin, separate for us the decline, the natural decline in terms of the lessening demand for the iphone versus them trying to not produce too many 7s in front of what will be a big, huge tenth anniversary 8 launch later on this year or next year. >> part of -- i'm negative on apple. i don't like their dependence on iphone revenue. the thesis is i want to see the stock crack before the iphone 8 comes in. if it doesn't happen on the january earnings report, right when you give the march quarter guidance or perhaps get one more quarter for the march quarter results, if we see some lessening demand there, the stock, if it broeaks then, it breaks. if not, falling to the eight circle. >> if they post good fourth quarter earnings in january, you might certain on the stock? >> we want to see what the guidance is going to be for the march quarter. that's -- it is less about the results and more about the forward look. you have to remember the december quarter has an extra week in it. that's going to make the numbers

look good. if you go back and look, you're seeing three quarters in a row of declining iphone sales, the market is ma chuturing and appl isn't keeping pace with amazon alexa devices, sold millions of those, north of 5 million, not catching pace on the services layer, they claim it is important, but still a very small piece of total revenue that remains dependent on iphone sales. colin gillis, we'll leave it there. apple shares as you saw on session loews, down with technology, down a percent. kay rogers is tracking it. >> on the back of that nikkei headline, apple suppliers are taking a hit, sky works solutions, analog, qualcomm and micron down more than 1%. taiwan semiconductor not reacting to this news, shares

have been down all day, though, off by more than 1%. with the exception of sky works, all the names are up double digits with this year with micron leading the pack around 55%. apple shares are lower on the day, but up 10% year to date. back to you. >> kate, thank you. and it is friday, so we have a news alert in the oil patch. weekly rig counts are out. now to our new energy desk, with jackie d. >> good afternoon, brian. that's right. baker hughes coming out with the weekly numbers, interesting, we're only up two oil rigs this week. we were getting used to the double digit increases and this week it is single digits. but it is the ninth straight week we're seeing the numbers go up. the total oil rig number is 525. i was looking for it to eclipse and come back to par from this time last year. it didn't. we're only down 11 rigs from this time last year. but what is interesting is with oil prices over $50 a barrel, this shows you more rigs have come online, the drillers are planning to pump and produce next year.

back to you. >> all right, jackie. good to see you. now to the broader markets. bob pisani is on the floor of the new york stock exchange. kick us off. pretty good year but looks like we're going to end it with a whimper unless something turns around in the next under three hours. >> i don't think that's likely. we are ending the quarter pretty much as we began it, with the financials in dominant position. they're outperforming. goldman the most important stock on the dow. 180 at the start of the election there. and now 240. travelers. these stocks have had huge -- jpmorgan up 30% for the year. the regional banks huge, regions up 50%. key corp. has to be up 30% at least. these are big, big moves. the overall market is still advancing. let's look at where we are in terms of the final trading day of 2016. remember the s&p is up roughly 10%, let's not quibble about a percentage small percentage. here is the two things you need to know. we're less than 1% from an historic high right now.

for all the sideways action, the markets are holding up great. the more important thing, the broader market is holding up great. the advance decline line, how many stocks are going up every day versus how many stocks are going down has hit a new high. what does this tell you? the overall market is still advancing. not just a few dow stocks. no, the market is holding up very well right now. a lot of talk about pension fund reallocation, out of stocks, into bonds. not seeing a lot of it. there is some volume and some big etfs. the russell 1,000 etf, power shares qqq, the european etfs had some action today. heavier volume than normal. so has the utility and the dividend. these are interest rate sensitive. the bottom four there, they have been laggards this year. little bit of selling going on, just note bond, most actively managed bond etf, big volume today. so somebody is buying some bonds right now. back to you. >> all right, bob, pisani, thank you. a check of the bond pits.

>> if you look at one week of tens, you see what bob is talking about. there has been some buying. we closed at 227, up 16 base points and the same amount below the high yield close around 260. but let's go through it. if you look at year to date chart, you see the 227 on the left. let's zoom it out to the spring of 2015. why do you think we're closing in the mid-2040s here? from june to july, there were key tops. we have a deconstructive move going on. you want to be cognizant of the time spent at key levels over the last several years. if you zoom it out one more time, this is a key for next year. the yield for next year, you want to pay attention to, 3.03. a little over 3%. we closed only one session since mid11 up 3%. the last day of 2013. that level will be very significant for 2017.

at least in my opinion. lissa lee, back to you. >> rick, thank you. happy new year. less than three hours left in the trading year. doesn't look like dow 20,000 is happening this year. let's look ahead to next year. with us, brian bellski with bmo capital markets and elizabeth collins at morning star. good to see you both. brian, i'll start with you in terms of your base case scenario. s&p 500, 2350, up side from where with are now or bull cases up 11.6% from where we are now. what separates the base from the bull? >> what separates the base from the bull is that we would love to see accelerating earnings and ref kn revenue off the platforms that president-elect trump is putting forward. we had the opportunity to speak with many clients throughout canada and the united states the last several weeks since we published our report in november. and it seems that a lot of people are excited about tax cuts and the like, but we think from a fundamental perspective the declining regulation point

of view with respect to what is going to happen in the united states in terms of the fda, the epa, the s.e.c., could be extremely important to earnings and revenue growth going forward. and that's why we're so bullish on things like financials, industrials, health care, materials, heading into 2017. we're essentially making stocks great again. that's what we're doing. a lot of people have been talking about the platform making america great again. but i think at the end of the day, we're starting to believe in stocks again and starting to accept the bull market and think that's very positive. >> brian, you and elizabeth are making the show great again. just more greaterer. however, however, brian, i will say this, all this stuff you're talking about i agree with. let's be clear. nothing yet has been rolled back. everything we're buying, all the talk about deregulating this, deregulating that is still just talk. >> that's absolutely positively correct. that's why we have not done anything with our target in terms of market or anything like

that because at the end of the day, there are going to be periods of noise. we know this was an emotional election. there is going to be things that come out in the beginning of the year and the first 100 days that investors were going to react to. we would tell investors do not react. be an investor because one year, three year, five years from now, stock prices in america will be higher. >> i get that. but the minute you -- the longer you wait, stocks don't wait until something happens in order to react, right? they react in advance. it is a predictive indicator. with that in mind, why do you think energy and materials, two of the best performing sectors of the year, are overvalued now? >> right, well, basic materials is our most overvalued sector because very muinvestors are --t commodity prices. most of the commodities are driven by chinese demand and though the chinese government has been stimulating their

economy, we don't think that that stimulus has long legs. we think there will be decreasing returns on investment and the high debt levels will ultimately come to fruition and china won't be able to sustain those commodity demands much longer. further, new commodity supply can be added to the market and that will be the case, commodity prices are much higher than the marginal cost of production. that's why we're bearish on basic materials. >> so materials, energy, overvalued, health care is undervalued and financials are fairly valued. do you like the two sectors, being long those two sectors into 2017? >> we like health care for sure. we think it is undervalued. it is our most undervalued sector now. we think there is concern about pricing power between the pharmacy benefit managers as well as the health care -- the pharmaceutical and biotech companies, but we think there is a lot of innovation at the drug companies and that will result in both increasing revenues due

to volume and sustained pricing pow power financials had a really strong run. we find them closer to fairly valued. >> brian, you like health care as well. you're overweight health care. do you think donald trump will take down drug prices? >> i think at the end of the day you want to buy products that keep you alive. so it is the drugs is the biotechs, united health care has one of the best databases of information on health care in the world. at the end of the day, health care is undervalued. but not just from an earnings perspective. if you look at price to cash flow on price to sales especially, in the biotech area, they look expressly interesting at these levels. i think too that the sector has been unarbitrarily sold since the midpoint of 2015. and so when biotechs peaked. we think most of our institutional investors around the world are underexposed

biotech and drugs. >> leave it there. thank you so much. happy new year to you. russia retaliates to u.s. sanctions. not in the way you might think. we're live in moscow. ahead, another look at today's mystery chart. you've been waiting for dow 20,000. this stock, it is partly to blame. the name and much more when "power lunch" returns. this retiremt. and i never getired of ies. aru entirelylyared trere plr never ting retirg rered tires rerement with etrade. aru entirelylyared trere plri'm in ves a as rg rervi invest with e*trade,s wherors cainvestigate d invest ivest.. or nn vests. up ate.com and get tsired do ♪

