live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" on cnbc. live from the nasdaq market site in times square. yesterday was a banner day. the trump rally continuing. today that continues. it looks like we're looking at about 8 points on the dow jones average which means we'd be 110 points away from dow 20,000. s&p adding about 2. s&p about 1.5. yesterday was the best day in three weeks. in asia, japan's first session back from a holiday. shares surging by 2.5%.

accommodative policies from shinzo abe helping the shanghai. in europe, the trade was fairly flat. red arrows across the board. italy eking out a small gain. as for criude, about 24 hours ao wti and brent surging, brent ended the day the worst day in about three weeks. we should note yesterday was a strong dollar day. we're not seeing that trend continue today. the dollar index is at about 14-year highs. checking the gold markets today, we're higher by about 0.4%. >> a bit of a mini rally on the right side of that chart. i thought that would get down somewhere maybe below 1,100. yesterday -- you got to be ready for your show at 5:00. >> yes. >> during the session, it looked like it didn't want to close

sharply higher. it opened sharply higher, and then up 20, up 30. up 20. after 3:00, up 50. then after the close, up 119. it was weird yesterday. head fakes. looked like it didn't want to extend the rally. after all was said and done, we got about half the points needed that we talked about to hit the 20,000 number. >> what was working in 2016, in terms of the post-election gains, continued to work. financials ended up stronger. >> the euro didn't continue to 103. it went back. above 104 today. the ten-year, 2.45 or so. some of those trends reasserting didn't continue. oil was down how much? that might be why the market was initially somewhat hesitant. the equities market gets he tant when oil has a rough day. >> such an intraday reversal on

the crude markets. was very, very interesting trade. yesterday we saw it up 2.5% or so on this time of day on news that kuwait cut production. that didn't last. >> there will come a time where the amount of knowledge i can impart 6:00 to 9:00, and then again at 5:00, you're bracketing -- >> book ending. >> you're lacking when you don't. >> when i don't book end the day? >> yeah. >> what time of day do you wake up? >> 7:00, if i'm not sheer. >> you immediately turn on the show? >> yeah. >> i think it's helpful for you to be there. >> very sweet of you. >> here are the big stories. 2:00 p.m. eastern, the fed will release minutes from its meeting last month. the central bank raised rates for the first time in a year since that gathering.

automakers will report december sales. a record year in 2016 with sales possibly topping 17.5 million vehicles. many analysts say rising interest rates, lower trade-in values and tighter financing may put an end to the strong sales run that started in 2009. what you can do in 140 characters. >> amazing. but gm completely shirked it. >> but ford at the same time -- >> which is ironic. ford said we'll reinvest money in the united states as opposed to investing new money in mexico. and we're going to shift small car production to mexico. so in the end, it is shifting production to mexico, but it's like look over here, not over here. look over here at 700 -- >> i saw schumer, senator schumer say we don't need a twitter presidency. we have not seen the downside yet necessarily of the tweeting. at this point some interesting things have happened. almost positively.

>> but you have to admit, how many times have you -- don't know if you per se, have sent out a tweet, regretted it, had a typo. >> i don't do it. i don't t-w-i at all. >> i don't say i have to be the reason -- >> i don't twitter while intoxicated. you have ever done that? >> no. >> you don't drink. >> i occasionally enjoy. intoxication is not the only reason for misfiring on twitter. >> i got 300 total tweets maybe. >> what was the last thing you tweeted about? >> someone yesterday put a video -- do you remember yesterday? >> i remember it vif rvidly likt was yesterday. andrew was talking about two guys talking, like kim jong-un and -- so i threw andrew in so

these idiots put video on that kellyanne conway destroyed me when i called trump -- once again, people -- i said you have never seen the show. you have 700 followers, go away. then i blocked him. >> twitter shamed the person and blocked him. final death blow. >> you can get more done in 140 characters than you can in a 10,000 word -- >> i agree. >> professorial lecture given by the -- >> there's a time and place for both. i'm sure mr. trump will engage in the latter at some point. >> not mentioning names. investors pulled $19.3 billion from blackrock's u.s. based actively managed funds continuing an ongoing trend into passive funds. the world's largest asset manager did benefit from the etf business. they took in $140 billion into, tfs.

they set a new global record. you getting used to this -- hello, prompter! hello! it's like the grand canyon between here and the camera. >> as you recall, this is the fast money set as well. i'm very used to it. >> it used to be right here. >> and bigger. >> yeah. >> and there used to be a clock there. >> still assimilating. >> you're doing well. >> but i watch the -- i watch some of the show. did you watch it, did you see it? >> i did. looks great. >> the lighting is amazing. >> fantastic. >> andrew looks unbelievable. >> he looks like he's in his 20s. and you look -- >> i look better, but -- >> look at yourself. you look great. you look like you came off the beach. your hair is -- >> i'm okay. i'm okay with it. it's never going to be -- not going to be 39 years old ever again, i don't think. unless there's a miracle -- >> if you can look it and feel it, you don't have to be it. >> have you ever gotten a needle in your forehead?

>> you mean botox. >> i don't know. doesn't it take that for -- >> ugh. i department know. some people swear by it. >> all right. >> i think you look fine, joe. >> you're nice. thank you. stocks to watch today, toshiba shares falling by more than 5% in asian trading today before recovering to close down 2% on report that's s.e.c. is investigating the company for inflating profits between 2012 and 2014. tesla motor shares moving in afterhours, lower by 2%, this after the company missed its 2016 sales target of between 80,000 and 90,000 deliveries. fourth quarter deliveries dropped. the autopilot feature happened in october through september, so theoretically that's been ironed out, but it completed the purchase of solarcity, will probably tap the capital

markets, but today a major giga factory tour in reno. so shares should do well in today's session. >> the latest headlines, children born today, we won't jinx it, we'll hear some things about children being born today, they may never drive a car. >> i believe that. >> or never pump gas. >> in new jersey, if you grew up in new jersey, you never pump gas. >> the future is already here in new jersey. >> tesla is a tweet press release company. >> or a twitter ceo. >> i'm ready. >> for what? >> for an @realdonaldtrump tweet. >> i like yesterday you tried to get out of kellyanne conway, who

actually tweets his tweets. >> she started bristling. >> do you think he passes the tweet by committee? i doubt it. >> i think he might run it by someone. >> at 4:00 in the morning, does he have an editor standing by snfrn? >> i doubt it. >> shares of takata surging more than 17% in asian trading hitting the daily limit for the third straight session. the stock is up more than 60% in the past week on the possibility that the company is nearing a settlement with the justice department for faulty air bags. >> let's bring in michael tyler and karen cavanaugh. our guest host -- i don't think we are introduced jeff. >> we didn't. we did not introduce. we just brought him in. >> we may have. may not have. also a cnbc contributor.

karen, last time you were on. i think i needled you because you didn't give trump props. you said these trends were in enforce. >> i did. >> tell me. >> so, yeah. the economy is doing better. yesterday our pmi numbers, it wasn't just the u.s., china, japan, manufacturing is all kind of zigging when usually we see a zig and zag. that's great. the global economy is getting better. i definitely give trump props in that he spurred something that we haven't seen in a long time. that's why we're seeing this growth and reflation trade. so the optimism, the pro-business climate, the wheels are in motion. a lot of investors are worried we won't get anything. if we don't get anything, markets will go down. wheels are in motion. we are seeing talks about more business investment.

that will help productivity and the economy. so i think the policies have really just the mention of anything pro growth sparked a lot of optimism and confidence. that's going to go a long way. but underlying fundamentals are there. company earnings have turned around. so that was the base. now we have the icing on the cake. it has been doing well. and i think it will continue in 2017. a lot of people are worried, i don't know if this is the true thing. it's the real deal. we'll see good things in 2017. and investors should make sure they're participating in it. >> michael, when you spoke to our person that gets your thoughts, you mentioned that this -- this is not why you're on, you said stocks are not as cheap as they used to be. okay. that -- thanks for that, but you also point out that unless these -- this is also conventional wisdom.

unless these things happen, we're ahead of ourselves. you're talking about tax reform, you're talking about all the things that are engendering these good feelings, the cabinet appointments, they all have to come to fruition to justify where the market already is. you think it could be a rough ride. i think people are making that point too. >> it occurs to me that there's a lot of optimism built in that things will go right. if you think back to 2009 when obama took office, he took a full year to get economic packages and obamacare affected into law when he had control of congress as trump has now. so there could be a many a twixt, and the markets are vulnerable to a pullback should that occur. at the same time we're looking at much stronger corporate earnings this year than last year. we're looking at an improvement in business spending for the

first time in a couple years. the strong dollar is not getting so much stronger so quickly. it's on a gentle ascent that we shouldn't have a real problem with manufacturing or exporting. so i think that longer-term, through the course of the year, the fundamentals are in place for a good year trump or no trump. the corporate picture is looking good. no question that in my opinion we are vulnerable to a pullback here and there when we get a problem in the headlines that something didn't quite go as planned. i would use that as an opportunity to load up some more. at least on the equity side. bonds may have a rougher ride. >> michael, with respect to bonds, at what point do interest rates matter for stocks? how many more rate hikes for the fed will it matter for stocks? where does the ten-year have to be for it to matter for stocks? >> a long time. if we get between 2 and 4 rate hikes this year, i don't know what the numbers will be, that's not an issue. stocks are handle that.

it's the staircase of a quarter point every six weeks will damage stocks over the long-term. we're nowhere close to that yet. it's not something i spend a lot of time worrying about. >> karen, you're sticking with financials and materials in 2017? >> i like a lot of the sectors. the consumer discretionary sector in addition to financials and materials is kind of overlooked. >> retailers are having tough go of yes, yet home builders are doing well. >> some retailers, especially the brick-and-mortar retailers are having a hard time. overall the growth policies and tax cuts in particular will put more money in the pocket of the consumer. this is a consumer with a good employment picture. the housing outlook is good. they have not really participated in the trump rally. if you look at revenues expected

for 2017, and the revenue performance in 2016, that's what an area where investors have overlooked. same thing with healthcare. healthcare earnings have been positive. the returns have been negative in terms of investment because investors are worried about what will happen with the trump administration. overlooking sectors that could be good places to be is a mistake for investors. >> we have to end it there. thanks, michael and karen you're here until 7:00. we are tracking key trump appointments and nominations for the new administration. among the jobs important to businesses and investors, wall street lawyer jay clayton has emerged as a top candidate to be chairman of the s.e.c. >> also on the political front, exxonmobil and president-elect trump's pick for second stair of state, rex tillerson, are agreeing to cut ties. if tillerson's appointment is

confirmed, the value of the 2 million shares he would have received over the next ten years will be transferred to an independently managed trust. tillerson will also surrender entitlements to more than $4 million in cash bonuses and other benefits. >> not a bad time to sell after this past year's run up. it's a challenge when you're struggling to get over something. >> if you have no -- the cough switch used to be saving me from coughs and comments that might -- >> that might get you in trouble. >> when does that cough switch come in? is it part of the transition? >> cough switch will not be on this set. >> no, because we're all wireless. you have to control yourself. >> in all ways. physically and mentally. yeah. >> cough switch is right here. >> that won't -- you mean by not

talking what do you use when you cough? >> into your elbow. as health officials advise. >> almost didn't get through that last -- i may just nod to you. >> president obama will head to capitol hill this morning to meet with house and senate democrats to discuss plans to protect obama care. president-elect president trump has vowed to repeal and replace the affordable care act. vice president-elect mike pence will move forward with those plans today. and he will discuss plans for the first 100 days. joining us now is chief washington correspondent john harwood. john, should be an interesting couple days here. >> i just have to go back to one thing that michael was saying, the imagery of many a slip, twixt, cup and lip. talking about the difficulty. think about that. >> yep. >> i mean, i -- that's a phrase that you don't get very often. and i'm trying to visualize it. what's the slip?

turn it over, it goes on me? >> yeah. >> has that never happened? have you ever had a slip, twixt, cup and lip. >> you spill yourself more and more. as you -- you've -- i'm sure you're familiar -- >> you're calling him old, basically. where is that mute button? >> that phrase spill yourself. we laugh about that. it's not really english. you're not spilling yourself. but if you look down and see something you didn't know was there, you have basically spilled yourself. that is getting more frequent. i have people laugh at me when it does happen. >> well, i -- i think he's right. there could be some slips, twixt, cup and lip in washington. and i think one thing that is really significant that happened overnight and that is set up for the rest of the week is this relationship between donald trump and the intelligence committee that -- community that he is going to be -- that is going to be working for him in three weeks.

