and treasuries are higher. i genuinely feel this is the one to own. >> doc what have you got? >> zynga. they make mobile games. unusual activity. >> does it for us. "power" starts now. we'll call it a chevy cruz missile, donald trump calling out the car maker about manufacturing in mexico. ford making a big announcement about its plans south of the border. we have it all for you coming up. speaking of the market, new year optimism, dow backing up from an early morning push to 20k. we're kicking off 2017 with new year's money resolutions just for you. ceo of a booming stock is here to help you slim down. i'm brian sullivan. the show for the year kicks off right now.

>> and welcome to "power lunch." happy new year, everybody. i'm melissa lee. hitting the skids once again. we were within 62 points of the milestone. the dow is now more than 200 points away with a gain of about 29 points right now. energy making a huge about face. crude oil now negative, after hitting a six-month high. nat gas is having its worst day since february 2014. tyler? >> thank you. i'm tyler mathisen. at this hour construction spending jumping to a 10 1/2 year high, gains in public and private sector investment. meantime u.s. manufacturing activity expands in december. ism index posting its fourth straight monthly gain and big cold blast pushing across a big part of the united states. northern plains, rockies could see temperatures 40 degrees

colder than normal. we begin today, though, with two big developing stories in the auto world. ford now canceling plans to build a $1.6 billion plant in mexico. this comes just hours after president-elect donald trump blasted general motors for its imports from mexico. phil lebeau following both these stories joins us now from chicago. phil? >> for months ford said no way, we're not going to stop our plans to build a plant in mexico where we will build small cars. today, they finally saw things the way the president-elect thinks they should see things, canceling plans for their new plant in mexico. they are still moving the ford focus production from michigan to an existing ford plant in mexico. meanwhile, the company is also investing $700 million, adding 700 jobs at its michigan plant. ford ceo mark fields talking about the reason it finally made this decision. >> we make business decisions

best on what's best for ford, first and foremost. like every other business an annual process where we look at the business environment and what we've seen, phil, over the last couple of years, we've seen small cars markedly decline. every year, we're looking at our capacity. we're looking at our forecast for demand. and it became very can clear that we didn't need this plant and can utilize an existing facility in mexico. >> just a couple of hours before ford made that announcement, donald trump was tweeting again saying general motors is sending mexican-made models of chevy cruze to u.s. car dealers tax free across the border, make in usa or pay a big border tax. gm responded shortly after the tweet saying general motors manufacturers the chevy cruze sechlt dan in lordstown, ohio. all chevrolet cruze sedans sold in the u.s. are built in gm's assembly plant in lordstown,

ohio. gm builds the chevy cruze hatchback in mexico with a small number sold in the u.s. just 2.4% of the cruze models sold last year here in the u.s. came from mexico. we're talking 4400 vehicles, a very small percentage. when you look at mexico for gm overall, approximately 400,000 vehicles that gm sold in the u.s. last year were made in mexico. so, yes, it gets a lot of business from those vehicles built in mexico. take a look at shares of general motors and ford. we're showing you guys since the election of donald trump what those shares have done. ford today, by the way, moved slightly higher after the announcement it was canceling plans to build a plant in mexico. >> if you take a look at ford shares, it looks like investors believe that ford somehow escaped the ire of donald trump yet would still be subject to the border tax.

they're going to be producing, moving some small car vehicle to mexico. one would assume that would be what you mentioned, gm produces 4400 cars that are brought back to the u.s. >> right. that's just the cruze hatchback. 400,000 in terms of total vehicle. >> there's still a lot of fallout to be felt. >> absolutely. >> essentially. >> melissa, you're looking at about 3 million vehicles imported to the u.s. from mexico annual annually, in terms of sales. that's all automakers. a border tax could have huge implications. we did the report a couple of weeks ago that there was a trade group funded in part by the automakers that did the numbers, ran the numbers. they estimate that a border tax would kill probably about 400,000 in annual sales. >> you're talking about why the cruze, why now, the sierra and silverado are made there. the lordstown plant in trumbull county, ohio, went democrat, democrat, democrat.

this time they flipped for trump. he made a lot of promises in trumbull county, ohio. this is a gift for them. >> sure. >> remember the day after the election, november 9th, what did gm do? they announced that the third shift making the cruze was going to be shut down. the day after the election in a county that went for trump, gm announces they're going to shut down the third shift, mr. trump with his long memory remembered that and this was targeted. >> if he wants to give them a real gift he will convince gm to retool the plant to build the hatchback there. basically what they're going to do -- gm ultimately could say the sales aren't that great. 4400 vehicles, only a short part of the year that's being sold. if this is not a huge part of cruze sales, gm simply will not import them into the u.s. so i know a lot of people are talking about the lordstown connection. that is where the cruze sedan is built. >> some could say that he

purposefully didn't mention any of the puppets. a much bigger target and went for something much smaller, which could be defended. but, phil, it's an interesting story. we'll certainly see how it pans out. phil lebeau in chicago. senior auto analyst with consumer edge research. great to see you. let's say this staks extetax is to every make and model. what is the worst case scenario in terms of the impact on gm and ford? >> yeah. good afternoon and thanks for having me. the worst case scenario, i think, would result in ford working with its dealership body, gm working with its dealership body to ultimately try to pass through the impacts of these taxes. and we're at a point now where demand is already weakening. we see incentives growing tremendously. up 21% year over year in november. there's not a lot of room to give. rates are going up. loan terms are about as low as

they can go. a very dangerous risk here as it relates to new vehicle sales to the extent that this border tax makes its way through. we've done some work on this in the senate, wto and quite a few other bodies may have an impact on ultimately what gets passed. we think there's some delusion likely to offset the real bear case -- not the bear case but the true downside case. >> when you say delusion, what do you mean? zblook what >> look what's happened in the last few months with ford. at the end of the day there's a political body and a corporate body that are, in fact, communicating with one another. they found another way to continue to protect profits without a new facility in mexico. that's progress. what we also heard from ford today is that they're not slowing down on merging mobility investments. so, everybody, it seems, is

winning because there's this dialogue going on. i think as harsh as the rhetoric seems coming out of the president-elect's tweets, i think this is going to engender a very helpful dialogue and that dilutes on the surface what seems very harsh in terms of what trump is proffering. >> that's very half glass full, jamie. the bare bear case scenario would be at a time when demand is weakening. how much more weakening could the auto industry see? stocks have not been performing well at a time when we have had record numbers of autos sold in the united states. >> i think the stocks are not performing maybe for two reasons. the first is we've had just about every positive you can imagine for ford and gm with respect to truck demand, truck pricing and truck sales overall. >> by the way, jamie, a lot of those trucks are made where?

