live from new york where business never sleeps, this is "squawk box." ♪ good morning. welcome to "squawk box" here on cnbc from our now home at the nasdaq market site. i'm andrew ross sorkin, along with joe kernen and melissa lee. this is how the markets closed out 2016. the dow was up 13.5%. the s&p 500 rose 9.5%. the nasdaq rose 7.5%. this is your home, we should say. >> it is the home of "fast money" happy to share it for the time being what a great back drop this is, right? do you like this? are you against change. >> i'm against change normally. but also trying to hear you. can i ask to hear you. yes, i think you can. >> normally -- do you have

anything? >> no, i know what you mean. >> we're all doing this together. coming together. >> it's cool. >> the lighting is great. everybody looks fantastic. >> it almost was worth moving here because you will not hear us clicking. >> yes. >> one of the great complaints we get is about the clicking on our keyboards. show the new keyboards. >> look at the letters on here. is this for me? huh? >> everybody has that. i don't wear -- i'm not far sighted. but thank you. whoa. >> it's a silicon overlay that makes it quiet. >> there, very smooth. >> are you worried they'll trash your set for the next few months? >> not so much worried about andrew. a little worried about joe. i took a deposit. >> good. >> if there's any damage, i'll collect. >> big deposit. >> we thank you that you're sharing your set. we're getting a brand-new set of our own. >> of course. yours will be super fancy. >> this whole thing is temporary. we'll be downstairs in the --

>> the three-hour flagship morning show. >> of course. >> i'm not disputing that. this is for the flagship evening show. that's all. let's check on the markets. as we start off 2017. look at how we are shaping up on our march to dow 20,000. look at that. at the open, the dow could add 146 points. s&p could add about 17. nasdaq could add about 32 points at the hope. granted it's early. wow, what a sign for a rally in today's session. looking at the european session, and we do have green arrows pretty much across the board. the dax is trading flat. in asia, japan was closed for a holiday. we had some good gains over on shanghai, up more than 1%. shenzhen up. and the big news here, you co d

production was cut by kuwait. the dollar strength continues today as we close out 2017 with a massive rally. up about 6% since the election. strength is continuing today. looking at the ten-year and the bond market, yields just above 2.5%. 2.514% on the ten-year note. >> among our top stories this morning, investors pumped a record $375 billions into etfs last year. these preliminary numbers are from blackrock. the king of those. lipper reports that the u.s. actively managed stock funds recorded 228 billion in withdrawals last year. on today's economic agenda, december manufacturing pmi at 9:45 eastern. and that's followed by the december ism manufacturing index at 10:00, along with november construction spending. and a nationwide customs outage is now over.

but airports are still getting back to normal. four-hour computer disruption began around 5:00 p.m. eastern yesterday. thousands of travelers were stuck in long lines for several hours. >> not a good start to the new year. people arriving from outside the u.s. were being processed by hand. it's not clear what caused the outage, officials say there's no indication that it was malicious in nature. 237 points is what we need. if woe start up 144, you never know. >> did we bring the hats? >> i don't know whether those made the move with us. 144, for two weeks we've been in limbo. we wondered when we'd do it. maybe this is it. >> when we talk markets -- >> we have to set the tone for this today. >> moving to politics. president-elect trump hitting back at north korea and china in tweets.

north korea leader kim jong-un warned the preparations for launching an intercontinental ballistic missile were in the final stage. trump tweeting in response that north korea stated that it is in the final stages of developing a nuclear weapon that is capable of reaching parting of the u.s. it won't happen. in a second tweet president-elect trump criticized china saying china has been taking out massive amounts of money and wealth from the u.s. in a one-sided trade but won't help with north korea. nice. so, you know -- >> then there's this. this is the other news on the trump transition. trump is expected to select robert lighthizer as trade representative. he served as deputy trade representative under president ronald reagan. and george governor sonny perdue is the leading candidate for the department of agriculture. for more on politics, let's

bring in john harwood who joins us on our new set. john? >> there's a relationship between the two things you talked about. bob lighthizer is a long-time trade hawk. somebody who more than most republicans has favored u.s. striking back, getting tough. he was a long-time adviser in addition to working for president reagan, working for bob dole. when bob dole faced a primary challenge from pat buchanan who was running on a trade skeptic platform, lighthizer urged dole to adopt some of that rhetoric. this is brand consistent for donald trump. i think lighthizer would be a popular choice within the republican party. somebody who has got a long track record. and sonny perdue as ag secretary, would almost fill out the cabinet. so the china and north korea

stuff, not sure whether that was just a marker by the president-elect, or something signaling that behind the scenes something is happening from his end. >> to me, the bigger question on the tweets is do we think the tweets will continue after he becomes president? >> all signs are that he will. and his aides have said they will. this is a way of communicating that he enjoys. that they continue control. >> he finds it effective, too. not because he enjoys it. it had a lot to do with the campaign, with the way he speaks to the american people. >> fire enough. without going through the fake news apparatus of the mainstream media. i tell you what i'm scared of. i'm scared of chicago, san francisco, or a city being within the range of an icbm from north korea. >> who isn't. >> if you read the editorial in the journal today, that either the obama administration or the trump administration or both need to get together and do

something defensively if he decides to test an icbm and shoot it out of the sky. we have the capability to do that. would these two administrations be able to work together to decide to do something which would be seen as provocative? >> i doubt it. >> so we wouldn't do that. the "journal" says we have to do it. >> i'm not saying we have to or don't. i'm saying i doubt that will happen in the three weeks -- >> that they test it or that we would shoot it down. >> that we should shoot it out of the sky. so we would let them become capable -- i guess when it reenters, there's a way you have to preserve it if it's intercontinental, that they don't have that capability now. if they do get it, they're full nuclear power, they're trying to get to that point before a new administration. >> there's a significant view within the u.s. government that north korea is like the three stooges on this. they're not going to be capable of getting this done.

>> like jv, like isis or -- >> real jv, below jv. >> okay. >> maybe sixth or seventh grade. but we'll see. north korea has had a consistent pattern of testing us with nuclear tests of various kind that usually don't work very well. and they want to get attention. they want to get some concessions. we'll see. >> this would be your nightmare. you know, president-elect trump may decide to take the hard line on something like this. >> not my nightmare. my nightmare is that he instigates something over twitter. i have a different question. house gop votes to gut an office reviewing ethics. this happened within the last 12 hours. >> that's extraordinary. out of the gate, you know, you have two different tracks going on. you have the trump administration with its appointments and policy development, and the republican congress which has an agenda on

the runway ready to go. it was kind of jarring after a campaign when drain the swamp was one of the themes of the republican party, and the president-elect in particular, that they decide to weaken the office of congressional ethics and the republican leadership said they were against it. this is something that members -- that bubbled up from members. and some people who pushed it -- >> bubbled up from members who had been investigated. >> investigated by the house. and their argument was we don't get due process, it's unfair. there are too many accusations hurled against us. when you think about the campaign, i don't think many voters were going to the polls saying i think the ethics scrutiny of members is too tough. >> what are the implications of this? does anything happen or nothing? >> to me, the only question is whether the president-elect denounces it.

this would be an easy way for him to make points, anti-corruption points. or whether the leadership finds a way to quash it. otherwise they'll weaken the office, there won't be immediate effect. it will simply be less scrutiny, less strict scrutiny and a talking points for democrats to attack them. >> all right. just looking around here. this is like the g-7. we have a much -- we have more capabilities to do more. >> we have more. >> who doesn't want to do more? let's get back to the broader markets. we'll check in with, like, six people on what they think will happen on this first trading day of the year. joining us now, we should have some time after i finish the int intros, we have drew mattis. what's going on? >> good to see you all the way over there. >> how do you like it here?

when i test my intercontinental ballistic missile -- >> you might need one from there. >> and jason trennert. what do you think 20,000, this week? next week? >> no, i think we're within -- maybe a couple hours. >> could be. when i get 144 upward pressure in the morning, that could happen. >> yeah. a lot of contingent optimism. not sure that will end soon. the real question is when we get into the negotiations, when we get sworn in. >> last week the headline was that the trump rally with you continuing to fade. because we had three days that we didn't go up. drew, have you -- your gdp numbers for next year, where were you before the election? have you ratcheted them up at

all? >> see, we did a -- >> talk louder. we did our entire revamp after the election. >> you did. >> we have 100 basis point acceleration off of last year. some of that is due to trump, a small part. we don't have a lot from the trump acceleration. >> where are you right now then? >> just under 2.5% for the year, for 2017. >> you didn't add anything because you were already smart enough to know it would happen? >> no, because i waited until after the election. when you look at the trump plan and where we are in the cycle, it's not a giant add. >> how you are measuring the plan? what are you pegging the tax rate at? where are you pegging repatriation? >> so i took everything in trump's plan that he put out on his website, and i scored it using congressional budget office multipliers and came up with if itself fully

implemented, 2 1 basis points a year. >> so this market is totally ahead of itself then. >> i think the market has gotten ahead of itself on what trump is doing. in terms of the economy and the rest of it, claims are low, consume sr is doing well. we'll have the unemployment rate closer to 4.5% than 5. all signs to the u.s. economy cruising along here that will trump anything else. >> you have how many fed hikes baked in? >> we have two. they want to do three. we think we'll spike up to 3% on interest rate hikes, and the dollar will go above 110, a substantial drag on the economy. net-net my gdp numbers are lower than drew's. but the extent of what's

happening now with the marketplace is more due to the fact you have done from a negative administration on business to a positive administration on business and you have an administration telling american businesses don't move your businesses overseas. so we'll see in 2017 a bit of that adjustment where we stop the leakage of jobs. >> if i could hop in, the one thing you don't know, and is very difficult to model econo c economicetrically is attitude. the change in attitude is my own small business -- >> so animal spirits -- >> yes. and the question is whether businesses change from focusing more on financial engineering to actually true capital spending. one thing absent over the past couple years has been productivity. it will be difficult to get a

continuation of corporate profits without an increase in productivity. that's a big thing i would be watching for in the next couple years. hopefully that will happen. >> the problem with productivity is you wind up losing jobs with the way we do it now. the big thing we have to do is transit away from a service economy to a manufacturing economy where all the productivity is. the problem now is the sector of the economy that's growing strongest is healthcare which has the absolute lowest productivity in the entire economy. other than perhaps news media that's where you get the drive. >> wow. taking a knock early on. >> i think in the future you could see more productivity from the service sector. if anyone is looking out and expecting -- look at the financial services industry. people are constantly being replaced. technology is picking up. that's an unusual change. as steve rightly points out, it's been all manufacturing driving the productive numbers, and we're making a switch into the service sector feeling some

of the presh showsure from productivity. >> 93% of the u.s. labor force is in services or government work. 7% of the labor force is in manufacturing. a little -- you have a long way to go, but also a little can make a big difference, from an optics point of view. >> and you get to manufacturing, then you have to play the dollar story, the dollar story will be very complicated. >> that's why i think steve is right. in many ways the dollar in my opinion will be the speedometer on how quickly the fed can tighten, as it found out early last year. it wanted to do four tightenings, it found out by februa february -- >> but if you're trump you almost want janet yellen to be dovish. at this point, you need the most dovish fed in town to make this all work. >> i think, you know, it plays well on the campaign trail to talk a big game on the fed.

but anyone who actually gets in the chair of president, you done want -- >> you don't mean speedometer -- >> you need a governor. >> you said speedometer. you meant governor. >> i meant governor. >> say what you mean. so it's not just a measure -- >> it is a measure. >> i'm trying to help. >> i know you're a motorhead. >> i'm a gearhead. i can drop a tran, put it back. no, i can't. i'm a light bulb changer. thank you, everyone. i won't try to name everyone. thank you all. thank you one and all. >> when we come back in just a moment. it is a new year. there are new laws now in effect. if you live in france, you have the right to disconnect. we'll tell you what that means when "squawk" returns live from the market site and nasdaq in times square.