>> interesting tweet today about that. >> i didn't see that. >> about the delay until friday. >> that was last night. talking about the delay in the briefing on russian hacking. put intelligence in quotes. maybe they're trying to build a case. said it was very strange. to have an incoming president openly mock the intelligence professionals who will be working for him, i don't know what kind of working relationship they're going to have. these are the people who will be helping him go after isis. >> brennan is an obama -- i don't know if i would say crony. but you saw the sean hannity, julian assange, all the back and forth going on there. >> john brennan served president bush as well. >> i understand. >> so has james comey. you have a whole lot of high degree of professionals underneath them. >> you have a high degree of confidence in what we know so far?

it is weird they're delaying -- >> i know nothing independently, but i defer to the expertise of the intelligence committee. they seem to be on the same page. >> was there a meeting scheduled for a certain day? >> according to intelligence officials, no. he got an intelligence briefing yesterday. they say their briefing with the mrektd w president-elect was planned for friday. >> i like to know everything. until we know everything and know exactly what we have, after the justice department, the irs, i don't assume the complete independence of any agency. i would love to i would love to defer to them and say they would never under any circumstances make this a political football. but i don't know anymore. i don't. >> there are a lot of americans who agree with you. >> the tarmac meeting. >> a lot of americans share your skeptd sichkepticism.

i don't. we're talking about thousands of patriots who put their lives on the line, put their professional reputations on the line every day to get it right as much as they can. they seem to have a consensus. similarly, in -- before the iraq war, i didn't think the intelligence community was purposely distorting information. >> we know they can get things wrong. that's for sure. >> that's correct. they got it wrong. a whole lot of intelligence professionals around the world got it wrong. i think it is an extraordinary situation when a president-elect is at odds with the people who will be in his office every day talking to him. there will be some changes along the way, too. >> sure. yeah. but even if you have a new cia director, fbi director, you

don't clean out the whole buildings. you have a lot of career professionals, i don't think we've seen a circumstance like this. don't know how it will play out. >> and like -- we've talked about the idea of hacking on a election, when we know you can't do that because of so many moving parts, using that term and conflating it with maybe being responsible in some way for what happened at the dnc, not with podesta -- i don't know where we are. i know people who have an axe to grind are using hacking the election are using it as a way to delegitamize. >> when people hear about hacking the election -- >> there's zero evidence of that. >> when you say hacking the

election, imaginations run wild. >> fair point. what we do know was was what the intelligence community said they know is that russian actors linked link ed to russian military intelligence penetrated the accounts of various political organizations and then weaponized that material. no idea the effect that had on voting. to me that's not the relevant question. >> have you seen our new chairs segment when we go over there and talk? >> do you it over there? sweet. >> have you ever had a jack in the box taco? >> never. but i understand that millions of them are sold all the time. >> and no one knows why. >> i've had many. >> jack in the box tacos? >> many. >> i've never been to jack in the box period. >> would rather jack in the box or taco bell? >> they're both different and have their own appeal.

we'll talk about it in chairs. >> cat food in a wet envelope is what people call it. coming up, a tesla rival. an all new electric vehicle that goes from 0 to 60 in two seconds. mit gur w

take one.

mit gur w directv now. stream all your entertainment! anywhere! anytime! can we lose the 'all'. there's no cbs and we don't have a ton of sports. anywhere, any... let's lose the 'anywhere, anytime' too. you can't download on-the-go, there's no dvr, yada yada yada. stream some stuff! somewhere! sometimes! you totally nailed that buddy. simple.

don't let directv now limit your entertainment. only xfinity gives you more to stream to any screen. . welcome back to "squawk box." a highly anticipated electric car unveiled by faraday. the ff 91 is a four-door suv that faraday claims is go from 0 to 60 miles per hour in 2.4 seconds, faster than the model s. it has see tats that can fold b. 2018 is the target date for production. the chinese billionaire investor already said there is a cash crunch. he overinvested in things like cell phones, and there may not be the money.

so real skepticism. >> i'm laughing at the paradox of taking a nap in the backseat and going 0 to 60 in 2 seconds. >> cool looking. tough to get number one get a prototype and have a line to produce it on. that takes money. >> they're taking reservations now. you can put down $5,000. but there's skepticism as to whether the car will be able to get into production. >> did they say the list price? >> no. how much of that is government -- >> tax credits. >> doesn't say. >>al that roll off. the credits will roll off. so, they may not even make it for the deadline. >> from the future to the -- this is the sublime. the great thing about the "wall street journal" every once in a while they have a story like this. trying to figure out the appeal to the jack in the box taco, which i have known about for 25 years. they've been around for a long time. >> 25 years? i had no idea they made tacos.

>> they've been around since the '50s. they sell 554 million per year. they call them gooey deep fried beef envelopes. >> 554 million a year? >> that's the same amount of big packs sold in 2007. it equates to more than 1,000 times a minute someone somewhere takes a bite out of a jack in the box taco. they talk about a lady who writes a food blog in cincinnati. she remembers her first. she got two of them for 99 cents. she took two bites, threw the rest on the passenger seat. steal, greasy, spicy, crunchy, saucy and strange. and she said who puts a slice of an american cheese in a taco. two minutes later she reached over and finished it and said this is vile and amazing. >> i wonder how many are sold

between midnight and 3:00 a.m. >> they're good after embibing. >> i wonder if there's a geographic skew to areas with legalized marijuana. and things like this disgusting sounding taco may do well. >> my first encounter was in boulder. >> in college. >> i don't remember -- might have been. >> maybe. >> that's where i was introduced to my favorite type of food. >> taco bell. >> mexican food. >> yeah. >> the worst is -- worst mexican food is great as they say about so many things. coming up, the top stories, plus china steps in to support the yuan again. details coming up. stock ideas for the new ideas as the dow marches closer to 20,000. here's a look at yesterday's s&p 500 winners and losers. n gest

♪ ♪ >> welcome back to "squawk box" on cnbc. let's check the u.s. equity futures at this hour. they did look and still look higher. strengthening just a touch. dow jones looking at about 14 points at the open.

we're 119 points or so away from dow 20,000. today maybe, joe? today? >> we did half of what we needed yet. 237, we got 119. 118 away today. >> among the market stories, china stepping in to support the yuan today. banks sold dollars and borrowing rates for the yuan rose, suggesting state interven slun intervention. and shinzo abe saying recovery of the japanese economy will continue to be his top priority this year. he spoke at a news conference today. abe pledged to keep shooting the three arrows of monetary policy, fiscal policy and growth strategy in order to beat deflation and get growth. shanghai up by 0.3%. three quarters, execute me, percent. >> jib for --

>> for what? >> they changed their name. they were foodmaker, jack in the box. i'm trying to book the ceo. hopefully you'll be here. >> get some of those tacos on set? >> yeah. because you lied to me about -- >> it's just jack. >> it's jack. >> you lied to me about the taco bell -- this is the greatest story. when we were moving here or when you were guying moving your set over, i said to joe that he will love it here because they are building a taco bell stand here at nasdaq. >> that's not insane. >> he said where is it? i said it's right inside the nasdaq. off the set. they're testing the grill. making tacos. >> was sort it was sort of a ho. it was a hope. >> i said they'll open it up early just for you, joe. >> if we get the ceo of jack in the box which is a $108 stock

now. >> up 44% in the past 12 months. if i can get the ceo and you're here, will you have that cat food in a wet envelope taco? >> yeah. >> i did use my time? i used my time. >> i used your time. yeah. the dow ruling the three major indices last year up by more than 13% but overshadowed by the mid cap 400 which closed up 19%. our next guest sees opportunity in both. let's welcome jordan waxman. great to have you with us. >> thanks for having me. >> are you favoring mid caps over large caps? >> there's bipartisan support for repatriatin repatriating trr dollars from overseas. that favors mid caps. in addition to buying back own shares and raises dif dvidenddi they'll look for growth. that favors mid caps and large

cap stocks. the rising wages, rising home prices helps individuals go to restaurants, like jack in the box, spend more money, or regional banks and small engineering companies that will benefit from the infrastructure boom. the mid caps are an interesting space. >> basically purely because you think m&a will reawaken and the mid caps and small caps could be targets as opposed to them being more domestically oriented per se. they could also benefit more from a more favorable tax rate, mid caps and smalls. >> all three of those issues will be a play in 2017 and beyond. we owned mid caps forever. they tend to be good performers. large caps, they come into vogue and out of vogue. mid caps do well. but in 2017, you will see repatriating of capital, the m&a boom continue, and wages and better economic growth, they favor regional banks, they favor

smaller companies. the united states is flush with small and medium sized businesses that tend do well when the economy does well. >> outside of regional banks, any other areas of mid cap? >> sure. sure. small industrial companies are in engineering, materials, cable companies, they make -- as my father-in-law in florida would say, they make gizzinters, this goes into that. those companies are needed when the infrastructure spending goes up in 2017 and '18. >> terms of two large cap stocks, vodafone is run. what's the back drop for vodafone? >> vodafone, let's look at it versus its peers. it's traded in europe, it's headquartered in the uk. $112 billion enterprise value, trades for 10 times enterprise value to ebita. stock is down the past year. >> when did you get in? >> i think now is the time to get in. we've been buying it from 25

down to 24 1/2 and now is the time to be getting in. interesting company. 6% dividend yield. >> what's the catalyst? stock has been in a downtrend for so long. >> deleveraging and focusing on high growth. >> which they have not done to date. >> they deleveraged by selling their stake in verizon wireless, they're flush with cash and looking for growth opportunities from the netherlands to india. there's a price war going on last year in india. that's why i think the stock is down 22%, and it's in the stock. 6% dividend, nice growth and inexpensive. it's under a rock, people don't love it and it's traded in europe versus at&t and verizon which is traded in the united states and much more in vogue. >> enterprise products. >> we bought and owned mlp since 1997. enterprise products is a well managed company. diversified revenue stream. they are also paying the 6%

dividend yield, growing it by 5%. the last year they underperformed the index, up about 5%. >> a lot of these mlps are highly leveraged. what happens with the trump tax changes and maybe a change in the deductibility of interest expense. how does that change the structure if at all? >> if there's any change in the tax rules about partnership income, then you might have a problem for mlps, but there's so little revenue that comes from mlps, the infrastructure is so highly needed in the united states, it's doubtful they'll go after pipeline companies. especially if you look at his cabinet, they're very pro energy, very -- not pro regulation. so it's more likely you will see more infrastructure spending and less regulation for mlps than more. now is the time, after last year, the index was up 18 %, still unloved, they're trading below their historical valuations.

