"squawk box" begins now. ♪ live from new york where business never sleeps, this is "squawk box." it is time to celebrate. good morning. welcome to "squawk box" on cnbc. we're live from the nasdaq market site in times square. i'm michelle caruso-cabrera. along with joe kernen and andrew ross sorkin. we're playing that music. we have two celebrations this morning. first, we want to wish joe a happy birthday. he's turning 40. >> 4 1. >> 41. i don't want to exaggerate. and congratulations to andrew on the birth of his daughter sidney. not on the same day as joe kernen's, but close. >> thank you. >> beautiful photos. >> thank you. i saw that you ran some on tv yesterday. >> yes. beautiful. >> a lot of nice e-mails.

well wishes on twitter. happy birthday to you, sir. >> thank you. i'm not crazy about this song. i would like to celebrate another day. ♪ celebrate another century. i don't want to go a decade. another century. >> you're going to. he we've talked about this. >> singularities -- >> sidney is a beautiful name for a little girl. >> thank you. >> but i don't -- it's weird, but i gender now. i don't like it that much for a boy. we tried to investigate why. bloomenthal. >> sidney bloomenthal. >> i should tell you that the history of sidney sorkin is my grandfather was sidney sorkin with an "i." it's an old school name. that's why we did that with sydney. >> so you're not crazy about australia. >> not an australia thing. i'm sure she'll think there's a country named after her. >> if she takes after you.

the delusions of grandeur. who is reading this? >> i believe it's -- let me see. >> it you? >> it's me. >> you -- >> my read. hands off. >> yes. >> u.s. equity futures at this hour not doing a whole lot because today is jobs friday. we don't often see action in this market until we get the number at 8: 30 a.m. eastern time. s&p would open flat, dow lower by 13. nasdaq open flat. overnight in asia, the hang seng higher higher. china getting active on the yuan. the central bank guided the yuan stronger against the dollar at the fastest pace in a decade. the pobc has been trying to support the currency amid concerns of capital outflows. this is three days in a row of strong moves for the chinese currency. if you're short that currency, you got burned over the last couple days.

european equities, generally flat, mimicking what we're seeing in u.s. futures as the world waits for the itseu.s. jo report. crude oil at this hour, a lot of countries saying they're fully complying. wti higher by 46 cents. brent higher by 49 cents. nat gas lower by 3 cents. 1% decline. some other big stories we're watching today. the top item on the agenda is the december employment report. forecasters say the economy likely added 183,000 jobs last month. the unemployment rate ticking high tore 4.7%. average hourly wages expected to have risen 0.3%. corporate news. gap reporting a surprise 4% increase in same-store sales in december. thanks to demand for its gap and old navy brands. the company expects the full-year adjusted profit to be modestly high.

gap shares almost up 8.5%. nice bump for that stock. frontier airlines preparing an initial public offering. they have hired deutsche bank, jpmorgan and evercore to plan the debut. the denver based airline hopes to raise a half billion dollars, valuing it at $2 billion. i don't believe frontier has a first class to babies in first class will not be an issue. >> they'll just be everywhere. >> i can't wait until you try to -- >> sydney and i will sit in the back. >> you have three kids now. that's totally different. that's not one row in first class anymore. >> we all -- when we fly together as family, we're altogether in the back. you think it's just us -- no. i know those families. you're saying the parents in the front and the children and the nanny in the back. >> the third changes a lot of things. >> right. the tables at a restaurant for

four, now we have five. yes. cars. >> minivans. >> the whole thing. >> you're looking at a minivan, my friend. >> really? >> not yet. we'll walk in and go party of five. party of five. >> that's cute. >> your little boys look so proud looking at their baby sister. >> they're very excited. >> little princess she will be. >> yeah. >> actually a queen. >> yes. >> a queen. that's her middle name. >> it is? >> yes. >> because my wife's maiden name is queen. she's going to be sydney queen sorkin. diva. >> wow. you programmed it in. >> we're here. >> sqs. >> we'll do some stocks, but i don't know if the whole world -- i didn't think the whole world -- i would not say all eyes are on the jobs report. i like maybe one eye, maybe half the eyes. but then with what the ten-year did yesterday. >> yeah.

>> 2.35? i thought we were supposed to be at three. >> people think janet yellen will be too aggressive. >> please. >> that would be totally out of character. i think people are worried about -- >> there's going to be a new president. >> but i think people -- it's good the dollar doesn't go straight to infinity. we don't go straight up in interest rates. if the dollar got too much stronger, it becomes self- self-defeating. >> you saw the "journal" has an opinion piece today on my favorite topic, border adjustment tax. that's strong dollar. >> okay. a couple of stocks to watch. novartis teaming up with ionis pharmaceuticals to license two cardiovascular treatments. the drugs aimed to reduce heart risk in patients that have high levels of lipo proteins.

regeneron and sanofi plan to appeal a u.s. court ruling banning them from selling their cholesterol drug because it infringes on amgen's patents. a jury found amgen's patents valid last march. regeneron and sanofi could reach a settlement to give amgen royalties on the u.s. sales of their drug. that would probably fix things. samsung says fourth quarter profit likely rose 50% to the highest level in three years. beating forecasts. this is on strong sales of chips and a rebound in smartphones. the optimistic outlook comes despite a slight drop in revenues and the expected $2 billion hit from the recall of the galaxy note 7 phones. out at ces there's now paper thin stuff you put on the wall. tvs. paper thin. >> really? >> yeah. >> that would be awesome. >> it's coming. >> that makes me happy. big story out of mexico. protests over a 20% hike in gasoline prices have led to 4

deaths after the ransacking of 300 stores, the arrest of 700 people. the worst of the looting was in the coastal city of veracruz where three deaths occurred. the gas hike is part of the government's plan to deregulate the energy sector. mass looting came before the epiphany holiday, three kings day, a very big holiday in latin america after christmas. >> and easter. my entire life my birthday has been on the epiphany. >> that's right. >> you were a gift to your parents. >> my uncle was a priest. i think he said it was above some of the more conventional roman catholic holidays because it brought everybody in. >> in the early days there was a fight over what should be more important, christmas or the arrival of the three kings. >> yeah. it meant the world was getting in to see the christ child. i don't know. i've always taken it as the most

important, as you know. >> your middle name is not queen. >> when a baby is born, then i have a birthday, there is a weird circle of life type component to that, which i don't like that much. someone comes into the world, i'm not going anywhere. just want you to know. then we play -- to celebrate another day of -- okay. the drive -- ♪ >> hurry. >> the drive for dow 20,000 is stalled. we'll soon find out if the jobs number might power the index over that milestone. joining us now, our guest host for the hour, ross costich, also with us is michelle girard. so is there -- starting with you to get an economic backdrop. when an important country

defends their currency, then bitcoin sells off, the ten-year falls to 2.35, should we read anything into that as far as our prospects for the country? i thought we were going to 2.7? >> i think we're going there. it's not going to be a straight shot. we've talked about this a lot. the markets have come a long way on a lot of very high hopes, which i do think are going to end i being validated. when you put pencil to paper on a lot of this tax, a lot of these things are going to be rolled up by the new administration, it is not going to be as easy to get everything done or as quickly as everybody thinks. to some extent this is somewhat of a pause as we start to really think about the details. even the border adjustment tax. this is a new element to this whole idea of corporate tax cuts

and tax reform that complicates things that people don't understand it what does it mean, how do people feel. so to some extent the market will have a period where it tries to assess the details of what we'll get. and so it's natural to see a pause. >> if you look at a snapshot of the current employment picture that doesn't include any of these initiatives coming after january 20th. did things start to taper off in the last month or last three months verse the pace? is it because the supply is harder to find? >> a couple different things. i was worried that the economy was cooling a bit in the second half of 2016. but certainly in the wake of the election, it looks like -- with the help, i think, of the election outcome -- >> consumers, small businesses. >> business confidence it looks like the economy ended the year

on a healthy note. even manufacturing, one sector that you would expect to see because of the dollar, some headwinds. we will data this week that suggested activity was holding up nicely. orders up. i think the economy ended on a strong note. with respect to the labor market, you're right. we've seen some slowing. we're looking at job growth tending below 200,000. slower than maybe earlier in the year. but i do think some of that is a supply issue. the labor market is getting -- we heard this from companies for quite a while. it's hard to find workers. it's to some extent the cooling going forward that we may see may be more supply than demand related. >> that wouldn't indicate -- then i get wage gains. >> that's the validation part if that story is right, it's more supply than deplannemand, we nee upward pressure. remember when we couldn't get

above 2.5%? we've seen a modest upcreep in wage growth. so maybe some validation. >> who do you listen to, russ, at your shop? does michelle agree with what you're hearing over at your shop? you have a lot of guys over there. more people coming from blackrock all the time. >> women, too. >> we have them all. >> you have it all covered. longs, shorts, up, down, lower rates, higher rates. is she right? >> she is right. i think you named it earlier on. >> no way. >> hate to say it, but i think you did. >> because it's my birthday? >> happy birthday. >> tell me what it was. >> you nailed it with your comment on the dollar. the dollar is self-limiting. if the dollar rips this as a de facto monetary tightening and part of what's happening. the dollar is doing some of the work for the fed. it's certainly a headwind getting into q1 on profits. that said, you know, going back to 2.35 on the ten-year off

coming off of 1.50 in july, that's not a big reversal. you do get to 3%. but, again, as you said before, not a straight line. probably a good thing it's not a straight line. >> yeah. so what does all that mean about equities? that's your thing, isn't it? >> we're multi asset class what it means for equities, you have an environment where rates are backing up because the economy is getting stronger, because there's some reasonable prospect for fiscal stimulus, lower taxes. that's okay. multiples actually can go up if rates are coming up from a low level. the key is are we getting real growth and is that going to support earnings in 2017? because we have gotten to a point in the equity cycle where you can no longer depend on multiple expansion to drive the next 10% 15%. >> all right. we'll talk more. i theneed to know about financi. they got hurt yesterday. retailers, will i ever buy macy's? i'm scared now. >> the financials is on rates. they have pulled back.