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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. we're in our new chairs. well -- the chairs -- >> old chairs. >> not really new. >> old chairs in a new environment. >> we do a chair segment because sometimes it's sponsored.

we think if we move from our normal seat to a different place so it has a different look, we can change the content or the thrust of what we're talking about in a more informed way. >> more entertaining. >> the old chairs -- last year, i used to be able to sit back. >> they're comfortable. >> i don't know how long it will be like that. any way, sean hannity. you heard of him. >> heard of him. >> okay. so he went to london to the -- >> so see julian assange. >> to the embassy of ecuador. julian assange swears on his mother's grave that they didn't get the podesta stuff from the russians. >> that's what he says, yes. or he even said a state actor. >> or from a state actor. all right. so we have the fbi and cia and everybody else. >> says the russians. >> not necessarily podesta, maybe the dnc or the wasserman

shultz stuff they're talking about i've seen scuttlebutt about, you know, that maybe these agencies do play along with the administration that is in power. what do you think is happening? >> one is donald trump over the weekend said something will come out. he said i know something. i believe that's this. >> maybe that was assange. because he's friendly with sean hannity. >> hillary said assange didn't like her. did he say that? >> julian assange always hated hillary clinton, and hillary clinton hated him. >> so you know for a fact they hate each other. >> because she contemplated going as secretary of state, going after him. >> right. so he would like to release the e-mails. he would lie about where he got them? >> the question to me is not -- let's take him at his word. the question is let's say an individual comes to him with this information, this

individual is not a russian person or -- >> so he can have plausible deniability. >> i don't know. none of us know. >> we're supposed to know for sure that it was the russians by now. >> i don't have the intelligence briefing which trump is going to have this morning. >> james woolsey said he believes it is the russians. >> all of it. podesta -- >> a lot of smart intelligence officials on either side of the aisle -- >> smart intelligence. that's redundant. smart intelligence. >> thoughtful intelligence officials, how about that? >> do you believe -- assange says it is being used to del delegitima delegitimatize the trumpcy. >> trump presidency. >> do i believe that's happened?

>> do you think he will push through the -- you don't have -- >> i have not considered this. >> you have to figure out what will you say. will you say do it or not do it. >> you have to figure out what you are going to say. >> you have to figure out whether -- >> yeah. >> let's tell but another story. >> let's go to something lighter. >> all right. >> sure. >> work e-mails. everybody is buried in work e-mails. >> we're doing france. >> yeah. >> yes. if you're buried, maybe move to france. as of the beginning of this year, a new law allows work employees to disconnect off hours. >> i keep checking. >> i check. >> i get nothing. >> what do you mean. >> i get spam. crap like that. very, very. did you get much on the

three-day -- >> i didn't get any e-mail from you. >> were you injured? >> i was injured. >> i wasn't feeling well. >> i should have asked how you were feeling. >> i'm worried, you were so high on that nasal spray. >> we got the e-mails about matching ties. >> you got the nasal spray, so if you get what i have -- >> xclear. they love it. >> it's saline solution. >> it's water and sugar. >> it's a placebo. it works for you, it is good. >> coming up, president obama plans to meet with congressional democrats tomorrow on strategies for fending off republican attacks on obamacare. we'll talk to one of the architects, dr. zeke emanuel joins us next. here's a list of last week's winners and losers.

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♪ welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. u.s. equity futures strong at this hour for the -- whoa, up

173. we need 237 to hit 20,000. the dollar this morning, about 1.04 against the areeuro, below that now, 1.03. 118 on the yeen. the pound, $1.22. dollar strong again. >> dollar strength, equity strength. >> same stuff. >> continuation of the trump rally. >> yeah. everybody got back from st. bart's. where were most of your friends this -- most recent time? >> times square. >> were they st. bart's? somewhere warm for new years. >> i know where a lot of people went this year, because of zika, hawaii. >> hawaii. >> hawaii. >> that's a long way. >> it's a long hike.

>> can't get there from here. >> a lot of the caribbean stuff, because of zika. a lot of people had to go elsewhere. all the boats were not lined up in st. bart's, the way they normally are. >> is zika still a thing in puerto rico? >> still a thing. >> i heard some people were in puerto rico. >> i know some people went to puerto rico, costa rica. people -- i don't want to tell you they didn't go down there. but you asked where. >> i did. you knew. you knew as i knew you would. >> any way, let's switch gears to corporate news. another executive is leaving twitter. the china chief announced her depart chore after eight months. kathy chen, who was the managing director in china said twitter would keep the hong kong office open. and also said that now that t t twitter is working with chinese advertisers, it is her time to leave. another executive shuffle to report, former deutsche bank ceo -- co-ceo, anshu jain is

jointing canter fitzgerald. he willover see cantor's strategy and prime brokerage. howard lutnick will be on at 10:00 a.m. to discuss the appointment. >> deutsche bank's pearils at te hands of jain. joining us now from washington, d.c. is dr. zeke emanuel, chair of medical ethics and health policy at the university of pennsylvania. good morning. happy new year. >> happy new year to you. >> walk us through what you think will happen and how it

will play out. >> it's clear the republicans have the vote for the budget resolution. but remember this is a resolution. what it does is empowers them to have a piece of legislation, a bill that can pass with 50 votes. that's the key element. they don't need the 60 votes for passing -- for overcoming a filibuster. a bill created by a budget resolution can only deal with those parts of the affordable care act that deal with the budget. that increase revenue or spending, and there's a lot in the affordable care act that doesn't do any of that. the resolution doesn't repeal actually the affordability care act. it simply gives congress the power to do that in a future piece of legislation. >> so, zeke, you've written, you've talked openly and publicly about your anxieties about what may happen once obama care is repealed. what is the single thing you

worry about, is there a way to keep whatever that is that you're about to say? >> so, look. the big problem is if you get rid of the mandate, you get rid of the revenues, you get rid of the subsidies to people, you disrupt the individual market for health insurance, and you really throw millions of people off health insurance, make it impossible for them to buy. if you do that and also eliminate the revenue that funds the affordable care act which republicans have said they want to do, it makes it hard to create a replacement option. that scenario, disrupting the insurance market with no revenue to have a replacement and to fund subsidies or refundable tax credits is a nightmarish scenario. i think it's giving some republicans pause. so i think that's the single biggest fear. >> we have a republican on the set making faces.

jason, what's wrong in. >> i'm making faces bay i have to sign the front side of paychecks. all i know is over the last three years, our shirinsurance premiums have gone up about 20% a year. what mr. emanuel calls revenues, i call taxes. what we call greater access to healthcare includes much greater premiums for people that already had healthcare. you know, i am sympathetic, wanting more people to have healthcare. by the same token there has to be a recognition of what has gone wrong as well. there are good things that came about here. i don't have a question, but that's why i'm making faces. >> can i respond to that in two ways? first of all, i always said the affordable care act is not a perfect bill. i don't think anyone thinks it's a perfect bill. there's always reforms to be had. to counter that claim of

insurance premiums, during the bush administration, insurance premiums for employed people went up 80%. during the obama administration, the same eight years, the shirns peop insurance premiums for employed people went up 35%. they went up but much less. so for a ceo to say healthcare under the obama administration -- >> it belies my experience. >> the data are the data. your experience is selective because you don't remember back 15 years ago under president bush where insurance premiums were going up at double digits every year, which they have not gone up under president obama. that's just the data. there's no arguing about the data. >> zeke, i have a market question for you. i don't know if you invest in stocks or not. >> can't invest in healthcare stocks. >> here's my question. who is the big winner or loser over the next year as a function

of this? >> if there's a repeal and no replacement, a repeal and delay, the insurance companies will be clearly the big loser, hospitals will also be big losers because the disruption of the market means people have less insurance and they will be out of it. i think still start-ups and companies trying to innovate and save money will still be the winners. over the long term that's really going to be the place we have to focus on. how do we actually make healthcare more efficient, get rid of unnecessary care. there's a lot of new, exciting companies doing that. my next book is about all the transformation happening in the healthcare system. and there's -- i mean, amazingly enough, there's a lot of change that's in the positive direction for cost control. >> you actually met with the president-elect on december 14th. what sorts of signals did you get from that meeting if any? what did you advocate to him?

>> the substance of the meeting is for the president-elect to announce. one thing i clearly got from him is he does, as he said on the campaign trail, he does want to create a system that americans can be proud of, that has universal coverage, and he wants it to be bipartisan. i think those are all things he said before in public. and i think he really believes those things. >> what do you make of congressman tom price, he's going to be the nominee to be the next secretary of health and human services. >> look, mr. price and i are both physicians. i think that makes it easy for me to talk to him and to understand him. we do have some fundamental disagreements. i would say one area that i'm concerned about is his view about the new payment models that we've been testing out in the country, like bundle payments, that do seem to be reducing costs and do seem to have an effective way of make the healthcare system more efficient, while keeping quality the same or actually improving

quality. that's a disagreement he and i have. i wish he would look at some of the experiments run over the last few years. doctors have embraced them enthusiastically and they do move our health system in the right direction. we just published an article that, you know, by having a bundle payment for hip and knee replacements you can save over 20% on the cost and no change, if anything, a slight improvement in quality. >> okay. zeke emanuel, great seeing you, my friend. >> great seeing you. happy new year to everyone. >> it's official, president-elect trump naming robert lighthizer as pick for u.s. trade representative. he served as deputy trade representative under the reagan administration. coming up, scott sperling, and then adena friedman is here.