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welcome back to "power lunch." we continue to follow a developing story out of russia. russian president vladimir putin condemning new u.s. sanctions against this country but says he has no plans to expel american diplomats. lucy cavanagh is live in moscow with more. lucy? >> traditionally historically when one country expels the diplomats of the other, the other follows suit in a tit for tat retaliation. that was the expectation by everyone who has been watching russia. that was the recommendation by the russian foreign minister sergey lavrov today. president putin in a surprise move declined to do that. i want to read you a piece of his statement he's issued on this matter. he said this morning, and i'm quoting here, we're not going to stoop to the level of irresponsible diplomacy and we will take future steps to restore russian american relations. what is president putin doing here? effectively, he's waiting for donald trump to take office.

just to give you a little bit of the tone here in russia, when those sanctions were announced, when the obama administration expelled those diplomats, the attitude in the media by government officials has been the obama administration is trying to undermine u.s. russia ties and the incoming trump administration. one of the foreign ministry spokeswomen wrote she called the entire obama administration, quote, a group of foreign policy failures. very accusatory language. then, today, comes in president putin, taking so to speak the high road. it is a move that is playing out well here in moscow, because it makes putin look like he's not succumbing to this tit for tat fray like he's above the fray. and more importantly it puts the ball in donald trump's court. the kremlin and russians believe that donald trump wants better relations with russia. and so they're not willing to antagonize russia at this stage in anticipation of the incoming

president-elect's administration taking office on january 20th. guys? >> thank you very much. let's get to admiral james devreeties. you said a couple of days ago on msnbc, you thought we needed to establish more a transactional relationship with russia. what did you mean by that and especially after the sanctions and sxumexpulsions, is there an common ground between the two countries left? >> i think a transactional relationship would mean we confront russia where we must, brian. so that's syria and there is support for assad. ukraine and above all in this cyberhacking incident. we confront where we must, but we cooperate where we can. that's the transactional part. we can cooperate on counterterrorism. we can cooperate on counternarcotics, on the arctic and its management, on arms control. there is zones of cooperation

out there, including afghanistan. it will be challenging, but i think we do need to avoid stumbling backwards into another full blown cold war. >> you know, we did nothing when russia began military action in ukraine and crimea in 2014. russia has been deeply involved in syria and really the genocide that has taken place. is there any surprise that russia may feel that it can do what it wants with the united states at this point? >> well, you know, there is an old russian proverb, probe with a baybayonet. when you feel mush, keep going. when you hit steel, withdraw. the russians have been pushing through a lot of mush. i think we need steel in our relationship. and i hope the trump administration will operate with that presumption as they take office. >> you know, immediately after the u.s. sanctions against russia were announced, a lot of people were quick to say that

president-elect trump was put in a box, so to speak, he couldn't necessarily deny the intelligence put forth by the cia and the fbi and you couldn't necessarily just roll back sancti sanctions. with putin's response being let's just wait, we're not going to do anything right now, does that remove him from the box? >> two separate things happening but i think he's out of the box as follows. because president obama has responded, has levied the sanctions, it does give president-elect trump an opportunity to take the higher road and say, okay, president obama dealt with that problem. i will be the one who establishes this new transactional relationship. . we'll see. the point is russians are master chess players. we need to be careful we don't end up as the pawns in this game. >> this was a pretty masterful move, wasn't it? on the part of vladimir putin? >> i think it is a clever tactical move and putin is a

master tactician. i think strategically in the long throw of history and the history of russia, russia's future is, in fact, with europe, with the transatlantic, with the western world. so good tactics, maybe not so clever in terms of long-term strategy, but in the end of the day, putin's real audience is not the world. it is the people of russia. he's playing very well there. >> admiral, real pleasure to get your insights. thank you very much and have a happy new year. >> same to you and melissa as well. >> thank you. up next, we're talking gold, blue and red. a colorful good, bad and ugly on this final trading day of the year. as we head to break, a look at the top performing dow stocks of 2016. "power lunch" will be right back. s traving over 200miles pe. win, ery miisecd tters. bothn the track wanthousas ofilesway. tters.

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welcome back to "power lunch." gold, blue and red. they are the good, the bad and the ugly in today's session. first, the good here, the goeltgoeltld, goldman sachs. it is higher by .8%. on to the bad, big blue. the stock struggling in a little bit in today's session, down by 15 cents a share, bit for the year it has been a winner, up 21%. and it is an ugly day for red. red robin under pressure following a downgrade. shares are down by 2%.

>> i got that. thank you. one last look at our final mystery chart of the year. we already told you this company is probably the single biggest reason we have not hit dow 20,000 yet. here is another clue. for the first five years this company was known as blue ribbon sports, before switching to the much more recognizable name, the big reveal when "power lunch" returns. ♪ get up t$250cuomerh on selectr these termodels e your lexus dealer.

selectr these termodels keeping the power lines clear,my job to protect public safety, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it. public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers.

we want to keep our community safe. this is our community, this is where we live. we need to make sure that we have a beautiful place for our children to live. together, we're building a better california. hi, everybody. i'm contessa brewer. here is your cnbc news update for this hour. senator john mccain is scheduling a hearing for next thursday on russian hacking. it comes a day after the u.s. ordered the expulsion of russian diplomats after evidence showed their hacking interfered with the november presidential election. a nor'easter dumped up to two feet of snow on new england. poor folks digging outed to. and they saw thundersnow. the good news for them, the storm is moving out of the region. weather hampers the search for a missing cessna plane in northern ohio. the faa reports it disappeared

from radar about 40 minutes after takeoff last night. the pilot has been identified as the ceo of a beverage distribution company with three family members on board and two neighbors. and he was known as the panda grandpa. the world's oldest male giant panda, pan pan, died at 31 this week in china. chinese sources say pan pan had more than 130 descendants and his offspring account for nearly a quarter of the 420 pandas alive today in captivity. really, pan pan lives on. that's the cnbc news update at this hour. >> like four degrees of separation of pan pan in china. >> a highly proliferating panda. prodigious. >> busy. thank you. a check on the markets with -- brian is sad sad about pan pan. two hours and plus left to go until the trading year now, taking a check basically flat across the board. dow is not going to be today for 20,000. but we're down by 26 points now.

s&p 500 down by a quarter of a percent. take a look at the semiconductor index, tough day after a stellar year. for the year, up by 36%. today, taking a breather, down by 1.6%. top performing component invidia, also, by the way, the top performing stock and the s&p 500, pulling back in today's session, down by almost 4%. last chance to guess today's mystery chart. again, it is the worst performing dow stock this year. the only one down double digits by far. if you haven't guessed already, just do it. the stock, of course, is nike. dropping 20% in 2016. will the stock make a comeback next year? our next guest thinks so. simeon siegel, thank you for joining us. before we get to your prediction for next year or outlook for the stock, not really prediction, what the heck happened this year? >> i think if you look, this is the forest and trees type of thing. >> both cut down.