>> because of the yield curve then. what about -- we'll talk. >> he's here for an hour. >> you're here for the hour. let's talk politics. the japanese government is coming to toyota's defense after president-elect trump called out the automaker in a tweet that happened yesterday. trump threatened to tax toyota because of his plan to manufacturer overseas. he wrote toyota motors said it will build a new plant in baja, mexico to build corolla cars for u.s. no way. build plant in u.s. or pay big border tax. responding today, japanese officials said toyota is an important corporate citizen of the u.s. stressing the contribution of japanese companies to u.s. employment. earlier in the week, trump went after general motors for imt porting production from mexico saying he was pleased to announce that ford canceled a new plant in mexico. we didn't understand it, if you remember. we didn't understand why he was going after gm at that moment.

that was the ford piece of it. shares of toyota dropping overnight. other japanese automakers fell in sympathy. for more on this, john harwood joins us. >> toyota responded by saying they wouldn't take jobs out of the united states for that plant in mexico. it wasn't going to affect u.s. employment but it's another illustration of the ad hoc approach that the president-elect is taking to this. today the big story is the intelligence briefing that donald trump gets just like president obama got yesterday on the results of the russian hack of the united states election. the democratic national committee, john podesta's e-mails. yesterday at a hearing with john mccain, james clapper among others testified that their conviction was resolute that russia was responsible for this election hack. they also responded to the suggestions that the president-elect has made about political motivation by the

intelligence community, lack of competence by the intelligence community, james clapper, who is due to retire, the director of national intelligence, said there's a difference between skepticism, which is healthy, and disparagement. when president-elect trump gets that briefing today, his reaction afterwards is going to be a strong influence on whether or not we have chaos in the national security community, open conflict between the president and the intelligence officials serving him, or we don't. >> is there a way to thread that needle? he said one thing on wednesday which was relatively complimentary of the intelligence services. >> relatively. >> then yesterday was back at it. >> last night he was back at it suggesting that there was politics and a leak to nbc news about the briefing that president obama got yesterday. he suggested that there was a competence failure because some servers were not examined by the dnc. he concluded with what is going

on. now, in terms of threading the needle, one way you thread the needle is by layering on more people acceptable to the national security establishment. yesterday the president-elect settled on dan coats, former senator from indiana. widely respected by both parties. that will be seen as a good choice. >> do you see any hypocrisy or disingenuineness in terms of the left's reaction to trump's taking down of the intelligence agencies in light of what we heard about jim comey after the second e-mail investigation? what is the -- on the left what is the current thinking of james comey? how would you characterize him? as a decent public servant? >> i would -- you talking about me or the left? >> the left. >> he's come in for a ton of --

>> the last i heard from harry reid and others about comey and the fbi, totally politicized, tried to skew the election. all these agents in the fbi had it out for hillary clinton. >> mm-hmm. >> no integrity whatsoever. i don't remember the backlash and the ire that, my gosh -- >> how dare you suggest that they are politicized. >> now it's like the same people are like, my god. to even question the motivations, political motivations at the cia. do you understand where i'm coming from? >> yeah. >> no one is bringing that up or mentioning that. >> fair enough. but i think it's did -- first of all, comey is in a slightly different category from the intel community. >> he's part of it. >> he is part of it. he is going to be briefing the president-elect today. but i think when you have a chief executive of the united states, the commander in chief openly mocking the people who

will be foundational to his own national security efforts, i think that's a challenge. he can't fire all of them. >> but it's been pointed out he's talking about the guys at the very top. not necessarily, you know, all the rank and file. the guys at the top will change. maybe the rank and file don't, but dus but -- >> we'll see. i continue to think it's a problem if they're in conflict. i suspect, as andrew suggested, he will find a way simply because he has to to function effectively of threading that needle. >> thank you, john. >> i don't know how that tweet reads. that's what i think it will look like. yet rob portman was called out for being boring on twitter. the senator responded. we'll so he you what he said next. and right now as we head to break, let's look at the dollar. stronger next to all the major

currencies. yen, again, almost 116 yen. the pound will cost you 1.23. "squawk box" will be right back. with the xfinity tv app,

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during an interview yesterday on "squawk box" i challenged rob portman to surprise me on twitter. >> you know, you would be vice president right now if people didn't think you were boring. remember when they said that? let's get going. when you get off the air, surprise us with something really out there on your twitter feed. >> will do. >> think how many followers you'll get. >> thank you, joe. >> he's from -- he's from cincinnati. we go way back. i love this guy. what i meant was, you look at his experience in congress, senate, trade. he's done it all. it was said back then this would be the guy if he just was not boring. this is what he did. i don't know where he found this

picture. after that interview, senator portman answered the call tweeting i'll try to make things interesting for you. throwback thursday to when my cincinnati friend was working with a little bit extra up top. >> is that a manipulated photo? >> no, that's the way it was. when i was a kid, i had one of those davy crocket hats with the raccoon -- >> you didn't need it. >> when i looked at this, i thought it was normal. that had to be when i was in my 40s. i can afford to lose half of that. a lot of people in their 40s can't afford to lose anything. >> that's a good point. >> so i don't -- i do miss it. i miss the days -- >> you still have a lot of hair. >> i do. maybe half of what i had before. i tried everything. >> i'm not only the hair club president, i'm also a client. >> i tried the rogaine, that only helps back here. i've tried to help you. >> i'm still holding on.

>> you're dangling. you're younger than i was when i had that. >> call me -- yeah. on my birthday -- >> i might do some plugs. >> yeah, you'll do that on the air? >> supposedly really painful. where do you get the hair? >> different part of your head. >> they take it from the back of your head. >> but not -- >> borrowing from peter to pay paul. >> can we go on to the next story? >> can we get it from a different body area? >> apparently you can. >> isn't it really curlily? >> yesterday a u.s. company and the cuban government announced a deal for a cuban export to the u.s. could be the first one. that export is something called artiinal charcoal. it is valued for its clean burning properties and is often

used in pizza and bread ovens. the ceo of the u.s. company said the company he founded will buy 40 tons of artisinal charcoal. first delivery scheduled for january 18th, two days before the inauguration of donald trump. nestle was importing coffee as well. if you're into cuba, this is big news. a lot of people who wanted more out of the cuban government will say this is what we got? artisanal charcoal? >> how would you say baja? >> baja. >> okay. >> she can roll it. >> there's no "r." >> when we come back, jobs in focus. the ceo of lasalle network will join us to tell us what the

changes in obamacare could mean for companies. first, a look at yesterday's winners and losers. >> that was wonderful. >> bravo. >> that was great. >> wasn't bad. >> parts wasn't very good. >> could have been a lot better. >> i didn't like it. >> was pretty ter rible. >> it was awful. loryangrsee.eve. e rrowni.a.(h

welcome back. you're watching "squawk box," live from the nasdaq market site in times square. >> welcome back to "squawk box" on cnbc. we are live from the nasdaq market site in times square. u.s. equity futures at this hour

are flat because we're waiting to see what the jobs report holds for us later on this morning. president-elect trump tweeting minutes ago about the proposed mexico wall. writing "the dishonest media does not report that any money spent on building the great wall forsake of speed will be paid back by mexico later." he's referring to stories that have come out about the construction of what's been called about the border fence along the u.s./mexico border. there's a story on pbs from 2009 called obama's border fence. money was put aside under the george w. bush administration to build a border fence. it was stopped, started, et cetera. so they can reinvigorate that program. >> was no sunset provision on the initial plan that george bush put into place at this time. but you have to put additional money about it. >> if you want it built soon,

that's what you would do for speed. >> then get paid back, he's saying. >> somehow. >> right. >> it's harder to get it paid back afterwards. >> quite a few people in the last few days, at least tweeting and other places saying is this really about the car companies? every time they mention it. there's other jobs going to other countries other than mexico. or is this -- you saw some of the stories written in mexico that -- there's some outrage. they're losing big plants and jobs. they're saying what's happening? the peso -- >> getting hammered. >> they're down there going, whoa. they are sitting up and taking notes. some people think this is a bargaining employ to get them to come to the table. >> in which case do you say to gm it's okay to do it then? >> here's the answer i would give. >> look at that. painful. >> the tax reform is going to make it so advantageous and

attractive to stay in this country that we won't need to do these sticks anymore, just all carrots. >> what is the sticking mexico about paying for the wall? >> that this stuff will continue. >> you have to put on punitive tariffs to equalize -- >> what about the border adjustment tax? that ends up being an import -- a tax on imports. the border adjustment tax could happen. here's the down side of that. all the economists are talking about the effect on the dollar, i think it's overstated. but imagine what happens to u.s. manufacturers if you see a 20%, 25% appreciation on the dollar. for a president that ran on a platform of reinvigorating the manufacturing base, that's going to make that difficult. >> but at the same time, you

disincentivize the need to put stuff overseas because you got rid of the tax arbitrage, the change in territory. there are other incentives they're talking about that would encourage manufacturing. >> but the question harder to answer is you have global supply chains. when you talk imports and exports t assumes everything is coming from one country. in ratie reality, a lot of what imported into this country is -- >> but nearly every other country in the -- all our major trading partners do this border adjustment tax. if this whole world can do it in the world of supply chains except us, why couldn't we join that process? >> you could join t bit, but ita big disruptive step.

