♪ live from new york where business never sleeps, this is "squawk box." ♪ good morning. welcome to "squawk box" on cnbc. we are live from the nasdaq particular k market site in times square. i we want to congratulate andrew and his wife pilar on the birth of sydney. 7 pounds, 9 ounces. andrew says he will be back with us soon. spend some time with the baby. look how cute. >> coming back tomorrow, i think. theoretically. >> what? >> huh? don't you think? >> isn't there paternity leave here? >> i -- you know, i -- >> don't judge. >> no.

>> i never do things myself. i negotiated six months off for him. >> you did? >> i did. >> he is taking not -- >> you're such a good person, joe. >> he's not going to use it. 7.9 is nice. >> yes. >> sydney is a beautiful name. i think for a little girl. >> yes. >> i don't think it's a great name anymore -- >> there's a but coming. >> i don't like it -- i wouldn't name a little boy sydney anymore. sidney bloomenthal maybe? >> that might have done it for me right there. sid vicious? but sydney for a girl, so -- >> sid finch, remember? >> no. >> we'll talk about that later. >> a trader down -- >> no, a "sports illustrated" april fools issue. i know it's early -- >> god, we have -- >> hello. >> it's like being home for me.

>> that's right. is that your -- >> no i'm where courtney is typically. courtney is on your left today, i'm on your right. >> that's okay with you? >> i'm in your house today, joe. this is a thrill for me. >> this is more your house. >> no. no. no. >> you're sharing houses. >> but i feel like i need to defer to him. >> stop. there's sarcasm -- dripping with sarcasm. >> no. >> joe is a sincere individual. >> exactly. you might not know the sarcasm. people at home a lot of times don't. another experience with that recently. let's check today on the markets. the u.s. equity futures at this hour, down 16 or so. down 2.4 on the s&p. and the nasdaq is down about 5. if we look at what was happening yoefsh night in asia. not really going to get a cue for where we should go this morning. european equities, most interesting what happened in the

u.s. yesterday. solid session. got about half of what we needed. not quite. i think we needed 180 yesterday. we need 60. 60 to get to -- >> don't say it. >> i'm not afraid to say it. >> no. a watched pot never boiled. >> of course it does. come on mcc. >> the cooler thing is the way you can put a -- you can't put a frog in boiling water. if you put it in cold water and slowly turn it up, it has no idea and you get frog legs. >> what's a metaphor -- >> no, i just like the expression. >> other movers this morning. energy prices right now. wti higher by 6 cents. $53.32 a barrel if you would like your wti delivered in

february. the dollar this morning taking a breather. it's stronger against -- flat against the euro. the pound will cost you 1.22. dollar is stronger against the pound. that may be why we see the ftse -- wilfred was talking about a new high. watching the chinese currency. spot yuan closing up nearly 1% against the dollar today helped by gains in the offshore yuan. yuan is limited onshore in china to a 2% ban on either side of the reference rate. that's why we look at the offshore rate, moves more freely. counts for the difference in exchange rates. so, it's strengthened in the offshore. that's interesting. there was talk it would get to 7 or 8. this is what's going on with the yield curve. 2.44% when it comes to the 10%. 30-year at 3.05. on the economic agenda, the

december adp employment report is out at 8: 30. friday is the big jobs number. i feel like we just went through this. >> we have a super bowl every months on cnbc. forecast calls for an increase of 160,000. at 8:30 a.m., jobless claims, followed by the december ism services index at 10:00 a.m. monsanto, walgreens, boots alliance, constellation brands report earnings today. steve liesman sits down with san francisco fed president john williams -- ♪ >> it's amazing he does both. >> i was waiting for music. >> it's playing. you don't hear it? >> i also don't understand, in an exclusive interview this afternoon on "power lunch" -- i don't understand the new camera

stuff. why those two are right next to each other now. is that new this morning? that's new this morning, right? >> yes. >> why? why did we change the angles? >> for the background. >> so you put them right next to each other. so you could read mine. i could read yours, then i could be looking this way -- is this monitor new, too? >> are you scorsese? >> yes. yes. why are those -- i started -- >> we have directors -- >> mac, did i okay -- all right. >> all right. >> you okay? >> no, i'm not. >> now you have a big line between your head. that's why they moved it. >> it's called a part. >> no. >> oh, that line. >> look how busy it is behind you. >> i want my american flag. where is my american flag? do you see that? >> so they got to slide the camera the other way. the way it was before. >> they had it all nicely blocked this morning when we walked in woke up in such a good mood. >> every day is a surprise. among the other top stories, apple removed the "new york

times" -- can't everyone do this -- from the app stores in china after a request from chinese authorities. apple said we've been informed that the app is in violation of local regulations. there must be some stipulation about fake news. as a result, the app must be taken down off of the china app store. when this situation changes the app store will offer the "new york times" app for download in china. the "new york times" calling the removal deeply regretful saying it has asked apple to reconsider. the "new york times" website has been blocked in the mainland since 2012 . >> since they published some stories about the leadership. the labor department is taking on google in an administrative lawsuit. the agency claims that google withheld compensation data and other information requested by the office of federal contract compliance programs. the labor department wants google to be treated as a federal contractor and comply

with the order or cancel government contracts and halt future contracts. google said it has provided hundreds of thousands of records over the past year. amazon and forever 21 reportedly weighing offers to acquire american apparel. both firms are in talk with financial advisers about submitting offers ahead of a deadline on friday. any successful offer would have to top a $66 million bid made by gilden active wear. american apparel manufacturers ets clothes in the united states, but a buyer could move the operations overseas. what would do you then? this is a tactic donald trump has been trying to stop. retail in a wreck after kohl's and macy's reported after the bell. courtney reagan has the details about what went horribly wrong.

>> at least for these two. despite a strong black friday weekend, holiday was rough for kohl's and macy's. both retailers saw comps fall 2.1% for november and december. both lowered full-year earnings guidance as a result which caused shares to fall sharply after hours and before the bell today, dragging down the whole department store sector. macy's now expects its 2017 comp sales to be consistent with that negative sales trend. kohl's says the gross margin will be lower than planned in part due to promotional levels. kevin manzeil said sales were volatile throughout the season. strong sales on black friday and the week before christmas and offset from softness in early november and december. macy's also announced a restructuring, eliminating 7% of its work force. 6200 are corporate, 3900 store

associates. 6 stores will be closing this year. i spoke to macy's ceo terry lundgren who said he is disappointed with holiday sales saying we thought a strong thanksgiving weekend, with that a december would be stronger than it ultimately was. momentum didn't materialize for the entire holiday period. regarding the restructuring of real estate updates, lundgren said we don't stand by and do nothing. when we have challenging results we take action. that's good, that's something the street often applauds, the concern about what happened holiday and that sales trend is expected going forward and that is concerning. >> when i see them closing this number of stores, is this macy's throwing in the towel saying we have to be a smaller business unless they can offset it in the online stream? >> i think they're saying we need to be a smaller business in store. i think terry admitted they have too many stores. some stores are profitable, by if these looking three, five

years down the road, they may not be profitable. let's get ahead of the game, close now before we get in trouble. it's not always that easy to close stores, especially with lease agreements, they don't outright own the stores. this is why they had the target of several years to close 100 stores, and said now 68 will be closing this year. >> thank you. >> thanks. for more on the markets, let's bring in seth masters, chief investment at a.b. bernstein, and chris rupke from mufg union bank. our guest host for the her, and adami, directcnbc contributor. seth, i've come up with three different narratives number one, the market moved up a lot on the promise of new policies from trump, maybe too far. yesterday i heard a different take. the market has moved up a

certain amount but the sum total of all of these pro-growth things that we have not considered for eight years, that the market is underestimating how positive it could be taken in total with regulation, tax reform. so it's not only warranted but has a ways to go. the third is the economy was already in an upswing, and not of this advance has much to do with the leak shun and that it was going to happen anywhere. of those three scenarios, what is most accurate? >> i think certainly the last one is definitely accurate. there were lots of data points that were beginning to strengthen in september and october. a lot of earnings coming through now relate to that period. i think the market is also estimating there is a fair amount of additional stimulus that is likely to occur as a result of republican programs being discussed no. mostly tax cuts for

corporations, possibly infrastructure spending, maybe some beneficial impact of deregulation. another interesting question is are there going to be headwinds from policies that might actually be contractionary. >> the people we have on -- i know what they said before the election and after. almost without exception, if they say this was going to happen any way, they were saying that the market was going to sell off if there was a trump election. they were pro hillary, the market would be helped. now that it's happened and we're closing in on 20,000, it's like th this was -- this still isn't because of trump. the obama economy is doing so well, it was already in the cards. is that why you were here? what did you think before the election? >> we had a lot of points of view internally. interestingly enough the general assumption was like most people, that what the polls were saying

was going to happen. >> right. >> that trump would not win. >> go on. >> a lot of the big data research that we are starting to experiment with was looking at social media was indicating that there was a chance, strong chance. >> what did you think, if the surprise did happen what did you think would happen with the market? go down 5,000 points? >> we expected an initial reaction which could be down, and did happen. but it only lasted a few hours. in the overnight markets, the markets traded sharply lower. >> we know. anyone who reacted to that is ruing the day. >> the thing is how quickly the market has said let's look beyond the sentiment and look at the possible consequences of the policies being talked about. we saw the same thing in europe, after the italian election, the selloff lasted a few minutes after the italian election because they realized what policy implications might this have in the medium term and

markets bounced back there too. >> chris? >> yes. i'm responding to the same thing. >> you don't have to. i think it's the trump effect. it's not the economy. the economy is not doing -- >> i'll give you novocaine next time i have to pull some of your teeth. >> there's not a huge upswing in growth at the end of the year that would explain this. i think it's all the anticipation of the policies trump might bring to bear. the only thing that concerns me and the fed has not upped estimates for growth. he wants to get gdp growth to 3%, 4%. the federal market committee is 2% this year, 2% next year. no one buys it yet. >> yet they're very hawkish. more hawkish than they've been. i don't understand that. >> they say they may go three times this year rate hikes, not two. is that hawkish? >> the fed minutes suggest trump

tax cuts would lead to higher rates. people are waking up to reading that -- >> there wasn't that much in the minutes to tip you off in that direction. some members thought the economy might pick up and that we might get inflation. it takes a lot to get inflation going. even with the economy at full employment, it won't set off a huge fire of inflation. inflation from the '80s took a decade to get going. >> i think what the fed comments and minutes do say is there is a wider range of possible outcomes. a lot more uncertainty about what policies will be enacted and what might happen afterwards. so there will be a bunch of surprises. a year ago, if we were sitting on this news set a year ago today we were seeing the markets melt down, everybody was

pessimistic. and 2016 ended up being a pretty strong year in the market. in 2017, i think we'll see a lot of surprises, too, they'll probably cut both ways. some good. some bad. i think we'll see a lot of volatility over the course of the year. >> there's no doubt that animal spirits have been awakened. you can look at small business, consumers, just the optimistic measures and other places. you have to be in denial. i think chris grudgingly accepted that, yeah, all of a sudden we didn't see a quantum leap in growth to account for a 2500 point increase it has to be election. >> the only thing that worries me, the metric for success for trump is gdp growth has to be above 3%. >> we'll see. >> companies have to invest. i think they made most of the investment for the cycle. we're at full employment.