and later, kellyanne conway will join us. you're watching "squawk box" on cnbc. nt yoryo

welcome back to "squawk box." let's check on equity futures in the first trading session of the year. looks like the dow could add 174 points. what a rally that could be to start off 2017 with s&p looking at adding about 20, nasdaq adding about 40. couple big movers, shares of disney. shares are higher, the stock upgraded to a buy from a hold, saying disney has pro inflation business model with theme parks, advertising, all of that to benefit under the trump administration. shares of nike gaining on the back of a note from jeffries saying it's a top pick for 2017. these are two dow laggards of 2016. looking to lead in 2017, at least on this first day of trade. digital currency, bitcoin jumping up $1,000 for the first time in three years. the web-based currency saw a boost last year from a demand in

china. most bitcoin trading takes place in china. and in india the prime minister removed high denomination bank notes from circulation in november. some people have decided to pick up some bitcoins. >> it's like the ultimate safe haven currency. it was the best performing curren currency of 2016. among the elites, getting rid of cash is a big topic now. joe stiglitz and other people, you can't control this. if you're a central banker you can't control physical cash. >> you guys remember last year, you probably do, melissa, the first week or so -- >> first week of january? >> terrible. >> terrible. >> yeah. looking at the chart, ugh. up 170, a far cry. how is the lighting? >> in here?

i hear the lighting is great. i will say the viewers can't feel this, but it is freezing in here. >> are you cold? >> i'm so cold. i can't even tell you. you're not cold? >> no. >> i'm drinking an iced coffee. >> that stupid nasal spray -- you're coming down with something. you are coming down with something. it's not cold in here. >> it's not? >> no. no. >> i usually get cold on set. on this particular set i usually get cold. >> i'm freezing. >> i told you that saline, it's saline. you will be so -- >> it has xyletol in it. >> which is sugar. >> i have not gotten any tweets about how the dye i'm using on my hair, i have to spend more money on it. >> look at that shot of you. >> i got a tweet about your hair. >> what does it say. >> you really want to know? >> yeah. >> hold on. hold on. >> when ever the lighting changes -- >> it says nice set for "squawk box," looks like you have more room, and joe looks like he got a cut and colored his hair.

nice. >> whenever the lighting changes. nothing -- any way. when i get a cut, they cut off all the -- i didn't, though. i haven't got it cut. they cut out the frizzy gray, i swear it's not. 2017 could be the year that the seven-year luxury apartment boom fizzles. according to a new report, landlords will likely be forced to slash rents and offer deep concessions as a result of the supply glut. since 2010 u.s. apartment rents have jumped by more than 26%, in 2016, rates rose by only 3.89%. a significant drop in the rate of rise. g developers in new york and los angeles are already offering big incentives on projects. was that -- too expensive to rate a place. >> it is around here. >> if i were to look to possibly do that.

to be closer. you get an extra hour -- that makes a difference. it takes me ten minutes to get here. >> an extra hour makes a difference. >> you could stay up to 9:30, 10:00. >> i can. >> and you do. >> i do. i do not. i need 8:30. that makes a difference. men . >> we'll work on it. >> if you want, i have a murphy bed -- >> if you have a futon i could -- >> absolutely. >> cnbc will pay for it. >> you don't want to stay over? >> i don't think we should spend more time together? i don't think so. >> i can't imagine the conversations over dinner. coming up, scott sperling -- >> a little chicken? >> scott sperling will weigh in, but first, mike santelli made his way to our set. what's coming up.

>> we'll talk about where we are in the bull market life cycle. is it early or late or are we set up for an exciting start as 2017 gets underway. inr ececdma nd m inr bng ccaatevevthfranetieyoolr ac

the trump effect on the bull

market driving public excitement for stocks and boosting consumer confidence, but is a correction coming? mike santelli joins us with more. how can you say that? the dow is surging this morning. yet, you're saying 2017 could be the end. >> i don't mean the end as in we've seen all the upside. i think this is the phase we might be entering as we get into 2017 of a later stage of a bull market, which is often the most exciting. i think the market is set up better right now than it was last january in terms of the conditions. credit conditions, oil is not crashing. all those things look better right now. that means in the intermediate term, especially after the market lifted up, and we have this confidence after the election, we're okay for now. the question is where are we in the overall life cycle. we've had eight straight years of positive total returns. we've only had nine straight such years once before in the '90s. and valuations didn't get any better. that's something that has to be justified by improvement in earnings and the economy itself.

the euphoria phase, is that something we're in for? that's the big question to me. does this confidence kind of feedback loop help us get money back into the stock market and basically push us to some kind of extremes, which is what bull markets do. eventually, they get to extremes, you start to overheat. that's often where a lot of the gains come in ping you have to push back against the idea that we're at the very beginning of some grand new phase. >> in your column, which is on cnbc.com, you wrote about a 237% figure. that is what was sort of concerning. >> that's how much we're up since march 9th of 2000. people have pushed back and said we've only been making new highs in the last year. i don't know how to square those things. stocks and bonds are not priced for great forward returns for the next ten years. i don't know how you're going to manufacture the ingredients for excellent returns over several years. >> all right. stick around. how do you reconcile that in terms of the valuation? >> i think mike brings up an

interesting point. you have not really reached the euphoric stage here. there's been, really, an absence of retail participation in this market. if you look at inflows into mutual funds and etfs since 2009, there's been net redemptions from equities. enormous flows into bond funds -- not enormous outflows out of equities, but certainly to progress has been made. to me that's the real interesting question. for those of us who were around in '99 and 2000, you had a lot of people, regular people, joining the bid. that has not happened yesterday. that's one of the big questions about 2017. >> on the p.e. front, we could get some improvement if there's corporate tax reform. >> there's no doubt about it. if you hold your valuation right now and earnings come back anywhere near people expect, you have a certain upside.

i'm not trying to say, get out, it's done. just that it's not 1982. you've had eight good years already. >> fair point. 1982, just for reference, market was trading at six times earnings. you had a dividend yield of 6% and ten-year treasuries were 14. when you think about a spring board for returns, that was something else. here we're obviously not starting from that point. >> all right. thank you, mike and jason. >> my pleasure. okay. coming up, our guest host for the rest of the show will be scott sperling. he'll weigh in on the trump rally and the tax changes coming up under the new president. later, nasdaq ceo adena friedman will be welcoming us to our new home at the nasdaq market site in times square. "squawk box" returns live in just a moment. ucue

markets ready to ring in the new year. we're live from our new home in times square as the nasdaq market site makes room for "squawk box." nasdaq ceo adena friedman joins us for her outlook on 2017. president-elect trump hitting back at north korea after kim jong-un's new year's warning. what it could mean for u.s./china relations in 2017. and we open up the 2017 playbook on media stocks. is more consolidation on the way? and will the ad market face a tough road ahead?

a sector outlook is just minutes away as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning. welcome back to "squawk box" right here on cnbc. we're live from the nasdaq market site in times square, our new home. i'm andrew ross sorkin along with melissa lee. this is her home. she's sharing it with us temporarily. in the meantime, take a look at futures. see how things are stepping themselves up on the first day post-new year. you're looking at the dow, looking like it'll open up much higher, 173 points higher, as it gets closer to that 20,000 mark. nasdaq would open 41 points higher. s&p looking to open 20 points higher. check out the ten year note this morning as well as we flip the

board around. you're looking at 2.505. finally, oil prices right now, you looking at wti crude trading at 54.92. we should tell you moody's is saying the global oil and gas industry will see continued tepid prices and belt tightening in 2017. oil prices will likely remain volatile and range bound in the coming year. currencies, we should talk about the dollar. i think the dollar may be the story of 2017, depending on -- given all the questions about what's going to happen in the trump administration and everything else. you're looking at -- well, right now, we should move the show to paris. that's really the answer. given that we're willing to move around. >> for it to be the big story of '17, you're talking about some pretty stretched numbers. so you expect to go from 103 to 93 on the euro? i don't know. >> no, i just think the dollar will have a -- it will be a

conversation. >> if it stays everybody where it is, it's going to influence. >> well, there are elections in europe. that could further push the dollar. >> but it just seems like moves have been amazing already. do you remember last year -- >> it's just we're going to want to have a week to make all this week. you need to have a weak dollar. >> not if it's more domestic. >> dollar strength usually accompanies stock market strength and economic strength. >> back to -- remember as the first trading day, so goes the first week, so goes the first month. i'm back to thinking it works. >> this time. >> first day is important. >> that's convenient history, joe. >> first day, big. first week, big. january, big. 2017, big. >> okay. >> all right? and you know what it's all part of. making the stock market great

again. but you already thought it was pretty great. >> it's going to be great. >> okay, good. breaking news in the last half hour. president-elect donald trump announcing that he intends to nominate robert lighthizer as trade representative. playing a major role in developing trade policy for the reagan administration. his new role, he'll work with commerce secretary designee wilbur ross and peter navarro, head of the newly created national white house trade council to develop and implement policies. later in the program, top trump adviser kellyanne conway will be our special guest. zeke emanuel on earlier. i almost brought up whether he's revising his kill yourself at 75. he doesn't want anyone living past -- you know, don't go to the doctor after you're 75 because you're useless. you're losing it, you're

slipping, your knees hurt. >> if you're running the country like a company, that's the way to think about it. >> wilbur ross is how old? half the guys in this cabinet would already be dead. zeke emanuel wants everyone to die just so obamacare works. so we don't have to pay for these old people. he's willing to push us all off a cliff at 75. do you know when the reagan administration was, sorkin? >> i think waiting on doctors at camp. >> the entrepreneur i was. >> hold is shatner? he's 85. he's like running -- he's like in the amazing race or something. he's doing something. shatner is cool. i started watching old "star trek." i'm going to start being like him. you should always be dramatic. every moment that you're saying

something should be so por te portentous. >> you need the eyebrows. >> you have some eyebrows to move. just one. >> i can move my ears. >> wow. that's great. that's a lot. >> you would be a damn good spock with a little makeup. >> i can't do that. by the way, the muscle that moves your ear, for those trying to do this at home, is attached to your eyebrow. if you can move your eyebrow. >> train yourself. >> you have to train yourself to not move the eyebrow. >> what do you think? you agreed to do this. >> the importance of eyebrow and ear moving. >> all right. >> here's what's making headlines at this hour.

the u.s. markets get back to work today with a few economic reports on the agenda. december manufacturing pmi out at 9:45 eastern time. that's along with november construction spending. financial services company cantor fitzgerald hires a new president. mr. jane resigned from deutsch bank about 18 months ago as concerned mounted over its financial health and the many investigations it was facing. and we have a programming note. lutnick will appear on "squawk on the street" today. president-elect trump hitting back. tweeting, north korea just stated it is in the final stages of developing a nuclear weapon capable of reaching parts of the u.s. it won't happen. in a second tweet, president-elect trump criticized

china, tweeting, china has been taking out massive amounts of money and wealth from the u.s. in totally one-sided trade but won't help with north korea. nice. >> i love that. sorkin, you got to love it. don't you? >> i'm scared he's going to instigate a war. >> just don't be a wimp about that. >> don't be a wimp? >> not going to happen. makes me feel better. where is china? they've been on the receiving end of all this great stuff. all right. i think it's refreshing. the white house releasing details on president obama's farewell speech, which will take place on january 10th from chicago's mccormick place. the event will be free and open to the public, but tickets are required. tickets will be distributed at mccormick place on saturday. the exact time of the ticket release is not yet been set. only one ticket per person.