>> there you go. so paper aside, when you think about what has been happening with nike, you have a lot of large competitors taking more share and coming back. and between adidas, under armour, puma, hearing more and more there are other players involved. when you think about the long-term and the tenure this company has had, there have been ups and downs. >> thank you for saying adidas and not adidas, the european pronunciation. it is like nokia, nokia. that said, you made a bear case for the stock, but yet you have a buy rating and $60 target on it. so bring the two together. >> i don't know if that's the trees or the forest. in the short-term it fair to say you can create that bear case. that's why the stock has been down. here, where we are now, the interesting thing looking longer term, we spent a lot of time looking at the p & ls of the different businesses. if you look at all of them, the sizing, eight times the amount of sales that nike does versus under armour. much smaller company. look at the expenses, they're

very similar. percent of sales they spend 10 to 11% there are other things that continue along those lines. expensive businesses, largest player is a strong long-term competitive advantage. >> there is no scale whatsoever if you're -- no advantage to being the size of nike versus the size of lulu. >> you can say there is no advantage of being the largest or you can say the smallest are going to have a very hard time catching up. >> they have to spend the same amount. >> exactly. you think about the context of -- e-commerce, we talk all the time, a variable spend, every dollar cost the same amount. a similar thing with athletic. people don't think about it like that. the reality is what's different, you think about the superstars that you're paying to endorse your product, that number ke keeps -- >> walk us through the product. take a pair of shoes, whatever you want. 11%, spend 11% on sales, that's a fixed cost no matter who you are, no matter what size, where does nike gain the advantage.

if they're losing shares, something else has to be there for them. >> product margins, that's tied to footwear and apparel and different margins within there. you think about the expense side that keeps going. research and development, marketing this is an ever increasing investment that needs to happen. you see company thaies that are nascent and others continuing to make these deals. >> also joining us on set is jan rogers. thank you -- you are a long time retail executive, now consultant, investment adviser. nike is not your warehouse because it is not a physical thing. but how do you explain this. the best performing retail stock this year is dick's sporting goods. better than everybody else with the exception of the smaller cap stock, tilleys, under the market cap radar. sporting goods seems to be doing okay. nike had its whoas. sports authority went bankrupt. is there a way to square the two things or do they need squaring.

>> the dick's story is -- more of the weakness of the competitors than the strength of itself. >> i'm telling my clients they should own suppliers, they should own strong suppliers with great brands because they're going to do remediation from the stores, sell more direct and selling direct, you don't have to sell wholesale. they take the sale out of the store and put it online, they can drive the roi up. >> does that mean finish line continues to lose, foot locker loses. if your belief is you own the contents, and doesn't matter which way the content is distributed, you don't need the distribute channels, the foot lockers of the world. >> you need distribution f you have one, you want foot locker. >> in your portfolio? >> you still need foot locker. they're going to do well. nike will stay with them. they're going to be the distribution point like pvh and

ralph lauren will be with macy's. >> here's the problem. my wife is a 20 year executive with a major consumer products company on the cosmetics side. there was always this conflict between okay, we're this great brand with all this -- but we can't tick off our retail partners. we need them for our distribution point. so i hear the great brand thing aside, but aren't you limited greatly by your relationships with the walmarts and the dick's and the finish lines of the world? >> the balance of power is shifting. it is in favor of the consumer. working your way back up, it becomes the vendor to jan's point, the ones with the power to say here, i'm going to pay the product or give you the product, they're getting the leverage. it used to be you needed that distribution channel. you could create the best shoes in the world if you didn't have anywhere to sell them, didn't really matter. you have -- >> they have the power. the brick and mortar store had the power. >> the monopoly.

the mall was a monopoly. anything physical presence was a monopoly. >> they can go back and they can say, worst case scenario, i have nike.com. as anyone can. >> i want to get to a retail market flash. kate rogers has the story. >> more news on the retail front. cabela's shares are down 4% now. the federal trade commission seeking more information about the sale to bass pro shops. the $4.5 billion cash or was announced in october. cabela's expects to close that deal in the first half of 2017. back to you. >> kate, thank you. >> there is something the government should stay out of right now. that's going to be a great merger, good for the consumer, won't hurt the consumer. cabela's and bass pro shops will allow them to be very competitive and sell products at a great price and having someone

take over the credit card portfolio is a really good idea. >> doesn't that go to what simeon just said, these two companies doing fine on their own need to get bigger so they have the biggest fishing pole when it comes to dealing with their suppliers. >> exactly. >> that's what it is. you're trying to figure out if technology is being your enemy, how can it be your friend. the new world dictates let's find other synergies to make sure we matter. whether that is through different deals, through better inventory, you need to counter that. >> more deals in 2017? >> sure. >> like who? like where? >> i'll hold off on that one. i think you're seeing -- the sporting goods category, as broad as fishing or within sporting goods itself is a category people are look at. cosmetics is another area. >> an easy one is kate's. all over the news today. somebody should buy kate and probably will. maybe a michael kors would want

to own a kate. coach was in big trouble at the time they did really well buying stuart weitzman. cour kors could do well. >> weitzman is shoes. >> but it is also clothes. they have never been good at clothes with michael kors. >> keeping with the european line, if you think about the european powerhouse s that people talk about, they're viewed differently than michael kors, kate or coach. this notion of having a portfolio, more consistency, being able to rely on not just are you the brand of the day, carries weight. >> could a foot locker buy a finish line? >> i don't see any need -- i don't see a need for foot locker to buy finish line. >> why not? to get the scale? >> foot locker has plenty of scale. all that matters to foot locker is how well they do with the vendors. and if they can just continue to gain market share and be the big

strong play, they don't need to buy something. >> he probably e-mails you, i'm at the valley forge mall and the container store is hot. give me a surprise, a wild card for 2017, a retailer who -- we kind of ignored, who may be on their way up. you're a little surprised in a positive way. >> wow. >> not recommending the stock. just tell us who to watch. >> i'm not going to tell you someone because when i look at it, what i say, is online is what's hot. if you're online -- >> if you're off price, if you're off price, you're hot. but i still think that side of the market is getting saturated. so do i think that they're going to do well with home goods because i think home goods will be really strong through 2017. that's a small piece.

i don't love tj max. i think the off price space will take pressure soon, but probably not in 2017. overproliferated and off price, everybody is doing off price from nordstroms from -- neiman and saks on down, everybody is playing the game, everybody is growing the business. burlington is growing the business. >> we're talking before, i think like last week about how some of these off price stores, they buy cheaper good ts to proliferate e off price stores. i do want to go in and buy actual brand name goods at a discount? yes. some stores focus more on that. no? >> they don't any of them very much focus on that. i contend that rack is 80% bought for rack. i contend that macy's -- >> what do you mean? not quite getting the same stuff? >> i think 80% of tjx is bought.