unlike the rest of the market. you can buy an mlp portfolio with 6% to 8% distributions, 4% 5% distribution growth and get a 10%, 12% return. >> jordan, thanks you. >> great you can see people are pro energy. just to distinguish them from the people anti energy, who want to go back to the pre-industrial energy. i'm anti--energenergy. i don't like energy at all. coming up, we'll tell you what mark zuckerberg is promising to do in the new year. can't wait. you're watching "squawk box." al

welcome back to "squawk box." mark zuckerberg revealing his resolution for 2017. the facebook founder making it his personal challenge of the year to visit and meet people in every u.s. state. zuckerberg writes after a tumultuous year my hope for this challenge is to get out and talk to more people about how they're living, working and thinking about the future. >> great idea. great idea.

there's 50 states, mark. great idea. >> how many states have you been to? >> probably 38 or 39. >> wow. >> impressive. >> i'll try to figure it out. he also the other day no longer is an atheist. which was interesting. >> what religion has he embraced? >> didn't say. he thinks religion is important. his wife, i think, is buddhist in some respects or -- don't know if it's practicing. didn't really go into that specifically, but he sort of said, no i'm not. but i think it's -- i don't know. don't want to get into that. coming up, why one pharmacutical company is facing an uproar over pricine ine gpri. stay tuned. that's next.

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welcome back to "squawk box." drug prices are on the biggest issues that are weighing -- one of the biggest issues weighing on the pharmaceutical industry this year at a time when deaths from heroin overdose surpass those from gun homicides. the price of the drug that can reverse opioid overdose is also on the rise.

meg terrell joins us now with that story. it's interesting. >> it is interesting. it's a combination of two of the biggest trends in health care we're seeing right now. rising drug prices and the staggering numbers on the opioid crisis. if you look at the number of opioid deaths in the united states, they've been on the rise in the last few years, driven by a use in increase in heroin and synthetic opioids like fentanyl. of course, as you mentioned, joe, overdoses from heroin have surpassed deaths from gun homicides in the united states. in total, more than 33,000 people in the u.s. die from opioid overdose a year. that's 91 people a day. so the numbers are just huge. but there is a drug that can reverse opioid overdose. public health experts call this a miraculous drug. it can bring somebody back within seconds. here's a quick look at how it works. the class of drugs called opioids includes illegal drugs.

they work with receptors in the brain. but those are also implicated in important functions like breathing. if they become overwhelmed by too many opioids, the body can go into overdose. this drug can rapidly reverse this process. it binds to those receptors, blocking the effect of opioids, quickly restoring breathing and saving a life. >> but the price of many of these versions has been rising, even though it's been available since 1971. there are many generic forms available on the market. these are just two of the four approved. they have been rising in recent years and following a trend. there's a similar epipen story. we've been around the country talking with firefighters, first responders who are having trouble accessing this drug because of the cost. we've also talked with the companies who make the drug who

say they think they're priced responsibly, and the reason the costs went up were for many of the reasons we hear over drugs go up, manufacturing and marketing. >> so when i'm watching "cops" or something and i see a person and they do -- it's kind of an epipen type thing, is that what they're using? >> it depends on what the person is going through. if they are in an opioid overdose situation, often they do use naloxone. you can use is intramuscularly. >> the rampant use of opioids, is it what we used to think of with needles, or is it now more pills? >> pills account for -- >> are people snorting it? >> i think there's a lot of different ways. pills account for more overdose deaths, but heroin is on the rise. often what you see is because people will start by getting

addicted to painkillers then trying to access those not through medicine can be very expensive. often the cost of that makes people turn to heroin. >> there's something else that's even stronger than aaron. >> fentanyl. >> is that part of this? >> it absolutely is. often you hear about people thinking they're getting heroin and it's laced with something stronger like fentanyl. fentanyl, of course, is approved for cancer pain, but it can be abused as well. >> how does this influence the marijuana legalization discussion? if people are getting hooked on painkillers, does it help the legalization argument to say, you know what, this is much less addictive or impactful, i guess? >> it's an interesting question. i know it comes up a lot. i haven't heard a lot about it in the context of this story that i've been reporting, but i think a lot of people talk about alternative pain methods. but whether marijuana has been tested in similar ways is a totally separate story and i think very interesting. >> this sounds like it's set up for either a tweet or congressional outrage, right.

it's got -- if first responders are being challenged in terms of accessing these life-saving drugs, then that becomes a public health crisis issue. >> yeah, we've seen congress hold hearings on this already and the price of these drugs specifically and send letters to some of these companies. it's a brewing issue. >> meg, thank you. and our thanks to you, peter. >> thanks. great being here. coming up, president-elect trump tweeting about u.s. intelligence briefings in russia. "the wall street journal"'s holman jenkins will join us. and byron wien with his market surprises. e

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markets kicking off 2017

with a bang. today traders await the fed minutes, mortgage data, and auto sales. we break down the latest market move with our panel of experts and find out where you should be putting your money to work in 2017. >> plus, a focus on financials. names like jpmorgan, american express, and others hitting new 52-week highs. we break down the sector and what names might still have room to run. and we are counting down to inauguration day. what are lawmakers in washington expecting from the trump administration in the first 100 days? we ask congressman chris collins 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" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen along with

melissa lee and wilfried frost. >> what great digs you've got. >> thank you. did you check out what's going on out here? >> i did. >> it's just times square meets security, apparently. i like having these guys here, i do. they're not like your bobbys over there walking around with little sticks. these guys are ready. >> they're armed. >> we commend them for that. >> the hats on is good though. >> those hats combined with thinking you're going to stop something with a stick. >> and there's no benny hill music when these guy walk around. >> that's horrible to talk about the benny hill music with the bobbys. >> why? >> i mean, come on. >> that's anti-uk.

>> i'm not anti-anything uk. i just wanted to hear the music. >> i can't believe you brought up the benny hill music. >> futures. futures at this hour up again. up about 119 yesterday when it was all said and done. up 12 this morning. at one point yesterday after being up over 100, we were up only 12. so this is meaningless. it's green though. the nasdaq up two. this is, again, more buying than selling so far after what has been a two-month period where we've seen very little pullback. ten year. check out the currencies. looked like they were off and running yesterday. sort of in that 1.04 area in the euro. very low levels for the euro and the yen. there's crude. 52.59, back in that 50 to 55

range we've been in. oil has been creeping back up. maybe it was oversold down at 11.30. >> let's have a look overseas. european trade was up about a third of a percent yesterday. this morning it's a little soft. not too significant. germany down a third. the rest of the markets pretty much flat. overnight in asia, very strong move for the nikkei after manufacturing data surprised on the upside there. it's been a decent start for the most part to 2017 for asian markets. >> here's what's making headlines at this hour. automakers report december sales today. it was likely another record year in 2016 with sales expected to possibly top 17.5 million vehicles. many analysts say rising interest rates and tighter financing may have put an end to the strong sales run that started in 2009. then this afternoon at 2:00 eastern, the fed releases the minutes from last month's meeting when the central bank raised rates for the first time in a year. and more data on withdrawals in 2016. investors pulled $19.3 billion

from blackrock's u.s. based actively managed funds, continuing an ongoing trend into passive funds. blackrock did benefit from its etf business. it took in $140 billion into etfs during 2016, beating its rivals and setting a new global record. a few stocks on the move this morning. a federal judge has cut in half a jury verdict ordering johnen & johnson to pay more than $1 billion to patients who say they were ordered by hip implants. the implants were defectively designed but cited constitutional considerations that limit punitive damages. the sock is flat in the premarket. tesla delivered 76,000 cars last year, which was short of its 80,000 goal. tesla off 2% this morning. >> implant.

implant. just try it. >> implant. >> so you can do it. you can say implant. >> we've been through this before. >> but that was a new one. i hadn't heard your take on implant before. >> implant. >> oh, man. i like that. all right. we're also tracking some key appointments. >> it's like hazing here. >> he's got a really good british accent. >> oh, it's fantastic. is what a british accent should be. >> exactly. >> you'd find some disagreement with that in britain, but i agree with you. >> single, 30, and in new york with that accent and 6'4". >> are you jealous, joe? >> no. really? >> 31. getting old. >> appointments and nominations are coming for the new administration. among the jobs important to businesses and investors, wall street lawyer jay clayton has reportedly emerged as a top candidate to be chairman of the s.e.c. clayton has served clients,

including goldman sachs and barclays, setting him up perfectly for the liberal fox in the hen house accusation. trump could make the announcement today. clayton would succeed current s.e.c. chairman mary jo white, another lawyer who worked for a wall street firm. wilf, got you again here, man. >> also on the political front, exxonmobil ceo rex tillerson is agreeing to cut ties if the appointment is confirmed. the deferral will be transferred to an independently managed trust. those shares are worth about $182 million at yesterday's closing price. tillerson will also surrender $4 million in cash bonuses and other benefits. liberal groups and democratic senators are taking aim at president-elect trump's pick for treasury secretary, steven mnichin. he oversaw thousands of foreclosures during the

financial crisis, earning him hundreds of millions of dollars. the liberal group allied progress is launching a tv ad campaign in arizona and nevada to call on senators jeff flake and dean heller to vote against the nomination. let's get back to the broader markets now. joining us is a fixed income strategist at jpmorgan asset management. eric knudsen, multiasset class chief investment officer. our guest host, richard bernstein. welcoming to you all. oksa oksana, i'll start off with you. you say diversification 2017 is key in terms of the rotation out of bounds. how much more money is in bond funds that should be going into equities at this point? >> i think the key thing for 2017 is there are those who diversify and those who will diversify. i think this will be the year of certainly the latter. it's not only bonds versus

stocks. it's u.s. versus the rest of the world. there's definitely this pronounced belief that the u.s. will be the outperformer this year. i think as with anything, it is a little bit dangerous to put all your eggs in one basket. certainly global diversification does matter, even if it's our view that europe is fighting perhaps more head winds than the u.s. in terms of stocks versus bonds, we've seen significant outflows on the back of $200 billion of inflows last year. the pain has started. it is not yet done. we're not back to where we were in terms of rates in 2010. if we were to get back there in the course of the next year, let's say, that is spelling, you know, mid to high single digit losses for traditional fixed income indexes. so this has the potential to feel very painful. perhaps the one singular word for 2017 is volatility. so investors have to stay tactical, whether they're invested in stocks or bonds, et cetera.