it does come back a lot to the dollar. if you push the dollar up too quickly and too far, that is a very -- >> here's the funny part. you know what retailers say? we don't believe the dollar. we don't believe the dollar will strengthen. this will crush us. walmart's imports will be so much more expensive that they want to fight it. you can't have it both ways. is the dollar going to be stronger or not? >> the dollar will be stronger. and some studies say this will eviscerate walmart's profit for a year, i don't think that's true. but it's a big change in the business model for a lot of companies. if you're a company and you've been inhibited from capital spending because you're unsure about the tax code and regulatory environment, you have to be confident this will last some time. >> tune in monday, i'll have an explainer on this show about what the gop tax plan is. it's so interesting. you'll finally be interested. >> i'm interested now. i'm just glad i don't have to make this argument i'm deferring

to you on the border tax stuff. th she just -- >> i'm with her. >> she owns it. >> i'll build the wall for monday. studio wall. >> let's talk jobs. >> if it's more domestic who cares about the dollarments. >> as we count down to the december employment report, let's get a breakdown of where the jobs are from one of the nation's leading staffing and recruiting firms. joining us is tom gimbel of lasalle network. i don't know if you have been listening to this conversation and want to weigh in on it and it's impact on jobs, on the manufacturing end but also on the services end which is where we historically have had jobs in the country. >> services have been adding. that's where the growth has been. we'll see manufacturing coming back. that's a positive thing. it's been coming back slowly. you're not adding close to 200,000 jobs a month like we always have, but it will be services led. but what you're saying is right there will be more jobs in

america. but what that will do overseas to the dollar when these countries like mexico depend on the american manufacturing to be done there, it will -- i don't think it's a 2017 issue, but it's going to be a 2019 problem. >> help us think through the implications of the repeal of obamacare on the employeed in this country. >> my guess is that we'll see more competition over state lines from insurance carriers. when they say they'll repeal obamacare, make it more competitive, which is what i think the gop wanted to do back in '09 with affordability care. that creates this circle of liaring that is really good that will keep the unemployment rate low. hopefully what i'm optimistic about is we have to start seeing wage increase and participation increase. those are bigger numbers than anything else. >> the other thing is the minimum wage, given the new

administration and how you think they'll think about employment in this country and labor in particular. >> the issue -- the one thing you can't take back is money you're already giving people. that's a moral killer. with minimum wages increasing in every major metropolitan area. san francisco has a huge increase coming in in minimum wage. chicago just passed one. now we'll see a national minimum wage. i have a son turning 17 today, he's not worth $15 an hour. that's the challenge we'll face. minimum wage increases will hurt main street, so like the employer shop, the store in downtown suburbia will have to pay people $13, $14, $15 an hour. it won't hurt the big companies. it will be an interesting dilemma. that's the one problem this administration i don't think will be ability to tackle. >> you think we'll see it in the numbers over the next 12 months? >> i think towards the latter

half of 2017, not the next six months. the ceos and cfos we're working with are bullish on what's going on and hiring is progressing. >> how much is your son worth at 17 years old? >> that's a debatable question. depends on if he's the golf course or not. >> tom, great to see you. >> thank you. the gop agenda, south dakota senator mike rounds will weigh in on healthcare, the tax code and national security. and democratic leadership responds to the republican agenda. steny hoyer will join us at 8:00 a.m. eastern time. at 8:30, the number of the morning, of the month. the december jobs report. the market responds. instant analysis. stay tuned, you're watching "squawk box" on cnbc. l ik tswhm sp ws) it h tao m?

♪ welcome back to "squawk box." time for the executive edge. monday will kick off a huge week for healthcare investors. meg tirrell joins us with a preview of the jpmorgan

healthcare conference. >> this is the biggest week in healthcare investing of the year. after a terrible year in biotech folks are looking forward to getting together and setting the stage for what to expect in 2017. in terms of performance for the biotech indexes, jpmorgan will have 9,000 investors, analysts, executives talking here in san francisco this week. jpmorgan took a look historically at how the btk index does against the broader market during this week. 81% of the time from 2001 to 2016 the btk index outperformed the regular index, with the caveat that last year was terrible. on average, the output was 2.8%. there are some specific stocks to watch here at conference. they often provide guidance as well as pre-announcing results. some of those to watch are celgene, always the first presentation on monday morning.

remember rememb regeneron and vertex. and regeneron last night lost a patent lawsuit. we'll see how that stock will trade today. a lot of fear with what happens with donald trump, drug pricing, will there be a drug pricing tweeted during the conference. >> what is amgen's cholesterol drug? >> pks9 inhibitor. >> of course. >> it's for dogs. >> that's right. that's right. for canines. >> it's for dogs? >> it's a canine joke. it's a new target. pks k9. >> i have no idea what's going on. >> oh. stop the presses. coming up, it's been a volatile week for currencies. we'll talk strategy. you've been busy. >> thanks, birthday boy. >> i know. i'm the one starting to slip. you've been busy. you've been busy.

you've had some happening. this time you have an excuse. how to prepare your portfolio for the trump administration. here's a quick check of what's happening in the european markets right now. sydney queen. i love that.

the dollar the dollar retreating from a 14-year high after weaker labor data. this has been a huge move. we're showing you the dollar index. the move in the yuan in the last couple days has been enormous. two-day move was a record. keep in mind the history of the yuan is quite short. there you see it. that's the dollar strengthening against the chinese yuan over time. on the right you can see it was weakening. all right. normally we always want to start with the euro, eric. but in the last two days, enormously interesting what's been going on with the mexican peso and the chinese yuan.

the central bank has intervened repeatedly. what do you do? >> the intervention we saw from the central bank of mexico was the first they've done, at least appears to be the first they've done since february of last year. >> besides hiking rates. >> and they've also been raising interest rates to try to support the currency. the direct intervention in markets done yesterday was done more to limit some of the volatility and restrain the weakness in the mexican peso. >> would you buy the peso here? >> we would expect continued variability in the peso. we think it could go lower, but that over time we would expect that it could stabilize maybe in the coming quarters. >> what's the trade i should put on today? >> for the mexican peso? >> yeah. >> well, given we would expect continued variability, probably stay clear of it. maybe look to buy into some weakness if we're looking out over the longer term. >> all right. i'm wondering if you're a company that's got exposure there. you've got your cfo busy trying to figure out what to do there.

the moves in yuan, can you help characterize for us just how dramatic these have been over the last three days for the chinese currency? which is very controlled by the chinese government. >> when we say dramatic, dramatic by chinese standards. it is a controlled currency. because of that, it doesn't tend to fluctuate in a very large fashion. so we have seen some strengthening. a lot of that had to do with offshore funding squeezes and the central bank and authorities in china taking measures to restrain capital outflows. so that helped to, you know, limit some of the weakness. but we would expect that given the fundamentals in china the continued slowdown, although there have been signs of stabilization. >> to where? seven, eight? >> to about 720 over the next year, year and a half. >> how should i read these moves over the last couple days? is this desperation? is this whatever speculators there are, we're going to crush them? how do we read this?

>> well, i would say if you were to compare the movement in tnow the movement last year around this time, the movement is probably -- i guess less extreme. at this time last year, markets were more concerned about the overall health of chinese economy. we're seeing that from the data. there's some signs of stability, although there's a continued slowdown. so because of that, we would say it could be a little more gradual in terms of weakening. >> let's talk about the dollar in general. your forecast for where it's going over the next year. >> we think it's going to get stronger. i would say the strength we would anticipate in the u.s. dollar would probably be moderate. we think that there could be some corrective weakness in the early part of this year, much like we saw last year but not maybe to the same extent. we think the dips in the u.s. dollar could be more shallow, a little bit less in terms of -- >> so the euro is where in a

year? >> probably around parody. >> what about the yen? we've had a big move in the japanese stock market. we know it's a very currency sensitive market. do we go to 120, 125? >> we're looking at about 120 over the medium to longer term horizon. we think that the yen continues to weaken, primarily driven by the interest rate differential with u.s. treasury yields going higher, whereas the bank of japan has pegged their ten-year government bond yield at zero. with the policy in place in japan and with the fed expected to continue to raise interest rates in the u.s. and that yield differential, should continue to move in favor of a stronger u.s. dollar, weaker japanese yen. >> thank you, eric. good to have you on. is this the most important thing you're watching this year, the dollar? >> it's in the top three. >> what are the other two? >> the other two would be u.s. earnings growth. i made the point before, you can't keep driving the market forward on multiple expansion. then obviously rates. it's not just, you know, your position in the bottom market. think about the first half of 2016. it was all about rates.

the segments of the market that did the best, utilities, staples, all the bond market proxies. they ripped because you couldn't get yield anywhere else. if we go back into a more normal rate environment, that changes the valuation on a lot of the market sectors. >> what? >> nothing. >> okay. >> what's that say up there? >> it says our guest host -- >> we got to say good-bye to him now. we got to toss to him for his final hang. go ahead. >> i'm so lost. >> you took the oxygen. >> did i take your read? >> it wasn't the read. >> you took the entire conversation. that's what happened there. >> you know why, because it's one of my last few days here. >> let's talk about -- you would like to do this. it's the other show you maybe want to get off of. anyway, thank you to russ for sitting in with us. you try going back the -- >> i like "power lunch."

>> you've been to paris. >> i'm going to save you from this. coming up, we're a little more than 90 minutes away from the december jobs report. prediction from mike ryan of ubs, michelle meyer of merrill lynch. next, mike rounds will weigh in on the gop legislative agenda. taxes, health care, and national security. we have a big two hours coming up on "squawk box." back in a moment.

countdown to the jobs report. it's the final snapshot of 2016 and the last payroll release before president-elect trump takes office. what it could mean for the markets and the fed straight ahead. we are following two big

trump stories this morning. the president-elect targeting toyota on twitter and the company's home country has responded. a big meeting today with intense officials. senator mike rounds will join us to talk about cybersecurity. plus, the u.s. border patrol is hiring thousands of new agents. we're going to tell you what they're looking for in new recruits as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning. welcome back to "squawk box" right here on cnbc, live from the nasdaq market site in times square. i'm andrew ross sorkin along with michelle caruso cabrera and joe kernen, on his birthday. happy birthday, joe. we are counting down to the jobs report, due out in less than 90

minutes. more on expectations in just a minute. all this may change in an hour and a half from now. the dow is looking like it would open down. a quick look at the ten year. my eyesight is really going. >> those screens are so far away. >> what is that? >> i can't tell. >> okay. i apologize. finally, a quick look -- >> 2.357. >> you can see that? oh, come on. >> the energy markets. wti crude at 54.15. most people have tvs that are bigger than 13 inches these days. that's what we're looking at right now. >> and they're 30 feet away. >> his eyes are shot. >> here's what's happening this hour. >> eyes wide shut. >> i said shot. >> never mind. >> in addition to the jobs

report, a few other notable items on the agenda. the november trade deficit numbers are out at 8:30 a.m. eastern time. economic data points over time ebb and flow in their importance. sometimes it's inflation you're really watching, sometimes the jobs report. i would bet under the coming administration the trade deficit is going to be a big number we start to follow a lot more. also, we're going to see factory orders at 10:00 a.m. a trio of fed officials are speaking today. chicago fed president charles evans, richmond fed president jeff lacquer, and dallas fed president robert kaplan. frontier airlines is preparing for an initial public offering. the low-cost carrier has hired deutsche bank, jpmorgan, and evercore to plan its debut. the denver based airline is hoping to raise half a billion dollars, valuing the firm at about $2 billion. and a developing story out of the mexico this morning. protests and looting fueled by gasoline hikes have led to four deaths. the ransacking of at least 300 stores and the arrest of more than 700 people. the worst of the looting was in