>> do they care? >> consumer doesn't care as long as they think they're getting a good deal at the price. >> people walk in and think they're getting expensive coloniali i clothing cheap. it is very different than saying let's go to an outlet and figure out where we're going to be. i'll do what no analyst should ever do. the amount of gifts i open is growing. there is this notion through the that everyone is trying to capitalize, try to take advantage. i say it as a growing category. >> tj max a good bit? that's a rich value. a rich valuation. >> just talking about valuations now are going to get you in trouble. in general, there are a lot of cheap valuations in the retail sector. they're companies you should stay away from. >> nike seems like an expensive valuation. he and i both agreed on air and off air that nike is an interesting thing to own now. >> simeon and jan, thank you

very much. have a happy new year. 2016 was a great year for many things in the market. except technology ipos. a dozen tech companyies, we'll explain. coming up, what keurig did for coffee, will this device do for marijuana? >> our company's goal is to simplify and improve the cannabis consumer experience. >> will the panel think the ceo startup is dope? >> i thought what you created is really interesting and new. >> or will his idea go up in smoke? >> why do you believe that consumers will adopt a new standardized delivery system for cannabis? >> stay tuned to find out. wher, is t t stuffhat matt the stakes a so high, yoyour future. how do you sol this? u don't.

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ceo of cannacorp. our first product innovation, the patent pending cloud offers the convenience of a single cup coffee system but for cannabis. inside our pod is natural cannabis. measured and tested. retailers and focus groups tell us this is spot on for the growing mainstream market. our partners will cultivate, package and sell the pods. our joint marketing plans include exciting online and point of sale programs. we have an msrp that is disruptive at $150. most of our revenue comes from the pod royalties, recurring revenue achieves $400 million by 2020. a small share of the expected $22 billion u.s. market. our veteran team includes three former keurig executives who raise 1.6 million, ready to go to manufacturing and we're ready to lead this health and wellness

movement. >> you saw james' pitch. now let's meet our panel. joining us onset, venture capitalist near leberborn. james, you're in the hot seat, near, first question to you. >> is your strategy more on recreational cannabis or both? >> people see the material on our website, it is obvious we have a medical bent. we think of it as wellness. people are using cannabis in a range of areas to make themselves feel better. doctors can recommend cannabis now in certain states and certainly that's a direct avenue for us. other states allow for people to self-medicate and get to know how this makes them feel. we want that controlled experience. >> kelly? >> where can people consider using your product? is where is it available? >> premanufacturing. we're getting ready to get the product out there.

early 2017 we'll be in states where medical marijuana is allowed. regulations all over the country, 26 states now that allow for it. we'll be in those states with those regulations. >> patrick? >> in the cannabis industry, many consider human capital more valuable than capital itself. what does your team have the right to win? >> we're built to scale. not only are we executing now, the three co-founders brought all this to fruition. we attracted three former keurig executives. we have three people who are significant at keurig guiding us, avoiding pit falls and we have a great opportunity to do something that no one has been able to do and bring this management team, three great guys together, to guide us. >> talk about the margin structure on the device and on the pods? >> sure. so as many of these programs go, we want that device in as many hands as possible. so slim margins on the device, great margins for partners selling the device and the cups.

we have seen a big pull from our partners because they see this as an opportunity. maybe to hold off some of the commoditization of the cannabis itself. >> how do consumers buy your product? >> today, most states have a dispensary model. go to a physical location to buy cannabis and that's where they'll find the cloud and the cups. we see a future of online fulfillment where you can order a cloud and pick it up in the store where i want to buy it. >> all right, so you heard what james had to say. now we want to know if the panel is in or out. nir? >> it has a strong found, a disruptive product and affordable price point. even though the mark set get is getting crowded, i think i'mthe product that a lot of people can use. for those reasons, i'm in. >> patrick? >> we can see how great a leader james is for the team and the

industry. and how well received the product is from levels of the supply chain. we're in. >> that's three ins. james, you heard the feedback. what is your reaction? >> wonderful. i'm glad you appreciate what we have done. we have a great team. our echo system around us of people that want to join us in our company is tremendous. so i'm hoping that all what you said comes true and we'll see you back here at some point. that would be great. >> that's today's power pitch. >> are you in or out? tweet us using #powerpitch. >> up next, we're taking you inside the home of the future. trust us. it is much more than robot vacuum cleaners. coming up later on, my three big predictions for 2017, we're talking stocks, corporate cash and one country with a bright future, despite what people think. a lock ok at the stocks that le the nasdaq this year. invidia, can't talk about it

enough. 220% this year, applied materials, big year, up 74%. and micron, mu, up 57%. "power lunch" will be right back. orill a big orr orxpanyo offe fiut how amecannprs cas anseices

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2017 could be the best year yet for smart home technology. if the makers of so-called smart devices make them a little less smart and maybe a little more consumer friendly. diana olick joining us from washington to explain. >> a lot of folks like me got smart home devices this year. meet my new nest thermostat. isn't she cute? 201 is expe 2017 is expected to be a bigger year. companies are getting smarter and realizing they have to be much more consumer friendly. >> they're confused what is the value they're getting. consumer could be spending upwards of a thousand dollars if they go the retail market. they don't understand what is the value? energy savings, fun and won't want to use it in a couple of weeks' time.

>> so education will be key next year. in 2016, 80 million smart home devices were sold. nest, august smart door locks, ring smart doorbells and big chunk of it was personal home assistants, like google home and alexa. 2017 could bring more consumers to smart tech because bigacquir devicemakers. companies will also broaden from home security and thermostats, specifically to your appliances. maybe you ask your smart home assistant for a meatloaf recipe and then you choose one, it goes ahead and preheats your oven for you just perfectly. the focus will also be lowering prices and enhancing security to

prevent cyberattacks. in the end, the key to selling consumers on the smart home is helping those consumers be smarter. i talked to agents all the time and they say people like the stuff, but they don't always get it. back to you. >> i get that problem, if you have a stand alone nest thermostat. but once you have something that integrates and it seems like finally that technology is catching up with all the other devices, oven or coffeemaker or light switch, you have something, a hub in your home that connects it and makes it much more attractive and user friendly option. >> it really does. simplifies it, walks you through all the steps. once you understand how it is connected, you understand the benefits. you also understand what some of the savings are. you look at a thermostat and say i think it is saving me energy but i'm not sure. if it is intergrated with all the other systems that track the devices, you can understand better. it is a learning curve.

i'm still sometimes not telling me when i'm cold or hot. i have to work with it. >> 72 seems warm. >> i like it toasty. i'm with diana. >> it was cold. like snowing out here. very cold. >> it is like 50 degrees. >> don't tell me i'm overheating. >> anyway. diana, thank you. >> happy new year. >> this is why we could never be roommates. >> here's what i don't understand. people in the summer turn the thermostat to 69 with the air conditioning. in the winter, to 72. the same temperature. >> the context, all contextual. >> put on a sweater. my house is 58 degrees and everybody is just fine. >> five layers. >> seal skin. just over two hours left in the trading year. why the etf market could be red hot and how to play it.