they have to look for uncorrelated sources of income. the outflows we've seen in bonds may have seemed significant, but in terms of impact on, you know, mutual fund bond aum, it's being something like 0.2% out. this has been nothing so far. >> it's staggering to think about the market cap value added to the global market, somewhere around $2 trillion after the election, to think that's just the tip of the iceberg. the money came from some place, obviously. that's the tip of the iceberg in terms of rotation. it's a staggering stat to think about. >> yes, and there was a study actually conducted by the fed at the end of last year, i think sometime in the fall, that looked at how bond mutual funds, for example, react to bond underperformance. it said that, look, bond mutual fund land is extremely sensitive to bond underperformance. so there's definitely more pain to be had there in terms of the technicals. >> eric, 2017. if you're going to pull money

out of a bond fund, what do you do? >> i think the keyword here was volatility. i want to highlight that. we think that 12 months from now, this reflation trade will have continued over that time period. we're going to see a lot of zigs and zags between now and then. on the margin, we're buying u.s. small cap stocks, selling global large cap, selling investment grade and high-yield bonds, buying bank loans. >> what's the general thesis? >> it's really that we still have another 12 months to go here on this. there will be, you know, more increasing in confidence. you're seeing it with the trump cabinet appointments, that investors are going to be pouring more money into u.s. stocks, into smaller cap stocks, into stocks that are benefitting from kind of the u.s.-first mentality that's going on. so on a 12-month horizon, we think there's plenty more movement here. there will be more volatility. we've already seen it this year. you saw it yesterday with what happened with oil prices. you saw it with the u.s. equity markets. we think it's going to be very

important to be nimble. diversification will be important, as oksana highlighted. and be ready to take advantage of a that volatility. >> richard, i suppose if we look at the year as a whole, bonds didn't actually sell off that much. feels like they have because in the fourth quarter, we saw a sharp move. over the year as a whole, wasn't that big a move. even though it feels like recently we've had a big selloff, how much further could that go if inflation does come through? >> i think it can go much further. you're sitting here now with a ten-year note about 2.50. there's no reason why if inflation goes back to 2, 2.5, maybe 3%, think about what the ten year could be. it could be 4%, 5%. that wouldn't be unreasonable. i think the big issue here, getting back to what oksana was saying before, i think it would be hard pressed to find an investor who has embraced cyclicality and made reflation the core of their portfolio when the general consensus makes reflation the core of their portfolio will be done. i don't think we're close to that yet. people think it's temporary.

what you're seeing is temporary. it has to go in the other direction. we're still in a secular deflationary trend. that's what most people would say. i have to tell you, i disagree with that completely. i think the deflationary trend is over. i think that was last summer. that was the story of last summer where you had massive flows into bond funds, when bonds were the riskiest ever. it was the march of 2000 for bond funds at that point. so i think we have a long way to go. >> eric, despite that optimistic view, in your notes you say there could be profound disappointment, your words, in terms of the market's expectation between policy rhetoric and reality. so there could be disappointment in that area. >> yeah, so again, on a 12-month horizon, we think the reflation trade will be fully engaged, but when you look at what we've got to get through between now and then, we're going from an environment that was led by central bank stimulus, transparent, technocratic, very stable environment, low volatility, low risk.

we're now moving to an environment where national orientation, fiscal policy led growth is going to be dominating. that is sloppy. that is messy. that is not transparent. we're going to see a lot of volatility over those next 12 months. >> why couldn't anything be better than what we've had? >> well, it depends -- >> even if you get 50% of what we talk about. even if you're disappointed in the other 50, why wouldn't that be enough to justify what we've gotten so far in the stock market? >> so the question will be -- and by the way, we are bullish. but there's going to be plenty of chances for people to be concerned about the tightening associated with higher rates, with higher inflation expectations, the stronger dollar, higher oil prices. it's going to take a while for any of the policy initiatives to actually play through and lead to gdp growth. >> all the things we've wished for in terms of inflation and faster growth and not being stuck in the muck, all these things we've wished for, we can't start worrying that they're going to go too far when

you're right in the beginni inn stages of those moves. >> we should always be worried. >> let's have japan get above, you know -- get a positive inflation reading after 20 years. >> absolutely. we still think inflation expectations are underpriced in the market. >> it's like worrying about interest rates going up when we hit 3%. >> right. we're buying tips instead of treasuries. we're moving to high-yield bank loans where we can take advantage of this rising rate and capture yield in the short term. >> translato >> eric, thank you. oksa oksana, our thanks to you as well. still to come, holman jenkins on the russia hacking report and president-elect donald trump. also, we'll be speaking about the sector and what you should be looking to add to your portfolio. then congressman chris collins joins us. he's a trump transitional

liaison. stay tuned. you're watching "squawk box" on cnbc.

president-elect trump taking to twitter again to make some announcements. he will be holding his first

news conference in over five months in one week on january 11th here in new york city. in another tweet, trump took a jab at the intelligence community. last week he said he would meet with officials to be briefed on the alleged russian hacking of the u.s. election. last night trump took to twitter to write, quote, the intelligence briefing on so-called russian hacking was delayed until friday. perhaps more time needed to build a case, very strange. >> joining us now, "wall street journal" columnist holman jenkins. in his latest column, he tackles the idea of sanctioning russian president vladimir putin by exposing his corruption. so that's, i guess, the question that this begs. first of all, tell us what you mean. that's really the way to get to him. he's worth probably, what, $80 billion, $90 billion? >> i have no idea. he could be worth zero on paper and he just points and things and says he wants them and he's got billionaires around him who depend on his favor who provide what he wantwants. >> so that's a way to really shame him, if we wanted to.

>> there's much worse things to shame him about if we wanted to. the press, books are full of credible allegations about very, very bad things. things you never hear from the lips of western politicians because if you said these things, you couldn't do business with putin. that's why it won't happen, this shaming. >> that's where i was going with the questioning. is it in our interest right now to confront the only other -- and they're not the superpower we are, but really the other nuclear superpower. do we confront them, or do we try to cooperate with them? what is in our best interest at this point? >> we deter them. we shouldn't say them. we're talking about putin. we don't really have a russia problem. we have a putin problem. he cannot leave power. his crimes are so serious that he must stay in power to protect himself and his cronies. he's not going to leave power. it's his desperation, it's cornering him that is, you know, the worst possible outcome, i think. we have to hope for some natural

course of events, if you know what i mean, to take him out of the picture. in the meantime, we have to deter him from rash miscalculations. >> you almost sound like trump with the second amendment. >> well, you know, or the almighty. >> how can he possibly be bailed out from improvement in the underlying fortune of his country? >> i don't think he can. >> he can't? >> he cannot afford to have a prosperous democratic open, free society anywhere within his sphere of influence. otherwise the russian people might say, why don't we have the same. that's why we have this problem with ukraine. that's the only bone of contention with him and the west, whether ukraine is going to be a role model for people in russia that he doesn't want them to have. >> there's one thing that always boosts his national ratings in russia. it is the kind of international expansion of russia and nationalistic sentiment across the country. in that sense, do we actually play to his hand by elevating this crisis? because it allows him to bring

back that cold war sentiment. it's russia against the world type thing, which boosts his rating domestically. >> very much so. we give him easy victories, and he trumpets them at home as a substitute for the prosperity which is no longer there since the oil price crashed. >> the economic sanctions when they first came into play after the start of the ukraine crisis, they didn't work initially. also, oil prices collapsing clearly put more pressure domestically on russia than perhaps the sanctions were doing. but either way, there was a sign that they were working. his approval ratings changed a little bit. could we not reinforce economic sanctions in a much bigger way? >> the most important sanction was the sanctioning of exxon. yet, russia has improved its oil output despite the absence of western technology. so far, i don't think the sanctions have been terribly effectively. putin has used them to his advantage to justify privation at home and say this is a

patriotic sacrifice we're making. >> what else are you going to write about between now and inauguration? you going to write about the closing moments of obama administration? what did you make of some of these moves? you think he'll do merrick garland? >> i doubt that. i think he's going to hang on to this russia thing, the hacking thing, and use that as really the way to -- >> what do you make of that? you saw julian assange? is he lying through his teeth too? >> yes. yes, he does. next question. >> you figure at this point, what, they're potential for the dnc hacks? >> i don't know exactly what their motive was. they were probably being opportunistic. they probably thought hillary was going to win at that point and they'd weaken her. >> what about the podesta hacks? >> i don't know. someone did them. certainly they got their hands on the information. >> so when the cia and fbi both say they've got strong evidence, is that like climate change 90%

evidence or done? >> it's an intelligence estimate. they use the word estimate for a reason. they're making a surmise from the known facts. >> has the nsa said they were definitely hacked? >> you only know why something happened if you have someone in the room when the decision was made. all through the cold war, we didn't have that kind of source. we don't have that kind of source now. >> do you think trump is undercutting them or is he going to bring in new people? >> i have no idea. i think someone else can decide those things. i think trump is going to tweet and be the front man running the government and coordinating the republican policy agenda is going to have to fall to someone else. i haven't seen who that person is going to be yet. maybe reince priebus. maybe mitch mcconnell. i don't know if the folks can get their act together. >> so are these tweets by trump about putin and everything related to the russian hacking issue -- is that just a big chess game for trump in terms of him positioning so he looks like he's denigrating the intelligence officials?