canada, not in the united states. >> they are, indeed, brian. that's correct. and i would say that during that time, if you had gone back two or three years and asked their investors of what peak multiples were, they were somewhat higher than the 11% or 12% we saw in the last few quarters. and so the peak wasn't as good as we thought it would be. obviously, demand is going to wane from here. second element here is the five or ten-year outlook for auto manufacturers as it relates to mobility. there seems to be a headline every day about the lyft and uber enthusiasts and how can ford play in that monotonization of data. >> right. >> this is an important announcement if you look at the different levels of ride sharing and shuttling. i don't think ford gets the credit, nor gm nor maybe chrysler for 100 years of demonstrated expertise in production. and so that's really, i think -- they have to show they can take that expertise, evolve with

consumer tastes and monotize those investments. >> jamie, thank you. jamie alberteen. >> thank you. president-elect taking aim at congress and tweeting about guantanamo. john harwood is outside trump tower in new york city. john? >> reporter: tyler, it's a fascinating preview we're getting today of what's going to be an extensive cause and effect debate on various things happening in politics and economics over whether or not donald trump caused them to happen or whether he's like the rooster, trying to claim credit for the sun. phil lebeau is talking about one of them, the decision by ford with respect to that plant in mexico. we just had another one with respect to the house republicans in their move on ethics reform. last night, remember, republicans came out. as one of their first acts unveiled a plan to gut the office of congressional ethics,

its independence and teeth with that office. that created a huge backlash. this morning president-elect trump tweeted criticism of the house republicans for making this a top priority. subsequently, we saw the house republicans withdraw that attempt to do that. now, donald trump hasn't claimed credit for that. when things reflect in a positive light, you can bet he and his team are going to try to associate them with the president-elect. as long as the news is relatively good, that has benefits to him, of course. when the stuff hits the fan and the news isn't so good, it's a different kind of discussion. now, one other thing the president-elect has done today is go after president obama's desire to continue whittling the population at guantanamo bay, the prisoners there. there are about 59 prisoners there now, about a third of

those have been cleared for release. president-elect tweeted that these are dangerous people who should not be allowed out on the battlefield. of course, the intention of the administration is not for them to go back to the battlefield but to go to secure facilities and countries where they will be monitored and overseen. we'll see whether or not this has any effect. i would doubt it, that it would have any effect on president obama and his approach but we'll see. >> also, a trade rep ahead of the u.s. trade office announced today. correct, john? >> reporter: that's right. bob lighthizer, deputy trade representative under president reagan, long-time adviser to bob dole when he was the senate republican leader in the 1996 presidential candidate and since then a trade lawyer has been named the ustr. this is going to be a positively received pick because of bob lighthizer's long-time ties to

prominent republicans but also because he shares many of donald trump's skepticism about trade agreements. and so this is a pick that i think will be well received on capitol hill and within the republican party. >> john, thank you very much. john harwood in new york today. >> just because dow 20 thou has kept us waiting for weeks doesn't mean the bull market is over so say your guests. we'll find out why. one easy to buy market outside of america you may want to take a look at. we're just getting started on "power lunch." happy new year, everybody. couple of days late. mamaer thelng abt ocatutu

welcome back. the road to 20,000 for the dow has hit a bump. some day, some way, we will get here. >> we will. 2-1 advancing in declining stocks. the market is a little fragile. energy stocks, oil, 55. it's all right. everything is great. nat gas plummeted in the middle of the day. natural gas oriented stocks all got hit. transports started weakning a little bit before 11:00 eastern time. trade war concerns, trump targeting gm plants in mexico. railroad stocks weakened, norfolk southern, union pacific, csx all to the downside. 11:00, ford announced they

canceled that plant in mexico, ksu they were going to haul the cars. another leg to the downside. overall about trump tweets in the markets and how destabilizing the constant tweeting. last week and a half. markets hate uncertainty overall. these tweets increase market uncertainty and the start of four years of a new form of portfolio risk where every day there's a new company that's essentially targeted. third problem, banks. the bank leadership groups, all these stocks were up nicely. jp morgan was right near 88 at the open. they all sort of drooped right here. 2-1 advancing the declining stocks but markets are showing a little bit of fragility right here. remember, we're still only one% from historic highs. dow may be struggling to break 20,000 but that doesn't mean the bull run is over. no, siree.

global wealth and investment management at bank of america and scott clemens, chief investment officer. what kind of year are you looking forward to, joe? >> constructive. a year from now we'll see the s&p up by a high single digit, throw in the dividends. global growth is picking up. u.s. economy is stronger than the numbers suggest. we're looking for a very constructive year, not only absolute but relative sense as well. >> how about you, scott? >> i'm optimistic. one of the most important developments in the fourth quarter of last year wasn't only the political sphere but recovery of u.s. earnings after two years of an earnings recession. earnings drive the market. that's the fuel. i think that drives a pretty good year this year. i like what bob just said, likely volatility emanating out of washington, tweets from trump or natural mistakes of a new administration, it will be a volatile year. when all is said and done i

think investor also make money. >> what should i buy and what should i avoid this year, joe? >> cyclical, industrials, materials, i like those sectors. emerging markets, south korea perhaps could do better. e-commerce and china. what to avoid, more of the telecom. any of the bod bottom proxies because i think the fed raises rates two or three times this year. ignore the headlines or tweets for that matter. >> how do i protect what gains i may have made in the fourth quarter of last year, scott? leave a little bit more room for gains in 2017 but also have some defensive ballast to protect against the kind of risks and volatility you just pinpointed? >> in a nutshell, in any environment, but particularly one that bears such company-specific political risk, it's important to own the shares of companies that have a greater than average degree of control over their own destiny.

whether that's through the loyalty of customers, provision of essential products and services, strong balance sheets. companies that aren't necessarily subject to the political discourse. >> give me some examples of each kind without indicating whether you're necessarily recommending those particular companies. in the former category, the ones that would be subject to political risk, you would be looking at -- >> the whole list of companies that bob just mentioned. today it's gm. it could be energy space. it could be anything within the firing line of washington and, obviously, anything could be within that firing line. it falls mostly consumer staples companies, that you and i are going to consume no matter what the political environment is, no matter what the control of congress is. those company also get you through the volatility. >> those would be insulated. how would you respond to the idea that if there is some trade action against manufacturers from whom walmart buys things or

from whom nike sources things that that isn't going to bleed over into the consumer? >> it certainly will. and there i think it's important for investors to make a distinction between things that impair the price of a stock, and there's a lot of risk for that, or things that impair the value of a company, making that decision will be important. >> all right. joe, final thoughts here from you on the kinds of companies that you think are going to do well again this year? >> we haven't mentioned small mid cap stocks here in the united states. they're going to do well. if you have a -- because of the trade wars potentially, that's where the money will flow first. i think there's more upside in the sector in this space. >> joe, scott, appreciate it. have a good new year. still ahead, forget cyber monday. why today could be the busiest online shopping day of the year. as we head out, a live look at capitol hill as congress returns to work. "power lunch" will be right back. g r trigpr

forget cyber monday. apparently today is one of the busiest online shopping days of the year. who knew? courtney reagan is here to explain why and what we can expect in 2017. >> it could be. think about it. we're back at our desks today, with gift cards to cash in and post christmas sales to take advantage of. so far today site traffic levels are similar to mid november and a little more heavily skewed