the president plans to make it a thank you to those who have been with him on what he's call z an amazing journey. a stock to watch at the open this morning, barrons up 20% since the election and could rise another 15% this year. with a steady mix of income from fees and loan growth, pnc could benefit regardless. we're also watching two dow components up sharply this morning, nike and disney. we'll talk more about disney next hour. disney getting an upgrade. nike being named to the top pick list. >> weren't those the two crappiest performers of the entire year last year? that makes sense. people were selling them probable into the close. now they're due for a bounce. let's talk markets. it's a new year. we have a new studio. there's a new president assuming office in less than three weeks.

joining us now for a look at what's in store for the markets in 2017, the chief investment at open hiemer. and keith banks is president of u.s. trust. our guest host this morning. the train left the station without anyone on board. people thought the market would go down 8,000 points when trump got elected. it went so far past what people thought made sense that people were waiting for it to come down. the market gives us a little indication that maybe it's tired for the last two weeks of 2016. right out of the box we're up 170. can the train again seem to leave the station where people go, i can't buy this. we could see a replay of that maybe and it could go much further, i think, in the first couple of weeks than people are anticipating. is that what you think? are we due for a pullback

already? >> we think there's more room to go. it won't be a straight line. >> what happened today? people come in after being out. 170 points. there's no reason for that. >> people caught their breath. there's renewed optimism. we look at a couple things. number one, we think you'll see higher nominal growth. number two, higher corporate profits. and a key component, and you touched on it with your last guest, is sentiment. we think business, consumer, and investor sentiment are all going to stay strong and all that's going to help drive the market higher. >> i also think art cashen really got it last week when he said the weakness, a lot of it had to do with rebalances of portfolios. it was a brilliant observation. end of the year, that's what happened. it took the wind out of the sails, but it was not a give it up moment. it was just simply a little bit of a rest, turning things around, rechanging portfolios to reflect the new order.

i agree with keith. i don't think we're headed up in a straight line, but this looks like a good year. >> trump trade, it stays in place. i wonder for how long. there's always some type of disappointment. it could be policy. who knows what it could be. you think it stays in place for january, for the first quarter? how long? >> i'd say we've got a good shot to ride a ways here. maybe as long as until april. then all the sudden once all the retirement money comes in, suddenly that'll be the moment that happens many aprils, especially since 2009. april tends to be a dicey month. sometime after the 15th of the month. >> there were a number of big investors who were waiting to take profits, if you will, from '16, thinking i'm going to do it early '17. what do you think happens this week on that front? is there going to be a group of sellers? >> andrew, i think some of those

people who were thinking about it are -- will probably be considering it in this week, but they'll be watching the momen m momentum. they're not going to want to fight the momentum if it tends to be up. we're going to have to watch it. it really is -- i think the general approach to take on this, and we've been bullish since january of 2009, okay. that's my strategy group. you got to be patient here, but the general momentum is up. we've had the federal reserve behind us for years. now we got fiscal spending, fiscal stimulus, tax reduction likely, reduction of regulation. this is all good stuff. >> so keith, going into this year, do you stick with what's working, or do you buy into the notion of buying laggards? we're seeing nike and disney trade higher premark. >> i think when trump was elected, people were not positioned for the kind of

things we believe are going to come. fiscal stimulus and other pro-growth policies. so number one, people were way overweight long duration fixed income. they had more defensive equities. they had what we call the bond proxies. what we would say is you need to continue to move forward a more cyclical exposure, value over growth. you need to continue to reduce exposure to long-duration fixed income. so any stock, any sector that would fit in that scheme, we think, is still a good play as we enter '17 and probably for most of '17. >> are financials still a value? >> financials, we believe a couple things. number one, higher nominal growth will lead to higher interest rates and a steeper yield curve. that's good for financials. we're just beginning to see the earnings power of those companies show through because rates really didn't move until the very end of last year. so the impact has not been fully felt. >> you're way over here. are you feeling better? >> i think i'm feeling the way

most of the country is feeling, which is optimistic that we have much more stimulative policies. i think people are optimistic because there is a change in the tone of washington. i think for most americans, washington was the sink hole that only issued forth, bellowed forth regulation in things they were not particularly positively affected by. what you're seeing, even with the tweets and everything else, is a complete change in how that works. when i talk to people out in the heartland and other places, i think that's a big plus that's adding to the sentiment. then you have the fundamental effect of deregulation, i believe, is going to get up 50 by itself of gdp growth. when you talk about compounding that over the course of three to ten years, that obviously becomes an enormous number. i think that's a big positive. now, on the other side, the strength of the dollar is going to have an effect on reported corporate profits. we've seen that before. interestingly, the last time it

happened, i'm not sure the analyst community was on top of what all that accounting meant. so there were some negative surprises. hopefully they'll be on top of this so that people understand the impact from an accounting perspective of that strong dollar. then i think, you know, we'll have to see how quickly and how strongly the republicans can really move deregulation and tax simplification through congress. because if it doesn't happen, if it gets slowed down by the democrats, i think that will adversely affect sentiment. >> halfway between philly and wilmington. we're not even to wilmington. newark to d.c. so you were worried, you know, it's in philadelphia, i missed it, but you still headed to d.c. if you can get on before wilmington, you can still ride it. >> you can get on baltimore if you want. >> or bwi. coming up -- john and keith, thank you. scott, you'll be with us for the rest of the show. this isn't getting old.

everyone loves choo-choos. coming up, a warm welcome in our new home. adena friedman, the ceo of nasdaq, is going to join us to talk about what's in store for exchanges in 2017 and the markets. stay tuned. you're watching "squawk box" on cnbc. t. i ve preparr retim esnd ain ÷ugell

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back to "squawk box." this morning we're live at the nasdaq market site, our new home right here in thyimes square. a nice shot of it outside there. scott sperling is our guest host this morning. great to see you. >> thank you. >> can we talk private equity? can we talk deal making 2017? >> sure. what do you have to tell me? >> you're the guest. what do you think is going to happen here? >> i think it'll be another good year for the industry. it's not a secret that over the course of the last five or six years private equity has done a pretty good job of providing investors a higher rate of return than other asset classes. i think the industry has had to evolve over the course of 20, 30 years. >> but as prices move up, which they have, it gets harder and harder for your business and the

strategics jump in, in these stock-for-stock deals. >> the overall world of m&a is so large that i don't worry about the strategics that much. it provides an exit for a lot of the companies that we've acquired. i do think your fundamental point is right, which is that when the stock market moves up and other people are there, then the multiples people are willing to pay seem to be higher. i think we have to guard against that. we saw what happened in '06, '07. i think one of the things that you're seeing throughout the industry -- i know it's true for us -- is that means we're buying smaller companies that we can get at prices that still give us the ability if we do the right thing with the company to see multiple expansion on exit. you need that multiple expansion to drive strong returns. that does get harder as things get pricier. so it puts more of a premium on getting a very broad network, trying to isolate a few deals that you can do, being willing to do smaller deals, and having the capability to do something with the company so that it justifies a higher multiple on

the way out. >> let me ask you about pension fund and endowments right now. what's the conversation behind the scenes going on in terms of how they've been reallocating their money over the last 12 and 18 months? we've heard about it in the hedge fund space. >> sure. i think it's easy for me to say right now because we seem to be the flavor of the month, flavor of the year. people have looked at the performance and the consistent performance over one, five, ten years of private equity, suggesting you can put your money there and get the higher returns that are required to meet the actuarial needs of your pensions or the needs of the colleges or universities or foundations that you're the endownment of. there's been a bit of a shift into private equity from other alternatives. then i think on the public equity side, obviously we've seen some shift into more

passive strategies that are lower cost that seem to perform at least in line with the market by definition, relative to the underperformance they've seen from a number of their more act i have managers. >> we're going to continue this conversation. i want to talk about repatriation and what that's going to mean. we'll talk about that in a bit. >> i was able to watch you. you look really good. >> look at yourself. >> i can't look at myself. i have to read. >> look at the big one. >> you look handsome, joseph. >> sit up straight. i think we're a little slouchy. >> here we go. >> but your lighting is marvelous. >> i got to stay -- >> stay on your mark. >> you got to stay on your, ma, yeah. >> okay. coming up, nasdaq ceo adena friedman is coming up. she's thrilled to have us here. and that was genuine, i think. >> i'm thrilled to have her here. plus, a wild night in

college football. it was wild. they said there would be a lot of offense in that game. i went to bed after the half. it was sc looked like they were going to run away with it. details after thebre break. oklahoma. "squawk box" is live from the nasdaq market site. we'll be right back.

coming up, fresh starts in 2017. adena frieze mdman, the new ceo nasdaq, will join us live. plus, your media playbook for 2017. anthony di cle men tee will be here. as we head to break, take a look at u.s. equity futures. setting up for a rally on this first trading session of 2017. stay tuned. you're watching "squawk box" on cnbc.

good morning. welcome back to "squawk box" here on cnbc. live from the nasdaq market site in times square. among the stories front and center this morning, president-elect trump naming robert lighthizer as his pick for u.s. trade representative. he served as a deputy trade representative in the reagan administration. we'll talk about the pick with

kellyanne conway at the top of the hour. another executive is leaving twitter. china's ceo kathy chen is leaving. and spacex announcing it's ready to launch rockets again. they plan to resume flying next week following an investigation into why one of its rocks burst into flames a few months back. >> 35 seconds ago -- see, now i'm watching your budbudd buddy @realdonaldtrump. you'll like this. the latest tweet from the president-elect. general motors is sending mexican-made model of the chevy cruze to u.s. car dealers tax free across the border. ma make in the usa or pay a big border tax. >> that's interesting. gm's ceo is on his advisory council. >> how can you not like this? to just be sitting here with a

twitter feed and see policy being made right before your eyes. that's awesome, andrew. you're a news guy. >> i don't know what to think. and people say, don't follow the twitter feed, follow the real policy. >> but there definitely is some connection. >> oh, yeah. >> it used to be trial balloons, they'd get their people to float something. we hear this or we hear that. this is right to the people. >> now we need to see the back story of what led to the tweet. that's what happened with the boeing situation. there were some comments gm had made at one point about doing more business in mexico. anyway, in the meantime, let's bring in our special guest this morning. on day one being here at our new home, the nasdaq market site, adena friedman is the ceo of the nasdaq. her new job starts today. welcome. >> thank you. >> so before we even get into it, what do you make of just the president-elect and his approach

to speaking so publicly to companies? >> i would say that he is cre e creating a new age of politics. now it's a matter of putting those politics into action and see what he does in terms of -- i would say 2017 is a real show-me story in terms of all the policies he's been proclaiming. we'll have to see what happens. >> if you're a ceo of a nasdaq listed company and he either criticizes or praises you, what are you supposed to do? >> i think you're supposed to continue to execute on your business strategy. then have an open dialogue with the administration as appropriate. >> big question, of course, has been about volatility. it's been remarkably low, much lower than people anticipated. does this change that dynamic? >> we kind of joke about that a little bit in the office. for us, volume is important in terms of the way our revenues are generated. we always joke about the twitter feed and volumes. i would say that at the end of the day, it's going to be what