welcome back to the second hour of "power lunch." i'll look at the right camera. i'm brian sullivan. this is melissa lee. two hours until the final closing bell of the year. here's what we're watching at this hour with markets hitting record highs this year, a ton of money is piled into broad market etfs. we'll highlight some etfs that our guest thinks could

outperform next year. russia responds. vladimir putin says he will not expel anybody in retaliation for u.s. sanctions. in fact, he's inviting u.s. diplomats and their families to russia for new year's celebrations. snapchat may be the most high profile tech ipo of next year. we'll highlight some of the more obscure tech companies na just might fuel a much needed ipo boom in 2017. a couple of hours left until wall street closes the books on 2016. the dow looking like it is not going out with a bang here. trading lower by .2%, moving further away from 20,000. the nasdaq is down by .9%, semiconductors dragging the nasdaq composite lower. the s&p 500 is down by .4%. united health, caterpillar, goldman sachs, biggest gainers in the dow this year, up more than 30%. invid

invidia, up 230%. free port is a double for the year. the nasdaq 100, as we learned earlie earlier, 107 stocks. those are some of the best individual stock pointers this year. what about the etfs, which funds rocked in 2016. bob pisani knows he's on the floor of the new york stock exchange. happy new year. one word for you, commodities. that was the big comeback story and reflected in some of the best performing exchange traded funds. take a look at them. gold, that was one of the big ones. that was the first half of the year. gold is underperformed, more importantly, steel started up and stayed up throughout the year. then you have surprise here, russia and peru, peru, why? large producer of copper. russia, large producer of oil and natural gas. both benefitted from a recovery in their respected commodities. these are small etfs. let's look at the most widely held efts, where the money is

and see what happened. why diversity of outcomes. small cap, russell 2000, big outperformer. emerging markets were below that. power shares qqq was a surprise, never recovered dramatically. here is the big loser here. modestly. that's europe. that's efa there. and many emerging markets also, as you said, a little on the disappointing side. how about the bond etfs, most widely held bond etfs. high yield, a little more like stock than bonds. treasury inflation protected securities did well. corporates did well. total bond and short-term bond on the flat side. here is what you want to look for. if you own a balanced portfolio, 50% stock, 50% bond, here is what happened. spy, up 10%. biggest bond etf, agg, basically flat. all of this outperformance basically came in the fourth quarter.

bottom line here is etfs under management, here is what you want to look at. top ten are 30% of all of the market. top 25 are about 45% and, guys, i think that will continue in 2017. 2,000 etfs out there. more and more you'll see the top 30, 40 etfs get most of the money. that's what happened this year as well. back to you. >> bob, stick around. we want to know which etfs you should be putting on your buy list for 2017. joining us, john merrill. great to have you on with us. a broader question, bob mentioned the proliferation of etfs and the strength of the market. do you anticipate that to continue at that trajectory given carl icahn has been a vocal critic and he'll be an adviser to the president-elect? >> we have been a vocal critic of a lot of etfs and etns that are thinly traded or highly leveraged. i don't think you have any worry about the ones bob was talking

about, the broad etfs, very deep and rich, great buys. very tax efficient, very thin cost, i don't have any problem with them. a lot of the ones that carl icahn is referring to i have a problem with too. >> that's a good point there. >> you like international stocks and the vanguard xus etf. i want you it walk through. when you're buying a basket of stocks, you have to know what's in them. what is in that etf? what are you buying? >> well, really, it is every publicly traded stock that is not in the u.s. any of these indexmakers will leave out a lot of the tiniest stocks. the top three stocks, there are nestle, novartis and i can't remember the third one right now. maybe daimler-benz in germany.

these are -- toyota. that's what it is. but these are well known stocks. they have got really caught up in the local politics and the turmoiled local politics whether it is europe, japan, asia. a lot of these companies really have not had a chance to benefit. a good example, out of germany, a can country that itself is benefitting from a weak euro, and yet you can buy a company like daimler-benz today, the manufacturer, mercedes, and a pe multiple just north of 9 and a yield south of 5%. very attractive valuation, very attractive yields. they have been left out of particularly the trump rally in the fourth quarter. >> a good point. only thing i'll push back on with the veu is that 43% of that etf is big cap european names. if it is that heavily weighted, why not buy a europe etf. why do you need the exposure

elsewhere. >> things rotate, the way i look at it. 43% europe. it is 57% mainly asia. but also it includes some canadian and australian shares too. these things rotate. we picture asset classes like in this never-ending horse race. europe has been a laggard here. but in recent weeks actually europe is actually come back and asia has been the laggard. it is a well balanced, if you want to own international, and you don't want to second guess what is going to leave next what is going to lag next, then it is best to own the broad index. from there, you can explore and do some of your own investing that can go into more specifics. but if you're going to start with international investing, my strong advice is to do it with a broadly based general etf. >> i can see the point. brian brings up a very good

point, what exactly are you trying to do if you're investing outside the united states. the problem here is, this year japan did well. europe did not. parts of latin america did well, china did not do that well. what are you really trying to accomplish here? if your goal is to play contrarian, then investing in a europe fund as you mentioned, vanguard is a big european fund, that's the biggest one out there, would be the way to go. play a contrarian. the problem i have with -- i'll cover the entire world is you don't really get much of anything, outperformance anyway. a vast mediocrity in the middle there. i'm in favor of area wide funds. even in emerging market etf, eem. >> it is tricky. eem is mostly china. china was a laggard this year. you're getting that head wind from china. but you like a more specific etf also and that is the vanguard reits in etf. >> here is another one that

really -- the last half of this past year really got trashed. interest rates rose. people really saw the reits, thinking yields will be less competitive. in my view, they oversold reits in here. very attractive. very attractive yields here, relative to the ten year treasury. and once better positioned, we have a new team in washington, a pro business team, coming in for more investment in america, whether it is by american business or international business, and much more friendly environment here in america. what is going to be a direct beneficiary of the investment in america other than reits? basically everybody has to have a real estate plant equipment to invest in. i think the really well positioned for america's growth. it is a purely domestic type, everything based in dollars. >> the only caveat there are billions of dollars in reits debt rolling over next year. tens of billions.

if interest rates rise quickly, they'll be caught in a little bit of a dilemma there. that's why they'll be under pressure. >> gentlemen, thank you. happy new year to you both. bob pisani, john merrill. >> happy new year. >> thank you. here what's coming up on "power lunch." vladimir putin says he will not retaliate over sanctions imposed by president obama. he invited u.s. diplomats it a party at the kremlin. barney frank joins us with his thoughts. and our predictions for 2017. and horrible hit and run caught on camera. police are looking for the driver. all of that and much more when "power lunch" returns. your insurance company