toward desktop and lap top computers. brad steele says the holiday hangover impact is strongest when the return to workday is at the beginning of the week. 10% on monday january 2 nd 2016. that's last year over the prior weekend and 14% bump on monday, january 5, 2015 over the prior weekend. they don't have sales numbers today yet. for those stock shopping, analysts are laying out some of their top picks for 2017. so, jeffries favors nike as his top pick after the dow component really lagging 2016 performance. he also loikes foot locker, michael kors and coach. he's a little guarded about what's going on at l brands, under armour and lulu lemon for this year. under performers with compressed multiples that have low investor

expectations and some potential catalysts in 2017. hanes brands, kate spade, signet jewelers and skechers. >> i was at a mall yesterday. it was more crowded yesterday. >> yeah. >> then it was in the days right before christmas. >> the retailers cannot recognize the gift card revenue until you spend it. they want you to spend it now or it doesn't count in the holiday spending. >> we need to add a third. learn to speak finnish and lose a couple of pounds. >> finnish? >> beautiful people. >> it also has to do -- >> third resolution, officially -- i think americans officially kill the term cyber monday. why not just have horseshoe thursday? they're about as relevant for a time perspective. >> yeah. i understand. >> a little less relevant than

cyber anything. >> consumers need a reason to spend. >> you go on cyber net a lot? they do in finland. >> there we go. court, thank you. >> i tried. >> right. well-known tech analysts kicking off a new gig in this new year, josh lipton in san francisco. josh? >> tyler, i am here with gene munster who today officially launches loop ventures. thank you for joining us. >> thank you, josh. >> you are going to concentrate on a few key areas, ai, virtual reality, augmented real iity, robotics. why those specific areas, gene? >> collectively, we think those will be a bigger deal than internet and mobile was. it's important for us to leave our current jobs. last day at piper was last friday and go after these head on. those four themes will radically change how humans interact and work. one example is we think that 70%

of jobs will go away over time. lot of ramifications of that. that's the significance of those three themes. we call those themes the future of perfect. we think it will build an absolutely fantastic future for all of us. >> a lot of these here in silicon valley, targeting those same areas. a ton of money has rushed into those areas. as you think about it, what will be your competitive advantage as a vc? >> we need to stick to what we do best, research. research-driven early stage vc fund. we'll continue to do that. we have a site you mentioned, loup ventures launched today. we'll be publishing three research note ace week, about the same pace we've published in the past. one of our competitive advantages, we'll be able to track these trends better and separately we'll be able to kind of mold some thoughts. we're not the operational experts that a typical vc is, but more on the tracking side.

>> vr specifically, gene, you make an interesting call there. you say long term, vr will be bigger than augmented reality, different from some of the estimates out there. you think about vr, gene, are those platforms already set? is it facebook and alphabet or is there room still for another big tech company to come in there like an apple? >> this is really early stage. to put it in perspective on our site today we have the vr excitement index, and so it's about one in ten of people that have even tried it. no one is really a clear winner here. ultimately, we think that vr is going to be a bigger deal than augmented reality. tim cook believes it will be big er than vr. once you get to a point where virtual and real worlds are indistinguishable, we think that consumers will flock to that. >> gene, listen, best of luck on your new adventure. >> thank you, josh. >> back to you. thank you very much.

another live look at capitol hill where vice president joe biden, for the last time, holding the ceremonial swearing in for newly elected and re-elected senators. there he is in the reception area. let's get to sue herrera now. >> here is what's happening in the news update this hour. andrew ladd announcing megyn kelly will be leaving fox news to join nbc news. in-depth sunday night news show and take regular part in the network's special programming. no financial terms announced. new york governor andrew cuomo is proposing to offer free tuition to new york public colleges to eligible residents. alongside senator bernie sanders of vermont he unveiled his plan. >> free tuition to a state

two-year school or four-year school if you come from any family earning $125,000 or less, the state will provide free tuition. >> overseas, spanish authorities detain two moroccans as they crossed the border into spain. 19-year-old migrant was hidden in a suitcase, pushed by a 22-year-old woman who tried to avoid security checks. that is the cnbc news update this hour. ng. tdeat t mp t a'i us aic ng. tdeat t ob

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we informed president-elect trump and also vice president-elect pence that we would be investing $700 million in our plant here in michigan, adding 700 jobs on top of the 28,000 jobs we created over the past five years and at the same time told them we would be canceling our plant in mexico. >> that was ford ceo mark fields on cnbc, in the past hour and a half, talking about ford's decision to scrap plans for a

$1.6 billion investment for a new plant in mexico. all this comes hours after donald trump called out gm for its manufacturing in new mexico. cnbc contributor. >> happy new year. >> happy new year as well. how much of this timing for ford was just random? you don't cancel plans for $1.5 billion plant in a couple of hours after a tweet. what's your take on this situation? >> my take is that trump is sending a very important message, of which i completely approve. he's basically saying to a lot of these big companies, look, do not jump ship now. we're on the verge of giving you major, major business tax reform and relief, including repa repateriation i'm here to remind you we have new leadership, new sheriff in town.

do not doubt me. >> is it protectionist democrat type stuff? >> no, no, just the reverse. he is saying that america is going to be the investment destination for the world, going to win the global race for capital and i'm going to enforce this. he has congressional support for this. going to get done. i want it to get done as soon as possible. but these big companies, he's saying no, no, no. don't do that. gm thing is a little different. we should talk about that. >> go ahead. >> the whole thing that he's going after the cruze, most of the cars are not produced in mexico that are sold in the united states. very small number of cars as phil lebeau points out. they're going to invest in the united states, ford, but move small car production to mexico anyway. so if they wanted to make an example, they could have gone after pickup trucks, made in mexico, much bigger deal for the automaker. >> that's not trumbull county, ohio, baby. it's trumbull county. >> is it really about the border tax? if it's about the border tax, he

would say all those pickup trucks you're driving out there -- not all of them but a lot of them are made in mexico. bring them back. >> that may be. he can't do that overnight either but that may be coming. it's a matter of incentives. these companies have gigantic tax departments, right? key cost of capital. they know exactly what they're doing, precisely what they're doing. big treasurer departments also. they can calculate this real simple. if you go through the tax breaks he's talking about, these are reductions, marginal tax rates. you have full incentives, 15%. one of the lowest in the world plus expensing, plus easy repatr repatriation. all he's saying is wait a minute. we're not going to let this go. stay. gm is a little different. just a quick comment. we have to figure out what we're going to do about the so-called border tax issue. very important point that's not yet been resolved. the congress, kevin brady's bill

from the ways and means committee, does create a border tax. i think it's going to run about the corporate tax rate of 20% or something like that. the trump plans have not yet incorporated that. so, we have to see. mexico -- look, let's go back to the original nafta. mexico had a 5% tax on imports, everything. they said they would leave it there. this was years ago. they did not. they raised it from 5% to 10% or 12% i bheev it's now 16%. they said they wouldn't and they did. now, mexican stuff coming into the usa is duty free and american stuff made in mexico is duty free. that's an imbalance, all right? i will say as a free trader, mr. trump nonetheless has a very important point. if you don't fix your tax rates equalization, then the free trade model doesn't work. let's fix this. border adjustment that's to be revealed. >> you said earlier that the tax

plan, the corporate tax plan is real simple. the border tax is anything but real simple. i need you to educate me on two things. what's going to happen with respect to the border tax on the taxation of the bmw that's made by american workers in an american plant in spartansburg, south carolina? the company is owned in munich, bavaria. it has info-tainment system made in korea. two, on a border tax basis what happens for the item owned by apple that is made overseas and brought in? >> these are tough questions. they're great questions. we'll have to figure out a way. if we do this right, we have to figure out a way to equalize the tax consequences of these transactions, right? you can spot the transactions. you can do it on a sales base or profits base. i don't care which.