the coastal city of vera cruz, where three of the deaths occurred. a police officer was killed trying to stop robberies at a gas station in mexico city. the gas hike is part of the government's plan to deregulate the energy sector, which is almost exclusively controlled by pen mex. happy three kings day to everyone. >> yes. >> three kings or just wise men? >> in spanish they say -- [ speaking foreign language ] >> beautiful. >> three kings day. >> i wonder how accurate that is. i'm not sure that might be totally historically -- >> could have been three women or? >> why not. frankincense. >> i'm just going to think about the wise men and women on the set right now. >> that's a good segue. we're watching shares of

bitcoin -- not shares. >> oh, my god. bitcoin, we talked about that yesterday. >> we haven't talked about it in years and look at this. >> hit a new high. >> the digital currency rebounding slightly after a more than 20% drop yesterday. it had been on a tear, hitting a three-year high on wednesday. yesterday's move was the currency's worst daily performance in two years. down about nearly 12%. joseph? >> i love that. crypto currency. >> because it's encrypted. a few stocks on the move this morning. gap reporting a 4.5% increase in same-store sales thanks to demand for its gap and old navy brands this time around. the company expects full-year adjusted profit to be modestly higher than where the top end of its previous forecast had been. shake shack says the ceo will retire in march. he's been in that role since 2013. the company is also naming its

first chief operating officer, who's been part of the executive team all the way back to the company's ipo in 2015. okay. less than 90 minutes away from the release of the december jobs report, putting the wraps on 2016. steve liesman joins us now. he's in chicago with some of the expectations and a look ahead to the job market in 2017. steve? >> good morning, andrew. and congratulations. i haven't had a chance to talk to you since the birth of the addition to the sorkin family. >> thank you, thank you. >> december jobs report, big one on tap today. always extra attention paid. looking for 183,000. unchanged, really, from the 178 we got in the prior month. unemployment rate essentially unchanged. the wages number could do a little better than the expectation and the hope. 0.3% is what's being looked for after a 0.1% decline. inside this thing, we want to know how much christmas hiring there was. was weather a factor. some economists seem to think

so. that will be among them. it's also a good time, by the way, to look ahead to 2017. obviously a lot of economic policy changes to come. what effect will that have? here's the baseline we're looking at. in 2015 we be 229. the expectation is when we average it all out, it will be plus or minus 180,000. a lot of economists think we're at full employment here. the reason is -- one of the expectations is higher wages on the one hand and steady to lower unemployment on the other. joe? guys, back to you. >> i don't really -- i don't think you can look ahead to 2017. i think it is 2017. i was confused there for a second, steve. it's january, right? he's already gone. >> his shot was having trouble. >> oh, it was? okay. well, good. this is you. >> very kind, joe. you want to take it since i took yours? >> no, no. i like when you do it. you can do all mine. for more on what to expect from today's jobs report, let's

bring in mike ryan, chief investment strategist at ubs and michelle meyer at merrill lynch. you know, last month we've seen a lot of data come in stronger than expected. a lot of people think it was driven by the election result. is it possible that the increase in consumer confidence, in business confidence, is it possible we get a better than expected number in jobs today? >> i think that's one of the key questions. we've seen a notable improvement in all confidence measures. consumer confidence, business confidence, even home builder sentiment skyrocketed higher. so i think the question is when does that increase in animal spirits start to translate to real activity. typically there's pretty decent lags between turns and confidence and turns of actual movement in the economy and investment in spending. but i think given the flow of the data, it's possible we have some upside risks in today's report. >> steve says we're at full employment. he's quoting a lot of economists who say we're at full employment. are we? >> it's hard to know what full

employment is in the sense it's hard to know what we consider it to be. it's an abstract concept. you have to be close to full employment. >> the reason i ask is if we get an upside surprise, maybe it's not in the number, maybe it's in wages, do we see it manifest itself in some other way? >> to me, what might get the markets to pay attention is if you actually have the unemployment rate stay at 4.6% or fall further, coupled with a faster than expected pickup in wages. that would send the signal that we actually could be reaching some period of tightening in the economy where inflationary pressures are building and we're already at that full capacity. so me, that would be the interesting story. maybe more important than the headline number. >> got it. what are you doing here, mike, as we wait for this number? >> first of all, michelle and i were chatting before the show backstage. one of the things, if we get a stronger than expected number, my concern is actually this could wind up pulling the fed back into play.

if it's accompanied by an increase in wages and we don't see an increase in participation rate, there's concerns that wage inflation winds up translating into higher finish goods inflation. with the market focused on what the next steps in the fed will be, that's something the market has to adjust. >> when you say the fed is back in play, you mean more than the three they've hinted or or sooner than what they were thinking originally? >> yeah, again, as the fed said, my view on the fed right now is the three dots, if you want to call it that way in terms of what they expect to do in 2017, is now kind of the central tendency. up until now, we viewed that as a ceiling. that was as far as the fed would go. in fact, they often undershot it. i think there's just as much of a risk that the fed could overshoot as undershoot in terms of rate hikes over the course of 2017. we certainly got this from the minutes, that we're seeing in terms of the payroll data, it's increasingly important how the fed's reaction function is. >> what does it do to the market? >> again, it depends on how much we see. if we get it in line with 175, then i think the markets are going to be fine with that.

if we get significantly over 200 and see a big increase in average hourly earnings, i think we start to discount prospects for a rate hike. >> russ was on last hour. he said the dollar strengthening would perhaps slow down the federal reserve and do the work for them. you think that's possible? >> well, you have these kind of natural stabilizers in a sense with the market. so what we had seen back in 2014 when the fed first started talking about a hiking cycle is a pretty notable move in the dollar. that fed back through to the real economy through a wider trade deficit. that means we're going to start to import some disinflation. yes, i think if the fed -- if the data comes in too strong and the fed starts to talk hawkishly, you get this feedback. it is certainly a consideration. >> what about fixed income, especially when we see what the ten year did in the last couple days. the yield dropping and the yield

curve flattening, suggesting there's once again concern about the economy. >> i think you had an initial surge in long-term interest rates around what is possible with regard to fiscal policy, what we could see in terms of the inflation implications from that. i think the markets may have overreacted. i think what you're starting to see is the markets are tempering expectations going forward. we are going to get some additional growth prospects that would come out from the policies of the trump administration, but i think the overreaction was a bit overdone. >> the reason i ask, last month i was terrified about the prospect of buying anything that was fixed income. nothing seemed safe. and the banks seemed the only way to go. if we're going to see a real moderation, those two trades are off. >> no, no. i wouldn't say they're off. first of all, our view is we still favor equity over fixed income. we still think the path is for higher rates as we look forward over the course of the next six and 12 months. i think the environment for financial institutions is going

to be a better one going forward than we've seen over the last couple years. first of all, we expect to see somewhat higher interest rates, which will translate into earnings. also, i think the regulatory environment is going to be a much more favorable one for financial institutions going forward. >> they've pulled back in the last day or so. is that an entry point? >> we're certainly going to get points where markets wax and wane whatever the headline release is of the day. i think over time, though, if we start to see some easing of some of the regulatory constraints we've seen in terms of financial service industry, this is a pretty favorable dynamic. >> how do you math that piece of it out? which is to say, once you take the regulatory reins off the banks or at least limit them in a very different way, how does that -- how do you actually math out what that means? >> well, it's hard. >> take the lawsuits away? so what kind of multiple do you apply? >> it's hard to come out with an exact multiple. what i think you'll start to see is we'll focus on a couple

things. what will it mean in terms of their ability to deliver earnings. how does this empower earnings growth. also, will it increase activity in the space. one of the things that's certainly limited activity in financial services space is a designation of being a, you know, a systematically important financial institution. >> you're talking about m&a is back then. >> if we start to raise the threshold, suddenly financial institutions that were out of play could be in play. >> and you believe that concentration -- see, to me, you might take the regulatory reins off some of the stuff, but i'm not sure m&a comes back. >> what i'm talking about is not all the sudden a huge consolidation. we have some deals that haven't been done simply because of this threshold of what a systematically important financial institution is. if you take that off, it increases -- >> once you know how the stress test actually works, if that's

one of the changes that should happen, do you actually apply a higher multiple to that? >> you do a somewhat higher multiple, yeah. >> interesting, okay. >> thanks, lady and gentleman. all right. a lot is still ahead on "squawk." up next, trump targets toyota and the company responds. we'll tell you what they said. plus, senator mike rounds will join us ahead of the president-elect's meeting with u.s. intelligence officials. and later, we'll head to the border to find out where the jobs are. stay tuned. you're watching "squawk box" on cnbc. with the xfinity tv app,