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vladimir putin says he will not expel u.s. diplomats from russia. he's inviting them and their children to a new year's party at the kremlin. john harwood is tracking all the latest developments. john? >> just 24 hours since the obama administration announced the sanctions against russia and already this compound on the maryland eastern shore is being shuttered. you see from the video there, this is a place that had been used as a recreational retreat, and according to u.s. government for intelligence reasons a similar facility in long island has also been closed as of this weekend. but this is not the end of the story. two big things happening next week. first of all, john mccain is convening a senate armed services committee hearing to explore the russian cyberhack

with leading u.s. intelligence officials talking about what they have learned. and secondly, president-elect donald trump is meeting with some of those same intelligence officials to get their assessment of exactly what happened. now, he's so far refused to accept the findings of the intelligence community that russia was behind that election hack, but after that meeting, he's going to face a choice. >> he's either got to come out and acknowledge that this did happen and that it is a problem for american democracy, not just for secretary clinton. or he's going to have to come out and far more dramatically than in the past challenge our entire intelligence institutional network. >> and, of course, it is clear that one of the reasons why vladimir putin decided not retaliate with tit for tat sanctions is that by tamping down the controversy, he may make it easier for donald trump to come out the way he wants

from that choice that jim jeffrey, the former u.s. ambassador was outlining. we will see. but the pressure from republicans on the hill including john mccain, lindsey graham and others is going to present a real wild card for the three weeks until his inauguration. john, thank you very much. happy new year. let's discuss the u.s. sanctions against russia a bit further with bill browder joining us by phone. thank you for joining us for the second straight day. we got cut off yesterday. somebody lived in russia for a number of years and did business very successfully there for a while, we talked about what doesn't work in dealing with high level russian bureaucracy and security. what does work. how do you win with the russians or with putin. >> what you -- so basically the only thing that putin

understands is hard force. he's a thug. you can't talk nicely to him and expect him behave himself and do what you want him to do and both previous presidents, obama and george bush before him, tried that. and it didn't work. what putin understands is real hard power. so the sanctions that are currently put in place and passed sanctions that have been put in place are effective, they don't change his behavior, but what they do is they create a consequence for his bad behavior. and if you don't create a consequence for his bad behavior, then that gives him the green light to do whatever he wants. and he's got a lot of bad things planned. >> he's got a lot of bad things planned? like what? >> if you listen to his speeches, he said repeatedly that the breakup of the soviet union was the single greatest geopolitical disaster. so in his mind, he wants to reconstitute in some way the soviet union. he wants to take back various countries that are now

independent. and the three countries that are most relevant to us in america and elsewhere that are independent are the baltic states, three little countries in the baltics, latvia, lithuania and estonia. these countries are members of nato. and we have a treaty obligation to defend them. and at the same time, putin wants them back. in the same way as he wanted crimea back, he took it. same way he wants ukraine back and a lot of places back. and he would like to redraw the map of the world and if he does that, it creates all sorts of effects we don't want to contemplate, do we go to war for the little countries in the baltics against russia? and other terrible choices like that. >> you think you would make a play for either one of those countries or some or all of them? >> i don't think you mack a play with tanks rolling in to riga and latvia, because he understands that would cause immediate -- >> would require a military

reaction. >> it would require that. that's not how he did things in ukraine, in crimea. in crimea, they sent in little green men. they had a bunch of mercenaries and criminals and other types of characters who effectively were members of the russian military without their military insignia on their uniforms, and they effectively took over the country and afterwards they said it was a takeover. russia likes to play with -- what we call asymmetric gains where they put in plausibly deniably people, do cyberattacks, they do all sorts of stuff that are not sort of in the textbook of what a military invasion is, they hope that doesn't then trigger a nato reaction. and i'm sure that putin will play those types of games. that's the kind of stuff he does. >> what's the chess game that putin is playing by not retaliating in what would have been an expected fashion, expelling 35 u.s. diplomats from

russia, proposed by lavrov. seemed like it was an elaborate act that they had coordinated that lavrov would propose expelling 35 in response to us expelling 35 and then putin would come out an say, you know what, we're not going to do that, in fact, we wish the american people a happy new year. >> well, so basically putin is -- he's got a big -- at a big gift in hillary clinton not being elected. because donald trump has said openly he wants to restore relations with putin, he's indicated or hinted at the idea that he's going to withdraw sanctions against putin and i should point out, the sanctions in place are devastating to russia. the current sanctions from ukraine that are put in place by obama are devastating to putin. his big objective and his long-term play is to get rid of those sanctions because the economy is suffering. it is hard to run a huge

military operation. this sanction, he wants lifted, he thought he had a queen run to the sanctions being lifted based on donald trump's indications and all of a sudden, yesterday, obama put a huge -- in the works by creating these new sanctions. and these sanctions about how trump was elected and so trump is in a corner now because if the sanctions -- if he lifts the sanctions, he's going to look pretty bad in washington. putin didn't want to put him into the corner further by retaliating because there would be no way he could lift the sanctions if putin retaliates, kicks out a bunch of u.s. diplomats and does other nasty things. pewten en putin is buying -- >> there is two ways to deal with a bully. ignore him or stand up to him and have a physical confrontation and hope it plays out in your favor that way. are you suggesting the sanctions are the wrong way to go because

vladimir putin is not the kind of guy that will go away. if you poke him, he'll poke you harder. >> i think the sanctions are the right thing to do to putin. anyone who has dealt with a bully knows if you don't do anything, they keep punching you when you go to school. he looks for weakness. let's be serious here. this is a country, russia is a country that an economy the size of italy. we're immensely more powerful than him. we stand up to putin, he will back down. and so the idea that we're going to appease him and we all know what appeasement does, if you look back at history, appeasement never works, you don't try to appease dictators. you have to contain dictators. this is the famous british politician neville chamberlain did with hitler. he said, he wouldn't cut a deal with hitler, you can have this, have that, there will be peace in our time. that's the single most historic state ever. and i believe that appeasing

putin is a similar thing. >> thank you. appreciate it. do the new russian sanctions mean anything? joining us former house financial services chairman barney frank. you probably heard what bill browder just said. do you believe the sanctions are the right action? >> i agree so much with mr. browder, i feel almost superfluo superfluous. he understands putin. the only thickng i would add, y can ignore him or poke back. donald trump has a third way to deal with a bully, thank you, mr. bully. as long as you say nice things about me. this is extraordinary. a man who says he's going to stand up for america's interest when nobody else has is in the process of appeasing or actually thanking and ingratiating himself the man who has done enormous damage to much of what america cares about.

this is a guy who said, remember, mr. trump, that putin said nice things about him, he'll say nice things back. no matter what else he does, that destabilizes europe, threatens democratic nations on his border, that interferes with the american elections, i think a failure to do sanctions would be a dare election of duty. you are saying, keep doing what you want to do to us. and, in fact, i hope to go further that with vice president biden suggested is going forward. i am -- i have to believe that when it comes to a cyberwarfare situation, the use of technology, we're better than they are. i don't think anybody has better technology than america has. so i hope there is also the kind of cyberwarfare going on as well that you don't talk about. >> again, though, following up on what bill said, sounds like russia's economy is a bit of a disaster. so that's forcing vladimir putin to do other things to either

distract the populous or to establish some nationalistic ferve. taking the intention away from the collapsing or weak economy. so should there be something further done in some way to eliminate that? what would it be? >> well, as i said, i hope there is cyberwarfare going on, going back to what he was doing and going after his capacity. i think even further economic sanctions, further economic tightening, everybody in the world needs -- disagree very much with the premise that when a guy abuses you and mistreats you, you shouldn't retaliate because then he'll get weaker and might do more things. there is nothing to suggest that the kind of irresponsible anti-democratic imperialist -- >> i want to be clear. not what i suggested. if i said that, i apologize. been a long week. what i meant to say how about cuba as an example.