sales is probably easier. a lot of people worry that we're crawling toward some kind of national sales tax or value-added tax. i hope we don't. i don't want to crawl. i don't want to go at all. but these things have to be worked out. you have to bring the great countries together. same thing, by the way, on currency. decent chance that china will be labeled a currency manipulator in the early days of the administration. i don't know that. just my opinion. there's a chance. i don't like that kind of penalty. but -- but, but, but, but what we need is a global deal. we need a global drcconference. let the g-20 earn whatever they earn staying at those fancy hotels and figure out how to create currency stabilization, which we have done in the past but not in the recent past. paul volker said this in an important speech two years ago, need international currency cooperation. >> is mexico a currency manipulator? >> it could be.

i don't know the facts. i suspect the answer is yes. but i don't know all those facts, okay? you've got tough interest rate differentials between the u.s. and mexico, major fiscal mismanagement in mexico. so they're not holy. all i'm saying is, let's make a deal. you need two deals here. you need trade deals and currency deals. and it has to equalize so these companies, a, don't have to play these games and, b, won't play these games. there will be no incentive for them to play these games. >> getting those two deals lined up, though. >> that's what leadership -- they're not easy, i grant you that. on the other hand, deals can be made. it's a matter of leadership. one thing about mr. trump, he's not bashful. and he has a reputation for negotiating deal. >> exactly. little experience in politics and a lot of experience in doing deal. >> i wouldn't write any of this stuff off.

this is a new era. this is transformational stuff. i think it's kind of fun. don't you? >> i wonder what comes first, the tweet or the phone call? does he call gm and they say sorry we're not doing it, then he sends out the tweet to shame them or send out the tweet saying i'm coming for you? >> i don't know the answer to that. >> what came first the tweet or the egg? >> i don't know. i love the tweet because he's going over the heads of the whole mass media. i love that. so he gets his point of view out without filters from certain newspapers and other media outlets. you know who i'm talking about. i love that. that is also transformational. >> absolutely is. >> and i just love it. >> larry, hold on. stick around for this next story. uve pave. that's a good day in finnish. it is a good day. unemployed fins between the age

of 25 and 58 will receive a basic monthly income of 560 euros about $581 u.s., replace existing benefits. they hope it will boost employment. earnings reduce the benefits they may receive. your view on this news out of finland? >> tricky stuff. jackie and i were doing the calculations. it's about $7,000 a year. that's what they're talking about, in dollar terms. here is what i don't get. why continue it? if you get your job, why continue it, the subsidy? look, we have -- there is a fiscal cliff or welfare cliff. the united states has a big problem with this. earned income tax credit. if you take a job and move up the ladder, you lose the subsidy such that your marginal tax rate -- >> look what andrew cuomo, governor of new york just announced, free college if you

make under 125. if you make 135, do you pay full ride? if that's the case, you go to your boss and say cut my income by ten grande year. >> could have been health care. if you wait it's expensive now, wait till you get it for free. that's what's going to happen to andrew cuomo. pulled out the earned income tax credit. food stamps, welfare programs. we have disability insurance, okay? they have exploded in recent years. many of the rules and regs have been lifted. so there's no -- work time, subsidies amounts, what constitutes injuries for disability. >> 14 million on disability if disability was a state. the eighth largest state of the united states. >> so what you want to do is create incentives to work, not to not work. that's the main thing. i fear -- casey mulligan has

done a lot of work on this. it includes obamacare, by the way. all these so-called small entitlements are creating incentives not to work. i think it's wrong for the person. i think work is a virtue, to be honest with you. and people are a lot happier when they do work. the finnish thing, we kicked this around in the states, universal income. i basically don't like it. i'll be interested to see how the experiment works. finland is not the united states. >> tiny country. >> tiny place. are they creating disincentives not to work? that's the question i'm going to ask. in the u.s. let's take all these small entitlements and bundle them. >> make it simple. >> that's correct. you know what? i wouldn't mind seeing some blueprints and plans on that to have a look and try some experiments. but the trick is to make it pay after tax to work. that is the absolute bottom line of this story.

and we've said for decades now if you tax something, you get less of it. if you tax it less, you get more of it. that holds for work, hours worked and so forth. it also holds for investment and risk taking. so you need to be very careful. let me also say mr. trump said congress' personal tax plans go to this issue. they don't finish it off but do deal with this issue. i hope they keep moving in this direction. work is a virtue. it makes everybody happy. arthur brooks, you should get him on. american enterprise institute has written about this. work makes you happy. he does the statistics on it. >> good stuff. >> thank you. appreciate it. >> happy new year, larry. >> happy new year. >> thank you for being with us. >> thank you very much. new year often brings with it new diets and swrim memberships. the stocks that can help people shed pounds and help you make money in the process. first, rick santelli has today's

report. >> market is sort of on a diet. it's gobbling up and in positive territory. it's just on a low-calorie intake here thus far. ten-year note yields have given it up. still a little higher, meaning priced a little lower. finished off the year. most of the upside has been overseas. boom yields are up. y t italians were up a dozen bases points. big implication in 2017. who out there is brave enough for the dollar index? key question for the year. another issue? don't touch that dial. "power lunch" will return in two minutes. raour un tewhu exex athebmelnize

let's get you caught up on

some stock updates you might have missed. buy disney not because the new "star wars" movie but because donald trump's tax policies should benefit it. verizon getting a jump after citigroup upgraded it to a buy from a neutral at $60 a share. intel 60% stake of the digital marketing here. alamo group up against quarterly dividend by a penny to 10 cents per share. on deck, new year's resolutions for you and your money. "power lunch" will be right back. k hi kele k hi bovin b wi..la man.

as we kick off the new year, a couple of resolutions are go to the gym or go on a diet. planet fitness, weight watchers, fitbit and nutrisystem. let's focus in on nutrisystem. the ceo of nutrisystem joins us. >> happy new year. >> i imagine this past quarter is a big one seasonally for the likes of nutrisystem.

you got a potential super charge from the confidence of consumers after the lnlg election. >> it's an exciting time of year. you see a big increase from december as you head into january and back down at nutrisystem, phones are ringing and increased traffic to the site. it's an exciting time. our second brand south beach diet which we just launched yesterday. >> a new customer reactivation growth through 2016. b. riley said it actually accelerated. to actually keep the customer going on a diet plan. how are you able to accelerate that growth in 2016? >> i think a lot of it comes from relationship building. so, you know, we look at the prior customers and we reach back out to them. we've invested a lot in content on our site. so really having an engaging experience and also the app that we developed keeps customers tuned in. doing a really good job at bringing back former customers and focusing on long tail.