>> that's also -- you know. >> i know, 5% versus 20%. >> no. 95 million people we don't count because they've given up. >> they're not coming back. >> we'll see. >> you saw the latest, there's a piece out from zero head. 94% part-time. people traded one good job for three crappy jobs. >> that's a different issue. that's not economics. we're at full employment. >> joe -- >> you can hit your head against the wall for eight years. when you stop, it feels so good that you're not in pain anymore. and that's good for 2500 points. if something good does actually happen, we may be off to the races. we may do 3%. in the reagan years, i know everything is different this time, which is a dangerous expression. >> demographics. >> but the worst year out of eight was 3.4. >> yeah. >> the worst. the worst was 3.4.

>> the baby boomers are retiring. they're saving. >> no we're not. speak for yourself. >> certain economists. >> speak for yourself. >> not everyone is. >> right. >> many, many are. >> two words, morley safir. poor guy. he a weekend of retirement. that's not so bad in you're 98. >> good run. >> john mclaughlin. >> good run. >> see what happened to him? where was he on sunday? we found out monday -- any way -- >> the message there, don't retire? >> or would you rather know when you're going to die or where? >> where. >> just don't go there. >> what if you die in bed? you never go to sleep again? >> i mean the city. >> the city. >> then you just don't go there. >> any way -- duke. >> thank you, gentlemen. >> duke of earl. >> how much thought have you given to your manner of dying?

>> are you -- you have hit the big 6-0 yet? >> i have. >> you don't once in a while -- >> john harwood is here. >> go ahead. >> i almost took a read from her. >> i don't think about that. >> you don't? >> no. >> used to be that you had at least 35 years left. now what do you peg it at now? are you going to live to 180? >> i have no idea. >> if he's 60, he could live another 35 years. >> you could. >> are you thinking about retiring? >> no. >> the senate armed services committee holding a hearing today on foreign cyberthreats to the u.s. let's bring in john harwood to talk about this. >> the youthful john harwood. >> exactly. look. this is where the conflict between president-elect trump and the intelligence community is going to get real and consequential within the republican party. john mccain who is a hawk on

russia is bringing in the leaders of the intelligence community, outlining the conclusions they reached about democratic accounts, john podesta's accounts during the election. those same people will give a briefing to president obama, and then to president-elect tomorrow. trump rejected the conclusions so far. people like john mccain, like lindsey graham, mitch mcconnell are not likely to back down when they get this data and how donald trump reacts to the data and how he reacts in terms of interacting with the intelligence community is a big unknown. there is talk that he will reorganize the intelligence community, get rid of the office of dni or strip it down. that's one appointment he has not made yet. director of national

intelligence a position that came up after 9/11. there are reports that the president-elect wants to reduce staffing at the central intelligence agency, get more people out in the field and the belief that it's become more politici politicized. that's one of the two issues on the docket today. the other issue which continues to percolate and our colleagues were talking a few minutes ago about policy insert uncertaintys obamacare. mike pence was on capitol hill yesterday saying it was full feed ahead on repealing and replacing. take a listen. >> we're working very closely with the senate leadership on a budget resolution that will begin the process of repealing obamacare and also create a framework for replacement going forward. >> now, the challenge is that president-elect trump was tweeting yesterday that republicans have to be careful

and not remove the onus of blame from democrats to republicans, not sure exactly what he meant by saying be careful. but it was partially read as a signal slow down on this repeal and replace process, if there's mess in the insurance market, that could bounce back on republicans. >> lead editorial in the "journal," you can deny and deny, but this is not always going to be obamacare. it will be trumpcare. it will be now we're in a mess, you're in charge, what do you do? for you, john, you must have thought that is pretty intuitive and smart of trump to put that out. >> for sure. >> look what they did with the ethics. that seems smart to these guys, too. >> for sure. here's the problem. if you repeal it, there's a risk the insurance markets and

exchanges immediately go into crisis. people bail. if that happens, you don't have your replacement plan ready and you want to do repeal and delay and put it off, then you have to stabilize those markets. you have to stabilize those markets with money and support. then as the "journal" pointed out, obamacare becomes trumpcare. we don't know how that will go. >> john harwood, thank you. >> did you -- did we talk about duke? we didn't talk about duke. >> we won by about 50 last night. >> i saw that. that was a snap back from the last outing. >> we've been struggling. you can see coach k. having back surgery. was gracen allen -- >> they put him back in. one-game suspension. he had a pretty good game. i was surprised. i thought he would be out longer. >> butler. did you see butler? >> no. >> beat villanova. >> really?

>> they did. these are colleges. basketball. >> i saw the video. >> what's your team. >> georgetown '86 guy. lahoya all the way. >> you had a great game on saturday. ha-ha. musketeers. >> georgia toetown will be just. they signed the biggest recruited in high school. the football games were horrible over the weekend. were you there for the perfect game against villanova?

times square looks great. could mark zuckerberg be looking for a new gig in government? speculation mounting about the facebook's ceo's interest in politics. his personal goal this year is to tour the u.s. and meet people in every state. some say it sounds like a political campaign. last year zuckerberg asked facebook's board to pass proposal to allow him to maintain voting control of the company if he serves in public office for up to two years, and he also says he's no longer an

atheist and that religion is important. >> yesterday on the huffington post i saw that they can't identify a single member of congress that is an atheist. they are totally -- >> upset about that? >> upset? are you kidding me? not able to find a kindred spirit. >> there are no atheists in foxholes. effectively it's become a giant fox hole now. maybe that's why you can't find an atheist. >> for zuckerberg, did we go from cambridge to northern california? was that the sum total of his experience with the united states? he should go to -- >> absolutely. >> to a flyover state. >> 50. >> that's a good idea. >> why not. >> he was conspicuously absent from the tech ceos that met with the president-elect. if he does decide to get into

politics, i would assume it would not be as a republican. >> i'm betting he's a libertarian. all those people out in silicon valley -- >> i don't think so it started with liber -- but not -- >> wouldn't it be the perfect time for him to do it? he has done everything he can at facebook. still a young man. this, to me, is the window of opportunity for him. >> why insist on control then? if he needs to walk away to do something else, how do you control the company? if you want to be in government, huffington post will get upset about conflicts of interest. >> if you're 30, you're not a liberal -- >> if you're young and not a liberal, you have no idea. if you're old, you're not a conservative, you have no brain. >> where is he? he's smart. >> i think it's when you get your first paycheck. what? they took how many? >> that's pretty self -- as a conservative, you also think -- you can have that viewpoint but also think that eventually you're trying to lift -- trying to grow the pie, hopefully it

gets split up more -- >> if the pie is bigger, there's more for everybody. >> but no reason to shrink the pie and divide it more equally. >> everybody ends up with less. >> this is great. i'm learning early in the morning. don't roll your eyes at me. >> you guys will be talking about resistance and support levels on some foreign stock -- >> i'm telling you right now, with jo without -- you have never watched our shows. >> are you jonesing because we have not said the vix? >> i'm not that guy. vix vix vix. >> it's trading at a forward multiple of -- >> stop. go to break. the music is playing. >> it is? >> i hear it in my ear. >> you still don't hear it? >> no. >> the voice in his head is not working. coming up a check on the charts. we'll talk about a technician about where she sees the s&p index heading this year. heading to break, a look at yesterday's s&p 500 winners and losers. . tgein

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♪ welcome back to "squawk box" on cnbc. we're live from the nasdaq market site in names square the you can see becky on that screen. she'll be back next week. u.s. equity futures suggesting

we'll have a negative open. dow opening lower by 3 points. the nasdaq by 9. is your mariah carey moment still going on, joe? >> leave joe alone. come on. >> he's just established that he's concerned about his -- >> don't transfer your divaness to me. please. if anyone is mariah carey -- go ahead. >> he hasn't been able to hear all morning. >> there's nothing happening now. >> times square. the parallels are incredible. >> we are in times square. >> this is for adami. >> kate tight stockton is here, and our guest host is guy adami who you can always see on fm "f

money." >> you are bullish in this market. >> i don't see how you can't be bullish. we've seen a lot of breakouts. all of the things stack up nicely for q1. however we do see signs of a pull back in here. an overbought condition on a short-term basis that we need to work off a bit. >> is the overbought condition i see here in the notes that the percentage of stocks in the s&p 500 that are above 50-day moving averages are very high. that's a comparison to late 1981 to ronald reagan. >> right. the percentage of stocks above the 50-day moving average is close to overbought territory than oversold territory certainly. there's room for that breath measure to contract. that would be associated with the pull back. >> we've been -- this is not, right now, a -- there's two kinds of tv, episodic tv and then stand-alone tv.

like, i think, what was that, dick wolf thing, "law and order" that was stand-alone. she's been on for the past -- when did you first come on? we've been following your calls for about a year. >> about that. >> we can go back and -- >> has she been right? >> she has been right. >> good. >> that's why i want to do it. so do you remember where we were? we were stuck in the muck for a while. you were worried if we didn't get through a certain level, and we finally did. you had some price objectives for the s&p. >> it's still that 2400. that's been my target since the summer months. >> were you surprised that a trump -- you don't care as a technician. but it was a trump election. >> i think this past year will be remembered for those massive inflection points. the trump low, the brexit low, february low. those were all really major -- >> the opposite of what was supposed to happen for brexit

and trump. >> the market internal measures showed that including sentiment, breath and leadership. all these things lined up at such extremes. that's what we'll look for. >> does the hair on your neck -- >> no. last year, 2016, in the s&p 500 was an outside year to the upside. only three in history since we've been looking at these things. >> who else would know that but a "fast money" guy. >> josh brown knows that as well. we can get into it. i don't want to make peoples eyes glaze over. >> like me. >> you see? i come here and getting a investigation. don't die on me there, joe. >> this has been a week. >> the other thing technicians will say, the market doesn't give you a long time to buy the low or sell the high. we've been at this level for quite some time. her 2400, we could talk about it in terms of fundamentals, but in terms of technicals, to me it makes sense. >> i don't want to pour cold

water on your excitement, by she's had this since the summer. it didn't matter who would win the election in her view. >> that's the way technicians work. >> it's about the levels, about momentum, trend following, to me the supply/demand relationship does support that. i reserve the right to change my mind, of course. i never cite a year-end target because the market is dynamic. but as it stands, it's right to be bullish, to look for opportunities, exposure, and get those sector calls right. in 2016 we had massive dispersion in the sector front. we need to prepare for that. in the early parts of this year, already seeing some rotation into healthcare. that's kind of interesting. a bit more defensive in its properties at times. healthcare does have a big footprint. >> think this through --