>> i got a trump tweet. 52 seconds ago. julian assange said, quote, a 14-year-old could have hacked podesta. why was the dnc so careless? also said the russians did not give him the info. there's the first tweet of the day from @realdonaldtrump. i keep this here now. >> the trump intelligence agency gives us its estimate. >> you can say a lot in 140 characters. administrations used to do it with trial balloons. it just took longer. >> to your question, i think the chess game is really against obama and the democrats. he's trying to preserve his freedom to have a russia policy that isn't dictated by, you know, the republican hard liners and by the democrats. >> holman, thank you. have you heard this, that "the wall street journal" is read by the people who run the world, "washington post" is read by people who think they run the world, and "the new york times" is written by people who think they should run the world and

are also very good at crossword puzzles. >> and "the final tincial times read by me. >> excellent to see you. >> "squawk box" will be right back. stay tuned. time for today's avenue lack trivia question. what was the first u.s. corporation to make over $1 billion in a single year? the answer when cnbc "squawk box" continues. h at. m

now the answer to today's aflac trivia question. what was the first u.s. corporation to make over $1 billion in a single year? the answer, general motors. , eaby

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good morning and 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, tesla delivered more than 76,000 cars last year, but that was short of its goal of 80,000. the company says deliveries fell

about 9% in fourth quarter due to production issues as it retooled its auto pilot feature. apple stores in china are going all out to celebrate the chinese new year. on friday, the company plans on handing out beats wireless headphones for free. headsets, excuse me, with the purchase of a mac or iphone. they sell at nearly $300 here in the u.s. and hillary clinton will join her husband, former president bill clinton, at donald trump's presidential inauguration on january 20th. some questioned whether or not the clintons would attend following clinton's defeat to trump. former president george w. bush and former first lady laura bush will also be in attendance along with former president jimmy carter. a weekly read on mortgage applications released at the top of the hour. this time we get a bonus two weeks of data. dia dia diana olick joins us from washington. >> reporter: good morning, joe. mortgage interest rates came down slightly to end the year but not enough to end the

bleeding in the home loan market. application volume plunged 12% for the week ending december 30th, seasonally adjusted. that's compared to two weeks earlier. the mortgage bankers association did not report weekly volume last week but did include an adjustment for the christmas holiday. volume usually drops over the holidays, but this was bigger than usual. higher rates since the presidential election have hit re-fis hardest. applications to refinance fell 22% seasonally adjusted during the two-week period. here's a scary stat. they dropped by more than half in the last four weeks and ended the year 13% lower compared to a year ago. now, the average contract rate on the 30-year fixed mortgage fell to 4.39% from 4.45%. mortgage applications to purchase a home loan have also taken a hit from higher rates, though less severely. they fell 2% during the two-week period. back to you guys. >> diana, thank you very much for that. now, we're likely to see big

developments in the banking sector this year from fed rate hikes to a potential rollback of dodd-frank's protections. jim cramer told us this morning he's positive on the banks. >> if you get rates going higher, four rate hikes equals $3 billion in profit for j. jpmorg jpmorgan. remember, the great thing about that is they don't have to do anything. if you can imagine the leverage. that's a profit. that's an extraordinary figure. so jpmorgan in the dow, bank of america not in the dow. that would also benefit similarly. some would say more. this is a play not just on the election of trump but also the fact we're going to have to have more rate hikes if the economy picks up. i'm a big believer the economy is going to pick up. >> to clarify, he was positive on jpmorgan within the banks, although would wait a little bit to buy them. let's discuss further. joining us is director of bank strategies. thank you for joining us. clearly banks had an outstanding

run in the fourth quarter. let's break down some of the drivers and see who benefits the most. in terms of the one jim was just talking about there, interest rate increases, who is set to benefit the most and is there more room to run amongst those names? >> there is. interest rates is the big trigger here. when we saw interest rates first start to rise in 2015, you saw the banks do well. then you saw that, you know, lull where we didn't really have any rate hikes, and the banks really suffered. as we're now starting to see the rate hikes start to take form and begin to believe that there's probably two or three next year, what we'll be looking at is the super regional banks that have the real souped up asset sensitivity as well as being on lag deposits. what most people overlook is 75% of the rate hike benefit comes from lagging deposit rates. >> given the focus politically on the sector in the last decade, is it possible there will be more pressure this rate

hike cycle on banks to hike rates for deposits quicker than they normally would? will they be pressured by politicians to do that? >> really what we're lacking at is their flush with liquidity. so even with the higher liquidity requirements and constraints, you're saying that the overwhelming amount of deposits that have grown that we've seen over the last, you know, five to seven years, are there ready. so the banks need to be able to lag those deposits to re-create the profitability on those deposits, which they haven't been able to do at those low interest irates. so it's important to lag rates. politically, they want to be able to see the banks be a little more stable and solid on the profitability level. >> marty, this is rich bernstein. good morning. two quick questions for you. number one, is it really that rates are being hiked, or is it that the yield curve is steepening? we don't want an inverted curve with the fed raising rates. that doesn't help banks. second, i think the term you used was souped up. are you implying we should buy lower quality banks that have

more financial and operating leverage? >> really there's some higher quality banks, super regional, like sun trust in a really good region in the southeast here, that have really strong deposit franchises. that's what we're looking at, those super regional banks that can take advantage of that. when you look at the yield curve, it's really just the proxy for the market of how much we're going to have in interest rate hikes over the next couple years. so the steepening yield curve does benefit investment yields. that takes several years to really roll into the earnings whereas the rate hikes where two-thirds of the balance sheet are is where you see the big impact. >> walk us through which kind of banks will benefit the most from deregulation. there could be an argument that some of the largest banks could still be subject to quite a bit of regulation because they are systemically important banks. fact of the matter is, goldman

sachs, for instance, probably not going to initiate a proprietary trading because deregulation is happening. >> melissa, you're hitting on the right thing here. we think there's a big bright line between the largest banks and what we would call banks, where that threshold is going to land. is it $100 billion? is it $250 billion? where that kind of threshold ends and we get the regulatory relief is where you're going to see the biggest benefit. we think the super regional banks here will benefit as well on the deregulation side, much more than what we'll see in the larger banks that still will have the regulatory focus on them. >> marty, thank you for joining us this morning. much appreciated. >> nice talking to you. coming up, congressman chris collins on the trump transition and what lawmakers are expecting after inauguration day. as we head to break, let's look at s&p's top performers. "squawk box" will be right back. s

welcome back to "squawk

box." futures right now pointed higher, albeit relatively muted. about 20 points on the dow, 4 on the s&p, and 4 on the nasdaq. yesterday we got about three-quarters of a percent to a percent of gains. president-elect trump is already flexing his muscles on capitol hill. house republicans are pulling the plug on plans to gut an independent ethics committee after an objection from the president-elect. joining us now to share what else the trump administration has in store for congress is new york congressman chris collins. he's a trump transition teams congressional liaisonliaison. congressional man, -- congressman, good to see you. we spent a lot of time talking about ephemeral, nonimportant subjects. why does he have to tweet against people that -- i read a cnn interview you did on january 1st. there were six questions about what trump says and his -- sort

of his personality and sentiment and nothing about policy whatsoever. i don't know who the cnn anchor was that morning. have you been back there since then? >> no, i don't think i've been -- i don't recall. >> okay. let's do this. let's just talk about what's happening with obamacare. the front page of the "wall street journal," the senate already has moved to take some steps to actually do the repeal and to actually dismantle it. at the same time, zeke emanuel and another individual on the op-ed pages has, please, ceo, stand up for obamacare, it's been a great thing. apparently president obama is trying some last-ditch efforts with democrats in congress to try to preserve it. how's it going to work? do you have any idea? can you tell us what's going to happen on january 21st? >> well, we're going to be beginning the process in the house next week. it's going to come down to what we could call budget reconciliation. that's a financial nuance and a way that we can pass a bill

without needing any more than 51 votes in the senate. we don't -- we're not subject to the filibuster. that's, in fact, how obamacare was passed. so we're going to repeal it, much like we did about six months ago, and obviously we put it on obama's desk, he vetoed that. fully expected. but this time when it goes on president trump's desk, he's indicated he's absolutely going to sign off on the repeal of obamacare and many of those issues that have driven most of us crazy, the employee mandate, the employer mandate, the health insurance tax, the medical device tax, the minimum set of benefits. they'll all be gone. but you know, we're going to have to grandfather current plans in for probably two years. there's a lag time between when an insurance company can introduce a plan, get dit approved, and roll it out. really, for 2017, the consumers won't see much change, and pretty much not much in '18, but we will have repealed it.

the democrats are helpless to do anything about it. we have an overwhelming majority in the house and clearly the senate. this is not subject to the filibuster. it was a promise that president-elect trump made, he was going to repeal obamacare as soon as he got in office. it's probably going to take us until the end of february to go through the reconciliation, to actually put that bill on its desk. as you pointed out, it started already in the senate. we're starting our piece next week in the house. then they'll all come together. >> can tax reform proceed simultaneously with that? >> it won't be simultaneous, but it will be similar when we do what we would call the 2018 fiscal budget. that, too, was reconciliation, a likely package for putting in fundamental tax reform. you're looking a the a march/april time frame. that, too, is going to come quickly, another promise president-elect trump made. >> do you trust your colleagues? i'm not sure -- were you around,

were you privy to what the ethics brouhaha yesterday, and what does that tell us about whether some of these guys have learned about priorities and sort of staying on message, and actually, you know, passing the smell test or having a ear to what the public wants at this point. what happened to those guys? >> well, it was a very nuanced situation where, you know, some members have been accused of something, but there's no due process to even know who's accusing them. it's been politicized. so i understand some of the angst that a few members had. but you're right. we were, you could say, tone deaf. many of us were not in support of that, but a majority did vote to put that in the rules package. donald trump, in fact, saved us from our own misstep because had we don it -- i mean, our phones were ringing off the hook yesterday morning from constituents. while they didn't understand all the nuances, the visual of it

was not at all good. >> first order of action. as they walk back in the door, let's get rid of this ethics stuff. unbelievable. but i don't know the details of whether it's a bad thing. i hear there are some problems. >> which we can deal with later. to do it on our very first day, the day we're sworn into office, was a tragic mistake. again, trump, who's one of the greatest communicators ever, he saw it, he saved the republican congress from ourselves. >> congressman, you spoke earlier about things like obamacare and tax policy, where you hope there can be relatively swift progress between republicans in congress and the trump administration. what about russia? is that an area where you think there could be significant disagreement between the two in terms of the best ways to deal with president putin? >> well, you know, it's interesting. we have two issues. one is russia flexing their muscles and whether that's in the ukraine or in other areas. that's separate and apart from

the cyber hacking. i think we need to deal with cyber hacking and that includes north korea, iran, china, and russia, differently than perhaps a state flexing its muscles militarily and trying to influence a region in that way. somehow we've gotten these things confused with obama's focus and the democrats' focus on the election, trying to infer that somehow the russians hacked into the dnc, those e-mails cost hillary clinton the election, and they've turned on a political edge as opposed to letting us be clean about it, saying cyber hacking from any nation is unacceptable, but so is a nation like russia interfering militarily in other parts of the world and again trying to flex their muscle. i think what's happened, it's been a very confused message because of obama and hillary clinton trying to tie russia in with her loss in the election. they don't have anything to do with each other. >> we've had -- actually talked about this quite a bit, about

whether the president-elect is undercutting people he's going to need to work with in the cia or the fbi, but then others pointed out the nsa hasn't really leveled charges, i don't think, necessarily against russia. do you think there's any political cooperation between people that want to delegitimize a trump presidency and these agencies? would they do anything like that? that doesn't seem -- you know, they're all professionals, right? >> well, we have some new folks coming in. mike pompeo is going to be the cia director. he's a no-nonsense guy. one thing i think all these career civil servants want to make sure is they keep their jobs. that's following the directions of their boss. between general flynn as the national security adviser, mike pompeo as the cia director, and certainly mr. bossert now, we've got a great team on the intelligence side. they're going to be calling the shots, certainly under the direction of president trump.

but these civil servants tend to fall in line. they may not like it every day, but one thing about the civil servants, they're not going to cost themselves their jobs. so right now, sure, there's some disarray. they're not sure who they're taking directions from. obama has done us all a disservice in trying to insinuate again that this election was impacted by russian cyber hacking and there's no proof of that whatsoever. but no, i don't expect there will be problems moving forward. they're going to find out their new bosses are no-nonsense guys and toe the line. >> okay, congressman. thank you. >> good to be with you this morning. >> hope to see you again soon, either here or maybe back on cnn. i don't know. but thank you. >> very good. coming up, market thoughts from guest host and cnbc contributor richard bernstein. later, wendy's serving up a juicy twitter feud that other businesses may want to take note of. you said twitter, so i should say twitta.