more flexible options for returning customers. >> you also got clinical test results that support claims of your diets. a claim of up to 13 pounds weight loss and seven inches off the waistline versus 10-5 for turbo ten. >> uh-huh. >> how did you evolve that? >> so, yeah, it's exciting because we've introduced some new products. we have our first week, which is our turbo takeoff week. we have probiotic shakes which help belly bloat as well as craving crusher bars. we do the clinicals and found we're able to sustain up to a 13-pound weight loss, which is great. losing 5, 10, 13 pounds gets people on the right path. short-term motivation is the key predictor of long-term success. >> how many people at nutrisystem use nutrisystem? >> a lot of people. i would say with south beach we just actually launched that. we have a lot of people trying

the program. we all test out the food and taste it. many of us are consumers ourselves for both of the brands. >> all right. dawn, we're going to leave it there. thanks for joining us. happy new year. >> happy new year. >> dawn zier of nutrisystem. is.

♪ >> welcome, everybody, to the second hour of "power lunch" with melissa and brian, i'm scott. the dow is higher but was up triple digits earlier. not so much right now. about 24 points. general motors, north korea, china, congress. president-elect trump firing off on twitter. what's his next target? lots going on to talk about today. 2016 was a bit of a rough year for the high-end housing market. what's ahead for luxury real estate in 2017? all that ahead on "power lunch." movers in today's session, dow rallying. oil and crude was up but now

down more than 2%. financials hitting new highs, but giving up their big gains. citizens, jp morgan, keycorp among them. biotech, oil, metals and mining up more than 1%. busy hour ahead. rapid update on the economy. steve liesman is here. >> what better to begin the new year than a rapid update? up above 2% for the fourth quarter, running just below it. q4 tracking 2.1%, average tracker, medium tracker for economists on the street. we'll show you some of thas their numbers in a minute. it is a come down from the stronger 3.5% we ran in the third quarter. put all four quarters together, averaging 2% for the full year. here is where folks are. atlanta fed is at the high side of this, 2.9%. hfe is at 2.3%, goldman sachs at 2.1% and morgan stanley has been the pessimist now at 1.6%.

strong ism manufacturing number, strongest since 2014 and good data on employment in that number. construction spending, best number in ten years, especially two back-to-back good months on construction spending, maybe that's turning around. a lot more data to come this week, auto sales coming out looking for 17,7, down from the prior month but a strong rate. fed minutes. how much did they talk about the coming trump policies and how much they talked about rate hikes next year? those tonight out of washington. thursday adp, claims and ism services the bigger part of the economy. finally friday trade and december jobs report. you can see what we're looking for. 183 against 178 the prior month to call it a wash. we would be lucky to do that number. unemployment rate 1.7. average hourly wages looking for a turn around. maybe better december retail sales for christmas and adp we're looking for, 168,000 on

the adp private sector folks. lot of data coming this week. that will close the books on 2016. that's looking like it's going to be a 2% year. been there, done that. right? >> like seven years in a row now. >> seven years in a row. i have to go back and look, but we did 0 .8, 1.4, 2.1. a lot of sound and theory. >> you did lots of very interesting work a couple of years ago on that first quarter. >> right. >> statistical anomaly. have they corrected that? >> they've taken initial steps to correct it. they believe they've gotten some of the additional seasonality out of it. but they're still continuing to work on it. >> basically is why is the first quarter always weak. >> it has been weak in five years. they finally admitted that -- i don't know if you remember this -- i was right. i don't want to blow my own horn, toot my own horn.

they admit it goes back 30 years. >> 30? >> 30 years of first quarter weakness. >> might have an answer for you. forgive me, i can't remember whose data it was. i apologize. for 50 years, january was like the middle of the road for the year in terms of stock performance. the last ten years it's been the worst month every month, every year. >> take iing october's place? >> january has been the worst performing month for the last decade. >> interesting. >> i wonder if because of stock -- >> if it's just responding? >> stock market rolls over -- >> because of the fact that the first quarter ends up being weak? >> do people get nervous? >> that's not bad, sully. >> it's not my data. >> no, no, but you're putting two and two together. the data comes in weak and ends up being somewhat revised away, often ends up being lower than it ought to be and gets picked up in the second quarter. what's also interesting, i see some other data that shows

january as a leading indicator for the year, that doesn't work anymore. >> no. >> did it used to? >> we learned that last year. >> no. >> we learned that last year. of course, it wasn't an election year. >> we're solving the world's problems here but we got the hook. >> i'll have to plug that into the spreadsheet. >> plug it into your spreadsheet baby. >> good work here thnchts morning, it looks like we may finally hit dow 20,000. we had a nice pop at the open. despite some of the positive economic data like the ism number, the market became the little engine that couldn't. dominic chiu is looking at that for us. dom? >> markets are handicapping this first trading day of the year, you get that sense. we have given back a lot of those gains, like you said. nasdaq, up about a third. s&p up nearly half a percent. dow up by triple digits now only .2%. we are seeing at least a little bit of strength in some of the

interest rate or more defensive sectors, telecom and health care to start the best performing sectors so far. look at the worst performing sectors, staples, those interest rate sectors on that side at least really tailing off in today's trade. couple of places you want to keep an eye on, guys, at least for -- we're watching right now, dow transportation index working on its fourth straight down day. the caveat we would put here, most of the losses being driven strictly by kansas city southern rail because of that ford news about them abandoning the plant in mexico. also watch what's happening with the small cap russell 2000. pretty much flat for the day. dow, s&p, russell, working out these statistically overbought situations. watch those particular sectors. we'll keep an eye on the volatility index as well. back over to you. >> dom, interesting stuff. if you're in the market for

individual equities, which ones should be on your shopping list this year? joining us, rob lutz, chief investment office of cabot wealth management. guys, we do appreciate. thank you very much. i love the new ideas, too, rob. you're bringing in hdfc bank. never heard of it. it has a rather unfortunately long and difficult to say name. that doesn't make it a bad investment. why do you like this stock? >> as everybody knows, i think a lot of value internationally today. emerging markets. india is one of the fastest growing emerging markets in the financial sector of the emerging markets. hdfc is one of the best managed ba banks. i've owned it for my clients the last ten years. last three or four weeks on this cash theme that moody's put in play. you covered that very well. it gives you an opportunity to get on board. 20% grower. i think they do very well buying

it here. >> you like vanguard health care. etf. the vht. it's down recently, rob. >> yeah. >> if you liked it, you like it more because it is down. what's in it? what makes it a good bet for our viewers? >> this is a well diversified exchange traded fund all in health care. it has big names like pfizer, merck, gilead. i think this whole group could get reset up, maybe as much as 8% or 10% this year. i'm calling a bet on all of health care. this is a great way to play it. individual stock pick, duluth holdings. >> warm weather, highly promotional activity. it really fell in the last month 15% on the news. when did you get in? >> we bought it before that. we had about a 20% gain. we've given it back. we're buying again here now, melissa. i think this is a great stock