>> tell me. >> fundamentals are real time. technicals are looking at a market that's four casting the future. if the market knew what the election outcome was going to be nine months s is in advance, s her 2400 because the market knew trump would win. you understand? >> okay. >> it was that it was -- >> discounting in the wind. >> thank you. >> you're welcome. coming up, former senate majority leader george mitchell will join us. he will talk about russian hacking. we'll get specific about what they supposedly hacked, because at this point it was the whole election according to the left. the future of u.s. intelligence agencies under president trump. and then the retail wreck. the department stores getting slammed. dana telsey will guide us through the biggest losers. and later, senator rob portman will join us to talk about regulation, taxes, and obamacare and who will own it if it's

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time for the executive edge. a whole new crowd of

billionaires -- that sounds weird -- moving to d.c. there's four of them in president-elect trump's cabinet alone. and it could create a mini boom in d.c. in the area of mega mansions. robert frank has more on the big money migration. we were talking about this. we think that the collective effect of the last eight years, the bureaucratic explosion was better overall. they're rich down there. it's the wealthiest -- >> everybody is driving bmws. >> four guys can't do it. >> for the past three years, the richest counties and zip codes, three of the top five are in the d.c. area. it wasn't -- in billionaire terms, four is a crowd, i guess. >> i guess so. price inflation on four big estates. >> no, check it out. the richest presidential cabinet in history, they all need homes in d.c. that created new

opportunity for local luxury brokers. wilbur ross bought this place in the washington heights, 10,000 square foot mansion -- sorry, massachusetts heights, listed for 12 million. has a movie theater, staff quarters, seven bedrooms. directly across the street from the home of outgoing billionaire commerce secretary, penny pritzker. ivanka trump and her husband are planning to move into this home, it sold before christmas for 5.5 million. it's unclear if they are the buyers or will rent it, but it's two blocks from the home that the obamas will rent after january. there are a sudden surge of showings in recent days from team trump. thnk >> this one has come to us with a particularly not only affluent group of cabinet members and administration officials, but

also many who have not served in the government before. >> let's do mansion shopping. this home in the plains, in virginia, has 12,000 square foot. main house, guesthouses, pool, spa, tennis court. list price is 9.7 million. in the heart of georgetown, this 5700 square foot home has a front door that weighs 1,000 pounds. it's made of smart glass and can go from clear to translucent with the touch of a button. it has home theater, glass elevator and glass staircase. joe, to your point, last year, typical year in d.c., they have about a dozen sales over $5 million. typical year. in the past month, they've had four alone to trump people. >> that's interesting. >> at that rate, this is just going to -- it's just such a small luxury market when we think of luxury as 5 million

plus. in new york we have hundreds of those sales every quarter. d.c. is not that kind of market. this kind of wealth -- and these guys have never lived or been in d.c. before. they're all new to government. so that's what makes this different. >> four billionaires, manhattan -- >> wouldn't be noticed. >> being you go to d.c. -- wapner is a big redskin fan. tell me about the house with the elevator. >> glass elevator. the front door is glass, you press a button. >> he only buys houses with elevators. that one, is it available? >> that's available. just under 10 million. >> he loves the redskins. hates the refs, loves the redskins. >> coming up, looking for bright spots in the struggling healthcare sector, we have portfolio picks in pharma that could make you money under president trump. don't move. s per cing 00

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a drop in fda drug approvals and continued pricing pressures rekindling fears about the pharma industry. i always come back to what the industry says, david.

that is you got the, you know, it's the cheapest way to treat chronic or even acute diseases around, so we really need to cherish this -- what is a bastion of american ingenuity and be careful with what we do with it. are there risks to that narrative at this point? >> it's absolutely true, and also it's true that drugs cost too much for most people. people are paying out of pocket, so it's a really difficult thing to say to a consumer like, hey, no, drugs should be more expensive because that's how we get new innovation. this new president coming in, he's going to shake things up a bit. >> but he does -- i still do see it in sort of a political prism, the way that people view drug prices. the people around him, right, that are mostly republicans. some people question his conservative. but they're going to be telling him that innovation comes from

the free movement of capital in and out of these areas. the they're going to convince him maybe you can't import price controlled drugs, can't do these knee-jerk reactions that the left would like to do that would be counterproductive. won't people talk sense into him? >> it's going to be a balancing act. on reimportation, that's never going to happen. every fda official says we don't have the people to staff checking those drugs. that's dead on arrival. >> how about if he deregulates the fda and makes it more private sector oriented? wouldn't that be helpful, not hurtful? >> there's going to be a big shake-up at the fda. you'll have a new head of the fda. i think pushing faster approvals, that will probably happen too. there will be increased funding. yes, you'll see a little bit more industry friendly moves in that regard. but you can also see some other things like i think pricing -- yes, republican house, republican presidency. that's usually very good for the drug industry. >> but in this case it's a wild card. we're waiting for the tweet.

there could be a tweet today. you never know. >> he's already said he's going to take care of drug pricing. how is he going to do it? that's the big question mark. >> he's talked about in the past allowing the government to negotiate on prices, which they're thus far prohibited on doing. >> it seems like a common sense approach. if we're paying for drugs, then there should be some negotiation of price. but then you get back to the idea of every time that's been proposed, people come out and say, well, what are you going to do to r&d? all the sudden we're making less money. you're going to have fewer drugs. >> because every other country in the world basically hoses americans, right. they don't pay r&d. >> there's a giant cost shifting going on. but i think people don't realize the majority of americans, when they're asked should drug prices be controlled, we'll say yes. if you ask them, should they be controlled and you lose innovation, you lose new drugs, they say absolutely not. >> so at this point, did bio tech rebound from the hillary

scare? is it still cheaper than it was a year ago? >> still cheaper than it was a year ago. you're seeing pharma start to act really well going into the new year. >> what are your favorites in fa

pharma? >> you have some smaller cap names. >> they got them up. you can see them on the screen. >> flexion i'd take a look at. >> who makes fillers for wrinkles? >> allergan. >> don't pretend you didn't know that. you have their bottles all over your desk. >> i don't have a desk. i don't know whose you're looking at. coming up, the retail department stores getting crushed this morning. a full rundown on the carnage. "squawk box" will be right back. ♪ nie.u. jusnt l,

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live from the beating heart of business, new york city, this is "squawk box." fancy. is that my -- all right. i see it. that is nice. see the red and white? >> i can see why you insisted on that. >> and i have a blue tie on. >> you going to do that every day? >> i always wear a blue shirt.

i don't always wear blue -- wilf has the white. good morning, wilf. that's kind of cool looking. almost formalwear. you think this is a big deal coming in here. >> i do. of course. >> you go with formal. good morning. welcome back. >> why is green formal? >> no, just -- >> oh, the white shirt. >> the shape of the collar. >> exactly. with him, formal means white. at the correspondents' dinner. >> i heard. white tie. all the girls were talking. >> six months ago. >> still talking. >> welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with michelle caruso-cabrera and wilfred frost. a pretty solid session yesterday got the dow up to 19,942. that's 57 and change to hit that big number. some day. we'll see.

here's the ten-year note. 21 on the dow. we'll see what happens. a lot of data coming out today that could influence things. the yield has been moderating. it was 2.6, then it was in the mid 2.5s. now 2.44. kind of interesting. nothing goes straight up or straight down. 2.44 is one of the lower numbers that we've seen in a while. it's sort of an intermediate low. now check out oil, which is 53.80. that's up today. gold has been in a little mini rally. i don't know if we have a chart or just the board itself. there it is. it's gone from maybe 1140, gained $30 or $40 to 1,172 now. let's check out what's happening overseas. joe, forget the dow, the ftse 100 has already been having record closes. seven days in a row of gains. >> as predicted.

if brexit were to pass. >> exactly. up some 13.5%. >> scynical. >> i realize. >> the end of the world was greatly exaggerated. >> in dollar terms, it's pretty much flat since brexit. asia overnight was pretty strong. services pmi out of australia, japan, china, all of which beat japan, ending down because the nikkei is strong today. given the level of the nikkei today, just a 0.4% decline, not badded a all. here's what's making headlines. the december adp report will come out at 8:15 eastern time. forecasts are calling for an increase of 168,000. 8:38, weekly jobless claims. amazon and forever 21 are reportedly weighing offers to acquire the bankrupt company american apparel. both firms are in talks with

financial advisers about submitting offers ahead of a friday deadline. any successful offer would have to top a bid of $66 million made by a canadian apparel maker. so could you call it american apparel if they get the company? sony sold 6.2 million units of its playstation console during the holiday season. the figure calculated between november 20th and january 1st marked an almost 9% rise from the 5.7 million units it sold in roughly the same period a year ago. playstation 4 software sales during the 2016 holiday period reached more than 54 million copies globally. and we're also watching bitcoin. andrew is going to wish he was here for this. hitting an all-time high this week and rivaling gold as a safe haven play. climbed 122% in 2016.

china and india both have been big buyers as part of a global -- broader global landscape that's pushed bitcoin's acceptance further along. chinese investors have bought bitcoin as the yuan has lost its value and as policymakers have sought to strengthen capital controls to make it more difficult to take funds out of the country. another thing where the demise was greatly exaggerated. when it sold off from that first peak, but then smart guys are behind it. i don't understand. >> there's something about the underlying software matrix that makes it extremely important for the financial world as opposed to the bitcoin itself. the encryption is the big deal. >> i know there's definitely emerging markets that let that rally up the last year. the price now close to gold.

>> both of those prices closes to what a normal person would pay for a nice suit. >> not wilfred. >> are you saying my suits are cheap? >> no. no way. >> no way it's covering one of your tom fords. >> well, i quit buying them in new york recently. so there you go. moving on, retail stocks getting slammed. shares of macy's and kohl's tumbling, reporting disappointing holiday sales numbers. the company expects a lower full-year diluted earnings. macy's also announced store closings and job cuts. meanwhile, kohl's slashing its full-year guidance to between $3.60 and $3.65 a share, well below previous estimates after same-store sales in

november and december declined by more than 2%. the ceos identified microtrends in retail that could weigh. we'll have more on retail in a couple minutes with dana telsey. big share price declines. >> this is eight seconds old. probably nine seconds now. >> tell us. >> donald j. trump. it's time for republicans and democrats to get together and come up with a health care plan that really works, much less expensive and far better. i think that's the first -- is that the first one of the -- it's the first one of the day and it's about -- oh, there was one actually six minutes ago that i don't think we mentioned. the democrats led by -- i mean, this is going to be every day. this is unbelievable. the democrats, led by head clown chuck schumer, know how bad obamacare is and a what a mess they're in.

instead of working to fix it, they do the typical political thing and blame. the fact is obamacare was alive from the beginning. keep your doctor, keep your plan. it is time for republicans and democrats to get together and come up with a health care plan that really works. yesterday it was interesting because while mike pence was on one side saying definite repeal, lining up the ducks, getting his ducks in a row on capitol hill, and the president -- when is the last time he talked to anyone over there? it was like when obamacare was being -- i think that might have been the last time. not really. so he was there too. then trump came out and said be careful what you wish for here because you're going to own it. so this is going to be very interesting. we got 16 days now. 15 days. then we'll see what happens. this obamacare stuff is really going to be interesting.