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stocks to watch this morning. a u.s. judge has refused to overturn a verdict upholding two patents held by amgen relating to its cholesterol drug. the ruling is a defeat for regeneron and sanofi, which

makes a rival drug. the companies plan to appeal. that's painful. a federal judge has cut in half a jury verdict ordering johnson & johnson to pay more than $1 billion to plaintiffs who say they were injured by the company's pinnacle hip implants. the judge upheld the jury's findings. the implants were defectively designed, but they cited constitutional considerations that limit punitive damages. >> sounds better when you say implant. >> constitutional is a word we don't even have. we don't have a constitution. >> which is one of the problems, i think. and blackstone is reportedly -- you've made some steps in recent months. i like everything about you. >> about him. >> no, i like everything about europe. i'm a little frustrated that you have the country of italy and

you can't make an event with your banks and economies and stuff like that. >> i'm not personally to blame for that, you realize. i can't make a go of it. >> i can do a sixth degree of separation where you're at least complicit. greece, greece. you can't take the greek islands and somehow make a go of it, tourism-wise. you can't turn a profit? >> i can't. no, i can't personally. i've tried. >> you've been to the coast? >> i have. >> how do they not make money? >> the price of a limoncello alone. >> those banks are insolvent, seriously? all right. >> i apologize, joe, on behalf of all of europe. >> all european people. >> the city of lights. blackstone is reportedly near a deal to buy music rights company sesac. the purchase as far as price is unknown. "the wall street journal" says the firm licenses songs from artists such as bob dylan, neil diamond, and, oh, boy, been in the news lately, mariah carey.

>> that was embarrassing. >> that was unbelievable. i still don't know what happened. >> nobody knows. >> new allegations on page six today in the "new york post." >> she does have a good christmas song though. >> she does? >> i hate that song. >> what? >> i hate that song. >> do you hate christmas too? >> no, i like christmas. i dislike that song. >> i watched "love actually" over christmas. >> you like the george michael christmas song. >> which one is his? >> "last christmas." and it was his last christmas, sadly. >> that was the headline that day. sad. coming up, the markets kicking off 2017 in the green. the dow, s&p, and nasdaq saw their best day in more than three weeks. is this a sign of good things to come this year? we talk markets right after the break. plus, a year to remember in auto sales. could be another record year for car makers. we preview today's big numbers. "squawk box" will be right back.

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wa toarpas f f cha e e markets kick off the year with a rally. what could surprise wall street? veteran strategist byron wien is here with his ideas. the trump transition. new reports that the

president-elect could tap a wall street lawyer as s.e.c. chairman. all that, plus wendy's twitter fight with an angry customer. a low down on the beef 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. welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. melissa lee is letting us use her brand new set. >> you're welcome. >> she's here though. thank you. and wilfried frost. who's jealous of the set. happy one year anniversary. >> that was good to see. many more, many more. >> i hope so. it's been a fun year. >> i know "squawk box" celebrated 20 years, but one

year is good. >> we're celebrating ten next week. >> also, joe, i'm only 31. >> oh. >> and 6'5". >> good for you, will. >> and single. but that's fine. there's a lot of great -- having a family is better than anything. believe me. >> i know. plenty of time. >> yeah, you got plenty of time. >> look at tony randall. >> the old man got married at 44. plenty of time. >> exactly. slow down. knowing you, slow down. god almighty. thank god you got that early wake-up call. our guest host this morning, richard bernstein, ceo of richard bernstein advisers. the futures right now are -- there's buying again. a little bit. now we're up 21, 119 points of buying pressure yesterday in the dow. indicated up another 21. today we need about 100 more on top of that to get to 20,000. the s&p up just under five. the nasdaq up about five.

treasury yields have moderated a little bit. 2.456 on the ten year. oil prices are right in the middle of the recent trading range. almost exactly. among today's top stories, mortgage applications dropping 12% at the end of 2016, in addition to a normal holiday slowdown, higher rates took a bite out of the financing business. speaking of rates, we'll hear from the fed today. minutes from last month's fomc meeting will be released at 2:00 p.m. eastern time. and in political news, a new tweet from president-elect donald trump this morning. he wrote, julian assange said, quote, a 14-year-old could have hacked podesta, why was dnc so careless? also said russians did not give him the info. so early morning first tweet. stocks to watch this morning. tesla reporting a 9.4% drop in quarterly deliveries. the company blaming production issues as it retooled its auto pilot feature. it also missed its forecast.

the stock was down 1.9%. depomed shares rising this morning. kkr is still interested in buying the drug maker. deadline for final bids is said to be today. that stock up by 3.25%. also watching shares of altria, rising on the back of a bank of america upgrade. they say this company should be benefitting from a better u.s. economy as well as a lower corporate tax rate. right now their current tax rate is about 35.5%. meantime, it's also downgrading philip morris, which is the international side of the business. the u.s. dollar is going to ding this company. the strength in the u.s. dollar, because 100% of its revenues come from overseas. corporate debt issuance hitting a reported cord on the trading day of the year. 11 companies and banks sold $19.9 billion of debt yesterday. the biggest start to a year on record. makes sense they would jump to do that immediately with rates potentially rising.

stock market kicking off the new year with a triple-digit gain. dom chu joins us live from cnbc headquarters with stocks that usually do well in january. >> good morning. melissa, last night we were both around. we talked about this idea that strategists don't expect a whole heck of a lot for the markets in 2017. so maybe that nice triple-digit move for the dow is not going to be repeated, but if you look at our strategist survey at cnbc, let's just set the stage for how markets may perform if the experts are right. they did get it right last year, thanks to the trump rally. the median forecast, 2,325. that's the level on the s&p 500 according to the median estimate from our survey. 3% upside. not a whole bunch here in terms of market action, if the analysts are right. wells fargo on the low side of things, 2280 there. the high end, rbc. that implies 10%, 11% upside. for those stocks that have historically done well, take a look at some of these sectors. january sectors over the past 20 years, longer term, technology

up about maybe 1.2%. but it's positive only about 55% of the time. health care also a positive trade. it's up about 60% of the time over that 20-year span. financials and materials, the two worst performers. they're both down negative about 60%, 70% of the time. as for the stocks you should watch, if history is any guide, in the post-financial crisis error, netflix and under armour are among the s&p 500 current members that seem to do well in the month of january. positive 86% of the time for netflix. meanwhile, tiffany and yahoo! both down a lot over the course of the past, at least, six, seven years. joe, as we take a look at the market snapshot overall, yes, the trump rally is here. we're at statistically unlikely levels for where markets have gone in a very short amount of time. we'll see if those momentum pieces can pick up later this month and into 2017. back over to you. >> very exciting just to watch, just to sit back and see what's coming.

the inauguration and what happens after. >> we have like a front row seat. i love being in news right now. it's like everything is up close and personal with regard to the markets and the economy. >> and you know, as much as i don't like twitter, i am now watching it just because you never know when something really interesting is going to all the sudden come out, maybe about gm or north korea. anyway, thanks, dom. joining us now, citi private bank head of managed investments. bailon is better than bailout. is that like a good way -- >> they did it in europe as well. >> italian banks are facing that. >> and you work at citigroup. that works with irony. >> not anymore. we're fine now. thank you for that. >> q&a managing director ed

campbell is here. also, our guest host, rich bernstein. much safer to just call yourself -- have i got that right? >> i have no idea what that means. you're way above me. >> i know, i know. david, how are you? >> i'm well. happy new year. >> how are you feeling about the advances we've made and whether the backdrop in the economy justifies these advances? >> well, the advances are obviously anticipatory. everyone's talked about that. what people haven't talked about is you're going to have a period of uncertainty before the legislation passes. then the cumulative effect of all of this might not be really appreciated. you're talking about regulatory reform, banks are going to be able to lend more, especially you heard earlier the small and medium size banks. energy policy reform, tax reform. then potentially honest fiscal stimulus. the total package has not been

done like that. if you go back to reagan, they were big but also focused on tax reform alone. so this could be much more significant in terms of its financial impact in both the last -- >> i'm sorry. i was kidding you. you just said no one is saying what you're saying right now. people are saying that -- they're almost saying that they've already played too much forward. we're expecting perfection. my take is if we get any of this stuff, it justifies the meager response we've had so far. you're actually saying that the sum total of all of it together, we could be underestimating how positive it is. >> right. we're going to have to wait until the end of the year. we have to see what it is. it is a very significant number of packages. >> against conventional wisdom. >> if you look at just the impact of tax reform alone, if ryan and trump did this, we're talking about a 3% change in gdp. let's assume that a third of that gets reinvested. it's obviously -- a lot of it's going to be saved. so i don't think we've seen an

experiment like this. the negatives against it are also significant. the boldness of what is about to happen will be significant and will advance the market. >> conventional wisdom is that everything has to go right to justify even what we've got son far. and that's not what you just said. >> not really. i think what has to be discounted is i think the uncertainties in europe and obviously the china situation, which is that this is going to put pressure on china and its currency balances. that will be significant and a major policy issue. >> when i started, you thought i was going to talk about marty bailon again. >> i like that much better than the citibank, which i love. >> all right. you don't necessarily agree. you think we're priced for perfection. >> i agree with what david said and certainly we're a lot

more -- >> he convinced you or you always thought that? >> we're a lot more bullish than that 3% strategist median that dominic had cited. we're looking for 8% to 10% returns for the s&p 500. >> which is even conservative in a great year. it's okay. we've seen better in the past. >> we've seen better. we saw better last year with a 12% return on the s&p 500. you know, it's not going to be pure, smooth sailing. i think there are a lot of risks. david mentioned some of them in terms of the european political calendar. so, you know, markets don't move in a straight line. i think we've got a clear window to rally between here and the inauguration. there will be setbacks this year. i don't think a trump presidency is going to be consistent with the vix index at 13. so there will be volatility, but overall, i think we're still playing that pro-risk rally that's been in place since the election. >> there's the old saying about, you know, the guy who's hitting

his head against the wall, it feels so good when he stops. on a scale of one to ten, what would you think the pro-growth business initiatives of the past eight years? what would you rank that on a scale of one to ten? >> what we're looking at going forward? >> no, the last eight years on a scale of one to ten. >> let's call it a four. >> a four? that's generous. okay. so if you get a 5 1/2, right there it feels so good when you stop. >> that's going to be a lot better. >> things don't have to go right to be better than what we've been through. >> the market is focused on the pro-growth elements of the trump plan, but there are also anti-growth elements. >> trade. you think that's really -- like taxing cars from mexico or china? >> well, there have been trial balloons certainly before the holidays about 5% tariffs on imports if something like that happens. >> you didn't bring that up. >> that would certainly be the downside. >> i think the tax policy they're talking about and how their going to deal with capital

expenditures definitely could be negative in terms of imports. the pressures within the country -- you know, we're at 4.6 unemployment. we're going to be taking steps against immigration. so we're going to cause a situation where there are, you know, limited supplies of labor. i'll give you an example. we were talking with a client who's aware that in terms of getting people to build homes in tennessee and in the south in general, they simply could not find, you know, enough talented labor to build the homes where the demand was. we're going to see that happen across the economy, i think. so that's the negative. you're doing this experiment at the very end of the expansion. but to your point, joe, the level of change we're talking about here is so significant in terms of its total economic impact. they're comparing it to what happened in the past eight years is almost irrelevant. this is a new experiment in a new time. it will have a lot of volatility. but its economic impact determines earnings, acquisitions, active regulation, infrastructure investment.