to -- it's a very seasoned, management team that's done a great job growing about 20%. 80% of the business is online. they're doing very well. it's like way to play amazon. >> on the other side of the health care trade, rob is playing etf. you have picked individual stocks. what do you like specifically about pfizer and johnson & johnson? why go the stock specific route than the etf group? >> of all the sectors out of the recent election, probably the one that will be thrown most up in the air as far as volatility will be health care. we don't know what's going to happen. you look at a couple of individual names, pfizer is a name that right now you can buy for about 12 times earnings, lot of its pharmaceutical peers are 4% earnings. they pay a nice yield, raising that dividend by 7% last year. they hiked it about 8% per year

over the last five years and made great steps in immuno oncology, which should drive their earnings. another name in the pharma/consumer space is johnson & johnson. typically you pay a 20% premium to get into j & j. right now it trades at about 20% discount to the stock market. that's for a name that you have a 3% yield. they've also been raising their dividends very aggressively. it's one of really the only aaa rated out there. you net that out you're getting it really at a steeper discount to the market today. >> in terms of american express, burns, is this a play on things getting better for the wealthy kind of trade? >> it's really -- it plays on a lot of long-term trends, all of which include that people are using plastic more than they're using cash. american express, you get a company with a great balance sheet. they've been great.

they've raised their dividend by 10% per year over the past decade. we love finding dividend raisers, solid brand name. it's a stock that really they trade a steep discount to a lot of companies such as mastercard or visa. >> burns and rob, thank you. appreciate it. >> thank you. to julia bornstein with some news. fox news megyn kelly or maybe nbc's megyn kelly. >> that's right. kelly just posted on facebook, quote, i'm delighted to be joining the nbc news family and taking on a new challenge. i remain deeply grateful to fox news and fnc viewers. she will host a daytime news and talk show as well as an in-depth sunday night show and will also play a role in nbc's political programming as well as other big

event coverage. this follows the departure of fox news' founding chairman, roger ailes as well as the departure of anchor gretchen carlson following a sexual harassment lawsuit last year. fox reportedly offered kelly $20 million to stay after her contract expired. nbc and other networks weren't willing to pay her as much. even with a modest raise to her paycheck for her final year at fox she will be one of the top paid tv journalists ever. melissa? >> do we know, julia, whether she will finish out her contract at fox, which i believe has several more months to run or what? >> we don't know yet. i don't know yet whether fox will let her out of that contract and will allow her to start at nbc right away. there wasn't any comment on when exactly she'll be starting. we'll be watching carefully to see on what kind of terms she departs from fox.

>> thank you very much, julia. on power lunch, how big a threat is north korea to the united states? is trump negotiating via twitter? another company that does a lot of business, drug prices stop soaring in 2017? think again. all that and much more coming up on "power lunch." t at'scal ika p erat iwort m t

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let's go up to capitol hill in the house chamber there. minority leader nancy pelosi was there with the speaker of the house, paul ryan as the house convenes for the 115th congress amid controversy that broke last night when the house republican caucus voted to basically gut an independent ethics office and and rely on other means to police and patrol ethics matters. separately, nbc news has reported that bill and hillary clinton will attend donald trump's inauguration on the 20th of this month. former presidents george w. bush and his wife, laura, will also be in attendance there on the west front of the capital on the 20th. we'll thereby, too, covering it for cnbc. president-elect trump continues to take to twitter to share his thoughts on foreign

policy. the latest, a monday tweet, deriding north korea's nuclear weapons program and another blamie ining china for not crac down harder on the rogue nation. global risks posed by rogue regime's like north korea. bruce clinger, one of the world's experts on north korea, having run the cia's korea branch during the clinton administration. welcome, sir. good to have you with us, bruce. >> thank you for having me. >> how dangerous is north korea? how unstable is its leader, kim jong-un? >> kim jong-un has a firm control of the north korean regime. that said, north korea is a very real threat, easily ridiculed. funnily little country run by a off and only little guy but have 16 to 20 nuclear warhead arsenal, increasing the testing of their missiles in order to deliver them.

north korea -- south korea and japan likely are already under a nuclear threat and north korea continues to develop capabilities against the continental u.s. >> how close are they to having that ability? various predictions that they may be -- may have it now. they may not have it for many, many years. >> it's very hard to determine exactly where north korea is on the path. we know what path they're on. four u.s. four-star generals said they think north korea either already has the acapability to target the u.s. with a nuclear warhead or we must assume they do. other experts will say it may still be a few years away but certainly within mr. trump's first term. >> you're aware of mr. trump's tweets with respect to north korea. what do you think of them? is he right or partly right in the idea that china -- in the final stages of developing a nuclear weapon capable of reaching parts of the u.s., it won't happen? it would sound as though you

disagree with that. 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! is he right to pressure china to put more of its heft and influence on that regime because they are basically its only ally? >> i hope he will work himself through rather than just twitter. what he means by a very short tweet. that said, china certainly has shown itself repeatedly to be part of the problem rather than part of the solution. they turn a blind eye to north korea and proliferation on their soil and only uniquely implement the required sanctions. there are things the u.s. can do to waen away chinese banks and

businesses from engaging with north korea, implementing third-party sanctions, we can influence the behavior of the banks and businesses even if the chinese government doesn't want them to stop negotiating. >> whenever they need something food, money, whatever, start to rattle the saber, bring people to the table through swedish or other neutral country's consulate in that country. how do we fix north korea? does it have to be the end of the kim dynasty? does kim jong-un have to die unexpectedly? what do we have to do get to this most closed and awful nation to open up? millions starve to death every year there. >> right. analysts are really coming to the conclusion that the only way the problem will be solved is

once that regime goes away. trying to bring about the end of a regime can unleash a lot of scenarios that are not what we want. implosion, explosion can be all very dangerous. meantime we need to step up the game on targeted financial measures. obama administration has talked a good game but underperformed. this last year was the first year that the u.s. has sanctioned as many of their businesses than zimbabwe's. >> that we would prefer not happen. >> north korea will do provocations in nuclear tests and missile tests regardless of what we do. they have a decades' long quest to develop nuclear missiles.

we do need to enforce our laws. we need to impose a penalty on those that violate our laws, u.n. regulations, resolutions and put in place measures to constrain the inflow and outflow of the items fo their nuclear and missile program. >> bruce, thank you very much. hope you'll come back again. >> my pleasure. thank you. >> appreciate it. new highs in the global markets. russia, germany, france, ftse 100 hitting two-week highs or greater today. rsx is off its high today but still up over 1%. on pace for its best day since november 30th. tim seymour, managing director -- partner, i should say, and fast money contributor. hey, tim. >> hey, mel. >> addressing north korea and the ripple effects it could have in that region. does that make investing in that region any more dangerous? >> i don't think so. if you're an emerging markets

investor, trade war and china's own inherent problems, significant capital flight, credit issues. they have the means to paper over them and continue to grow sideways. but if you're investing in em, know that china is 30% of that index and then the veenlg 55%. i actually think that south korea is very well positioned. export nations that have a currency that's a bit weaker, it gives them opportunity. valuations are also supportive to, say, want to be in south korea right now. >> taking a look at the dax, they're posting new highs in today's special. given the number of elections coming within months at this point, would you go there? or would you stay away? >> pmis, bond yields moving higher. all very positive. ecb gives you another 12 months

of assets and, therefore, as we look to elections and put them in the same context of where we've seen already significant legislative, not a bad thing. francois hollande -- >> so we get a brexit-like response if the establishment is voted out? >> some establishment out and at least a transfer in france is going to be positive. big change in germany wouldn't be as positive. i'm not sure i expect that to happen. again look at europe, the euro is benefiting greatly from the dollar strength and mpis are growing. i wouldn't want to stay in these markets. >> all right. tim, see you later. >> thank you. >> tim seymour, fast money for you 5:00 eastern time. >> what time is that show? >> 5:00 eastern.