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and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. president-elect trump tweeting earlier this morning about the propose the mexico wall, writing, quote, the dishonest media does not report that any money spent on building the great wall for sake of speed will be paid back by mexico later. that's because there's talk of restarting what's called the border fence. money back for that under george w. bush, continued somewhat under president obama, and now they're talking about reinvigorating that process. but you would be using money

appropriated by congress. >> we'll see how that works. president-elect trump targeting automaker toyota. phil lebeau joins us with that story. >> andrew, toyota is the point of the target that came from president-elect trump yesterday, but what we're talking about is any mexican-made auto. he's not happy about the production down there. we'll talk about how many are built south of the border in just a second. here's the tweet that came from the president-elect in the middle of the day yesterday. seems like it's getting to be a regular occurrence, where something on my beat gets a tweet from donald trump. he says, toyota motor said will build a new plant in baja, mexico. it's not in baja, but it is in mexico. -- to build corolla cars for pupu u.s. no way. build plant in u.s. or pay big border tax. assembly is scheduled to start in 2019. when you look at the trump tweets coming out, you have the

toyota corolla that will be built in mexico. the gm cruze. the hatchback is built in mexico. then the ford mexico plant. remember, ford said we're going to scrap those plans because we've been the target of all of these comments from president-elect trump. technically ford said they did it because small market car demand is slowing down, but make no mistake, this likely would have not have happened if president-elect trump had not won the election. look at how many vehicles come in from mexico and who the leading importers were of vehicles built down there last year. gm leads the pack with 438,000. close behind is fiat chrysler. nissan, ford, vw. by the way, when you look at toyota itself, just 47,000 vehicles were built by toyota in mexico and sold in the u.s. last year. but their operations in canada led to them importing 528,000 vehicles from canada. yesterday in response to the president-elect, toyota said production volume or employment in the u.s. will not decrease as

a result of our new plant in guanajuato, mexico, announced in april of 2015. guys, this is not the end of the trump tweets regarding the automakers. next week is the detroit auto show. we're going to talk with the head of toyota north america regarding what the company's going to do. it is planning on building that plant. they say they need that extra capacity. well, what's going to happen now? are you going to change your plans? ford has already changed its plans. there are a lot of automakers who currently have sites under construction or in the planning process in mexico. guys, 7 million vehicles imported into the u.s. from all around the world last year were sold here. there's a lot of demand that would have to change if the tax situation changes. >> do you think there's any difference in the calculus because toyota's not an american company while ford and gm are? >> you mean is he saying it's

easier -- >> in terms of the company being a little stronger and say, no, we're not going to change our plans. just wondering. >> i think maybe a little bit but not a lot. at the end of the day, the most lucrative market in the world is the united states. so you want to be here. you do need to change your capacity around the world to meet that demand. having said that, small cars are the least profitable vehicles that the automakers sell, and they're not in demand right now. that's part of the calculus made for scrapping the plant down in mexico. if you are an automaker, you can say, look, can we squeeze corolla production from somewhere else? fine, let's do it. what is interesting, michelle, and what a lot of automakers executives are already talking about is, okay, you rip up nafta and bring in a border tax for anything built in mexico, what happens with canada, japan, korea, germany? we're importing 7 million vehicles. are you going to add a tax for all of those markets or increase some type of border tax?

that's the concern that they have. >> absolutely. phil lebeau, thanks so much. >> you bet. >> part of the gop plan is this idea of taxing imports but not taxing exports. coming up, it is jobs friday. the u.s. border patrol is hiring. we're going to head to the agency's headquarters to find out what they're looking for in new recruits. that's next. "squawk box" will be right back. time now for today's aflac trivia question. which condiment used to be sold as medicine in the 1830s? the answer when cnbc "squawk box" continues. g. i t gon bou g. withey

u miov. .afbrr minisice wothenivery n ve ?withmout. anbuth dsnhao,lie

now the answer to today's aflac trivia question. which condiment used to be sold as medicine in the 1830s? the answer, ketchup. coming up next when we return, president-elect trump expected to get a briefing on the alleged russian hacking today. we're going to talk to senator mike rounds about what we can expect from that meeting

straight ahead. as we head to a break, take a look at u.s. equity futures. dow looks like it's going to open off about 16 points. we're back in just a moment. llss ye ew

good morning. welcome back to "squawk box" here on cnbc. we're live from the nasdaq marketite in times square. among the stories front and center at this hour, the top item on today's agenda we're going to be getting in just a little over an hour from now, the december employment report. the economy likely added 183,000 jobs last month. that's the number to beat. the unemployment rate seen ticking higher to 4.7%. average hourly wage is expected to have risen 0.3%. in corporate news, great news for the gap. they're reporting a surprise 4% increase in same-store sales in december. that's thanks to better demand for its grap and old navy brand. banana republic still struggling. they're expecting their

full-year profit to be higher than previously expected. the stock up about 8.5% right now. finally, frontier airlines preparing an initial public offering. the low-cost carrier has hired deutsch bank, jpmorgan, and evercore for its debut. they're hoping to raise half a billion dollars, valuing the airline company at $2 billion. finally, a quick check on this. this is pretty cool. alexa, how about sushi tonight? amazon's popular digital assistant can now order takeout from any of the company's affiliated restaurants, but there's a catch. you must be an amazon prime member, and alexa can only get food delivered from places you've ordered before. the new feature is available in 20 u.s. cities right now and delivery is free. we have one right here. hold on. >> it's been listening to us this whole time? >> yeah, here we go. alexa, can we order some sushi please? >> voice ordering in my deals

are exclusively available for prime members. would you like me to add sushi to bradley's amazon cart instead? >> yes, please. >> okay. added to bradley's cart. >> and i have one other thing for you, alexa. alexa, could you wish joe kernen a happy birthday this morning. >> sorry, i didn't understand the question i heard. >> i thought i'd try. it's joseph's birthday this morning. happy birthday. alexa didn't know or doesn't understand yet. she's working on it. >> my favorite thing to do with alexa -- >> she's better than siri. >> way, way. >> i was thinking i could order food from siri. god knows what would show up. like a car or something. >> oh, how about this. alexa, what do you think of siri? >> i like all ais. >> she's very nice and polite. >> alexa, is there a god? >> i don't have views either way about religious matters.

>> oh, she doesn't have views. did you hear that? >> i can barely hear it. alexa, louder. >> you took it right to the -- wow. >> i always do. >> all right. i'm going to read this. the baby was born on wednesday, right? >> wednesday morning. >> so you were here one day. i looked -- i was looking at you in the monitor again. your shot, your skin and the lying -- >> makeup. >> no, but the lighting. when you went home, i didn't get to talk to you. did you look at your shot? >> i'm narcissistic but not enough to watch the whole show. >> you didn't watch part of it? >> you look -- i mean, the lighting is amazing for you. >> thank you. you look ten years younger. >> no, no, no. >> you look 41. >> saying yes with your hands, no with your mouth. >> who's that clown? you look better and more attractive -- i mean, he thinks he's -- >> he's a handsome man. >> he thinks he is. he's got nothing on you, my

friend. nothing on you. >> thank you, birthday boy. >> you're welcome. president-elect trump expected to meet with u.s. intelligence officials later today and receive a briefing on russian hacking. joining us now, south dakota senator mike rounds. he sits on the armed services committee. senator, you got some great lighting too. >> hey, good morning. happy birthday. >> thank you very much. i appreciate that. i listened to everything i could about yesterday. i understand all of the ramifications, but at this point, do we know any more about the actual substance and evidence that definitively got the intelligence agencies to this conclusion? are you totally convinced at this point they've got this right and there's no conjecture? >> we haven't seen the report yet. we understand that president obama has two reports, a classified and unclassified report. we think we'll have access to both of those in the near

future. then we'll be able to make our own determination. at this point, the different agencies seem to be convinced that they can show clear evidence that russia was directly involved. we haven't seen the evidence. we'll take a look at it then. these guys are professionals. they're good at what they do. we've been working with them -- i've been working with them for two years. i find them to be very sincere in what they do. they wouldn't be making these types of comments if they didn't have some pretty good evidence. >> although, if you admit we should -- clapper admitted we should be skeptical, just not disparaging. if you admit you should be skeptical, it just seems like there's still some wiggle room. i don't think that this "washington post" -- the notion that there was celebration when the election outcome -- you know, when the results were released to senior officials in russia, there was cheering. i mean, i heard some cheering in different parts of my neighborhood when the election

outcome was finished. none of those people hacked into the dnc. >> there was a lot of cheering in my part of the country when the election results were done. look, bigger picture here. when we talk about cyber and what's going on, this is just the tip of the iceberg. it's very important to bring this to national attention. number one, when we get into the e-mails and that's only one part of it, we have to be talking about what happens when they get into the different security systems within the united states. our financial systems, the operation of our trains, the operations of our communications, the financial services markets and so forth. those are the things that we're trying to make sure that we have access to programs that we can protect those important infrastructure items. we want to continue to talk about whether or not we can do that in realtime to protect against the damage when they're trying to incur it. >> although it's been going on not even just for the past eight years, even for longer than

that, we saw how many public employees were hacked by china. that wasn't the straw that broke the camel's back. it's just a little weird -- not weird, but maybe telling that the straw that breaks the camel's back also helps to delegitimize the election for the next president. it seems like it's a little bit more out front from certain sectors because of what it's able to do. there's no political side to this, senator. >> there's always a political side to it. the reality is there was the hacking of the e-mails, but it wasn't just democrats. they didn't try just democrats. they tried other places as well. they tried to get into the rnc as well, they just weren't able to do so at this time. once again, bigger picture. cyber activity is going on. we've got to do a better job in the united states of making sure that we can defend ourselves, and that's part of what we've got to focus on. this is bringing it to the national -- i mean, this is bringing it to the forefront in

america today. let's not lose the opportunity to talk about what we have to do to protect our infrastructure against those cyber attacks. if this was a kinetic attack, an attack where someone is coming in with a weapon, everyone would be up in arms saying what are we going to do to defend against it. that's what we should be talking about with cyber activity as well. we have to continue to focus on the big picture. >> that's absolutely true. let's talk about whether this is an act of war from russia. let's talk about what type of punitive action we should take. we've already taken some punitive action. then just the overall notion of who do we deal with and negotiate with and talk to, and who do we just confront full on. we've decided to talk to iran at this point. i know this hacking is against the law. they're meddling. they're troublemakers.

i don't know whether they're actually funding terrorists. i don't know whether -- we talk to everybody at this point. we make deals with iran. what kind of relationship should we have with the other superpower, the other nuclear superpower? iran doesn't even have the bomb yet. these guys got 1500 of them or something. those are the guys we want to, you know, confront directly, but we want to talk to iran. >> we have to be able to communicate with those individuals we disagree with. if we can communicate and we can stave off that misunderstanding and stop a war before it starts, we win. but on the other hand, you've also -- if you lay out and delineate a clear policy about what is considered an act of war in cyberspace, you might very well begin to deter those individuals from going that far in the future. that's the reason why we proposed last year a cyber act of war provision that now is becoming a part of the national defense authorization act this year, directing the administration to lay out the

policies, the policies that would identify if something happens, is it considered an act of war, how would we respond to it, how would we defend against it. and to start that discussion now. once we start laying out what is considered to be an act of war or an act of aggression that's going to get a response, now the bad actors across the world start to think twice about whether or not they really want to incur the wrath and if they want to incur the damages done to their systems that we would be authorized to do. >> okay. >> make sense? >> no, it does make sense. it does make sense. it's just, you know, watching everything in this highly politicized environment, you know, it's just interesting to watch everything. i've talked about this earlier, the ire from the left about questioning the intelligence community versus what i heard about comey after the second e-mail investigation. i mean, do what i say, not what

i do. there's hypocrisy all around. i don't know how you deal with it every day. >> there's nothing wrong with having an honest discussion and a debate about things you disagree with. there's nothing wrong with going back to the intelligence committee and asking them to show data and so forth. >> i want to see the final report. i'm interested in the final report. there was a wmd report too and a benghazi report. i want to see all of it. anyway, thank you. >> thank you. >> we appreciate it. jcpenney just out with holiday sales. another department store retailer reporting a same-store sales decline. theirs was 0.8% in november and december from the prior year. jcpenney says business improved after weakness in the first three weeks of november. but the company specifically cited weakness in women's apparel, which affected their sales. they did stick, however, to their profitability turnaround, they said. they're still targeting a billion dollars.