>> it's usually around this time, isn't it. top of the 7:00 a.m. hour. >> i'm starting to become a blee believer in twitter instead of just the trolls. there is a useful purpose to this. >> we have a guest coming up as well to discuss the risks around it. so easy to hack compared to things that have already been hacked that are supposedly much harder to be hacked. >> i can't believe they can't monetize this thing better. you have the president-elect using it as his platform every day, and yet the stock can't get out of bed. it's astounding to me. >> it's because it's a news service, not a social media platform. social media you can monetize, news you can't. >> lying ted. little marco. head clown chuck schumer. they were friends. >> that's what i thought. they had the nice meeting. >> schumer said yesterday, is there any supreme court nominee you're not going to block? he said no. there's no one we will not try to block. they're going to try and stay at

eight forever, apparently. >> all right. speaking of washington politics, let's get to ayman javers. a very busy day on capitol hill. ayman joins us from washington. this is where russia is going to get discussed. >> that's right, michelle. this sets up an absolutely high stakes couple of days for the united states intelligence and foreign policy, particularly with this specter of russian hacking hanging over washington over the past several days. take a look at the witness list. you'll see just who's going to be on capitol hill today testifying. starting with the director of national intelligence, james clapper. you've also gone marcel lettre ii, he's the undersecretary for defense. and admiral mike rogers, director of the u.s. national security agency. that is a big series of witnesses. they'll be testifying before john mccain's committee on capitol hill. lindsay graham, a significant

russia skeptic, is also on that committee. we'll wait to see what they have to say later this morning about russian hacking. but we do know over the next couple of days we're going to learn more about what u.s. intelligence knows about all of this because we expect that u.s. intelligence will have completed their report on russian hacking and send it to president barack obama today. we expect the president-elect donald trump will be briefed on this tomorrow. all of this comes as the president-elect -- there's a story in "the wall street journal" this morning saying he's planning to revamp the intelligence structure of the united states, starting with the director of national intelligence office, but also scaling back jobs at cia headquarters in langley and pushing more agents out into the field. an enormous new plan coming out of the president-elect's office. let me give you one tweet, which gives you a sense of where the cia's mind might be. this is from george little yesterday in reaction to some of donald trump's comments about julian assange and the russias.

george little, the former cia spokesman, said, let's stare this reality square in the face. the president-elect is pro-toou pin and believes julian assange over the cia. on january 20th, we will be less safe. guys, that probably gives you a sense of what the reaction is to some of donald trump's plans and comments about russia and julian assange inside the cia. george little doesn't work there anymore, but he has a good sense of what the feeling is among active duty agents. i think what you're looking at here is a real schism, a dramatic schism between the intelligence community of the united states and the incoming president-elect of the united states. that's going to be fascinating to watch unfold over the next couple days. >> when there's a new guy, eamon, career bureaucrats a lot of times, they don't turn over every four years, but it could be a little bit different. i'll tell you one thing that's come up. no one is saying that these

organizations would necessarily sky the skew their report, but it is a little unusual to be so vocal about the findings in a public way between the election and inaugurati inauguration, to be so vocal and out there drawing conclusions before the report is out. that's what gives the impression that maybe the current administration holds some sway in how it's all being presented in terms of -- >> and that the intelligence agencies have been politicized. >> maybe not with the conclusions but at least with just being so out there with all the findings for political reasons. >> well, you have to ask yourself, are they doing something unusual because they've decided to behave in a different way, or are they doing something unusual because something unusual happened here. if you talk to lindsay graham, he put out a statement yesterday saying, look, you've got two choices here. you can trust julian assange of wikileaks, somebody that republicans and conservatives had considered an enemy of the united states until very

recently, or you can trust the 17 united states intelligence agencies, which have all come to this conclusion. lindsay graham appears to have made up his mind. donald trump is not there at all. donald trump putting out a tweet yesterday saying that the, quote, intelligence, unquote, briefing had been postponed with those sort of mocking air quotes or actual air quotes around the word intelligence. he's mocking the u.s. intelligence community. that's something we haven't seen from an incoming president-elect in my lifetime. >> part of that is from the media conflating hacking the dnc or hacking podesta e-mails with hacking the election. they don't separate the two things. >> that's a good point. the key here is that what russia is alleged to have done is to have hacked the podesta e-mails, hacked the dnc, stolen those documents, and put them out there in the public to affect the outcome of the election. it's what russians have called for years compromising material which can be used against a political figure.

whether or not they hacked the actual elections, the machines, the technology, that's not in play. >> no one is saying they put words in podesta's mouth. it's just shining a light on what was happening in the first place. >> it's stealing information. >> it's against the law. all right. let's bring in george mitchell, a former senator of maine. you were probably able to hear a lot of that, senator. i don't know how much time we have left, but we'll talk about the latest things happening with the affordable care act as well. what do you expect to happen tomorrow after the president-elect is breeiefed on what these agencies actually know? >> well, that depends of course on what the report says. there's been a lot of speculation in the press and otherwise about what it may or may not say. i do think there is a disturbing feature in this debate, and it's been mentioned earlier in your

discussion that mike pence said that the president-elect is displaying a healthy skepticism toward the intelligence agencies and by itself there's nothing wrong with that. they're humans and mistakes are possible, but these are americans who devoted their lives to protecting and defending our country's interests, while there's no skepticism whatsoever that's been demonstrated toward putin and assange, two men who have devoted their lives to attacking criticizing and undermining the united states. so if there's going to be skepticism, i think there ought to be some there because both of them have been charged with violations of law. putin in leading russia into its illegal actions in the crimea and ukraine, for which russia was appropriately sanctioned. and assange, of course, who has been holed up in the embassy because of his refusal to return

to switzerland to face criminal charges. i personally don't put much stock in what ai shassange says. i hope if there's any skepticism toward any report, it extends to all involved in the debate. >> you've been in the business a long time, senator. i was just thinking back. and i agree, these are people that are serving their country, they're doing the best they can. i just think back on jim comey and what the left decided about jim comey as time went by. initially it's like this guy, what is he doing? looking at all these e-mails. then when he said, no, no, we can't press charges, oh, my god, harry reid, this guy was the greatest public servant in history. he was a hero. he was an icon of the way a public servant should be. until that next reopening of the e-mail investigation. now as far as the left goes, you would see the fbi and comey and all those public servants

completely disparaged by, you know, the latest take from the left, that they threw the election for donald trump. it just depends on what side of the aisle you're sitting on, on whether you, you know, defend the public servants or whether you trash the public servants. >> that's true, joe, but keep in mind that attitudes toward comey on the republican side -- >> same thing. >> in the reverse direction. >> and assange too. assange was public enemy number one to most conservatives and republicans. now it's like, you know, well, julian assange says. but the irony of it on both sides is just thick, senator. so that's why whenever -- you make a good point about one side, then you have the same one for the other side. >> how about the core idea, though, senator, can intelligence agencies be politicized? people read front page stories in "the wall street journal" about internal feuds at the fbi where agents said they were being told not to investigate

hillary clinton. this tweet from donald trump comes in a context where people remember weapons of mass destruction under a different administration, reports that they weren't allowed to investigate hillary clinton. it feels like if you're just a reading what's available to the general public that the intelligence services could very well have become politicized. >> well, that's as old as human nature. everybody may not remember jay edgar hoover's reign. >> the very definition of politicization. >> in an open political system, you're going to have people trying to skew findings their way or to interpret them one way or another. let's be fair. let's not limit that to politics. that's human nature. all of us receive information that is consistent with our prior beliefs very well. we retain it. we use it often. but information that's inconsistent with our prior beliefs, we don't receive it well, we don't retain it, and we rarely use it. let's not be too tough on

politicians and bureaucrats. that's true of human nature everywhere. always has been. >> looking back, a lot of the agen agencies, the impression i used to have of the irs is not what it was. the impression i used to have of the justice department in recent years isn't what -- i'm getting a lot of comments come in. this is the same cia that lied about benghazi. that a lot of the agencies have been corrupted or at least compromised in recent years. depending on which side you're on. then i've got another -- other people talking about russia gave trump the election, but russia gave hillary the popular vote. so the whole -- i mean, a lot of it just doesn't make sense. this is the very heated political discourse we're in right now. >> i think it's one of the corrosive effects of the dramatic increase in information, the existence of the internet, the ability to use

technology, which is neutral, for purposes that are not appropriate, not truthful, not accurate. and it's very hard for individual citizens to sort it all out. the division of the media into nakedly partisan positions, which has been common place in many other countries, indeed most of the countries. that's exist the here for a long time, but it's intensified and accelerated now in the area of the internet, new technology, and social media. >> senator mitchell, on the topic of russia more generally, do you think or, in fact, hope that president-elect trump's rhetoric towards putin is part of his game playing, his art of the deal type negotiation strategy or he really fundamentally believes in what he says on that topic? >> i think in my judgment, and this is speculation, of course, it's very likely both. but i think he's in for a rude

awakening. vladimir putin does not wish the united states well. let's be clear about that. he sees the united states as the perpetrator of a great tragedy upon the soviet union in russia. he has said that the greatest catastrophe in recent years was the demise of the soviet union. of course, for the hundreds of millions of people outside of russia who lived behind -- in the warsaw pact countries, for them it's a deliverance. it's a freedom. and that's the problem. >> all right. but you know, iran has probably said worse things. it's a weird world. once again, this isn't a political prism as well. we maybe don't want a huge confrontation with the other super power, nuclear super power. senator, someone's asking me why i call you a senator. i'm going to call you leader. thank you, leader. leader mitchell. you were majority leader.

once you're that, you always are in our view. thank you, leader. >> thank you, joe. coming up, we're going to talk the hitting their second positive session in a row. then, the retail wreck. macy's and kohl's, stocks were slammed in afterhours on weak holiday sales. dana telsey will be here to break it down. and can donald trump make twitter's stock great again? a closer look at twitter and the trump effect in a bit. as we head to break, a mixed quarter for walgreens. revenues fell a bit short. company also raising the lower end of full-year guidance. "squawk box" will be right back. h. ouicr th s dou take nrafot mplmy dou ts annsnsood sudoss take nrafot

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still to come, macy's slashing jobs, closing stores after poor holiday sales. more on that move from dana tulsey in a few minutes. president-elect donald trump seems to have mastered twitter, so can the company take advantage of his use of their platform? we'll discuss in a bit. "squawk box" will be right back. time now for today's aflac trivia question. in what year did the new york stock exchange open its first permanent headquarters? the answer when cnbc "squawk box" continues. his.