>> just to offset some of this bullishness, even if we're right for this very positive growth in the economy, that doesn't necessarily lead to market gains. if you look at the gains for obama's percent residency, it l about 14% per annum. >> you know the ceo of general electric. >> i do. >> so he's -- people will look at that and say his stock is down 30% or 40% from when he took over in 2001. if you go back to where obama took over, ge was $6. he's up 400%. he's going to be remembered as not having moved the stock at all if you use the same metric. so he's up 400%. >> but we come to a new

presidency with markets up seven years in a row for the dow. >> we were at 666 on the dow. >> you're saying the bull market is ageing at this point. >> exactly. i'm just offsetting. even if you're really bullish on growth, that doesn't necessarily mean that we get -- >> and you've got a firm with its own name. >> a couple things. number one, it's corporate profits, not gdp growth. so even though the gdp growth during the obama years have been very punk, to say the least, corporate profits have boomed. number two, your point is well taken. also, i think we're going to see a major rotation in -- and if you think about -- i think one of the eernnys that's behind what's being talked about about the policy is that we may not help consumers. we may get jobs. we may have a tight labor market and wages might go up.

but if we do have trade barriers or more inflation, purchasing power may go down. that's very more to normal in a mid-to-late cycle environment. so what's happening is you're seeing a rotation away from defensive quality consumer oriented stocks towards much more cyclical, lower quality stocks that are likely to benefit from some of these policies. >> absolutely. i can be very constructive on the banks with the interest rate. >> can you stay the rest of the week? and bernstein is going to leave. >> we're going to swap out. >> i'll stay with him. i'm not a substitute for him. >> no, i'm kidding, rich. >> i'm sure you are, joe. there's always truth in sarcasm. >> that's true. >> with joe especially. >> we'll leaf it there for now. thank you to david and ed. rich stays with us. a lot still to come here on "squawk box." up next, the nation's top automakers rolling out sales figures today.

we'll tell you what to expect. plus, crude prices hitting a two-week low yesterday and an 18-month high intramovemeday. plus, byron wien stops by with his annual ten market surprises. we're back in a couple minutes.

that looks good. nation's automakers will be rolling out sales figures today. phil lebeau joins us with the expectations. morning, phil. whoa, wow. still got the pajamas on with the tie. >> don't make fun of phil's shirt. >> i put these on, i went to sleep on the plane. it's tough flying out here from chicago. >> you look like pajama boy. >> i got footsies on. >> you look like that guy selling obamacare. pajama boy. anyway, sorry. go ahead. >> joe, do you know that last year, depending on what we see

for december auto sales, last year 2016, could be another record year for auto sales, and if that's the case, you're looking at the first time since the early 1920s that we have seen seven straight years of rising ae ining auto sales here united states. take a look at this bar chart. it will show how we have seen a recovery in auto sales since 2009. back then, about 10.2 million vehicles. this year, depending what happens with the december numbers, it's likely to come in at 17.5 million. we did 17.46 million in 2015. the thing to watch today, yes, you're going to get a lot of headlines about whether or not we set another record for annual auto sales. if we do, it's only going to be by a couple hundred thousand vehicles, if that. maybe 50,000 or 70,000. but the thing to watch, incentives. they have been going up. you'll hear automakers say, well, as a percentage of transaction prices, they're

still around 10% or 11%. we're seeing higher incentives and growing inventories. you have gm and ford along with other automakers curbing production, in some cases idling plants, depending on the vehicle, for one or two weeks in december or in january. that's what people are going to be focused on. what's going on, both with incentives and inventory. we get the first numbers in the next hour. in the meantime, joe, i'm going to go back and take another nap for an hour or so and i'll get back to you. >> phil, this is unbelievable. trump must be watching because he sees phil lebeau on cnbc and tweets about ford. while you were talking. here's the latest. thank you to ford for scrapping a new plant in mexico and creating 700 new jobs in the u.s. this is just the beginning, much more to follow. so that's while you were talking, phil. you believe that? this is getting fun, watching this twitter feed. you never know. >> you never know, joe. my favorite part about these new

trump tweets, it's calling the company after a ceo or executive pops up with trump or something is tweeted by trump and then you get this kind of reaction from the people at the company. what? what happened? uh, uh, uh, hold on, i'll call you back. they're being caught by surprise in a lot of cases by what's happening from the president-elect. >> so sometimes you're probably calling, and they haven't seen what you're calling about at times. that's amazing, isn't it? >> that's happened. that's happened. i happen to be right in the area where a lot of companies are being the focus of mr. trump's attention. >> you are. aerospace. >> you have the automakers. >> defense. >> the carrier plant down in indianapolis. i'm not surprised to see he said that about ford. let's see what happens now that he's turned his attention a little towards general motors. >> no mention of the small car production moving to mexico as part of this whole deal. >> no, no. but then again, we didn't hear him say anything after carrier

said they're still going to be moving a sizable number of jobs to mexico. it's about those jobs, even if it's not as many as he promised or said. those jobs that were quote/unquote saved. >> ford shares, by the way, are spiking. up about 1.1%. prior to the tweet, they had been higher by about 0.7%. so we're seeing a reaction. this is on top of the gains ford made in yesterday's session to the tune of 2%. >> okay. thanks, phil. coming up, one angry customer attacked wendy's on twitter. the fast food chain did not hold back. that story is next. i think we've got calls out to jack in the box too. >> oh, good. >> we'll be right back. coming up on "squawk box," it's a new year on wall street. will the trump rally roll on or fizzle in 2017? we'll look into market maven byron wien's crystal ball.

"squawk box" will be right back. n

coming up, from tax reform to regular laying, find out what blackstone's byron wien thinks could surprise the markets in

2017. he'll join us next. as we head to break, let's look at u.s. futures. we need 119 points for dow 20,000. "squawk box" will be right back.

just warming you up, byron. welcome back to "squawk box." that should be frozen. just like that. i tried to get the head of the nasdaq -- >> i think that looks amazing. you look great there. >> doesn't it? like six stories tall. i've dreamed about this my entire life. >> now what? >> yeah, now what? exactly. >> it's over. >> we're live on cnbc from the nasdaq market site in times square. futures are indicated up about 28 now. after 119 up yesterday, another 28 today. we're not far, if you add that into where the dow is, less than 100 points from 20,000. the s&p is indicated up five. the nasdaq indicated up just under six. >> let's have a look at oil prices. big fluctuations yesterday. we hit an 18-month high then pulled back to end down a couple percent. this morning, as you can see, we're higher by about almost 1%.

natural gas still in the red following the largest daily decline in almost two years yesterday. let's discuss oil prices for 2017. matt clipper joins us. good morning to you. i suppose so far in recent months it's all been focused on supply going ahead with that opec deal. inventory levels, though, are what spooked oil prices a little yesterday. what's your latest take on that and whether this lower supply can support prices through the year ahead? >> right. well, it's been fascinating to see prices sell off on that first trading day of the year, really. but what is happening from our perspective is that we're not going to get the first opec monthly oil report for another two weeks to see where the production levels are coming through from the likes of saudi arabia, et cetera. but from our data, we can see that their exports have been exceptionally strong. you have saudi arabia. you have the united arab emirates and kuwait.

these three members who are expected to cut production by 750,000 barrels a day to try and reduce inventories, to try and balance this market, and yet we saw them exporting at a record level for saudi arabia, yunited arab emirates as well. these guys have been going pedal to the metal before they try to reach compliance. >> matt, we all focus on the people part of that deal, but what about the u.s.? could they boost supply significantly this year if, for example, donald trump reduces regulation in the sector, and could that scuff up the price somewhat? >> very much likely so, but it's more likely to be driven by economics than anything else. if we see prices closer to $60 going forward, we project we'll see shale production increasing by 300,000 barrels a day by the end of this year. so as well as you seeing opec production coming back to market in the second half of the year as we see the production cut

finish where it's likely to see non-opec coming back as well. although prices are likely to be supported going forward in the first half, they're going to come under pressure in the second half as we see this wave of production from opec, from the u.s., from others, the likes of brazil and kazakhstan as well. >> and demand outlook for the year ahead? >> well, we believe that it's going to remain somewhat? check. that's driven by an emerging market demand. obviously india has its problems with the withdrawal of notes over there. really, the key thing here is china. china loves to bargain hunt. with prices rising above this $50 level, we think they're going to be disincentivized to fill their storage. from that perspective, we think that could be the bearish influence more than the bullish influence on demand growth going forward this year. >> matt, thank you very much for joining us this morning. matt smith from clipper.

the fomc is going to release the minutes from its december meeting today. steve liesman joins us with a look at the fed's makeup in 2017. >> good morning, joe. yeah, new year, new members of the fed. just real quickly on those minutes, these are the minutes of the meeting where the fed hiked rates and when it first began to consider some of the fiscal policies that could come from the trump administration. let's talk about the new fed. what we see is that doves will be replaced by a couple hawks. new voting members on the rate setting federal market committee. this is the 2016 committee. you can see there, take a look at your right. loretta mester and ester george were two of the most hawkish members of the fed. not a lot of company in term of the most dovish members here. this is on a scale of 0 to 10, an average as weighed by our respondents to the cnbc fed survey. now look at what happens in 2017. the two hawks, they go away, replaced by two centrists.

in comes charlie evans all the way on the left. the result, if you add it all up, is one of the more dovish feds we've had in a while, except for a couple things. donald trump, the incoming president, has at least two appointees this year. we don't know, is it going to be hard money appointees, even some have been talked about of the gold standard. as many presidents hope, does donald trump hope for an fomc that keeps rates as low as possible. that's just one aspect of it. the other aspect of it is how do the doves and centrists and members of the fomc react to the fiscal policies. as i said, that's something we're going to hope for and get more information from, from those fomc minutes where we know the fiscal policies were discussed. and if that's not enough, there's a whole bunch of fed speak later this week. take a look at what's coming your way in terms of fed speak. on friday, from the american

economic association annual conference, where i will be, there's charlie evans, jeff lacquer, dallas' robert kaplan. then jay powell and neil kashkari. tomorrow we'll have an exclusive interview with san francisco fed president john williams live from the aea conference in chicago. there's your full screen announcing that important interview we'll be doing tomorrow. joe? >> yeah, all right. hopefully power lunch will get the music ready for you, steve. >> well, not like you guys do. it's just a timing thing. nobody does the music better than "squawk." ♪ >> there you go. >> i still cannot land that interview. i've tried. i can't land it. >> never mind then. >> no, no. it's still important. even though it's not about music. different john williams, joe. >> all right.