>> what time is that out west? >> thank you, brian. "street talk" is next. amitomst a 's of mm goveanth amitomst a th uom rime i

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miller. now the least attractive stock in the contract office furniture. >> how many stocks are in that sector? >> i wonder that myself. doesn't seem like too many. but it's the worst one. saying that north america remains challenged by competitor pricing, choppy order patterns. north america, by the way, the largest and most important business. >> second best. second stock xerox credit suisse $8 price target with the spinoff of a new business. i'm sure you've seen the commercials. we've talked about it on cnbc today. upside cost savings and a well laid-out long-term strategy. regarding that last point, analyst calls the management realistic about the long, slow decline on the printing side even with today's gains stock up 17%, $8 target is 20% more upside.

xrx, a big holding of carl eichorn. >> rbc less bearish. upgrading from underperformed price target remains unchanged at 4 bucks, down about 45% over the last five months and that makes the stock more reasonably valued. obviously. rbc, though, admits substantial fundamental challenges remain. back when they started they had -- >> cool when you look at it like what are they offering? mani/pedi for whatever. neither of which i get. clip my toe nails in months. groupon is up -- just kidding. >> we don't know actually know. >> i see you smiling over there. >> small cap called a day. leerink bumps target. shares down 13% but leerink

expects sales for carcinomaa treatment also sees potential label for expansion into bladder cancer area and partnering with roche. i need megan here to help me pronounce some of these names. average target is $18 a share. pretty bullish view. not helping today. stock down is 3%. that name itself is hard to say. >> trading day the dow is up by about 30%. intra- day reversal for oil. very big one, in fact. let's get to jackie deang lielit the energy desk. >> sluggishness we saw in stocks today as well. 52 -- excuse me, 54.22 was the session high of $3 swing to the session low, $52.17. very, very interesting because there was a report that potentially libya wants to ramp

up its output. shows you how fragile this opec deal is. u.s. production numbers out for the month, they are higher. people are concerned about that and spike in the dollar doesn't really impact this trade until it does. people started to care about it today. we saw a big swing in thnat gasn weather forecasts saying january will be more mild than expected. nat gas had a really nice run all the way up to 393. we've come back to that 334 level. back to you guys. donald trump blasting gm, saying it makes cars in mexico and sells them here. just another negotiating tactic by the art of the deal author? going after companies that do business with the government. we'll take a look at that. when "power lunch" returns on cnbc. .

general motors, the latest company to be targeted by president-elect trump. gm joining now the company of boeing and lockheed that have a lot of business with the government and get tweeted by president-elect. eric joins us now. eric? >> that's right. changing corporate plans just on the power of his tweets.

so we wanted to look through the data. which companies make the most money through government spending? six companies that earn over a billion dollars from the federal government in 2015. obviously the biggest recipients will be defense companies at the very top of this list, lockheed martin. it goes way beyond defense. many publicly traded companies across several industries getting huge sums from the government. for energy it's exxonmobil. berkshire hathaway, metals to the u.s. mint, flight training to the faa through the company's nonfinancial holdings. top government vendor is mckesson. then private prisons from geo group. leader. at&t for telecom and fedex as the number one delivery firm. not even counting state or local

spending, federal government paid almost $240 billion to its top 100 contractors in 2015. gm's take of a quarter billion didn't even crack that top 100. all these companies better consider themselves on notice, tyler. >> all right. eric, thank you very much. more around the president-elect himself with trevor hanger, director of research. you heard eric's report. all the defense companies that moved to the dc area, that's actually added population over the past decade. everything else has been out west. do you think the president-elect is really going after these contractors or is this just kind of voter optics? >> a large part of it is voter optics. president-elect has taken to twitter as a means to deliver

these short, pointed bursts. number of voters in the rust belt, places he feels really excel in the election. but these companies have to pay attention and have to understand that this is one of the ways in which they communicate and has to be on notice. >> the lordstown plant where they make most of the car is in trumbull county, the main county in the main state that probably flipped the election. plus gm announced a shift cut the day after the election. it all seemed to me to be less about the chevy cruze and he has to do what he said he has to do and that county and that company whatever made it a nice target. what's your take on the gm side? >> i think that's true. ford was the whipping boy during the election and the timing certainly interesting to see president-elect tweets at gm in the morning and a couple of

hours later ford announces it made some changes to its plan to develop a factory in mexico and, instead, invest in michigan. i think that the shot at gm is one where the president-elect understands that this is about optics. this is not about necessarily what's in the best interest of the corporation or the shareholders. but it is about what he believes will resonate most with voters. >> i'm asking not expressing an opinion here. do you see anything wrong with the president using his leverage, bully pulpit to try to affect change in corporate behavior? what do you think the reaction would be if, say, president obama had done the same thing at the beginning of his? >> i'm a little surprised at how well this has been received by some republicans. this is certainly not the light

touch to fair market, free market capitalism we've come to expect. certainly the president-elect has a bully pulpit and will have a bigger one as president. he is able to potentially affect some change here. i think donald trump thinks everything is a negotiation and will take every opportunity he can to send those messages and, you know, we'll see just how effective it remains. he's probably got to be careful not to do it too often. certainly picking his spots. but it's not business as usual, that's for sure. >> trevor hanger, heights securities. always a pleasure to get your insight. thank you. >> thanks a lot, guy. >> all right. if you were hoping sky rocketing drug prices would slow down this year, you might want to think again. we'll have a list of some names you've got to see. and financials 20% up the past two months. will financials continue to lead us higher this year? we'll find out. hang on.

this year will not be the year drug prices stop rising. joining us with more on this. everybody thought this was it,

2017. >> that's right. after all this talk of drug prices we thought maybe we wouldn't see these price increases anymore. we woke up to several drug price increases. allergan, on 22 products, biogen, 2 to 8% increases on six of its drugs and acorda on its one major drug. raymond james saying either investor fear is overblown or management teams have a tin ear with respect to this issue. we suspect the former rather than the latter here, saying essentially investors are overly worried about the impact of these price increases. we reached out to allergan and said it's the first increase they've taken since september 2016 and say they are consistent with those commitments which pledged not to raise prices more than 10% if a single year. this will be the only increase they take this year and the discounts they have to give on these drugs will bring the net increases to 2 to 3%.