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now the answer to today's aflac trivia question. in what year did the new york stock exchange open its first permanent headquarters? the answer, 1865.

welcome back to "squawk box." jobs data front and center this morning. the december job cuts were up 25% since november's lowest monthly total of 2016. here to break down the numbers, john challenger. good to have you here, john. give us the overall for the year. so december rose a little bit, but when you look at all of 2016, it was an improvement in the number of layoffs compared to 2015. in other words, it went down, right? >> sure was. 527,000-plus jobs for 2016. that was down 12% from what we saw a year ago. we're back to kind of the 2010 levels, just before the recession hit. strong numbers, a sign employers are holding on to their employees. >> december job cuts up 25%.

that looks alarmingly negative, but the overall picture is actually positive. >> i think so. it does look up, but november was the lowest month of the year, so the 25% jump for december is certainly up. it was up significantly from december of last year. so certainly it does suggest there's some pressure there. we'll see. as long as unemployment stays low, employers are really being very careful about laying off people, but they're certainly not shy about it. if a company says we're going to shift our -- our business is shifting and we need to change, they don't wait like they used to. >> so we were showing people on the screen the sector with the biggest job cuts, energy. more than 100,000. and the state, texas. i assume those coincide for a reason. >> no question about that. energy was very heavy this year, especially in the first six months of the year.

of the 107,000 cuts, about 70-plus came in the first six months. it slowed down as oil prices started to rise. in fact, 20% of the cuts in the second half of the year in the energy sector came from renewable energy. >> okay, got it. john, thanks so much for joining us with the monthly numbers. >> thanks. all three major u.s. indices closing higher yesterday for their second positive session in a row. let's bring in the senior managing director at evercore isi and the chief investment officer at merrill lynch and u.s. trust. guys, good to have you here. chris, let me start with you. do we discount in improvements in taxes and improvements in the economy, or don't we at this point? based on president-elect trump's win. >> the market's pricing in a good portion of it. >> should investors continue to do so? >> absolutely. >> why? >> the big reason is that's what's been missing. we've had a secular stagnating type of environment for quite

some time. we had a pro cyclical move. we had the election. now it's about the what if. the what if should be more about tax reform than infrastructure and some of the other longer term growth ideas that simply are not going to come in '17. so investors should start to discount this. that discounting mechanism is what equities are. that's kind of why we're getting this -- >> so keep buying? >> keep buying. these levels right now, you can argue they're fair value. there's arguments about where earnings are, valuation, and all that. i would say investing spirits have yet to fully come in. there's a difference. the investing spirit is going to go through three or four phases. we've only had one. >> dennis, are you positive? >> not as positive, but positive. we describe it well priced for

low forward returns. to your question specifically, i think you definitely priced in a corporate tax cut. i don't think the market has priced in the benefits of lower taxes and fiscal stimulus on the economy. you can see that in the future strip. so the fed is outlining a 3% fed funds rate by the end of '19. the market based expectations are 100 basis points below that. you're getting the corporate tax cut priced in because any stock that has had a high effect of tax rate is outperforming. that's been consistent since the election. you're definitely not seeing a forward rates market price in that improved economic growth. we have a trend rate of the economy right now about 1.8%. if we're going to grow at 2.5% to 3% with a fiscal stimulus, short rates are going a lot higher. that's not priced in right now at all. >> chris, do we see a bit of a rotation in the market? it's interesting to see, for example, auto sales very strong yesterday and of course that was a sector that lagged in 2016. they led the market yesterday. can that kind of thing continue? >> it should. the economic surprise indices

here and in europe are continuing to improve. this cyclical move is so early. investors are not positioned for a cyclical rebound. they haven't seen one in quite some time. so when you look at rotation between fixed income cash and equities, it's still early. dividend growth is fine over the long run, but if you're just talking '17, you have to get more cyclical. >> dennis, chief risks you're watching out for that would make you less constructive on equities? >> actually seeing 3% economic growth for two years. if you don't have a significant increase in productivity growth -- and we're running at 3% because of inflation induced fiscal stimulus. in theory, you're pulling forward a lot of demand and creating a shorter economic cycle. you have two years of much better economic growth followed by who knows. potentially below trend economic growth. so if we do get business confidence to improve, do get

business investment to improve, there's a potential for higher productivity that sustains a psycher for lower. if you don't and we just have tax cuts, we have the possibility that we're going to a boom/bust cycle. >> hasn't the trade-off been -- so boom/bust or just bleh for a long time. >> yes, but part of the reason the market was being held up for so long is because not only did you have that blah forever, but recession risk was very low. each recession following an asset price bubble has been more severe than the previous recession, which is why the fed has been so hypervigilant about not letting stocks decline. that blah was associated with very low risk. rightly or wrongly, i don't necessarily agree. >> got it. chris, dennis, thanks so much.

coming up, a retail wreck for macy's and kohl's. holiday sales falling short, stocks getting slammed. we'll break down the miss and find out what it says about other players in the sector. as we head to break, take a look at u.s. equity futures.

retail wreck for the markets this morning. macy's shares down as much as 10% after hours on disappointing holiday sales. the retail chain also announcing store closures and layoffs. kohl's falling as much as 14% as it cut guidance. fourth quarter results were worst worse than expected. joining us now to break it all down is dana tulsey. good morning, dana. thanks very much for joining us. first, the simple question, is this a consumer issue or a department store issue? >> good morning and happy new year. i think this is a department store issue. i don't think this is a consumer issue. you can't paint the retail spectrum with the brush of what's happening with some of the department stores. i think what happened in the department store world is that you had a strong black friday. you had a weak in the middle of the month of december. then it finished up okay.

but the shift to online doesn't just happen easily. it happens with more expenses that are needed and what drives retail stock prices is sales growth. take a look at retail overall and whether it's cosmetics like ulta, whether it's active wear like foot locker and lulu, the broad brush of retail isn't what the department stores is. >> dana, so far we've just heard from macy's and kohl's. when do we hear from the rest? do you expect them to be suffering to the same extent? >> i think you'll see many of them suffer. i think you'll see the same thing at nordstroms, see something similar at dillards. we're going to have some of the companies report this morning. l brands, children's place just reported a better than expected comp. there's a big icr consumer conference monday through wednesday of next week. you're going to have urban outfitters reporting also. so we'll hear a bunch of data points in order to assess the landscape. i think it's more sector specific. i don't think it's the broad brush of retail. >> dana, maybe you need to

change your whole business model on what you cover. i mean, the world is moving too fast for me. are department stores just on their way out and everybody is online? maybe you better bone up on your digital operations or something. are you thinking about that? >> i think you have to. you bet i'm thinking about it. it's all different types of companies that are relevant today. and these companies, look at what you have with elf cosmetics. you have to be aware of amazon because it's everybody's major competitor in what they do. look at private companies today that are just growing so fast that make a difference. whether it's the warby parkers of the world. you have businesses out there that are integrating with retail. the balance sheets of these retailers, watch them integrate with some of the online e-tailers with physical retailers. >> dana, given that, why is amazon announcing, as it did yesterday, another bricks and mortar store? is it purely to sort of laugh in the faces of their fellow retailers who are suffering and show them that we can afford to do this even if it's not

actually profitable? >> i think what it is, is the harmonization of physical and digital. you need both in order to win. look what you need for the stores. the returns to stores, the buy online pickup in store, it's a higher average transaction customer, a more loyal customer when you have multichannel distribution. >> what about macy's and kohl's sto stock? is this priced in the worst? are they just going away? do we go back to my childhood when all these guys were going bankrupt and you have to worry about the debt, not just the stock? >> i think their balance sheets are in good shape. i think these companies are evolving themselves. you have macy's talking about a comp store sales decline in 2017, similar to the november/december trend. they need sales growth. what's the category that's going

to drive sales in the face of online increasing and importance? i don't think they're going away. i think the stocks are going to be dead money for a while. >> dana, thank you very much. >> thank you. >> wow. world's changing. coming up, president-elect trump taking to twitter just about every day, making news, moving stocks. so can twitter take advantage of trump's tweeting success? we're going to find out in just a bit. "squawk box" will be right back.

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welcome back to "squawk box." let's check in on what the futures are doing after a decent day yesterday. the nasdaq led the pack higher. it was up about 0.9%. the dow lagged, up only 0.3%. we're expected to open lower today by about 40 points. so we've lost a bit of ground in the last half an hour. still, nothing too worrying in terms of the expected open to the downside. coming up, will donald trump make twitter great again? the president-elect taking to twitter every day, making news, moving stocks. we discuss if he'll actually help the stock of twitter itself. "squawk box" will be right back. . . mp t.

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i love those guys. did you see right there? they have police department right here. we have a satellite office. don't you like that? >> i do. i thought you were referring to the camera guys. >> no, that's right there. >> there it is. nypd, right out the window. >> i like that and the cart and the flag. i like the little pretzels.

>> in general, you like the new set. >> i do. eventually, we're going to move down and have the whole corner. >> wow. >> seems like not a morning goes by here on "squawk box" that we don't get news from president-elect trump in the form of a tweet or two. this morning, the president-elect tweeting that -- i just -- you know, i look forward to this, especially when they're like this. the democrats, led by head clown chuck schumer -- i mean, did reagan ever -- >> never. >> i'm not criticizing. >> it's a whole new world. >> led by head clown chuck schumer, who will now be known as that, even if we have him on, about how bad the obamacare mess is. they do the typical political thing, and it's time for republicans and democrats to get together and come up with a health care plan that really works, much less expensive, and far better. despite having the soon-to-be leader of the free world as one of its power users, the social media network still faces significant challenges. joining us now for more on where

twitter goes from here in the and of trump is eric hippo, managing partner at lair hippo ventures, and eric kantorwitz. i don't know if it means anything that the president uses this, eric. maybe twitter ends up like npr. like a public service that people use but never -- is this going to actually help monetize what twitter does? >> if i were twitter, i'd be all over it, right. here you have the next president of the united states that is using my platform to communicate directly with its audience. bypassing the media, bypassing everybody. it's a major opportunity. >> how do you monetize it? >> you have to embrace the fact that you are a technology born company that's now become a major media platform. you have to run it as a media company. i'm not suggesting that you have to create your own content. >> i'd pay for it now. maybe they need to charge.