actions result from his twitter feed. what is he able to do once that actually goes through the entire congressional process. >> when you look out, this is now the new title, in terms of looking out this year, what's the big project for the nasdaq? >> well, we actually have -- we are both an exchange operator and a global company. the areas of focus for us in terms of big projects are all around technology. we've been putting block chain into, embedding it into the technology that we offer other exchanges, as well as experimenting it within our own markets. we'll continue to do that throughout the year. for us, it's a matter of making sure we continue to take all of the new technologies that are available in the marketplace and bringing them into our markets and offering them out to our clients. >> how do you view a potential new s.e.c. chairman like paula adkins, in implementing this new technology? >> i think the block chain at this point, you have to end up

showing either a reduction of risk or a benefit to the clients in terms of the ability for them to get things done faster with more certainty. and if you can really prove that out, then i think that the regulators will get on board with it. in terms of the s.e.c. and looking at market share, i think it's going to be an interesting year potentially in terms of the opportunity for us to continue to experiment in terms of market structure. we have introduced something called the extend life order that's on file at the s.e.c. right now. it's going through that process. we hope we can continue to find new innovations in market structure as well. >> the nasdaq has always been known as the home for technology companies. a lot of the big listings of technology companies. there's a number of big listings that may come this year. people talk about uber. they talk about spotify coming. they talk about snapchat, probably being the biggest. how important is that fight for nasdaq to get that listing, and how important do you think it is for the markets, for those ipos

in this market, to be successful to actually get more people involved in the markets again? >> well, first of all, we actually had great success in 2016. we won 87% of all of the tech listings that came to market last year. the top three tech listings chose to come to nasdaq. we're really, really pleased with the ability for us to attract tech companies to nasdaq. while we look at each company and fight very hard for each company's listing, it is important to recognize that we believe we're the best home for any company to list in the united states and to tap the public markets. we have a great market structure and world-class technology to support the trading. we offer a whole suite of solutions that help them navigate the markets. and for those large companies you mentioned, we have the nasdaq 100. it allows them to be next to some great, great companies as well as get some -- >> we have a guy here who likes to be private though. you've made the argument for many, many years that you can do so much more and be more

efficient, more innovative, more productive, and perform better in the private market. and by the way, a lot of technology companies have made the same argument. >> right. so there's a life cycle to everything. there's a period where a company can undergo relatively transformative changes to its key business processes, make itself a better competitor, make itself more efficient so it generates a higher margin, however you measure margin. and at that point in time, the company probably is ready to once again be a public company because the key significant changes that maybe in the mere term adversely affected its reported financials have already been accomplished and now can provide the kind of certainty, because more than anything else, it seems the public markets like relative predictability and certainty about what's going to happen.

so the company that's undergoing major transformation is not going to give that to them. once that's being accomplished, i think it's very appropriate for our companies and others -- >> and you're a former private equity executive yourself. >> i am. i'd say there's a life cycle for every company. i totally agree with that. that's why we created the nasdaq private market, which allows for an efficient execution of liquidity for private companies. we see more companies staying private longer. the jobs act has given them that ability. so we want to make sure they can foster their ability to be a previous company for a long time and still offer some liquidity. >> isn't that an on-ramp to the public market here? >> i think time will tell. i think nasdaq private market has been able to facilitate some liquidity for some great private companies. >> have you had that switchover yet? >> we've been private for two years. it's been a more difficult ipo environment. so we haven't seen a lot of companies move from private to public yet. >> what do you anticipate for

2017? >> that's a great question. what was really interesting about last year is that we did not -- everyone said it was a very difficult ipo environment and it was. but the companies that went public on nasdaq actually had 24% increase in their market valuation in general. usually that can be a prediction. if companies do well -- and overall in the nasdaq in the u.s. it was 20%. that's usually a prediction there's going to be a more healthy ipo environment in the next year. we are seeing companies really pick up the pace in terms of preparing for their ipos. we expect the first quarter to be a strong quarter, assuming the market backdrop stays this inviting. >> gm is recovering, but gm was down. >> down 1.75%. >> if trump were to ever tweet about the nasdaq, it would be unbelievably complimentary as the bastion of free market capital. they take on this state institution and disrupt the

entire -- it would be nothing but positive. you're not going to have a problem with this. >> i love everything you just said. i would hope so. >> you know that billboard out front. how long do we have that with our picture, that great big thing? >> the big thing, the tower? >> what have we negotiated so far? >> so i think you have the tower as the show is airing. >> what about after? is it possible to get it after? >> we provide equal opportunity for people to use the tower. >> what i just said to you was really important. >> we could just put the quote up on the tower with your picture. >> so we've got just during the show right now? >> you know, i'd have to ask our marketing executives. we've got the nasdaq market open, 9:30. or maybe ipos thereafter. >> then back to "squawk box." >> got it. this is a great place for issues. >> thank you for welcoming us to your new home. >> we are really, really

thrilled to have you here. so thank you. >> and we got like a cart right here. pretzels and stuff. >> hot dogs. starbucks too. >> and the police department. right here. >> armed forces. >> i love that. there's so much going on. >> what about bubba gump? >> right over there. >> the brooklyn diner. >> when does naked elmo? you

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president-elect trump tweeting about general motors. phil lebeau joins us now on the cnbc newsline. the stock was down, it's recovered a little bit. i don't know if you're a gm executive, that's a happy new year, how do you do on the first trading day, isn't it? >> yeah, and i think if general motors executives thought they were going to avoid being criticized or blasted for production in mexico because so much of president-elect trump's focus has been on ford when it comes to mexico production, well, they're sorely mistaken. it's clear that the president-elect is going to go after not only ford but also general motors for the production they have in mexico. just to be clear, as we throw up the tweet from the

president-elect, he essentially says, look, general motors is manufacturing the chevy cruze, which they then ship back to the u.s. with no tax. there should be a stiffer border tax. that's ultimately what we're talking about when it comes to auto production in mexico. you're looking a the about 3 million vehicles for all automakers, not just ford and gm, about 3 million vehicles in auto production that are shipped back here and then sold in the united states. it's clear from the president-elect's tweets, not only on this, but also with ford and when it comes to mexico auto production overall, he wants that to change. he wants there to be a stiffer border tax. now, whether or not that would drive auto production here in the u.s., that's up for a lot of debate. a lot of people in the auto industry do not think it's going to change the dynamics there. but it's clear from this tweet that general motors now finds itself, like ford, having to defend its production in mexico.

we've reached out to general motors, have not yet heard a comment, but certainly as soon as we do, we'll let you guys know. >> phil, do a little math with us here. you said 3 million total vehicles. if you look at gm on its own, what are we talking about in terms of vehicle and profit that's a result of those cars? >> you know, there would be no way for me to put a profit number on that. in terms of general motor's production, you've got the gm sierra, the silverado pickup trucks. those are manufactured down there. you have the chevy cruze as well. it is a substantial base of production for general motors, not just for north america. while the bulk of those vehicles do come to the united states, but you're also looking at -- they use that as an export base, as all automakers do, for central and south america, and increasingly to other markets around the world. it's because of the free trade agreement, guys. that's the key. mexico has more free trade agreements with other countries in the world than any other market.

>> phil, real quick, do you have any sense of a back story why now in terms of going after gm? as you said, he had spent some time pillaring ford, historically. he personally had a relationship with gm through cadillac. there was a trump car. >> absolutely. >> they were a sponsor of "the apprentice" for many years. >> i interviewed donald trump at the new york auto show about nine years ago. he stood next to bob lutz, talked about how great cadillac was, talked about how great general more to motors is. i think it's clear he's going to use the auto industry as the force point to drive home the message that nafta needs to change and this is why it needs to change. in his opinion, you should not be able to manufacture vehicles and ship them back here without having to pay some type of stiff border tax. >> but the worst case scenario, phil, because he just simply singled out the chevy cruze in

that tweet, is that the border tax gets extended to all vehicles manufactured in mexico. >> absolutely. i think that's a worst-case scenario. especially if you're general motors, you look at the pickup truck you manufacture down there. they also have manufacturing plants for pickup trucks in the u.s. they sell a lot of what comes out of those plants in the u.s., but they also ship from mexico back to the u.s. those are high profit margin vehicles. that's a concern for general motors. >> okay. phil, thank you for that. we will continue to talk to you. hopefully there's more to this back story, we can figure out how this happened. with boeing, he had seen a quote he didn't like. anyway, we'll find out what happened. in the meantime, coming up, are media stocks ready to go rogue? we're going to get an outlook for the media sector right after the break. !rvk.m l rovihoeaac

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did you see that? i think people were lining up for hot dogs already. >> i advertised them. >> it's the first trading day of 2017. we're opening the playbook to help you get set for the year ahead. julia boorstin has some predicks from the media sector. >> reporter: with the rise of cord cutting, streaming video, and entertainment alternatives, throwing the media industry into upheaval, expect traditional

content giants to make major changes in 2017. first, media mergers. not only will at&t's acquisition of time warner likely be a approved, but now that viacomm and cbs are no longer looking to emerge, they could be involved in mergers, especially as we see more vertical integration as distribution companies like the telcos, cable giants, and tech companies align with content companies to distinguish themselves from rivals. second, china will double down on hollywood. as chinese media and internet giants from alibaba to wanda to tencent pay up for a piece of u.s. studios. and look to capitalize on the global appeal of american intellectual property. that as china's box office overtakes north america's for the first time. third, cracks in the tv bundle. as new lower cost digital alternatives launch. in addition to hulu's live tv package due out in the first quarter, expect google to jump

into tv. and we'll see if apple can finally ink its content deals. we'll see plent plenty of evide cracks in the tv bundle at the consumer electronics show, which starts later this week. we expect hulu and sling to debut their latest options. plus, it will be interesting to see what new virtual reality experiences we see. joe? >> thanks, julia. stick around. joining us now with more on the media sector, let's welcome anthony diclementi. it's the first day of the year, our first show from here. and here you are. i think that says something about what we think about you, anthony. >> there's no place i'd rather be. >> must feel good. did you hear julia -- you hear that laugh? you heard julia's report. anything to add? >> i think the number one thing to watch is these new virtual cable packages online. there's no doubt that people of

all ages are getting more comfortable with online video. so things like hulu live, directv now, we think the big tech companies will have virtual online cable packages. if those take off, then this narrative in media about cord cutting could evolve, right. so cord cutting moderated in the third quarter. and if you include these new online packages, remember the media companies get paid if they're in those quote/unquote skinny bundles. look, there's no doubt that people are moving to online video. that's good for ad supported platforms like facebook, like youtube. netflix and amazon are going to combined spend over $10 billion in 2017. so who does that benefit? it benefits those with the best content, the must-have content. on the other side of that, if you have kmcomodtized content, you'll be really advantaged. >> the bundle is not as skinny as we thought. and the price point is not as low as we thought.