thank you, steve. for the 32nd year in a row, blackstone's byron wien is issuing his ten surprises for 2017. joining us here on set is byeon wien, vice chairman of the multiasset investment group at blackstone. happy new year. >> good to be here. >> your very first surprise of 2017 has to do with politics, which is surprising, considering your first surprise of 2016 was wrong on many fronts. >> i never get them all right. >> democrats control the senate in november. that didn't happen. >> neither one of those were one in three. those were conventional wisdom, that hillary wins and the senate. >> 2017, what's your big political surprise? >> well, in 2017, the big political surprise is that trump isn't as extreme as he appeared

in the campaign. that he softens his stance on almost everything, particularly on domestic policy, that he focuses on his growth agenda. he concentrates on reducing taxes, dismantling regulation, and spending money on infrastructure. as a result, the market does well, the economy does well, corporate earnings do well. >> do you feel like we've seen dpl glimpse of this kinder, softer trump from the e election to now and that's part of the reason the markets have gone up so much? >> during the election, he said he was going to appoint a special prosecutor to investigate hillary clinton's e-mails. he withdrew that the first day. i think on every other thing that he's made an extreme statement about, he's going to pull back somewhat. now, you could raise the affordable care act. they will repeal that, but there

are 20 million people on that. you know, they can't deprive those people of coverage. so they can't take it away without giving something in its place. so i don't think you're going to see trump be the fierce trump that he was in this campaign. mario cuomo had a statement, campaigning is like poetry, governing is like prose, and i think he's going to discover that. >> in terms of the real serious surprises on the political front, but changing geography, your predictions for european politics are quite against consens consensus, is that right? >> well, i don't know. you know better than i. >> you say merkel's going to lose. >> i think populism is taking over the world, taking over free democracies. i think you're going to see it in the french election. i definitely think you're going to see it in the german

election. i'm worried that angela merkel will lose the chancellorship in germany. >> you also think the hot spots like the middle east will cool down. it sounds overall when you read all these surprises, economic growth will be better, donald trump will be sort of softer, populism will spread. it could be a very good year when you look at the markets, the investment. >> i have the market going up another 10%. >> is this as bullish as you've been in how many years? i mean -- >> well, you know, if you reduce taxes, if growth is 3%, not 2%, if s&p earnings are 130 and not 120 or 125, then you can see a higher market and the market is starting out that way. >> currencies, stronger dollar again. is that a fear or not? >> i think the dollar is going to -- the dollar is already at a lot of strength. i don't think it will be a whole

lot stronger against the euro. i think it will be stronger against the yen. i do think that'll be good for japan. so japan doing well is one of the surprises. >> that's a miracle. real growth in japan exceeds 2%. that's a miracle. >> let's just call it a surprise, joe, not a miracle. >> seems like one after the last 20 years. >> right. and i imply that in the surprise. it finally pulls out of its deflationary recession. >> it took trump to do it? that's unbelievable. >> the world is changing. >> you said worried about mer merkel, so you wish she wouldn't lose. >> what? >> you're expressing the possibility she might. you weren't attaching a value in your own opinion. do you wish she wouldn't lose? are you worried? you think she should stay? >> i think she should stay. >> you do. okay. >> that's an interesting point

because we're very focused on domestic positivity, growth picking up. could situations around the world derail the u.s. equity market rally, or have we learned from the brexit vote it's irrelevant, we rally regardless? >> i think if things went -- if the european union broke up, that would be negative for the u.s. but right now i don't think that's a 2017 event. i think the european union will be weakened this year by the elections as they work out. >> is it a 2018 event or '19 event? >> i don't know. i just do it a year at a time. >> when you sit down and you write these ten potential surprises, they're probably ones you feel more highly convicted about. what's the one you feel the strongest about in terms of happening and the least? >> the one i feel strongest about, i think it's going to be -- the one i feel strongest about is the first one. i think trump is going to be a more reasonable leader than people fear. almost every op-ed you read

indicates that people are terrified of his presidency. i don't think -- you know, i think trump wants to be remembered as one of the great presidents. i think his behavior is going to be consistent with reasonable, logical procedures. >> byron, you sound more bullish than i remember you sounding in a long time. if you look at 2016, where were people investing? they flooded into bonds and bond funds. in your position with multiasset strategy, what would you tell bond investors right now? it's a little off the tin, i understand, but i think -- >> no, it isn't off. one of the ten surprises is that the ten-year treasury yield is going to go up. rates are going to go up. inflation is going to go up. those are all consistent with my view of what's going to happen next year. i would tell bond investors, and i've been telling them for two

years, to get out of high-quality bonds. the only place that i'm invested -- i'm invested in mortgages, i'm invested in leveraged loans, i'm invested in high yield. there's still values there. >> byron, great to see you. thanks for coming by. >> thank you. >> byron wien. coming up, wendy's doubles down on its twitter feed. the fast food chain getting into a very public fight with a customer. the details after this short break. we're back in a couple minutes. don't go anywhere. ositat,

welcome back to "squawk box." uber is planning to light up your local road. the ride hailing giant was granted a patent for a light to go on top of cars that could signal to customers when the car is arriving. passengers could select different patterns from the app. uber is currently testing a dashboard mounted color changing light in cities like denver and nashville. this would obviously solve one of the biggest frustrations that we all have with uber. they're black cars. there's five of them at the corner. you're like, i'm melissa, are you here for me? >> and in new york, they're all toyota camrys. there's no variation in what color. >> if you don't use the uber x

or something, you know a camry is coming. during christmas week, we were trying to get away from a broadway show. they were everywhere. there were all these camrys. we're going uber? they're going, yeah, but it wasn't ours. >> so light, the pattern. not bad. and wendy's is firing back at a customer on twitter. t huggy d. >> is it huggy or thuggy? >> who knows. okay, it is. yeah. it's all capitalized. tweeted that the fast food chain had frozen food and wendy's defended its square hamburgers, saying it's only served fresh beef since its founding. i thought that's what they hang their hat on. after a few more exchanges, the twitter user said that mcdonald's had the restaurant beat with its breakfast. wendy's replied, you don't have to bring them into this because you forgot refrigerators existed, referring to the user's

repeated accusations that they couldn't store fresh beef. we can't show you the original tweets because thuggy d deleted his account after the feud. >> i love this. i applaud wendy's on this. it's not just a corporate approach. it's nice and refreshing to see them go for it altogether. i don't know if the guy that did the tweeting is in trouble, assuming he's not. >> troubling meaning banned from wendy's for life. >> we're told and we're told not to respond to negative ones. it's a refreshing approach. go for it. say what you want. >> in this case, they were in the right. >> usually they say, oh, we're sorry you feel like this, we're going to send you a free burger. >> you drive? >> i do. i miss driving. >> i realize i'll never see -- you know, it's just better not -- why waste your time engaging a lot of the time? >> sure. that's what i do myself. >> you do get turned around.

>> if you were on the street and somebody yelled something nasty at you, would you yell back? you probably would not. same rules apply to twitter, i think. >> but i try not to. >> why? >> it doesn't take much it acce. >> exactly. >> then you don't know what is going to happen. that's the only time in your life if you're on the highway, the guy -- the guy could be an ex-con, you have no idea. gang member. >> look at that. >> how did they get that? that was mugging, mugging, mugging -- okay. that was a 1,200 horsepower car they were letting me drive and there was no place to go over 30 miles an hour. >> but you don't get angry when you drive. anyway, mattel is teaming up with microsoft and qualcomm to launch very own version of an amazon echo. for instance, the aristotle "usa today"s -- uses internet of

things. mattel announced device at the consumer electronic show cost $299. i wouldn't know what's needed in this area. >> me neither. >> no. we didn't get to do the jack in the box. calls are out. >> yes. i hope that they will accept the invitation to come onto "squawk box." i'm eager to try their taco. >> and hopefully you'll be in. >> or maybe you'll invite me in. like a cameo on tasty taco. >> they're good. but you got -- they're not your usual taco. you might need to -- >> okay. american cheese is definite differentiator. >> both vile and amazing. >> okay. up next, the only jim cramer will join us live from the new york stock exchange. stay tuned, you're watching "squawk box" on cnbc.

time for kensho stats of the day.

let's get down to the new york stock exchange. jim cramer joins us now. jim, you were up -- were you on wilf's show this morning? >> you bet.

look, it's a great anniversary. i think it's changed the way i look at a lot of things in the morning because they put a lot of the issues that are the handoff from whether it be asia to europe to the united states, they put it in context whether it be currency, whether it be the actual data out of europe. and it makes me feel, by the way, more confident about our market because so many things are going right overseas. we don't talk about enough other than on that show. it's terrific. >> yeah. if things start going right over there in addition to some of this other stuff happens, it really does make you wonder what we're looking at. we had one saying the sums of the total is underestimate and not overestimate, that's not conventional, is it? >> no, couldn't agree more. what i think should happen is the dollar should exactly kind of level off if not even -- you know, see a better comparison versus the euro. if all of these countries in europe are doing so well, they're going to have to do some -- they're going to have to make some changes.

they keep italian interest rates as low as they are. it's crazy. and i think byron's piece was very bullish. most bullish piece i've heard. point-blank. >> i remember at least three -- he's been coming on a lot. he's iconic. we call him byronasaurus rex, he doesn't like that. he thinks it makes him sound like a dinosaur. >> i'm glad you had him on. i think he's great. >> jim, thank you for watching. we'll see you later today. don't forget marc lasry at 12:30 eastern. stay tuned. "squawk box" will return after the break.

welcome back. guest host this morning richard bernstein. ceo of richard bernstein advisors. richard, you say you want to play low quality cyclicality. so very high beaten names. >> yes. i think people -- there's always this notion if you like something you like quality companies, that's kind of a chicken's way of investing. if you like something, you want the companys that have great financial leverage and operating leverage, which are generally

lower quality companies. so if you believe in a lot of the talk this morning was all about reflation, if you believe the reflation story, you don't buy big cap cyclical names. you buy small cap cyclicals. they're the ones that will have all the operating leverage. >> richard, great stuff. thank you for joining us this morning. >> thank you for having me. >> they'll bring you up-to-date on "squawk on the street" and more @realdonaldtrump is sending out more tweets. stay tuned, "squawk on the street" is next. and good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. waking up to a mildly supportive premarket. a lot on our plate today. fed minutes, auto sales, vice president-elect pence to capitol hill later this morning. euro cpi in slightly ahead of consensus up 1.1 year on year, oil is relatively steady, mort