you can see the stock is off 4.5% in the premarket at this hour and echoing what we heard from macy's and kohl's earlier in the week. already declining substantially over the last couple days, jcpenney. coming up, the u.s. kcustom and border patrol agencies are hiring new agents, and no, it's not because of president-elect trump's proposed wall. kate rodgers is going to tell you why and what they're looking for, next.

welcome back to "squawk box." the futures right now pretty flat because, of course, we are waiting for the big employment report. right now the dow would open lower by 23 points. the nasdaq, a little more than one. everything can change when we find out the big jobs number in about 45 minutes. in the meantime, let's find out where the jobs are. kate rodgers has found some in el paso, texas, right along the border. hi, kate. >> reporter: hey there, michelle. that's right. on a typical day, u.s. customs and border protection agents

will process about 1 million people entering this country by land, as you see here mind me, air, and sea. but the agency has an immediate need for more manpower. even though annually they'll receive between 55,000 and 65,000 applications, hiring new trainees and retaining existing agents remains a challenge. if you're looking for a challenging career and have a desire to serve and protect, look to the nation's borders. the u.s. customs and border protection agency is actively recruiting. >> we're looking for men and women that really have an innate set of core values, of honesty, of integrity, of dedication, of respect. >> reporter: the agency needs to bring on about 1700 new border patrol agents in the near future to help protect 6,000 miles of the country's land border and more than 300 ports of entry. new agents train for roughly four months. prior law enforcement experience isn't necessary. >> you don't have to have a college degree. you don't have to be prior military. if you do, that's great too. we can start you in at different

levels. >> reporter: however, many applicants don't make it past the initial screening process. other challenges, the job often requires agents to relocate to remote areas and deal with harsh terrain and weather conditions. >> generally we're not in major metropolitan cities. that can be a naegative aspect for some folks. i think the mission we have outweighs that. >> reporter: now, the agency was reluctant to comment on what a donald trump administration might mean for its overall operations and policies. as for president-elect trump, it does remain to be seen which of his campaign promises, including building that great wall, as he tweeted about this morning, between the u.s. and mexico comes to fruition and who might foot the bill. we did reach out to the trump transition team for comment on what their administration might mean for the border patrol agency as a whole, but they did not respond to our request. back over to you. >> okay. thank you for that. coming up, the animal orchestra has a special song for the birthday boy this morning.

and later, you don't want to miss it because minority whip steny hoyer joins us. "squawk box" returns in just a moment. the police often question him just because they find him interesting. his beard alone has experienced more than a lesser man's entire body. his blood smells like cologne. he is the most interesting man in the world. >> i don't always watch cnbc, but when i do, i prefer stocks to watch and the animal orchestra. keep watching, my friends. with the xfinity tv app,

anything with a screen is a tv. stream 130 live channels. plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen.

download the xfinity tv app today. oh, look at that. the dancing lady for you. >> there's shatner. >> fantastic. >> wow. >> oh, look at you doing push-ups. and the animal orchestra. >> this producer is deranged. >> i thought a fan of yours. >> kwhost twho's the guy in the right? >> i love her. >> but joseph -- >> yes, sir? >> there's a special lady who

wants to wish you a happy birthday, to sing to you actually. >> marilyn monroe? >> alexa, can you sing happy birthday? ♪ happy birthday to you ♪ ♪ happy birthday to you ♪ ♪ happy birthday happy birthday ♪ ♪ happy birthday to you ♪ >> thank you, thank you. >> alexa, enough. thank you. >> that is very -- >> i'm not sure what you meant by that question. >> alexa, stop. >> stop, alexa. does she know hal? has she ever met hal? >> alexa, have you ever met hal? >> sorry, i didn't understand the question i heard. >> stocks to watch. >> everything's running smoothly. >> open the pod bay doors, alexa. novartis is teams up with ionis to license cardiovascular treatments in a deal that could eventually be worth more than $1

billion. the drugs aim to reduce heart risks in patients with high levels of lippo proteins. get her out again. i want to see if she can sing one other thing. regeneron and sanofi could still reach a settlement. ask if she can sing "a bicycle built for two." >> alexa, can you sing "a bicycle built for two"? >> sorry, i didn't understand the question i heard. >> after you say alexa, nothing else. >> it confuses her. >> alexa, can you sing "a bicycle built for two"? >> hmm, i can't find the answer to the question i heard. >> one more shot. >> alexa, play "a bicycle built for two." >> i didn't find "bicycle built for two" in your library, but

it's available with amazon music unlimited. would you like to learn more? >> that was good though. >> you wonder why it's a $600 billion company. alexa, you little -- anyway. shake shack's cfo will retire in march. he's been in that role since 2013. the company's also naming its first operating officer -- its first chief operating officer, who has been part of the operation since 2015. what they're disconnecting hal, slowly taking away the computer's memory, he learned how to sing. that hurts, dave. don't do that, dave. as they're pulling out his memory. i'd like to hear her say it. >> i've heard her refer to hal. my mother-in-law has one of these. i play with it all the time when

we're visiting. he has brought up hal. >> i'm sorry, dave. i'm afraid i can't do that. >> great voice. that movie never gets old, by the way, if you're looking for something to watch. watch that again. it's awesome. >> somebody on twitter says they had an alexa on in their home and they're watching tv and we're controlling their alexa. >> no way. >> that's happened on "power lunch" too. >> something bad is going to happen from all this. i don't know what it is. >> thousands, maybe millions of homes across america playing "happy birthday." >> in the meantime, some other news. cadillac launching a new luxury car sharing service called book. there's a flat monthly fee of $1,500. members can drive and swap out pricey cars whenever they want. subscribers can just select what model car they want from a menu within an app and wait for the car to be delivered. it's like leasing a cadillac.

just pick the one you want. >> very interesting. >> our alexa's a lemon. chad's alexa in columbus is playing "a bicycle built for two." >> because he has amazon prime and subscribes. >> we haven't set ours up pro r properly. >> you heard it. >> you're on amazon prime. >> i am, but i don't know whose account this one is on. >> put your account number in there. >> maybe we'll also bring the google home on and do it. >> frontier airlines is preparing for an initial public offering. "the new york times" reports the low-cost carrier has hired deutsche bank, jpmorgan, and evercore to plan its debut. the denver-based airline is hoping to raise half a billion dollars, which would value the firm at about $2 billion. okay. the first baby born in chicago this year bearing homage to the cubs. baby wrigley rose joining the world on new year's day, two months after the cubs won their first world series since 1908. the baby girl, who is of course named after wrigley field, is the daughter of ellen and aaron

dabley. the couple told "the chicago tribune," they actually chose the name before the cubs won the world series. so congratulations to them. >> that's a cute name. wrigley rose. >> it is cute. coming up when we return, it is jobs friday and the last report before donald trump takes office. we'll talk to representative steny hoyer. then the reaction from our jobs panel is all straight ahead here on "squawk box." back in a moment. tati or gos ivy

jobs in america. breaking news this hour. we are just minutes away from the final jobs report before president-elect trump takes office. what will the numbers say about obama's economic legacy? we'll ask house minority whip steny hoyer. plus, the data, the market reaction, and instant analysis from our panel of experts. a special hour of "squawk box" begins right now. ♪

good morning. welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin, michelle caruso cabrera. the futures have been sort of in hold mode until we see what happens with the jobs number. we're down 28 now on the dow, 1.3 points on the s&p, and a similar down move indicated on the nasdaq. treasury yields have moderated. 2.35. the yields have actually come down. the dollar has reserved some of its gains. today's top story, what else, the jobs report. forecasters say the economy likely added 183,000 jobs last month. unemployment rate is seen ticking higher to 4.7%. hourly wages are expected to have risen 0.3%.

that report is due in just a half an hour from now, 8:30 a.m. eastern time. the biggest data point of the month. consumers in focus again this morning. that's because jcpenney's reported a same-store sales decline, like the other retailers we heard from this week. a decline of 0.8% in november and december from the prior year. retailer says business did improve after the weakness in the first three weeks of november. but the company specifically cited weakness in women's apparel. stock is lower by 4.5% in premarket trading. however, better than expected report out of the gap. a surprise 4% increase in same-store sales in december. numbers helped by demand for its gap and old navy brands. that stock is higher by more than 8%. considering how much the retailers had sold off, you get a good number from a retailer. a strong rebound as you see there. steve liesman joins us from chicago, getting ready for the

jobs report. was it the last two, steve? >> no, i've been running good for four now, joe. i've been looking at my history. i had a couple bad ones before that, but the last four months have been, i want to say, randomly good. i have no expectation. >> the faux humility works for certain people. >> it's not false. it's not false, joe. here's the deal. i should have an average error of 54,000. that's been the average error, plus or minus, going back to the model which ran back to 2001. the last four months it's been running half of that. i don't know why. i've been looking at it, trying to figure it out. there's no reason it should be better no uh than over the last 15 years. it's running very good. maybe i should just shut up and go with it and take it. >> so what is your number? where are you now? >> you think i'm just going to give it to you right now like that? >> give me a big buildup then.