middle men in the system which take part of these price increases out of what actually comes back to the companies. we reached out to acorda on this. ampyra, the product they took the price increase is its only meaningful product and put 40% revenue invested into research. they only realize about two-thirds of the price increase there. they're not going away. there's always this concern that somebody could get targeted for one of these increases. they're not slowing down. >> drugs have a smaller patient population than, say, myelin's epi-pen. that was sort of made for tv drug price increase when it comes to targeting. >> a lot of things made it hit headlines the way it did. multiple sclerosis. a lot of folks use those. raymond james pointed out they're taking a more aggressive price increase than we've seen them take in previous increases. are they trying to do it before some of the pressure comes?

we don't know. >> two thirds of the price increase because pdms are taking the rest of it? >> that's what they say. let's ask the trading nation team if banks can continue trading stocks like they did last year. >> i'll start with you. bank stocks look like big values. now they've come up. pretty much higher than what it was. are they still good values? >> yeah. we would overweight the sect secretasector due in part to be being much more subtle. banking sector will relevel. and raising rates two to three times, the fed. that will help in interest margins and thirdly we think the leveraging of the household now has come and gone and that there will be a new releveraging.

>> craig johnson, do technicals match up that bullish point of view? >> well, we're neutral to financials right now. let's look at this chart and here's why. nice head and shoulders pattern. you broke out. right now you reached that measured objective. every time i see us reach this measured objective, you usually consolidate and back and fill for a little bit. look for backing and filling in the financials and use it as an opportunity to buy stocks longer term throughout the year. >> so, you're not that optimistic? just sort of, eh? >> waiting for a pullback here in the financials. at that point in time -- >> think we'll get one? >> more optimistic and -- i do think we'll probably get one. we see this kind of price action, this is the kind of narnt sets up. it's running out of momentum. you look at the bottom of the chart. isi in there. classic divergence between momentum and price action of the chart suggesting we will get that pullback opportunity and

opportunity to buy the financials at a bit of a discount. >> all right. craig and chad, pleasure, guys. thank you very much. >> all right. for more trading nation, go to trading nation.cnbc.com, even on cyber monday. >> 2016 was a tough year for luxury real estate. what is ahead this year? we've got that, next.

"power lunch", everybody. if you've been dreaming of that deluxe apartment in the sky, 2017 it says right here could be your year. not my year, your year. "the wall street journal" reporting, however, that the luxury apartment boom could

fizzle in 2017. i guess that's good news if you're a renter or a buyer. let's bring in two people who know all about that luxury market. dolly lentz and our wealth editor robert frank. dolly, "the wall street journal" says there's too many high-end apartments, that the leasing companies are having to offer all kinds of inducements from free parking to no security deposit to free rents. >> absolutely. there's too many units and that's what happens, right? it levels off. they'll offer a few months of rent. you signed a lease at the higher amount. nobody has to know you got free rent. very interesting how that's all handled. free gym membership, all kinds of things. >> we're seeing the continuation of what i call the great inversion in the luxury housing market wherefore years during the recovery the low end was weak and the high was strong. now it's completely flipped where in manhattan the strongest part of the market is the 1 to

$2 million apartments. >> which is the low end. >> the low end. that's crazy. but the 5 million plugs is super weak. and what happened is all the developers in 2014, 2015 started building these massive overpriced towers that are now coming online, 3,000 of them this year. 30,000 new units in manhattan. that's twice the average. >> what's going to happen? >> 85% of those are super luxury, hyper priced. >> the banks are probably not going to let prices go below a certain level. the banks are very invested. so that's probably not going to happen but these units may turn into pseudo rental towers, half condo, half rental because the owners will rent those out versus give them away. that's going to be the change over the last recession. >> the owner/developer? >> correct. >> there's a lot of masking? >> yes. >> rentals, offer a few months rent so that the print is high. the print will be high to cover

closing costs and all sorts of other things to get that list price, sale price high. >> without a question. >> another masking of the market has happened because a lot of the units that went to contract a year or two ago are now closing because the buildings are done so you're seeing an unnaturally high level of sales even though people aren't actually going to contract now because they're leftover from a year ago. when all of this starts to wash out in the first and second quarter, that's when i think we'll really see where the rubber hits the road. even though we have a billionaire real estate developer should help high housing. >> what do you think of next year? >> i agree in the first and second quarter will be a leveling off and the third and fourth we'll see lower regulation, lower taxes. hopefully we'll see things that are stimulating to the market and people will come back and buy. one change we talked about on friday, the russians are coming, the russians are coming. i have nonstop calls from

russians out of the market and now they want to get in. is that a trump effect? i don't know but it's certainly happening. >> china announced overnight that they could impose -- >> could impose. >> there could be a rush. >> right. but they're saying they would start immediately. it's unclear what that means. to my mind the chinese are much more of an important part of the overseas buying market than the few wealthy russians. >> is what we're talking about a national phenomenon or something that's more prevalent in the major metro markets of new york, boston, washington where we just read "washingtonian" that they have bought a home. >> i want to be a d.c. luxury realtor. five new billionaires in the cabinet. they need big homes in d.c. >> exactly. >> but, no, seattle is exploding. >> right.

>> so that's like -- >> new york city is boring now, boring. >> no, it's not boring. >> no, it's not. >> new york. >> new york is insane. >> new york and miami, way -- >> new york city. >> we way overbuilt in new york and miami. those two markets are similar in that they're going to be soft. >> san francisco. >> san francisco, prices got way out of line. >> if the building doesn't sink it's a great place to live. >> yes, i agree. >> prices got so out of whack. >> los angeles is high. >> los angeles, new york. >> everybody who can move is moving to l.a. >> not out of the question. >> l.a. is booming. >> why? because it's 75 all year round. >> new york city is boring. >> traffic. >> i can tell you that new york city is boring. >> do you have something i can hit him with? >> my foot. >> as a landlord -- >> exactly. >> -- dolly -- >> have a great 2017. >> thank you so much. >> check, please is next. d.e, a

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expecting quarter delivery numbers. third business day after the quarter ends. they drop the numbers whenever they come out. we're still watching tesla shares are up 1.1%. they have a big giga factory tour. first, the delivery numbers which we should be getting any minute now. >> you know, i want to double down on my comments about new york. i think new york has -- i've lived -- >> what, what, what? i can't have an opinion. >> of course you can. i completely disagree. 100%. >> you disagree with everything i say. it's gotten so expensive that the restaurants have to have a homolo homolowho h

homogenous menu, 200 to $300 for tickets. >> all of new york isn't manhattan. >> i wasn't talking about manhattan. >> thanks for watching. >> "closing bell" starts right now from boring new york city. hi, everybody. welcome to the "closing bell." it's 2017 and i'm kelly evans at the new york stock exchange. >> i'm bill griffeth. shout out to chattanooga, tennessee. happy new year. donald trump is driving the business news agenda. he's back at trump tower and he's been tweeting up a storm going after general motors, china trade issues and oake. we'll have the details and the potential impact on the market all coming up. >> welcome to trading in the new year. stocks losing steam and a big