did the sanctions against cuba accomplish anything? >> no. but there is a different situation. i don't believe that cuba was being aggressive in its assault on america. don't remember castro, the other way around, we were involved in cuba. i don't regard -- i thought castro was a great purveyor of democracy. he comes to power purely to anti-dictator sentiments and then becomes a terrible anti-democrat. i didn't mourn him at all. but he was not intruding in america the way putin is. and i think to fail to retaliate on the ground, it will make him madder and do more, first of all, i think mr. browder is right. this has a long-term cost for him, it is a constraint. i would say this, the suggestion that putin is doing any of this because we weakened the economy, no, this is a man who has no democratic instincts. look, the quote that we just heard that the defeat of the

destruction of the soviet union was the greatest geopolitical problem, that was, as ronald reagan correctly said, and george h.w. bush took some credit for, the best advance for human freedom in memory, since the defeat of -- >> the notion, running out of time. what i meant to imply was is there something between or different than either, a, direct military action, which nobody wants, or, b, sanctions. i didn't mean to say don't sanction the country, but is there something else -- where is the rest of the world? where is the rest of the world? how did this become a u.s. -- what they're doing in -- >> excuse me. why is this a u.s./russia thing. >> it isn't. one of the things we had, this is true with regard to iran as well, one of the successes of the obama administration and its foreign policy was that western europe is with us.

the sanctions that we have had, the economic ones that have had so damaged putin are not unilateral american sanctions. they are nato sanctions. european union sanctions. that's where putin was trying to undermine democracy and openness, not just in america, but in other countries. he's got a deal with marian la pen. up until now, up until trump began to flirt with putin, and say nice things about him, america had successfully rallied much of the world including the european union and that's why the sanctions against russia have been so effective. they have been multilateral. >> congressman barney frank, thank you. this is the final countdown. not the awful song by europe, the last oil close of the year. they're doing this, just to

twerk us. >> to you. >> we have been nice all year to our "power lunch" team and they'll end the year like this. here's the question, what will happen in the energy markets next year? haleema croft nailed opec. she's here with her predicts of the new year. what the vue oca? whabasketball cos $14.e? what's teaspirit worth? what's it wortto talk tyoom? what's thealue of catal is to eateds? the vf not h, but things tt matter. rgnl

seems like we have to wait until 2017 for dow 20,000. nine minute s to go in the trading year and we're at about 240 points away. the oil market closing for the day. to jackie deangelis at the energy desk. >> we just lost pennies in the crude oil trade of the day. equities have slowly but surely slipped away from that dow 20 k mark you mentioned. crude oil logging a 45% gain on the year. having its best year, yearly gain that is since 2009. what will happen next year? opus is saying probably lower for longer but not going to test the lows we saw this year. remember, we got dangerously close to $26 a barrel. meantime, with the year ending, we're talking about all the volatility that we saw, let's break out the 2017 playbook with

some of the predictions for what you can expect in commodities for next year. volatility was the name of the game in commodities this year. gold, oil and copper all saw massive swings. next year, it looks like that will continue. because there are so many unknowns. gold prices will move lower. gold prices will continue to move on fed action. dovish fed has been supportive of gold, a hawkish fed that hikes rates is not. the fed's actions also impact the dollar which in turn impacts gold. so with fed change coming, the expectation is that gold prices will not farewell. crude prices will move higher. crude oil saw massive swings this year. expected to slowly climb higher and stabilize next year. the range is expected to be between 60 and 7 0. but that stabilization hinges on supply decreasing and demand rising. there are a number of caveats that could throw that equation off. crude has shocked the market the last two years, not impossible

for it to strike again. copper prices seesaw. copper, of course, is eyed as an indicator for global growth. copper will continue to be in focus but expect prices to bounce around. data headlines the fed, these will all influence the hot commodity. >> as i mentioned, crude oil was a big gainer. gold prices saw a 10% spike. copper prices almost 20%. there was one loser on my screen that stood out, it was cocoa prices, down 30%, using a lot of that steam in the fourth quarter actually. simple supply and demand story here the chocolate holiks wanted more than mother nature could procure. that's the problem with cocoa. brian, i'm not sure you had anything to do with that? >> that was our first and only cocoa update of 2016 and came on the last trading day.

it is perfect. next stop, talking about, like, what is the obscure commodity we can find. >> palm oil. >> that's it. palm oil. a big year. with the last close -- regular oil, not palm i'oil, to haleema croft. i try to give you a compliment. you said opec would stick the landing and come together and so far it looks like they have. >> like saudi arabia, they did a 180 on the oil policy. for fiscal s $50 oil. i think saudi will drive this deal home throughout 2017. >> they needed 50 for a long time. they haven't been able to get 50. what changed, were they able to wield that influence a little more. >> i think the saudis said if we have to take more, we'll take more.

they said we'll do whatever it takes to make this deal work. i think that stabilized sentiment in the market. people thought everyone would cheat. but now i think people think opec will try to hold it together. >> how could the situation with russia impact the oil picture next year? >> one of the things to watch for, if hillary clinton were president, i would say get ready for more sector level economic sanctions on russia. that could impact the future oil development. now there is a trump presidency. he's saying let's move on. i think we could be in a situation six months from now, if the dust has settled, we start talking about energy sanctions being removed, putting u.s. companies on an equal footing with european companies and russian exploration. we have to get a couple of months out. i think we could see some energy sanctions coming off. >> even through all of this, you see in six months some of the sanctions -- >> i don't think it will be lifted. i think six months in, tillerson, secretary of state -- >> who is our secretary of state designate. >> i think the argument will be that european companies can

continue to operate, why should u.s. companies be penalized versus european companies. >> jackie just talked about cocoa. your team, your team at rbc, you do a lot of things. a lot of different commodities. do you come to a conclusion about what is the best way to make money in 2017? >> oil, we thought gold as well. we think oil is going to be a steady move higher. >> slow grind. >> slow grind. what you want to watch for are crazy variables. you may have a snapback of u.s. sanctions, extra territorial and they would require importing companies to make reductions. if venezuela implodes, that could be another situation which potentially pushes prices higher. you want to look for what is the geopolitical shock factor. and what could be supportive of

gold, a trade war with china. what if you get some type of geopolitical catalyst. >> the humanitarian crisis in venezuela is terrible. people waiting for food, eating out of dumpsters. are they investing in oil? >> they're pumping every last barrel. but when you can't -- >> thick, sulfury. >> you can't pay your service k.k. venezuela can't cheat on this deal. they have in barrels. >> haleema, happy new year. >> happy new year. >> your boy's here. >> yes. hi, gunner. >> you could have gotten on television. the lengths one person went to get an edge on the competition. plus, if you missed the belt bowl last night, you missed out t was not only one of the greatest comebacks in college bowl history, also done by arguably america's favorite university team. the virginia tech hokies.

full highlights of america's te team's win coming up. incred bdd ptectn in path thin, ...tnk it woulul work, but it does. it's clealys discrt for bladdeleaks, t super incred bdd ptectn in path thin, .abent cor rns quid tgel. know'm wri t no one ee will.