directv now, which started at $35, is going to $60 already. so what does that do? >> here's the thing i would say about that. good morning, julia. you have deep pocketed companies who are using media to, in what i would say, decomodtize their business or platform. you see that with at&t trying to acquire time warner. you see that with amazon using prime instant video, which they've launched in 200 countries to really leverage against their ecommerce business. as long as people are going to use media, that's good for the media companies. that's a scarce product that people could use that content to decomodtize their business. now, the flip side of that is there's too much media out there, it's so crowded, there's too much content, i don't know what to watch, there's so many platforms. that's why, you know, really the very best content, the cream will rise to the top. >> julia, jump in. >> yeah, no, i think it's really interesting. obviously we've seen amazon and netflix become these huge forces in video. anthony mentioned facebook.

facebook has increasingly been a force for video. it's too soon to say whether facebook will ever be seen as a real alternative for real online video consumption. but facebook is investing in getting more premium content on its platform. we'll see how that evolves in the coming year. this past year facebook really doubled down on video. >> i have to try out my deal of the year, a prediction in today's deal book column. synergistic value there. disney buys netflix after trump overturns net neutrality. it's bob iger's last major deal. then he puts in digitally savvy sheryl sandberg to run the whole thing. >> i think it's okay. i think disney for twitter makes no sense, but disney for netflix

you could argue. >> if you think about where he's really been able to shine. >> all right. got to go. we're going to hit all our hard breaks from now on at this new place. thanks, anthony. coming up, kellyanne conway. of y

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a new year on wall street kicks off with a bang. stocks around the globe in the green. we're going to get you set for the first trading day of 2017. the trump transition. the president-elect tapping robert lighthizer as u.s. trade rep. coming up this hour, trump adviser kellyanne conway will join us live. plus, new year, new digs. we'll show you our new home at nasdaq as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york. this is "squawk box." good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin and melissa lee.

our guest host this morning is scott sperling. our futures right now, if you believe so goes the first day of january, so goes the first week, so goes the first month, and so goes the year. didn't work last year, but that's certainly a portentous start for 2017. we'd need about 237 points to hit that 20,000 number. the trump trade is trending again today. i like says all those trs. trying to think of more. trump, trade, trending. >> i can only think of a bad one. >> treasuries. treasury yields. prompter gave it to me. as you can see, the ten year, 2.509. oil prices have not been the story recently. somewhere between 50 and 55. up at the upper end of that range now. the dollar is something to watch today. some of those stretched numbers we saw at the end of last year. there was a little bit of a pause.

now we have the euro down at 103. big story of the morning, just happened within the past hour. president-elect donald trump slamming general motors on twitter, tweeting the following. general motors is sending mexican-made model chevy cruze to u.s. car dealers tax free across the border. make in u.s. or pay big border tax, exclamation point. we're going to have phil lebeau join us. >> he made an excellent point of this not being the only car made in mexico. if this tax is extended to the other vehicles, it could be a dent for the pickup truck industry. there we have it, gm shares down slightly. they had been off on the immediate aftermath of that tweet by more than a percent. now down by less than half a percent. in other political news this morning, president-elect donald

trump announcing he intends to nominate robert lighthizer as u.s. trade representative. he will work with secretary of commerce designee wilbur ross to develop and implement policies. just 17 days until donald trump is sworn into office. joining us now during our first show from the nasdaq market site, here to look around, kellyanne. >> fancy. i don't think the west wing looks like this. >> somebody is making squawk great again already. 17 days. >> i love it. dpla dpla congratulations. >> it's happened here. it's happened in the market. he's not even taken oath yet. >> i'm sure you saw the ap article last week, how entrepreneurs are really excited. >> the animal spirits across the board. we were talking about this gm -- or tweet from the

president-elect today. i think all of us would like to know behind the scenes how many people are involved with a tweet like that. i'm sure it's not just, you know, donald trump doesn't wake up and say, these crappy chevy cruzes are coming up across the board. there's more people involved. this is actually putting out policy directly to the people. can you tell us what went on over the weekend and whether you knew this was coming, whether you were involved in the decision, or who was? >> i'm not one to disclose specific information like that. that's confidential. >> how about north korea? >> i will talk about twitter and his social media platforms generally, joe. that's going to continue because he has combined 44 million followers on instagram, facebook, and twitter. he does -- he's able to express himself, particularly on policies like this, and react to news. so this is usually just him tweeting. he's tweeting basically his reaction to what is being done or what is not being done on any one issue. and it becomes an immediate news

story. >> you have andrew worried again. he thinks you've got a crazy man over in north korea with icbns. now a crazy man here tweeting whatever comes to mind without any due diligence, with advisers. >> i don't think we want to compare north korea's leader to our president. he's not a crazy man. he's the president of the united states. there are plenty of people involved, but in terms of delivery, he cuts through and goes right over the media. that's why the media don't like it. he communicates directly to the american people, the way he did during the campaign. he'd go to these rallies to cut through. it ended up a very effective tool. >> does he physically tweet himself? >> often. >> like that tweet, you think -- because he doesn't have -- does he have a smartphone? >> he does. >> so he's physically doing it, or does he have somebody else who does it for him? >> i would imagine he sent out that tweet. i've watched him tweet many times. >> there's a theory he tweets on an iphone and other people tweet

on an android device and you can figure it out by the origin. >> your debut today. i was invited on, we're going to talk about how he tweets. the fact is he does tweet. >> only because of the gm tweet. >> and north korea last night. but the point about it that i think is significant is how he has this unprecedented way of communicating with the american people. whatever you were going to cover this morning, you're covering this instead because he makes news. i guarantee you the next ones you'll hear from will be gm. you see what happens with major industry, with leaders. >> the stock moves. they take note. is this leverage, building up leverage with mexico to pay for the wall? >> he's been very clear that he's going to build that wall and have mexico pay for it. that's something that he's not compromising on. but this is also a big part of his, as you know, trade and economic vision. it's not a coincidence you're talking about his new trade

representative, working with wilbur ross, working with peter navarro. this is one of the issues. this is an issue that donald trump was able to take at like a 1% or 2% issue at best and elevate it so people looked at it through an american work and fair trade lens in a way that i think really changed the dynamics of the race. hillary clinton never really had a good response to that, frankly. >> when you -- so i don't know what you've got planned this week. you got 17 days. there's a lot of things that are going to happen starting january 21st. will you leave here? are you going somewhere, where you'll be with trump and his advisers to talk about that? >> today? >> yes. >> i'm going from here to trump tower. we have a series of meetings. >> so obamacare is on everyone's minds. how do you repeal that? how do you do it? i don't know what's fake news and what's real anymore. that's why i like twitter. i like when he tweets because there's no danger of fake news coming out from something like

that. what i'm seeing now is that repealing it could open up a can of worms that sink the republicans between now and -- >> no, that's just not true. i think that's hyperbolic. tomorrow, vice president-elect pence will be on capitol hill to meet with the republican conference and the senate as well to talk specifically about repealing and replacing obamacare. he's competing against president obama, who feels the need to rush over to capitol hill, rare appearance for him, to meet with house democrats to try to protect obamacare, the affordable care act, which has done some good things, like covering pre-existing conditions. there are people who have health insurance who didn't before. but the fact is many americans feel harmed by the affordable care act. it was on the ballot in 2010, 2014, and 2016 when republicans won. a total of 1,000 legislative seats in the state chambers. a dozen governorships, 68 house

spee seats. there are many people who say, i thought was going to be covered, but all i got was two 25-hour jobs a week. there are people paying higher premiums. we have fewer choices, lower quality, less access, higher costs. that wasn't supposed to be health reform. buying it across state lines, helping the individual pools, health savings accounts that you own your own health coverage and it has your name on it. you control your spending. a lot of great, innovative ideas in repealing and replacing, but we're already on -- we're already there. in palm beach last week, he met with the head of mayo clinic and cleveland clink. this is serious stuff. >> one of the things he said is he knew something about the hacking. this was the big hacking question. he's going to have a meeting, i believe, with intelligence officials either today or

tomorrow. is that happening today? but he said he knew something we didn't know. is that the sean hannity interview with julian assange? >> no, this is the president-elect of the united states. he receives any number of different intelligence pieces of information from a number of different sources, including the pdp, the presidential daily briefing, which is a product. in addition to that product, andrew, he receives regular briefings from his security team, from outside sources, and he, your viewers should know, has agreed to receive this top-level intelligence briefing from the nation's top intelligence officials here in new york. >> what do you make of the julian assange interview where he says the russians nor a state sponsor group of any sort provided them with the dnc e-mails? >> we should pay attention because he knows the source of the e-mails that he received. i would note that the expulsion of these 30 or so russian operatives last week, you never heard the word wikileaks, which is curious to me only because that's what we're all talking about.

i know the clinton people are very embarrassed about the uncomfortable content of the e-mails, that hillary clinton can't find her voice, chelsea is a spoiled brat, all her team saying this. that was uncomfortable. other people are trying to blame the election results on everything except the message and messenger that were completely flawed. i would say irredeemably flawed, to coin a phrase. >> do you think the hacking, the fact we're talking about it as opposed to talking about what our trade policies are, what the health care policy should be and how we repeal and replace and what exactly that looks like for the -- >> infrastructure, so many things. >> all that. it strikes me that one of the benefits of the tweeting is he's tweeting about issues that

people really care about, and he's doing it directly. the media is still staying on -- i looked at an alternative network early this morning. all they could talk about was the hacking. i don't think they understand what was hacked. it often sounds like the election was hacked. that's not the case. >> well, you're right. many do hope that if you confuse and conflate these issues constantly that people will come away saying, oh, i get it, and this is why she lost and 77,000 votes. it wasn't even close. he got 100 more electoral votes than mitt romney did, and mitt romney had all the king's horses, all the king's men, the republican party supporting him. the other thing you just said is very important. if i can go back and look at something that really hasn't changed since the campaign, it's many in the media telling america what's important to them and americans saying, are you kidding me? that's not important to me. >> kellyanne, there's two narratives now. it's gone back and forth with what president-elect trump has said on how president obama and

his administration is paving the way for the new administration. on the one hand, i see they said they're doing everything they possibly can. and president-elect trump has said some nice things about how president obama and conversations they've had and how it's been friendly. i see other things written that, okay, you do the arctic drilling, you do the million acres that you grab before you're on your way out. i've seen headlines that president obama's trying to tie president-elect's trump hands from the get go in terms of, you know, the transition. which is true? which is the true narrative? >> i think both are true, and here's why. they certainly -- and i've witnessed it first hand -- the president and president-elect certainly speak on a regular basis. they both love this country and want a peaceful transition in our great democracy and are working hard to do that. president obama's senior staff has been very good to those of us on president-elect trump's senior staff. reince priebus, our incoming

chief of staff -- >> did you meet with valerie jarrett? >> i have lunch with her tomorrow in the white house. >> i want to hear about that. >> we'll be talking about a number of different things. i very much appreciate her invitation and all the help she's offered. so that's on the one hand. on the other, they're ideologically, politically different. their vision for this country is different. i understand that donald trump will be there maybe for eight years, and president obama will be there for 17 more day, and he's in a rush to try to sew up other pieces of his legacy. he'll go to chicago, give his farewell speech. he'll go to the hill tomorrow and talk about, quote, saving and protecting the affordable care act, obamacare. i'm sure there's some concern there's unfinished business and that on day one or let's just say the first several weeks perhaps, president trump is able to undo many of the corrosive and backward and overly zealous regulations particularly that president obama's put into place. president-elect trump has promised to do that. he'll make good on that promise.