we need this. bloomberg charges for those terminals, alex. do they just need to start charging for twitter? >> nobody's going to pay for twitter as much as twitter would like that. one of the things that you see when trump tweets is that every news organization, since all their reporters live on twitter, they quickly jump on it, aggregate the tweet, write their own context, and provide more value than what twitter can deliver on its own. so does twitter want people to pay for it? maybe it does. are people going to pay for twitter? i think there's a fat chance. >> did you see jack dorsey when he was asked about how he felt about donald trump using twitter? it was the most -- >> he was almost embarrassed. >> he looked embarrassed that the future leader of the free world was using his platform. i was amazed he didn't own it and embrace it. >> here's the problem. if you're an executive in silicon valley, if you're a founder of a major telecom

business, you want to be in the technology business. you're not embracing -- it happened to yahoo!. i know because i was there for many years on the board. when yahoo! became a media company, they could not embrace it. they fell. same thing is happening to twitter. very likely at some point something could be happening with facebook. look what's happening with fake news. they don't want to embrace the fact they've become a media platform. >> they won't get as high a multiple, right. >> but you have to face reality. the street would like twitter to compete with facebook. it's not in the same category. it's not the same social network. you have to embrace reality. >> alex, does the president-elect stand alone in terms of his -- the level of his preference for twitter over other media platforms? because clearly it's pretty much just those 140 characters. you can do pictures and some videos as well. is he alone in that in terms of his level of preference? >> i think it's fair to say we

haven't seen a world leader embrace twitter the way donald trump has. one of my favorite donald trump tweets is he said twitter is like owning your own newspaper without the losses. he knows you can directly communicate with the people using twitter. he doesn't need to go through intermediaries, as you know he hates when the media mischaracterizes words on reports on them in a way he doesn't particularly love. so what better way to communicate directly to the people than putting it on a platform where your tweets are what they are and they can move incredibly fast, thanks to twitter's retweet function. >> so it's hopeless. >> i mean, hopeless, i think we're going to see some really interesting, you know -- it's going to be a new world in terms of the way -- >> how are they going to make some money? >> they're not going to make the money. what donald trump is doing is not fundamentally different from the promise that twitter has delivered on since his inception ten years ago.

what twitter does is it allows you to watch the news as it unfolds in realtime. if people didn't really feel drawn to that promise over the past ten years, which is how old twitter is, donald trump tweeting is doing the same thing and it's not going to change the game for them. >> they can change the game. they can make it so much easier for people to find topics and find channels and find the right people. they need a level of curation that they were unwilling to do. >> you're still not paying for it, and you're still not buying things. >> no, but it's huge for advertisers. advertisers can find a very influential audience. advertisers are always willing to pay a premium. >> does a media company buy them out? >> no, it has to be a tech company because of the valuation. >> thank you both. coming up, the adp jobs report. that's why we have to get to that number. plus, a big cybersecurity hearing on capitol hill today. senator dan sullivan going to join us with a preview after the

break at 8:30. ann winblad gives us her top tech picks. then the trump transition, senator rob portman is our guest. "squawk box" will be right back. a reue otr

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breaking economic news. minutes away from the adp employment report. we'll bring you the numbers and market reaction. the cyber threat. intelligence officials holding a hearing today on the hill. plus, a new age real estate story. why your next home could be up for sale on snapchat. 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. again, welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with michelle caruso-cabrera and wilfred frost. andrew ross sorkin is off today, and for a good reason. congratulations on the birth of sydney.

a little girl, 7 pounds, 9 ounces. mother and baby are in good health. big brothers max and henry are thrilled their sister is here. a little family now. >> charming. >> she will be obviously the bell of the ball. pilar is too. nothing like two older brothers. >> and a little sister. so cute. >> like i said earlier, sydney is a cute name for a little girl. i don't think i'd use it anymore. it's weird. it's the same name. >> spelled differently. >> i know it's spelled differently. it's like a homonym. but for a guy, i don't like it as much for a boy. >> makes me think of sydney blumenthal. >> ruined it. >> not the city. >> no, not the city. that's right. is that spelled the same? >> it's spelled as andrew has chosen. >> the futures -- australia,

right? how do you know you pick up on my sarcasm? >> i think, typically, i pick it up. >> exactly. futures right now are down 42. it's worsened. >> it's like with soccer. i know you're actually being sarcastic. you love it. >> it's very important to nbc. i do love soccer. it's phenomenal. treasury yields. we're now down 41 after a pretty good session yesterday. we closed yesterday within striking distance of 20,000. as the of right now -- >> i don't understand. does this mean yields are lower or the bonds are lower? >> yields are lower. slipping a little bit. not much movement. >> the actual price of bonds is increasing. that's always weird to show it red like that. you don't really invest in the yield. you invest in the bond. >> you've got the dollar slipping today as well. slight retracement of the start of the year trend. >> we were one of three for a

while, earlier this week. 118 on the yen. back to 116. >> the dollar weakness was sparked by the yuan move, the chinese currency move stronger. that led to dollar weakness in general. it was up about three-quarters of 1%. so the dollar has rebounded a bit, but it's still down against the yen significantly, as you can see. making headlines this morning, shares of retailers getting slammed, led lower by macy's and kohl's, both cutting their profit forecast due to weak holiday sales. dow component travelers dropping sharply this morning. morgan stanley downgraded the stock to underweight. we're watching bitcoin, the digital currency back below 1,000, off the all-time high set earlier this week. that just moved south today. a bit of profit taking on

investors that have had a nice ride over the last couple months. >> it's the dividend sector that investors are loving again. telecoms are the second best performer si eer since the elec. dominic chu joins us from headquarters. that's counterintuitive. >> if you talk about the overall picture for dividend paying stocks, remember we talk about utilities, we talk about consumer staples. both of those sectors have been really, really lagging ever since the election, as interest rates have gone higher. take a look at this. the s&p 500 financial sector, we all know, has been the best performing sector in the s&p 500 since the election. but now telecom, let's just put it in perspective here. the second best performing sector in the s&p 500 during that time span as well. financials, telecom, you can see here showing some real signs of life, up 15%. a dividend paying sector that's getting a lot more positive momentum. take a look at one of the big etfs that tracks it. this is the vanguard.

it's got close to 30 stocks that all track small s mid, and large cap telecom companies. this is up about 44% over the past ten years. it hit a record high in yesterday's trading. so a big deal here for some of these telecom stocks. if you're looking for what stocks are actually driving the action, that particular etf that we just referenced, 40-plus percent of the etf is made up of two stocks. no surprise here, the two biggest ones in america, at&t, 11% higher just over the past month. so a lot of near-term momentum. it still has a 4.6% dividend yield. then verizon shares, up about 9% in that same time frame, a 4.2% dividend yield. if you're taking a look for where investors are at least playing some of these dividend plays without worrying about some of these other interest rate worries, check out telecom stocks. if you're wondering what stocks in that etf pay dividends, i put that list up on twitter as well. check that out. back over to you guys. >> all right. dom, so travelers. that's a downgrade? we just showed that, right?

did you just read that? that probably accounts for the dow being down 40. if you do the multiplier on ten points, how much of the dow's selloff -- that's why it's changed from down ten to down 40 after a downgrade. the senate armed services committee will hold a hearing on cyber threats to the u.s. this morning. the hearing will address the alleged russia e-mail hacking, which president-elect trump has called into question. joining us now, senator dan sullivan. he serves on the senate armed services committee. senator, it's good to see you this morning. >> good morning. happy new year, joe. >> so you're a republican. i guess you won't be quite as critical of this brouhaha that comes from people saying that,

you know, the president doesn't trust these great, dedicated workers working at these agencies. i remember it seemed okay to do that to the fbi and comey. it just depends on what side of the aisle you're on half the time. is president-elect trump -- is it unfair for him to be disparaging these -- questioning the intelligence of the intelligence committee? >> i think it's going to be an important hearing today. a couple points on that. as a marine, i've had the opportunity to serve with a lot of our intelligence officials. they're professionals. a lot of them, as you probably know, risk their lives in service of their country. but you know, an important point, we're going to start looking at the extent of russian hacking, but there's been no credible reports whatsoever that it impacted the election. so from my perspective, i think it's clear that donald trump, mike pence won the election fair and square. those who are using the russian

hacking issue to somehow delegitimize the election results, they're simply wrong. they're doing a disservice to americans. but second, you know, we should be looking at this issue but not just russian hacking. the u.s., in many ways, we've become a cyber punchi ining bag. if you remember last year, china allegedly stole the files of millions of former military and federal workers from the office of personnel management. very sensitive files. my file got stolen. so we need to ask the broader question, why is this happening and where is the strategy to prevent it? i think it's happening because the cost of taking action against us are so low we need to change that equation with a stronger strategy. >> the russians were so smart that they were able to distinguish which e-mails would help in the electoral college but wouldn't help with the popular vote. so they just released the

e-mails to help trump win the electoral college. didn't care about the e-mails -- i mean, it's ridiculous. the notion that -- you know, what happened with the popular vote? >> look, i think that the point i made earlier when you had partisans saying, hey, we need the electoral college members briefed by the cia on this, that was clearly trying to politicize and delegitimize the election results. what i think we need, and we're going to start it today, this is an unclassified public hearing. i think it would be useful to start having more transparency on these issues. one of the frustrating things for most americans in the last several weeks has been these unnamed sources, intel sources, fbi sources who are leaking things to the press. let's declassify documents. let's have public hearings. have an honest discussion with the american people about what's really happening. we're going to start that today. >> right. i mean, harry reid and others went crazy when there were leaks

coming from the fbi about the hillary clinton investigation. a lot of these agencies seem like they're -- whether it's real criticism or not, it does seem like there's some to litization of these issues. a lot of people say the irs, the justice department, even with benghazi and blaming it on the video initially, that they've all been corrupted. >> look, i think those are legitimate concerns. what this needs, what i think is most helpful way to approach it is doing what we're going to start doing today. asking questions in the open, asking for transparency, and getting answers that the american people can see.

so we're starting that process today. i think we should be trying to declassify these documents, let the american people know what's really going on. but enough of this, you know, unnamed sources in the media. you don't know who's talking. you don't know what their agenda is. >> i was surprised that a lot of newspapers don't refuse at this point to play that route. if you're going to make accusations at that level, senior white house officials, sometimes it's so vague it's ridiculous. we'll get on conference calls sometimes, they're the most mundane conference calls that any reporter can join, and we're told we can't actually name the official who's speaking. it's got to be some generic senior official. it's ridiculous. and when things are as serious as this, to always do things with unnamed sources, i still

can't believe major newspapers do it. >> you make a good point. it's been very vague. i think it undermines the trust of the american people. they don't know who's speaking. that's why, like i said, we need to start having these kind of hearings to actually hear directly from the leaders of these intel agencies. >> sure. thank you, sir. >> all right, senator. thank you. >> thank you. coming up, breaking economic news. we're minutes away from the adp employment report. don't move. ÷

breaking economic news. the december adp employment report is coming out right now. steve liesman joins us from chicago with the numbers. steve? >> thanks very much, michelle. adp, the private employment company, saying that jobs grew by 153,000 in the private sector in the month of december. that's the final report for the year. it's a bit below the estimate, which was 168. they revised down november just a little bit. it was a strong november month, as you'll recall, up by 215,000. above 200,000 now, a little bit of payback here. a big distinction. you can see between the goods sector and services sector, goods down again, minus 16,000, while services surging up 169,000. there's that nonfarm payroll estimate, up 183,000.