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georgia and auburn. auburn players snuck into the huddle during a time-out. and no one seemed to notice. the players with their arms around him either. one assistant can saying to him, to the ref, get him out of here. georgia was up by 11 points when this happened. they held on to win. unbelievable. you don't notice the guy next to you, wearing a different uniform. >> i love it. bold. it is bold. >> sticking with sports, an amazing comeback by virginia tech in the belt bowl. they got crushed in the first half -- >> his favorite team. >> right. down 24-0. we came out in the second half, like a team possessed, virginia tech capitalized on a number of arkansas turnovers, 35 unanswered points to beat the razorbacks 35-24. get this, you love stats. according to the win probability index, arkansas had a 97% chance to win at the end of the first half. virginia tech took the 3% to the

house. like trayvon mcmillan. america's team, virginia tech. >> good for the hokeys. >> one thing about my school, which i love. if you go back to -- run that clip again. 55 degrees in charlotte. people are in the stands with, like, face masks and blankets, that's not cold. it wasn't that cold. >> they're weak. >> america's team. >> coming up, some big unicorns revive the ipo in 2017? "power lunch" will be right back.

let's get to john harwood with a news alert. >> we have just got a tweet from donald trump, his first public response since the sanctions that were issued by the united states against russia. and it is really a breathtaking tweet. donald trump saying, great move on delay by vladimir putin. that is to say putin deciding not to retaliate. i always knew he was very smart. this is extraordinary in that you have the president-elect of the united states praising the russian leader a day after at the instigation of conclusions by the u.s. intelligence community the existing president has sanctioned him for interference with the u.s.

elections and also for intimidating u.s. diplomats. i can't imagine this will have any effect other than to increase the ardor of people like john mccain who is going to have haergearings on this next , critical of vladimir putin. this is a remarkable thing. the statement that was issued in his name last night donald trump's name last night said he would have a meeting with intelligence officials next week. now he's tweeted in his own name that this is something that was very smart by vladimir putin and praising him. we have not seen the likes of this before. and the ramifications are -- we have to watch over the next couple of weeks. >> john harwood on the trump tweet beat. thank you very much, john. we appreciate it. so back to business. specifically small business. what are they doing to get ready for the new year and the new presidential administration?

we're going to schihim. and predicts for 2017, watch, write them down, and get ready to call me out one year from today. we'll be right back. it is time for the "your business" presents of the week. 3-d printing is changing how business is done and the owners of hv 3-d works in harmony, pennsylvania, are helping the car world get up to speed. they're revving up ways to apply this technology to the auto industry. and leaving their can competition in the dust. for more watch "your us aboutbu sunday mornings on msnbc

. we heard a lot about big business, but what can small

businesses look forward to next year under a trump administration? with us, ravin gandhi and ryan gilliam and our own small business reporter kate rogers. kate, i'll start off with you. set the table for us in terms of -- i you set the table in terms of how we think tax reform is a major thing. >> taxes are always a top three concern for small businesses, regulatory concerns, taxes. all businesses i talked to they want a more simplified tax code. many of them that i spoke to liked the idea of the donald trump administration for that very reason. >> you are looking forward to some sort of tax relief rsh right? >> absolutely. any entrepreneur when it comes to lessoning taxes you have to be bullish about that. >> are you afraid because you have operations in china and india. i'm not sure if you have operations to sell products within the regions or are you afraid of border adjustment tax?

>> i have global operations because we supply to most of the large american companies and they source their stuff from overseas. my number one concern with the trump administration is if he -- i am cautiously optimistic that he is realizing that you campaign in poetry but govern in pros. >> what are you seeing in 2017? a better environment for your business specifically because you have the great things like simplified taxes but also the repeal of obama care which can really impact your business. >> we will have a republican-led government for the first time since president george w. bush in 2003. it will be interesting for me because during that period the small business administration only gave out big business loans at the time. if you think about those significant decrease in loans

under $100,000 we had an increase in loans over a million dollars. i'm looking at it from the standpoint of helping main street and not just big business. >> how are you feeling in terms of business growth because that is one thing i saw the post election optimism sentiment index soar on expectations of a better economy. do you think that is something we see under a trump administration? >> we won't know for some time now because the rhetoric hasn't met actual policy yet. i'm optimistic. the aca looks like it will stay the same way. the revenue will be there for us in our individual business because we are talking about people being able to keep preexisting conditions policy. you are looking at 26 year olds staying on their parents' insurance. we are excited about that and hoping that the name may change from the aca but the purpose may

stay the same. >> i'm curious, how are you feeling about 2017 versus a month and a half ago before the elections? >> i'm feeling pretty good. we are just finishing up our best year ever in 2016. we are seeing a slight slow down here at the end of q 4. i don't think that is representative of something recessionary. animal spirits are back. the market likes president-elect trump. we are looking for acquisitions in 2017. in that sense like i said before you lower taxes and regulations you release the bulls. i do think that from a trade perspective it was acquired ten days after the election by japanese conglomerate and tells me that i might be worried about a president trump they see. i don't think my deal would have gone through had people been worried that they were going to shut down trade.

>> best of luck to both of you. our thanks to our own kate rogers. coming up, my big and fun predictions for the new year and what may be the single worst or oddly best piece of junk mail i have ever received? can't believe what we got in the mail yesterday. stocks accelerated. looks like we head to the new year with a wimper. we are back right after this. th is my riremt. tiringet tes. and i ver get tired of it. anour nevetingetiring tired tires retirement aru entily tiprepared to re? 'm in vts as a venvtor in ve. and i ver get tired of it. investith e*ade, whe instors ate and instvests... or n in vests. sign uat etrade.com and get up to x hundred ar

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great year for the markets but we will win 2016 in the red. dow jones down. the s&p is up by more than 9%. the nasdaq really taking the worst of the major three down by 1%. for the year the nasdaq is up by 7.3%. meantime we have also got a tweet from the president-elect responding to putin's decision not to respond to u.s. sanctions. great move on delay vladimir putin. i always knew he was smart tweeted president-elect. >> my prediction is that will make some headlines. in the meantime let's have fun and talk about predictions. these are my three predictions for the next year.

i have been doing this every year for the last four or five years. let's have a little. here is my prediction. congress will reach some kind of a massive tax deal, a lot of talk last year about billions in corporate cash from overseas. some democrats are on board and i think they come together and get things done. i think it is a good year for the dow. if the dow can rise 8% to 12% last year. i have been bullish since hopium days of 2011. i have been a little bit -- finally doubling down on mexico. i wrote about the bullish of mexico back in late 2013 as part of my 2014 predictions. the mexican ipc is up eight percent. local currencies aren't that concerned. i think a lot of concern about trump administration may be overdone so mexico and that is a

multi year thing. these are just for fun and really like i do these for melissa. it is an opportunity for melissa and you, america, to call me out when i'm wrong. >> she is marking this. she recorded this thing. i don't like -- it's not our job. i think -- you talk to the fast money guys, what do they say about the market snz. >> i think there is a lot of optimism about corporate taxes. not as much on repate rgz. that could -- >> although some of the folks that we have talked to on the record said we don't want the money just -- you have to make a deal to use it for some stuff. >> back to the markets we were talking about these predictions in my note book. i will check them next year. it does look like the market took a turn lower after the president-elect tweeted his admiration for vladimir putin's

response to the u.s. sanctions. so there you have it. slight tick lower as we look to close out the year. >> i'm sure "closing bell" will pick this story up. have a wonderful safe, happy healthy new year. >> "closing bell" starts right now. hi everybody and welcome to "closing bell" on this new year's eve eve. i'm kelly evans. >> one more time for 2016. i'm bill griffith. stocks are ending the wild year. major averages being stymied by thin trading volume although we are moving lower here. >> check out the gains for the year. the dow is up more than 13%. the s&p rising about 10%. the nasdaq up nearly 8% and the russell 2000 almost 20%. we are goi