we hear from entrepreneurs every day and would-be entrepreneurs that they just feel strangled by these regulations. you've got employers who can't keep the jobs here, who can't retain a good work force and expand their operations here. you get rid of some of those ridiculous regulations and right away you're unleashing -- >> and that's probably a big reason why the stock market is where it is. does the president-elect take pride in the rally we've seen since the election? >> he's very happy to see that the market is responding already, particularly if you go back and listen to -- first of all, everybody said he couldn't win. then when he did, even that night, like 3:00 a.m. on november 9th, he was like, oh, the stock market is going to tank. he's always the trend setter. he's always the leading predictor. >> the follow-up is a lot of people are saying this rally is going to be dependent on actual change actually happening, such as corporate tax reform. how quickly do you think that could be? the last time you were on, we had technical difficulties.

i think you were trying to make a comparison to the '81 reagan tax cuts. we weren't sure. how fast do you think something could be done? that's what the market is looking for at this point. >> sure. the more recent comparison i would give you is june of 2001. that is when president george w. bush had his big tax relief package pushed forward. he did it with a democratic senate. why? because as democratic senators up for re-election the following year said, oh, my constituents like tax reform, i better vote for it. we have a situation where you've got these democratic senators up for re-election next year, including, if not especially, the ten that represent states president-elect trump just carried five of ten by double digits. you're telling me those united states senators are not going to answer the call of their own constituents and vote for the tax reform package? they should. we're looking at 2001 as another model where president bush was able to push that through by june of that year, and people loved it.

it spurred a lot of economic growth, as you know. people were very in favor of the tax relief package. and that's something he's run on and i think he has a mandate for. >> let me ask you another question about some news of the morning. happened in the last 12 hours. front page of "the new york times." house republicans overriding their top leaders voted on monday to significantly curtail the power of an independent ethics office set up in 2008 in the aftermath of corruption scandals that sent three members of congress to jail. donald trump has talked about draining the swamp. will he condemn this act? >> i have not discussed this particular late-breaking news with him. however, of course he's going to drain the swamp. ethics is a big piece of that. i think america responded to somebody who goes to washington owing no one anything in this nonpolitician, donald trump. but i don't want your viewers to be left with the impression that somehow ethics is gone now. there will be a new group in its place that is overseen by the house ethics committee, and that new group is in large part wants to curtail what some have seen

as 100 investigations since 2008, only a third of which have been referred to the house. ethics committee who have complaints from members and staffers and witnesses that they feel their due process rights have been violated or comprom e compromised. constituents can still file complaints, but they can't do so with anonymous tips. there has to be some kind of grounding, you have to own it. but also, this is a way to streamline. look, nothing has been completed here. this was a committee vote, and it was done by anonymous ballot. but today, the full house will vote on this. people will have an opportunity to stand up and be heard, whether they are for or against it. >> kellyanne, thank you. >> thanks for having me. good luck here. fabulous. >> happy new year. >> you'll be back. >> happy new year to you. >> she'll be in d.c. >> bring your set with you to d.c. >> we'll be down there friday morning. >> awesome. see you there. coming up, it is a busy week on wall street. all leading up to friday's jobs

report. we're going to get you all set. first, robert frank has made his way to our new set. what do you have going on? >> we're going to look at the year ahead for luxury. lower taxes, lower regulation, a stronger stock market, and a billionaire in the white house that could bring a banner year for the wealthy. also, hidden risks. we'll break down the big money and spending in 2017 after the break. we g- t ttre

anything with a screen is a tv. .moeerkrk 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. >> trading for 2017 will get under way in a little more than an hour. we're opening up the playbook. robert frank has predictions of what you can expect from the luxury sector. >> reporter: with the first billionaire in the white house, biggest tax cuts for the top since ronald reagan, the wealthy will have much to celebrate in 2017. the population of millionaires and billionaires after flattening out in 2015 and the first half of 2016 will likely resume their growth of 5% to 6% in 2017. there will likely be more than 11 million millionaires by the end of 2017, and there will be more than 700 billionaires in the u.s. the top 1% will see their taxes go down between 12% and 20% if the trump plan and the house

plan join together. that will mean an average of $300,000 extra in their pockets. all that extra cash will mean extra spending on everything have art and real estate to diamonds and classic cars. the art market, after a 40% drop last year, will see a rebound since higher interest rates don't affect rich real estate buyers, who usually pay with cash. greater confidence could lead to better luxury sales in new york, california, and florida. inequality may raise, but public attention to the wealth gap may shrink. that could lead the wealthy to go back to a more conspicuous consumption. as robin leech told me, in 2017, it might be okay to be rich again. there are, of course, some risks to all that. the taxes are not a sure thing. prices ran up so far in these markets, they may not have much more room to run.

rising rates could slow that. plus, we've got the overseas issues, which remember at this time last year, china was the big obsession when it came to the wealthy. this year less of a concern. but the growth overseas, the wealth creation from those emerging markets is a little slower than it was last year. >> dolly lens last week said there are a lot of russian buyers. she closed her first deal in a number of deals with russia. are they going to come back because of this perceived warming of relation? >> we had some news overnight china may further restrict the purchase of overseas property by the chinese. that would have a much bigger impact than a few oligarchs buying again in new york. >> okay. robert frank, thank you. our guest host this morning, all morning, is scott sperling. i'm going to ask about the oligarchs of private equity. what's going to happen in a

trump world? >> look -- >> and how much does it matter? >> i think that it's been pretty clear that the way carried interest gets taxed is consistent with the tax code. it's consistent with the way income is characterized for the investors. i don't think there's ever been a real problem with it. i understand the political advantage. >> he made some comments about it on the campaign trail. >> he did. and something might happen there. >> it would hit him and everybody else because the real estate business, same story. >> same story. real estate, oil and gas, a lot of small companies are set up in ways that would have been captured by the legislation that was proposed a few years ago. so i think it's bad for people trying to accumulate wealth. now, for people who accumulate a lot of wealth, i think that's why warren buffett is always fine with whatever tax increases. he's rich and he's always going to be rich. but for people who are trying to accumulate wealth, whether it's entrepreneurially or through

supporting entrepreneurs, then that would have a negative impact. >> okay. we got a lot more coming up. scott is going to be sticking around. coming up, 2016 was a tough year for hedge fund managers. a rundown of the winners and losers next. plus, congress is back in session with a busy agenda. the market implications and the sectors you should be watching. that's straight ahead. plus, why facebook is apologizing for removing a user's photo of one historic statue. stay tuned. you're watching "squawk box" on cnbc.

look at that handsome man. >> i just want to keep it like that. do you think i convinced adena to keep us there? >> you're really trying to keep yourself on that. but look at that. it looks good. you look good up there, joe. you were born to be up there. among today's top stories, president-elect trump slamming general motors, tweeting, general motors is sending mexican-made models of the chevy cruze to u.s. car dealers tax free across the border. make in the usa or pay big border tax.

cnbc's phil lebeau joins us now with more. ford's already sort of gotten singled out. now it's gm. i don't know if it's company specific. i'm not really sure it is, phil. >> i think it's industry, joe. i think what you're seeing, you saw ford. he's not letting up on ford, by the way. general motors is being criticized today. i bet you eventually you will hear about it for the entire auto industry. this is clear that president-elect trump wants there to be a change in terms of these vehicles and all the content that goes into these vehicles coming back across into the united states because of nafta without some type of a heavy border tax. he believes that there should be a border tax. that would then force the auto industry to at least ensure that the production that's really here in the united states stays in the united states, if not increase here in the u.s. i should point out, guys, there's a lot of debate in the industry about whether or not all of this criticism will

ultimately lead to automakers adding production plants in the u.s. most believe that it won't because of the economics of the industry and the global economics, not just what's going on here in the u.s. relative to mexico. but with this tweet that he sent out to general motors, guys, it's very clear that he is going to be going after the entire industry. by the way, don't forget, general motors ceo mary barra, she's on one of the councils that was named i think about two weeks ago, three weeks ago, a number of ceos who are to advise president-elect trump regarding economics, business, trade policies, et cetera. she's on this committee. now, she hasn't talked with him. at least she hadn't talked with him as of a week and a half ago. i'll be curious if there's a conversation now that he's clearly targeted them. >> i wonder what goes on, phil. do you think they call each other after that tweet and say -- >> yeah, they do.

>> yeah, they're probably on the phone, hopefully watching us, on speakerphone talking about it. what are we going to do? who we got to call? >> it's a tough start to the new year, phil, for gm. i guess it probably is. did they have any idea -- >> but joe, to my knowledge, they didn't have any idea this was coming. and yes, it will spark a conversation. we saw how this played out with ford. if you're general motors, what are you going to do? are you going to stop production down there? yes, the chevy cruze is also manufactured here in the united states in ohio. they will likely point out they do manufacture the vehicle here in the u.s. and they will probably try to once again tell the president-elect and his team, look, this is the way the world is going when it comes to auto production. i'm not sure they really care. i think the president-elect's team is like, that's fine, the world may be going that way, but we want it to change. >> i've seen that car. have there actually been any sales at all in the u.s., phil? >> yes, joe. the cruze -- there are sales of

the cruze. it is not some niche vehicle. for general motors, it's an important vehicle. keep in mind, if you're looking at general motors relative to mexico, it's the pickup truck production down there that should be of concern. >> exactly. >> that's the high-profit vehicle. >> you got to wonder why trump is picking on the chevy cruze, not the pickup truck. >> what he didn't tweet and said what he did tweet. >> maybe that's more important. >> maybe you're right. >> phil, thank you. phil lebeau. >> i just want to know what happened, what goes on. >> you mean in his mind? >> was there a conversation over the weekend? you remember what instigated is last time with boeing. he read a comment. >> boeing said something nasty about him, so he went back.