manufacturing down again. mining, i'm a little surprised to see. we've seen something of a rebound in the natural resource sector with more stable oil prices, but it's not showing up in the adp data. there's your services sector plow manager ahead. up 18,000. 29,000 in education. trade and transportation up by 82,000. this data shows the employment data is strong but it is really slowing. you can see that we began the year with the three-month average of about 200,000. now it's come down. what's struggling now is small business, up by just 18,000. medium and large businesses surging ahead, up 71,000 each. but if you look at the chart, there it is. well done in the back there, guys. if you draw a line from left to right, it is sloping downward. we had a 200,000 three-month average. now it's down near 160,000 or 170,000. and here's the outlook for tomorrow's jobs report. you can see we're looking for

183 off of the 178 last month. unemployment rate seen ticking up to 4.7. we're looking for a rebound in average hourly wages. they declined unexpectedly in november, down 0.1%. looking for a 0.3% in the month of december. just one more thing, guys. later today i'll be able to talk to john williams, the fed official, the fed president, the san francisco fed president, not the conductor. that will be exclusive from the american economic association annual conference. >> you're going to ask him if he liked "rogue one" right? >> exactly. if you would give me a list of songs, i will definitely ask him about them. maybe i'll ask about the fed minutes that came out yesterday with two warnings, by the way, about possibility of higher rates in the year ahead. >> steve, when was the last time you remember zandy sounding not optimistic or not sugar coating jobs numbers? that's weird, isn't it? so he actually said it continues -- >> i wouldn't necessarily agree with you that he sugar coats the

jobs numbers. >> when was the last time he didn't sort of accentuate the positive of the jobs picture? so now he's saying it continues a decelerating trend. >> yeah, we've talked about that for almost ever now, joe. the idea that when we were running above 200,000, that that was above the capacity of the economy. >> but it was still solid. every report over -- every third friday it's always -- or first friday of the month it's always been a good report, according to him. blah, blah, blah, right? >> i think mark east a really good economist. i'll leave your assessment of mark's biases to you. mark has done some excellent work. i'm glad to be working with him on a variety of projects. >> all right. whatever. >> he's a really good economist. >> we'll get santelli on and see what he thinks. >> take care, joe. happy new year.

we did see quite a move in the dollar off the back of that data. before the break, we showed you the euro was up 0.3% for the day. it's just softened a little off the back of that. that's a little behind from what i'm looking at. by the way, the dollar has moved a little off the back of that. when we return, citigroup global head of commodities ed morse will join us. that's next. "squawk box" will be right back. llou b groel er ereca heak job

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welcome back to "squawk box." we told you earlier about how bitcoin was trading near its all-time high. well, check this out. it's now plummeting today. in just the last half an hour or so, down some 18%, 19%. still up, of course, sharply over the last couple years since its low. some significant profit taking, taking place this morning. >> that's fun, isn't it. let's start playing in the bitcoin. >> right, exactly. >> the other thing about bitcoin, it's so insecure. if it gets hacked or raided, you know, if you have a bank account, bitcon, forget it. you're out of luck. >> and there's regulatory fears

as well, in terms of what the rules will be. >> i'm just worried about losing all of it. from a digital currency to commodities, which of course ended 2016 broadly in positive territory. joining us with his firm's annual commodities outlook, ed morse. very good morning to you. thanks for joining us. might just kick off with gold before we move on to the energy names. in fact, strong for the course of 2016, even though q-4 was sharply lower. on the one hand, you have the prospect of inflation, which is good for gold. on the other, stronger dollar, clearly bad for gold. >> the question is which is going to be weighing more. i think that over the course of the last two months, inflation fears have kind of gone into the market, whether you look at investors in europe, in the middle east, and the u.s. or in

asia. the theme of commodities as a hedge against inflation risk has re-emerged. that's particularly the case with gold. so i think there are a whole burch of reasons to expect that gold will not be flat for the year as it would be based on expectations of a stronger dollar. but there may be some signs of not necessarily a big breakout but certainly the yellow metal is becoming much more attractive to investors, as are commodity pools in general. >> in terms of oil, ed, so much of the recent rebound in the oil price has been predicated on this opec plus russia and a few other countries' supply deal. which countries are you most focused on within that as to who's most likely to break that supply agreement, and what percentage chart do you put on that happening at some point in 2017? >> sure. well, the focus is first of all on the countries that are not part of the agreement. so those would be nigeria and

libya. we've seen libyan production really surging compared to where it was a year ago. now approaching 700,000 barrels a day. libya has a free pass on this agreement. the question is will the very optimistic view of governing forces in libya to get production back over a million barrels a day, will that come to pass. i think we're going to see a very choppy period ahead, both for nigeria and libya, with signs of new production growth, counted by a loss of production growth. so i think that really is the big wild card on the opec/non-opec agreement. what happens to these two countries, each of which could add roughly a million barrels a day to supply, if things go right, it would kind of totally undo the 1.8 million barrel a day agreement. >> and ed, what's your demand outlook for oil this year? round it out for your price target. >> sure. we think robust enough.

1.2 million barrels a day. not very different from last year. we saw a little bit to go. it looks like it's going to be around 1% increase for the world as a whole or 1.1% or 2%. that has to be made up. we think non-opec supply will be marginally higher coming out of the u.s., where we think fourth quarter will finally show signs of big increase year on year, maybe 400,000 barrels a day. but we don't see much in the way of oversupply in the market given demand growth and given the opec agreement. we're talking a $65 brent price for the end of the year with as much risk to the upside as the downside. we're in the era of fragile petro states. so there's the bull case.

>> ed, great stuff. thank you very much for joining us. news just crossing from the mexican central bank. once again, they're trying to firm up the mexican peso, which has just gotten hammered in the wake of donald trump and the announcements coming from ford. the mexican central bank has confirmed they've sold dollars, in other words bought pesos, to try to stem the fall of the dollar. they've raised interest rates several times in the election period. 21 pesos to the dollar. that's extraordinary. >> it really is. they're going to need a few pesos for that wall. coming up, jobless claims due out in just a few minutes. we'll bring you the numbers and the market reaction.

welcome back to "squawk box." breaking news. our latest read on continuing and initial jobless claims. a drop of 30k, down 30,000. actually, that's from 265 down to 235, where it is. but that 265 was revised to 263,000. so we're only down, what, 28,000. that is really a big jump. now, let me think. what happened? lots of holidays. most likely there are some distortions there. if we look at continuing claims, a little bit different timeline

by one week. we move from just under 2.10 million to a bit above 2.11 million. the big news might continue to be the less than expected adp. we'll get nonmanufacturing, the service side of the ledger coming up top of the hour at 10:00. and of course that ism is very important, but maybe the biggest news, all night all i was getting was e-mails and texts regarding short rates going up in china a boat load. that, of course, pushing the dollar lower, the yuan higher. many wondering what the reasons could be. let me think. currency manipulator. all the sudden their currency isn't going down as much. we all can put two and two together potentially. but it is a huge story. there's been a lot of volatility. so we'll continue to pay attention. back to you. >> thank you very much for that. futures still lower by about 36

points on the dow. meantime, new app store numbers from apple hitting the tape. josh ripton from san francisco joins us with the details. >> good morning. apple just now reporting these results. apple saying developers earned over $20 billion in 2016. that is a 40% jump year over year. they say knnew year's day 2017 s the highest single day ever for the app store, $240 million in purchases. all-time records this holiday season, including, they say, $3 billion spent on the app store in december alone. i did have the chance to catch up briefly with apple's phil shiller to talk about these results. shiller calling this an ama amazingly great year for the app store. the catalog of apps jumped about 20% to 2.2 million. i asked what are some of the drivers of the app store in 2016. he said no surprise it was

games. we know about those blockbusters like pokemon go as well as those subscription based apps. so netflix, hulu, hbo go. there has been some research which indicated maybe the best days for the app economy are behind it. people have all the apps they need. shiller disputed that, said he would let the app stores results speak for itself. of course, investors are paying more attention to the app store, just as broadly that smartphone market matures, apple has been emphasizing its role in services, those recurring revenue streams that don't necessarily depend on new device sales. but the headline here, developers earning over $20 billion in 2016. guys, back to you. >> josh, thank you very much. coming up, veteran tech investor ann winblad will tell us her top picks for the new year. just 15 days until president-elect trump takes office. tax reform and health care at the top of his agenda. we'll talk to senator rob

portman from the great state of ohio next. "squawk box" will be right back.

welcome back to "squawk box." let's have a look at currency movement this morning. three main ones to watch today. the peso moving significantly, as you can see. about 1.2% higher after the mexico central bank confirms

that it has been intervening. it's been selling dollars, buying pbu buying pesos to try to stem the depreciati depreciation. that's worked a little bit today. 1% move south for the dollar. the euro is strong against the dollar, as you can see. about 0.4%. it was more than that earlier. it was about three-quarters of 1%. and bitcoin, big, big move today. it had hit a record all-time high earlier, but it's seen significant profit taking. down 12% on the day today, back below 1,000, albeit following a sharp rise over the last couple months. now to today's what's working series. we're looking at top tech picks for 2017, specifically software. ann winblad joins us. great to have you here. >> thanks. good morning. >> so everybody knows you as venture capitalist, private equi equity. you're here to talk about stocks in the sectors you know a lot about, particularly software and technology. last year you recommended

microsoft. it's up 12% this past year. what do you like for 2017? >> well, i still like microsoft. i think they've got a lot of room to grow, especially with the linkedin acquisition. they're in second place between amazon in the fast-growing public cloud space, which should grow 22% compounded annually until 2020 up to about 236 billion in revenue. they're ran a 13 billion run rate last quarter for their cloud business. amazon will do 12 billion this last year in their cloud business with very fast growth. so both amazon and microsoft are still picks for me. >> and is it the cloud business exclusively? you mentioned linkedin with microsoft. when people talk about amazon, they're very impressed by the retailing for sure. when you look at what happened with macy's and kohl's overnight, clearly they're taking market share. people seem even far more excited about the amazon web

services, aws, that's growing it seems even more rapidly. >> well, i think people are excited about all parts of amazon. amazon really had an amazing christmas season. over a billion units shipped. strong support of alexa, which puts them in a great space for the voice-controlled space and for the connected home and connected everything. they're innovators in artificial intelligence, which they use both in their commerce space and enterprise space. i think both aws and their other businesses are driving each other. they're well positioned in multiple markets, which is very challenging for large companies. amazon seems to be number one at captivating leadership in multiple markets, both aws and commerce. >> accenture? i was surprised to see this on the list of stocks you like. >> well, it's expected that 3.5 trillion will be spent on i.t.