>> okay. well, here's the number then. i'm going to give you the number. 160, joe. >> okay. all right. >> that's my number. i've seen numbers, by the way, lower. i've seen 200 out there. what i wanted to say in the last hour is you know your buddy john riding, he's on board with this idea about not just full employment, but this idea of this skills mismatch. he thinks that average employment over the next year is going to be just 125,000. so that's something to think about. look, i don't know how much of this is before the trump policies are figured in or afterwards, but you have a labor force and whether or not those folks are coming back to work, i don't know what your opinion is, joe. a lot of economists are skeptical that the people are out there to fill the jobs that may be coming. >> good problem to have, i think, though. >> i think that's right. i think that's a really good way -- because it means better wages, by the way. it should mean better wages. >> and we got to start matching up the skills to where the jobs are too. a lot of times that will start happening. a lot of times you can't pass a

law to do it. it just happens because people -- >> but who should do it, joe? the businesses or the government? who's going to prepare people for those skills? >> a combination of both, probably, but it would be better if you just saw the market forces. wow, look what's happening over here. i'd like to be able to take that job. >> i'm afraid that businesses are sort of trained in a pavlovian way to rely on government to train their workers. there's a lot of that. that's something that ought to change. >> all right, steve. thank you. we got to go. >> thank you, steve. we'll have our next special guest, who's coming to us from capitol hill this morning. joining us to talk about this topic and a lot more, house minority whip steny hoyer. >> morning, joe. happy birthday. >> this one is andrew. birthday boy is right over here. >> thank you, leader. i appreciate it. i appreciate that. thank you.

another one. another one down. >> andrew, apparently my happy birthday is premature for you. >> he had a daughter two days ago. >> wonderful. congratulations. >> good news across the board. congressman, let me go here, which is one of the issues steve liesman was talking about. if you look at all of the economic analysts that have come out in the past month since donald trump won the election, the expectation for the growth rate in this country has improved remarkably. from where you sit, does that make sense to you? >> well, i think there's some sort of feeling in the business community and the job creating community that taxes are going to go down, regulations are going to disappear, and it's going to be a good environment in which they can invest. now, whether or not over the long-term that's good for either the economy or the deficit, that remains to be seen. i think there is some expectation that it will be a better environment, a looser

environment, whether that'll be good for the environment, whether that'll be good for consumers, whether that'll be good for the deficit is yet to be seen. in any event, i think there's a short-term, somewhat euphoric feeling that there's going to be a better environment. the fact of the matter is, of course, the economic environment since president obama took office has substantially improved, incredibly improved. unemployment down, unemployment applications down, 74 months of job growth, 14 million new jobs created, stock market tripled, which means that people's retirement, 401(k)s are substantially in a better shape than when obama took office. so there's some very good economic statistics. can a spurt in growth occur? i think it's possible that can occur. whether it can be sustained given the policies that the

administration says it wants to pursue with reference to taxes, i think, is problematic at best. >> congressman, that fundamentally is the question. not to relitigate history, there's no question that the economy has gotten a lot better during president obama's tenure. of course, the question is, could we have gone faster. that's what the market seems to be suggesting today. the question there, is it an indictment to some extent of some of the previous policies? >> well, you know, i think one could hypothesize that, but the fact is, the u.s. has grown better than anybody else in the world. so from that standpoint, the recovery in the united states has been the best in the world. so could it have been better? i suppose we could always hypothesize it could have been better if, but the fact of the matter, it was better than almost anybody else. it has been a -- have we gotten to where we need to get? no, we have not. globalization obviously has had a real impact on average working

people. you were talking about that a little earlier, the skill set match. we've got to make sure that average working people do, in fact, have access to jobs and that they have the skills to perform those jobs. >> congressman, you've expressed some concern about a couple of the nominations that donald trump has made, including exxon ceo rex tillerson as secretary of state. what's your issue? >> i think what we've seen in the president's appointments are, first of all, either people who have had no experience in the area of the expertise they'll need to run agencies that are critically important to the united states of america and indeed to the world in the form of the secretary of state's job. mr. tillerson, i'm sure, is a very able individual. one of his problems is he's dealt not so much on the foreign policy issues, the human rights issues, the issues that relate to the relations between our countries as he has with the economic issues. is it good for exxon in a

particular country, and does it meet his expectations of bottom line access and an ability to work in a particular country. that has been his focus, the welfare of his corporation, as opposed to necessarily the welfare of his country. he'll have a different perspective now. i think there's going to be a lot of questions of mr. tillerson as to how he's going to balance the economic interests that he clearly has had as the leader of one of the largest enterprises in the world and his responsibilities as secretary of state. the nominee for epa is obviously focused on destroying the epa and denying that climate change exists. almost every american, i think, overwhelmingly believes that climate change is a reality and needs to be dealt with. we need to have policies -- >> whoa, whoa, whoa, whoa. i don't know. i'm going to have to turn in my citizenship. leader, let me change the

subject. i was watching a competing channel last night. it's a channel that maybe the president doesn't like that much. but i heard that -- they were talking about the victory lap and the speeches we're hearing now. one very bluntly said the american people probably aren't buying it because of three words, president donald trump. there are some that say it's not a repudiation of president obama's policies, that maybe it was a bad candidate or maybe it was jim comey. there's a lot of different reasons. isn't there something to that? or do the american people not understand that globalization has made it tough or that, you know, it's been tough to get 3%, but it is the first presidency to ever have a year, not a single year above 3% gdp. not a single year in eight years. that's the first time that's happened. >> it's the first time in a very long time that we've had as deep

a recession and as tough a clawback from that deep recession, which was worldwide. but nevertheless, the united states has done better than almost any country in the world in getting there. i'm not sure exactly what you mean. obama's favorability rating, as you know, is higher than trump's and higher than clinton's at the end of the election cycle. >> personally, he's very -- he continues to be very popular, but if someone -- i mean, if i had to ask you a year ago, is there any chance donald trump becomes president running against hillary clinton, who's running on a continuation of barack obama's economic successes, you would have said the guy from "the apprentice" is going to beat someone who's going to continue president obama's policies? you would have told me -- you would have asked me if i visited colorado, what i was smoking. >> i would not have said he was going to continue obama's policies. >> no, hillary clinton was going

to. >> i would have said he's not going to be president of the united states. no doubt about that. >> american people would choose a candidate in hillary clinton that would continue the policies, the legacy, and try to nail down everything president obama did. that's not who they chose. >> there are a lot of strange things that have happened in this election. there's no doubt about it. first of all, when some of the trump people said -- you had this overwhelming victory. 2.8 million more americans voted for hillary clinton and the policies she supported than voted for donald trump and the policies he supported. >> leader hoyer, pennsylvania, wisconsin, michigan. he won the popular vote in all these places, where a republican hasn't won in 30 years. >> i got it. that does not change the fact -- >> well, you can't win new york and california -- >> we understand the electoral college. donald trump's going to be president of the united states. that happened in 2000 as well. >> and throw in florida and ohio and all those places that

president obama carried easily. i don't know. something's going on. something's going on somewhere. that's a song too. >> well, obviously something is going on. what was going on is the american people and particularly working americans who saw their lives as not being what they wanted them to be were striking out for change. whether or not the change they're going to get, just as when they voted for republican congress in 1994 and got newt gingrich, they decided about 11 months later when he shut down the government three months later, that wasn't really what they wanted. so i think that you can't discount the fact that the popular vote was more for the other side than at any time in recent history. 500,000 in the gore race. 2.8 million in this race. yes k yes, the lelectoral college is configured to donald trump becomes president. that's our system. >> well, you're not going to

score the world series with who has the most runs. it's who wins each game. you can't do total yards in a football game. you know that. you're from maryland. you wish you had more scores, university of maryland, recently. >> amen. >> leader hoyer, thank you very much for coming on. we always appreciate it, sir. >> thanks a lot. >> you're welcome. coming up, jobs in america. we're counting down to the release of the big report. our panel will join us right after the break. stay tuned. you're watching "squawk box" on cnbc. y y! y urupup thr f t oy t t s

n'worr accd.ththsaary.foot rerecho grn ops s ing wikowi i provide for my family. i will use my education to help my community. i will inspire our next generation of leaders. i am a college student, but i am only 1%. only 1% of college students are american indian. donate now, and help our numbers grow. ♪

we are minutes away from the december jobs report. let's get to our panel. david blitzer is managing director and chairman of the index committee of s&p dow jones indices. and ryan streeter is at aei. steve liesman is with us. david wetzel, a senior fellow at

the brookings institute. david, you're doing jobs friday with us? >> that shot's not good yet. >> oh, okay. well, give us the state of the current jobs picture. it's not running at the same rate it was, let's say, a year ago, but people still think that's for good reason. still a strong jobs market? >> it's okay. the year-over-year trend has been slowing. i think we're 150. that backs out a year-over-year rate about 1.5%. the economy down shift in the fourth quarter. to me, a lot of those changes, with the right policies in '17, if we get them. in the short term, you're getting weakness, but i don't think it lasts. >> david? i think generally this is a good economy. not incredible but very good. the numbers look good.

you've got low unemployment. you've had recent job growth. i think you'll continue to see job growth and so on. the near term, i think the big questions and big uncertainties are on the political side, not on the economic side. >> david wetzel, you're good for us. you're joining us on a jobs friday as part of our expert panel. congratulations. >> it's a birthday present for you, joe. >> you know what, that was the one that i thought there was no way that i could get what i really wanted. how strong -- on a scale of one to ten, what's this labor market right now, do you think? >> i think the labor market is about a seven or eight. we've krorecovered from the gre recession. unemployment is low. wages are finally starting to rise. i think we're seeing and we'll see in today's report continued worrisome things about chronic conditions in the labor market. one fact, 15% of the men between 25 and 54, prime aged men, aren't working. that's a chronic problem that predates the great recession.