that's your native, andrew. you don't know if it's always that, always a payback. >> no, no. but the question is what led to it. >> gm had to do something that made him mad for him to do this? >> maybe he was having a conversation down in mar-a-lago with someone who said, by the way, you should say something. whatever it is, i'd love to understand what it is that led to it. >> he clearly has some -- and this was, i think, true of ronald reagan and bill clinton and why they were successful presidents. they had two, three, four key things that they tended to focus on. i think when he says i'm going to focus on building jobs, manufacturing jobs in the u.s., and so all of this -- all these companies leaving but being able to come back, that's bad. now, i'm not sure he's making policy, but i think he's providing a reinforcement to that overall plan. i think it only works if on the other side of it we do reduce taxes, we do reduce regulation, and therefore it's actually advantageous to keep more manufacturing in the u.s.

so the two have to go hand in hand. >> all right. >> did throw that guy off a golf course for writing an autobiography. >> watch out. >> i don't know if you golf, but not going to be at any trump courses any time soon. >> yeah. 2016 was a tough year for hedge funds with more than $83 billion in outflows. the industry had its first year of net redemption since 2009. for more, let's bring in the global head of research at evestment. peter, great to have you with us. what's your sense in terms of how much that outflow money is ever going to come back? are they pensions and endowments that have decided in 2016 we're not going to invest in hedge funds anymore? we've heard a lot of that, certainly. >> i think what happened in 2016 was -- if you look at going back to 2015 funds that lost money versus funds that gained money, about $117 billion lost.

i think what we're going to see going forward is a refinement of the industry in terms of number of players. i don't think large investors are necessarily leaving the space. it's just a matter of weeding out those that are able to be successful in an environment that actually allowed for a lot of differences of opinion. and those differences of opinion ended up resulting in some meaningful losses for large firms. but i don't think necessarily there's a broad pullback from the industry. >> i mean, you're not hearing this from, say, treasurers? that seems to be the -- i don't want to say it's a trend because it's not the overwhelming rule, but there are certain high-profile state treasurers who are saying we haven't gotten the bang for the buck, and we're just going to go to index funds. we're going to have a smaller

buchb bunch of alternative investments and do it ourselves. >> in prior years when we've done this, hedge funds were ranked between one and three. last time we did it, which was middle of last year, hedge funds had fallen to fourth behind private equity, real estate, infrastructure. kind of on par with commodities. the commodities sector on the hedge fund side we saw in 2016 actually had net inflows. so there is some demand. it's not what it was three, four years ago. i think there will absolutely be pressure. the industry has tended to do well when there's a prevalence of distinct opportunities. not so much when there are -- there's an environment of, you know, multiple opinions about the same situation, which can cause meaningful losers,

meaningful winners. one thing we saw last year was among billion-dollar-plus funds, highest average losses since the financial crisis. nowhere near on par, but just saying that there was the possibility for big bets to be made and some big losses. >> okay. we're going to leave it there. thank you, peter, for joining us. coming up, it is a big week for the economy. the data you need to watch, stay tuned. you're watching walk squawk rig -- "squawk box" here on cnbc. back in a moment.

the new year is starting with a full slate of economic data leading up to friday's jobs report. steve leesman joins us. >> it's interesting. we'll figure out whether or not trump tweets trump economic data. we'll be beginning the process of closing the books on 2016. let me show folks what we have coming up. big ism manufacturing data at 10:00 today. construction spending as well. wednesday we'll get phil lebeau all day, reporting on auto sales. there's supposed to be 17.7, down a little from the month prior. still a high level. thursday, mark this on the calendar.

because of the holiday, adp is on thursday. we'll bet claims and ism services for the bigger part of the economy. then friday, the big jobs report. let's take a look at what's in the jobs report here that we have coming up. nonfarm payroll is expected to be 185,000. that's down from -- sorry, up a little bit from the 178. unemployment rate seen ticking up. most economists think we're around full employment. wages are believed to do better here. and there's the adp number we're expecting just for the private sector. again, we'll get that on thursday. overall, we're looking for about 2.4 million jobs to have been created last year. down a little from the 2.8 in the prior year. ultimately, we're running about 1.82%. you guys heard it this morning. he came in and said that we had reported this a couple weeks ago. looking for just 0.2. what you have is a difference of opinion among the stock guys essentially and the economists who are a little bit more

skeptical or call it missouri show me about the economic policies coming from the trump administration. whereas guys like stock pickers are more likely to fold in things like confidence and the animal spirits you guys were talking about. economists are a little more skeptical about putting that in. and look, i've said this a hundred times and i'll say it again. if the trump administration can get 1% additional growth, it is a huge number. i worry that they go out there promising 3%, 4%, 5%, 6%. i hope they can get the expectations in order. if they end up delivering three, that's massive. >> you get a three handle, you're happy. >> three is great. >> steve, you seen this latest majority of jobs are part time? >> i've seen some of them. where is that from, joe? >> i got a zero hedge report. 94% of all jobs were alternative

work. >> i think it depends where you measure it from. since 2010, what i found was that all the jobs are full-time. i'll look at that report. i'll report back to you. that's what we do. >> it's making the rounds. >> i'll take a look at it. >> it would explain a lot. when we come back, the new republican controlled congress is heading back to work today with health care and tax reform high on the agenda. we'll debate market implications next. "squawk box" returns in a moment.

some breaking news. gm responding to president-elect donald trump's tweet, slamming the automaker. cnbc's phil lebeau is in chicago. >> and they are very forceful in telling the president-elect, look, most of the chevy cruzes that are sold in the united states at auto dealers here in the united states are built in the u.s. at the gm plant in lordstown, ohio. in fact, the official comment from general motors in response to president-elect trump's tweet says, general motors manufacturers the chevrolet cruze sedan in lordstown, ohio. all chevrolet cruze sedans are built in gm's assembly plant in ohio. gm builds the chevy cruze hatchback for global markets in mexico with a small number sold in the united states. so essentially general motors saying to president-elect trump,

look, there's a very small number that are coming across the border from manufacturing in mexico. most of the cruzes that are sold by gm dealers here in the u.s. are built at a gm plant in ohio. so guys, that's the response from general motors. interesting that this was not the deferential tone of we respect where the president-elect is coming from when it comes to manufacturing and improving the economy. this was a very pointed, look, when you're talking about this vehicle, it's built in the u.s. a small number are built in mexico, and that's all they had to say. >> phil, i see it the other way. they didn't say -- they're saying we do build them in the u.s. they didn't say we reserve our right to build them in mexico and proud. >> you could look at it that way, joe. i've seen two responses so far when it comes to the auto

industry to the tenor of the trump administration when it comes to slamming production down there in mexico. generally speaking, what i'm hearing from a lot of people is he may not have all the facts correct in their opinion, and therefore they're probably wisest to tread a little more carefully when it comes to communicating with president-elect trump. and of course, we don't know if mary barra has already been on the phone with the trump administration, with the trump team, or with president-elect donald trump. she may have already this morning and said, look, these are the facts regarding the manufacturing. >> all right. >> okay. phil lebeau, i'm sure we'll be talking and hearing from you a lot more today. in the meantime a new congress will convene in washington today. republican leadership looking to take on health care and tax reform. both are likely to have major market implications in 2017. joining us is dan cliffton. good morning to you. real quick on gm, maybe it's

going to be an equal employment opportunity for every crisis manager in america. i assume if you're an american company that manufactures anything anywhere, you got to have a plan already in place for when the tweet arrives. your quick two sense on the tweet. >> new sheriff is in town. donald trump won 80% of private sector union workers in michigan. that's his base. he doesn't care what the company is saying. he is fighting for the workers. i do believe this will impact how the tax reform debate happens. particularly with the border adjustment tax proposal, putting taxes on imports coming in. the house -- >> how do you think it is going to play out? >> sure. >> on the border adjustment tax. it'll be, i think, an issue we have not discussed enough. >> that's right. >> m.c.cc loved that topic a bi >> when you look at tax reform, you need revenue to do it. to lower the corporate tax rate, the border adjustment tax gets you there and fits with trump's

goals of saying every other country in the world has a border adjustment tax system except the united states. i think it is unlikely it'll go through, but i think it's going to be a big part of the debate, andrew. it'll negatively impact retail and auto and possibly refiner stocks until the debate is resolved later this year. >> but hold on. if you can't get the border adjustment tax, what does it do to the corporate tax rate? >> well, i think -- >> we talked about it being -- you think somewhere 22%, if i remember. >> that's right. we could get it down to 23%. if you want to get it lower, to 15% or 20%, where trump and paul ryan want to get to, you need the border adjustment tax system to come into effect. it means you have to get that over the objections of all the retail companies, all the auto companies. it'll be difficult to do. that's why trump consistently doing this on the tweet and going after these companies starts setting the agenda for him to start getting this stuff through. >> dan, given the gm news, we have to keep it short. love having you on. come back. we'll continue this conversation. >> thank you. when we return, jim cramer

joins us live from the new york stock exchange. we'll get his take on the top stories. you're watching "squawk box" on cnbc.

time for your stat of the day. what are the best performing sectors in the first quarter? over the past five years, health care, consumer

new york stock exchange, jim cramer joins us now. i'm reevaluating my view on twitter. i'm liking twitter. if we can do this any morning, look down at the feed and see something, i mean, it makes for interesting times, jim. >> yeah. look, i think that if it weren't for the turnover of twitter, the lack of investment in twitter, i think we'd be saying, wait a second, this is the new news outlet because the president doesn't trust traditional outlets.inter-mediation of medi you have people saying, the cruze has been made in mexico a while, used to be in korea. it is one way. we have to piece together a response. it is an effective way to get your point across. >> jim, if most cruzes are made in the united states, does that mean 51% are made in the united

states, 49% elsewhere, or is it 90% are made in the united states and 10%? i need to know. i need more details. >> there are a lot of parts made in mexico. cars come back. there's a lot of cross border traffic with ks union and union pacific on a lot of cars. you have to change nafta to do this. i'm surprised that trump doesn't just say, listen, nafta has to go or we have to redo nafta because of currency manipulation by the mexicans. this is piecemeal, and it won't get the job done. >> gets us talking about it though, jim. i'm sure you will on "squawk on the street." we'll be watching. >> thank you. coming up, don't miss howard lutnick. 10:00 a.m. eastern. "squawk box" returns in a moment. ma

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our very special guest host and thanks to our guest host who has been hanging with us at our new home. thank you for being here. >> honored. >> what do you think? >> i'm thinking we're up 170 or whatever. so if we do -- >> in honor of our new -- >> 155. we need 237 to hit 20,000.

it's tuesday, right? have i got that right? >> tuesday. >> four days. may or may not happen this week. it was interesting. i'm going to check my twitter feed. >> go check your twitter feed. >> every morning because you never know. >> he may be directing one at you, joe. >> one of these days, we the only hope. thank you. >> you're welcome. >> there's the clock. we have to go. join us tomorrow. "squawk on the street" is coming up next. ♪ it's a beautiful day ♪ blue sky good tuesday morning. happy new year. i'm carl quintilla with joe cramer. a new year of trading begins today with a bang. futures strong ahead of a busy week of fed minutes. isms. jobs number on friday. in europe, pmi strongest in two and a half years and oil is at an 18-month high as the opec productions cuts are