next year. certainly software is a big beneficiary here. software grew 6% last year and will grow 7.2% this coming year. so software spend is accelerating. where is that software spend going? almost all large enterprises are undergoing digital transformation. they're bringing in service providers to help them. i.t. services number for next year is about 953 billion. accenture had some surprise earnings last year, and i think they'll be a positive participant and have some upside surprises for us this year. yes, they're not a traditional software pick, but they're a major player in global digital transformation of enterprises and major partners to all of the leading software companies in the enterprise. >> okay, ann. i need an update. first company to a trillion dollars in market cap. apple, google, amazon, microsoft

or comcast -- no, not comcast. hope springs eternal. or someone we don't know? >> you ask me that question every time i'm on the irair. >> i need an update. you said google last time, didn't you? >> yes, i did say google last time. i still think it will be google. but it'll be a tight race with microsoft and amazon. i don't think it'll be apple. >> see, that's unbelievable. you didn't mention comcast. okay, fine. >> and google is one of her four picks for next year. >> she mentioned google, microsoft, and amazon, but not apple. ann, the reason i ask, every analyst in the world when had apple had a 700 million market cap, they had no problem with price targets that were implying

1.5 trillion. there's these guys that get paid for recommending things, and you ask them, well, that would mean 1.5 trillion if it hits your price target. they go, oh, well, i'm talking valuation. it's ten times earnearnings. they never look and consider the law of large numbers, i don't think. >> well, i don't get paid for recommending stocks. so you can take my answer lightly. but you can look at what's happening around apple. even microsoft is making headway with their hardware surface against the mac pro. artificial intelligence and siri, they're getting behind relative to alexa and other things. so in the technology race, they've got a lot of players that are looming ahead on various market opportunities. the connected everything. look at what's happening at ces. amazon's not even there, and they're capturing all the

headlines. >> ann, we've spent a long time talking about how president-elect donald trump uses twitter so much, and yet stock can't get out of bed. it struggles so much. you'd think somehow they'd be able to capitalize on the leader of the free world using it so much as a platform. what's your diagnosis of twitter? >> well, as a venture capitalist, we have to always look whether we're funding companies or products. companies are companies like amazon, google, microsoft that we've just talked about, where they can't be just one product. they have to own a broad platform that leverages them into multiple markets. look at microsoft with linkedin. the leverage there is with office 365 and dynamics 365. that's independent of azure but complementary. twitter is a product company. if it came and pitched to a venture capitalist, we'd say no, you're a product, not a company. >> interesting.

thanks, ann. >> i still might ask you next time, ann. i'm sorry i do that every time. i'm really interested. >> i'll keep rethinking my answer. >> we should ask mr. crane. he'll have a different answer. >> when we moved into this new studio, i thought comcast. right? anyway, coming up, senator rob portman joins us live.

president-elect trump and the republican controlled congress gearing up to reform the u.s. tax code. joining us now, u.s. senator rob portman. the tax reform, but obamacare has been grabbing headlines. that's what the president-elect tweeted about today. i don't know if you saw the tweets earlier talking about senator schumer, head clown schumer, in terms of obamacare. where should we start? what's on the top of your list for january 21st, obamacare or tax reform? >> both are important. i think both relate to the economy and how we get the

economy moving and increase economic growth and also bring back higher wages. so i think they're related. also, part of tax reform, joe, i think ultimately is likely to be something that involves the tax code, in other words a tax credit or refundable tax credit to give people the ability to buy their own health care, get the cost down. i think they're related. both have to be done. regulations is the third one, which is also related. we've got to cut back on the overregulation. we're going to be doing that over the next month with these congressional review act procedures that we can do with only 51 votes in the senate. >> senator portman, it's michelle here. >> hey, michelle. >> when i look at the gop plan for tax reform, they really want to change the corporate tax structure dramatically in the u.s. they want to tax imports and drop corporate tax rates on exports to zero. is that something that you think is a good idea? do you have any indications that president-elect likes that?

it would certainly help him deliver on his promise to tax imports. >> i think you're absolutely right. look, there's such a great potential here to fix our tax code and to make it more competitive and therefore to create more jobs. all the analysis says if we do that, we will have higher wages and better benefits for workers as well, which is the key. i think it's really exciting. i think there are two aspects to it. one is to go to an international system where we can repatriate much of the profit that's been made overseas to staying overseas. people say that's $2 trillion or $2.5 trillion. that would be a huge boon to bring that back and invest it here. then border adjustability. other countries have vat taxes in place where they don't tax exports going out but tax imports coming in. that puts us at a competitive disadvantage. i think both of those things can and should be done. i think we'll see a big impact immediately. you recall over the last couple

years, joe, you and i have talked about this, and michelle, i know you've been involved in this issue as well. chuck schumer and i put together a working group plan about a year ago that was bipartisan that paul ryan liked, that other people spoke favorably adminis that took on some of these international tax issues. so i think this can actually be bipartisan as opposed to maybe some of the obamacare discussion we started off with and something that will really help to get the economy moving. >> senator, let's see, just in the last couple of days we had the minority leader, senator schumer, saying there isn't -- there's not a nominee in the country -- supreme court nominee that's going to pass muster with him or the democrats. so they're just saying that they're so mad about merrick garland that there's going to be absolutely nothing. you've seen harry reed and the slow steady decline -- do you think it's salvageable in the future with donald trump as

president? >> well, i hope so. i mean, i do believe that civility is part of the answer here, you know, to get back to a situation where we can disagree on policy issues but figure out a way to find common ground. and that includes respecting one another. i guess i'm old fashioned in that regard, joe, but that's what the american people want, by the way. i just won an election in ohio where i talked about that all the time and talked about 45 bills i'd gotten passed and worked across the aisle to get stuff done. i'm a conservative who believes in results. i think that's what people want. i hope we can get back to that. if we don't, we're really letting people down. let's face it, you guys deal with this every day. this economy is underperforming. and the impact of that is primarily on families and on wages being flat even declining on average over the past couple decades. on the other hand expenses are up dramatically, especially health care. so those are two areas, you know, the tax code will help, the regulatory reform will help on the growth side, the obamacare reforms will help in terms of getting costs under

control where we can help people, but it requires us to work together. >> well, do you feel confident that republicans are up to the task of the replacement side of the repeal/replacement? >> yes. >> you do? >> i do. by the way, it's not going to happen immediately. it took us seven years to get where we are right now with regard to the affordable care act. and it's not working. i mean, it is increasing costs for every family in america whether you're in the exchanges or not. small businesses are dying under the weight of this thing with the mandates and the cost. i think everybody acknowledges that. even democrats have said, yeah, we're going to have to fix parts of this thing because it's not working. when you have bill clinton talking about that and other democrats standing up and saying that. so i think what we need to do is start the process now of saying, you know, let's have a transition period here where people are held harmless if you're under the medicaid or exchanges you're going to continue to get your coverage, but let's work together to come up with fixes. everyone should come to the table on that because it's just

not working. >> yeah, bill clinton, that's the gift that keeps on giving. do you tweet now, senator? >> of course i tweet, joe. i thought you were one of my followers. i'm disappointed. >> i'm feigning like i'm sure -- actually, i'm going to follow you now. >> i'm not as exciting as the tweet you talked about this morning. >> why not? >> he called chuck schumer a clown. >> you'd be vice president right now if people didn't think you were boring, rob. remember when they said that? let's get going. let's get -- >> all right. i'll try to put a little edge on it. >> when you get off the air, surprise us with something really out there on your twitter feed. think how many followers you're going to get. >> okay. thank you, joe. >> senator, thank you. we appreciate it. >> bye michelle, bye joe. >> see you late orrlater, allig >> twitter, wilfred, did you know what i was talking about when i said twitter?

>> what is that? >> let's get down to the new york stock exchange. jim cramer joins us now. wilf wants me to ask you about what ann winblad just said. i gave four stocks, she said either amazon, microsoft or google gets to a trillion first before apple. >> well, i think those have more momentum. they can have p/e expansion, which is not necessarily the way you want to play it because some people think it's a greater fool theory, but alphabet does have i think a lot more earnings power than people realize, particularly if these other bets pay off. i thought the most important call she made was accensure. in terms of price selection, that's the one i like best. i like apple, it's not been wrong to dislike it since tim cook came on "mad money" when the stock was at 93, but obviously it needs a super cycle to come. i'm always fearful of a super cycle, but they need the new phone. and i think they're doing better than expected. you can read through the app store number and decide service

revenue is doing better than expected, i think that's very important. most people don't. it's a big mistake to overlook it. >> and the likes of amazon going to benefit from kohl's and things to come, jim? >> look, amazon is playing with tanks and jets and the other guys are calvary. and they can't figure it out. horse drawn. horse drawn. >> all right, jim, thanks. >> yep. >> we will see you at the top of the hour. >> thank you guys. >> later on ho"halftime report, don't miss lee cooperman. that's at 12:00 eastern. "squawk box" will be right back. ♪mini e.

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welcome back to "squawk box." you might be able to find your next home on snapchat. but then once you find it, it disappears never to be seen again. so you can't really go there. a new snap listing account features rentals and homes selling for upwards of $6 million. it's run by new york real estate agents looking to capture millennials by posting so-called property porn. they think millennials might be intimidated by typical brokers and, god, almighty, they might be triggered or something and need a safe space for their man buns. they can direct message in

realtime and arrange apartment viewings. >> but do you want bunny ears on your apartment? >> do they have -- >> it's worked, apparently. there's been some big listings successfully. >> sold to millennials on snapchat? >> you are in fact a millennial, aren't you? >> i am. i don't think i'm truly representative of all millennials -- >> i wouldn't cop to that either. >> joe, i'm going to skip my next story and instead do this because i understand it's your birthday tomorrow. i'm not here tomorrow. but i've got you a gift. >> i have two days of torture? >> you've got the gift you've always wanted. you can maybe tell what it is. >> i think i know what this is. >> is this wrap or how you're supposed to use it? >> it's the best -- >> no, i love andrew. >> yeah, it's a soccer ball. >> well, let's have a look. >> it's wrapped so nicely. >> i want to see. i want to see. >> not just any soccer ball. >> that's a beauty. >> is that your team? >> you have to now be polite.

>> i'm touched. >> you love soccer, right? >> i do love soccer. it airs on nbc. it's really hard. i'm not a weather man. have you ever seen -- >> yeah, they can do backwards like mirror image. >> thank you. and i'll be here and have to put up -- i guess i'm not going to be able to hide that. >> 41. >> the new 41. make sure you join us tomorrow for the big day. sidney sorkin just missed being born on the best day. make sure you join us tomorrow. "squawk on the street" is next. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer, david faber at the new york stock exchange. premarkets a bit cautious this morning, big hearing of intelligence officials on capitol hill, global pmis and of course ces in las vegas. europe is mostly mixed this morning. ten-year around 2.42,