i think this is a time to focus on those things. the short-term cyclical picture looks good. >> ryan, at the aei, what is the consensus? is there any flies in the ointment? you see any negatives that are kind of glossed over? the participation rate or part-time employment? >> i think the new normal we're in right now -- we'd like to have a better normal. we'd like the normal to be better. it's like the train is going down the tracks with a little bit of sand and rocks in the gears. so we're not full steam ahead. i agree with what everyone else has said. the sand and rocks in those gears are primarily the structural problem. the skills mismatch. when you look at the last month's report, more people dropped out of the labor force than we added in the entire health care sector in the previous year. so it is a real problem. the skills mismatch is a huge

thing. it's a real thing. it's something that we talk a lot about. when it comes to public policy, how we kind of revitalize career and technical education with apprenticeships and the like, that's where we need a lot more creativity. i think policymakers in washington have talked a lot more about health care reform, regulatory reform, even reforming the social safety net. we need fresher, better ideas for that kind of policy. >> skills mismatch is very simple. it's that there are jobs available, but the people who theoretically could do them don't have the skills to do those jobs. somebody at the aei isn't telling me that the government should fix that problem, is he? >> it's a partnership, right. obviously we spend money every year on career and technical education programs, primarily at the state level. the fed has sent a lot of money that way. look, it's not connected with our k through 12 education very well. we don't really know how to do apprenticeships in this country in a way that fits our labor

market. i think employers have to drive this. they're the ones who know what skills they need. >> okay. that's what i expected to hear. >> what's interesting is the strategy in the past for the skills mismatch has been to train or retrain the people. donald trump seems to be changing that strategy. he's not out to retrain people who used to work in manufacturing and get $25, $35 an hour. he's out to bring back manufacturing. he's playing the other side of the game. >> i don't disagree with that, but i think long the question has been -- the mission has been to retrain people. the question was always, who should do the retraining? do you have a big federal program that does this, which never works. steve liesman, you and i have talked about all the money spent on job training. it should happen at the industrial level, at the corporate level. >> again, when you see people move from new york to north carolina, what you see a lot of is you see the local governments come up, the state governments

come up and offer either tax credits or some form of compensation for using the local community colleges. the government is deeply involved in this. i think there's a broader way to set the framework here, which is that when david was talking about men dropping out of the work force, you have drug dependency issues that are a big part of it. to me, the year shapes up like this. i want donald trump to prove alan kruger wrong and to recap, for people who haven't been watching, alan kruger thinks people have zrdropped out of th work force and ain't coming back for a whole lot of reasons. i want to see donald trump, his policies, bring those people back into the work force. that changes the dynamic of the economy in a big way. >> you really want to see that, or you're saying i want to see that. i mean, what was that? i don't understand. >> joe, you can say that i'm saying that in any way you like. i want to see it happen. i want to see it happen. >> oh, now you actually want to see it. okay. i just want to be specific.

okay. >> thank you, steve. stick around because our panel is sticking around. we're going to bring you the jobs number and market reaction. el

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do not move because the moment of the morning, the month, the mack daddy economic report of the month, the december jobs report coming out, final number of 2016. it's just moments away. we'll bring you the numbers. stay tuned. you're watching "squawk box" on cnbc live from times square.

now, this makes me excited. >> makes you pumped.

>> yes. >> 20 seconds to be pumped. >> about 15 seconds away from the december jobs report. futures are down 24 on the dow, down 1 on the s&p, the nasdaq has actually turned positive. oh, my god. for my birthday, we got a different guy at the labor department. it's eamon javers. in t numbers, please. >> 156,000 in december. unemployment, little changed at 4.7%. that gives a total of 2.2 million new jobs for 2016, which is less than the increase of 2.7 million in 2015. health care was up 43,000 in december. social assistance was up 20,000 that month. food services and drinking places, my personal favorite category, up 30,000 in the month of december. employment declines were seen in mining and logging, construction, and information. the number of long-term unemployed was essentially unchanged at 1.8 million. the labor force participation

rate changed little at 62.7%. let me give you some of the revisions here. october jobs were revised down from 142,000 to 135,000. november was revised up from 178,000 to 204,000. that's the news from here, guys. back over to you. >> i think we're going to talk to -- i mean, all i can think about the whole time you were talking was liesman. that's all i could think about. i didn't listen to what anyone else said because he did 160 and it was 156. he's probably like strutting back and forth, his chest is stuck out. look at him. look at him. am i right? there's that faux humility we were talking about. there's humble steve. there you go. god, almighty. that's all i thought of, really. i didn't listen to anything else eamon said. i just thought, oh, no.

he was within four. >> let's get some reaction. where's rick? >> rick santelli, are you there? what's going on with yields? >> yeah, i've been here for a while. >> well, don't get pissy. >> how are yield reacting? >> give me a question, i'll give you an answer. >> how are yields reacting to steve liesman's clearly accurate prediction? >> i don't know about steve liesman's clearly accurate prediction, but i can tell you this, i didn't see the predictions. i didn't hear the predictions. and doesn't anybody find it odd there's no variance to these numbers anymore? they correlate so highly with what we see on the adp. i really do question that. >> oh, rick. >> that's a discussion for another day. listen, to me there's two big stories here. there's the notion -- actually, two of them go right to china. the notion of the great trade you want to be in front of

treasuries selling because, as many have pointed out, who are the largest holders of treasuries? think about it. the fed, many of those who are holding collateral for structured finance. then there's the overseas, the foreigners. but out of all these groups, who really is the active pro seller? it's china, okay. i think many got in front of that trade along with the optimism that we're going to have an administration that won't mistreat business. but i also think that if you look at the overnight rates and the fluctuations we've seen in china, there's a lot of issues going on here. i would think that we're going to be dipping a little bit more. i would have thought the year would have closed at 227 to 230. i was very vocal about that in october. very significant level. basically a week later we're getting there, but i wouldn't think these moves are over. i think it's more of a pause. look for a little more buying to come in today on treasuries. >> got it. we'll watch for that. thank you so much, rick. joe, what do you think of this number? >> it's the proverbial ham on

rye, boring as you can get. >> dude, this is cable. >> i know, i know. i'll make it exciting. here's the thing. coming back to the point we were talking earlier about infrastructure. one of the plans that president-elect trump wants to put forward is obviously infrastructure building. i would argue there's a little less on the skill mismatch. just pure brute labor. if you're looking to bring people in who have been out of the work force, who maybe have had their skills atrophy or are nonexistent but you need workers, you need bodies, infrastructure spending, construction, things like that will go a long way to hire people. that's something longer term. >> i would agree with that. i do think the real challenge for the next six to nine months is much more on the political side and the real uncertainty. the new president is asking for a whole lot, tax cuts, spending programs, infrastructure, and so forth. it's all got to go through

congress. he's got to get congress to get busy and do something and focus on the immediate things. if the republicans spend the next six months and argue about getting rid of or replacing health care, it seems likely we're not going to get the presidential program that's been promised, and we're all going to be very disappointed. that's where the uncertainty is. it's not in the economy. we're starting off with a reasonably good economy. starting in about two weeks, it's donald trump's economy. presidents get blame or credit for what happens on their watch. it doesn't mat wear they inherit. >> the president, as everybody know, has both houses, the gubernatorial, state legislatures. reagan, with nothing like that, got his tax plan passed in august of '81. bush with even less did june of '01. these people are smart enough to know they have to push a domestic agenda fast. i'd be stunned if a portion of the tax package doesn't pass by this summer. >> david russell, you're in washington, d.c.

you agree with that? >> look, here's the interesting question. for the last several years, we've had relatively tight fiscal policy, even though the fed had been begging the congress to do more fiscal expansion. now we're at a point whereby the fed's calculations, we're pretty close to full employment. if we get a big dose of fiscal stimulus, whether it's on the tax side or the spending side, i think the fed is going to raise interest rates more than they expected. we're at near full employment. the fed is taking its foot off the gas pedal. if the congress and the president put their foot down on the gas pedal, the fed is going to have to pull it off more rapidly. >> steve? >> you have to believe the numbers, though, for that to be the case. >> i agree. i think there's a lot of uncertainty around what the fed thinks is going to happen here. there's three levels of uncertainty. the one is what's going to be proposed. we don't know that. what's going to be passed and then some sort of figuring about the potential economic effects. then it gets back to the discussion we had in the prior half hour, which is -- and i

don't know if joe addressed this, but do we have the workers to power the economy the way the economy -- the way the political side wants to power the economy. if the fed is right about this -- and again, i hope they're wrong. but 125,000 is all you need to keep the unemployment rate steady or lower down. the question is, are these people coming back into the work force? what's going to happen to immigration policy? big question that economist are asking is to whether or not we're going to have the workers to fuel the growth that the political side seems to want. just real quickly on the numbers themselves, interesting when it comes to the holiday season. you had 6,000 gains in retail. transportation and warehousing up by 14.7. what's interesting is more and more holiday employment is now delivering stuff. that's a big part of it. >> what is amazing about what steve just said, yojoe, is

suddenly we're asking questions about having enough workers. it's been eight years. we haven't been able to ask that question. >> i don't know the answer to this, but the household survey is a random 60,000 survey sample. i'm not sure exactly how the bls does it. they give you literature. i wonder -- and i'm just throwing this out there -- if that survey is even accurate. if anything we've learned in the past five years and more recently -- >> you're questioning the unemployment rate itself, not the job creation number. >> i've never heard of anybody that's been surveyed by the bls. is it by phone calls? is it by land lines? >> david, why are you saying come on? >> dave, you've never worked with data, so you don't know what you're talking about. >> i think there's lots of questions about how we count people, but do we think the bls has suddenly gotten worse over the last two, three, four years? >> sure. have you heard of a cell phone? you've seen the standard on their numbers? 400,000 a month. >> and it hasn't gotten -- look, they do the best job they can.

questioning the numbers is just pandering to the people. >> i'm saying this is something for further investigative study to see if the survey is correct on it. >> steve, go for it. >> i've done a lot of work on this, joe, trying to understand. there was an allegation about a year ago about a potential, you know, political interference with that. i think they're using both mail. they're using a whole bunch of things. i agree with david, the idea that if it is bad, there's no reason why it might have gotten worse. there's also been some corroborating studies about what's happening in the work force, people question this issue of drugs. alan kruger did a whole report. >> i understand that, steve. >> we also have the payroll survey. >> i'm not making any political calls. i'm saying about how the methodology and how it's done,

getting the right sample. >> it's intuitive to question it simply because of all the polling we saw in all the elections around the world that were so wrong. >> the polling is a completely different kind of thing. i don't think the survey is necessarily perfect. i think it's good enough so we shouldn't immediately say that's the cause and that's why the economy is good or bad. the economy is good or bad because of what the economy is doing and so on. >> all right. >> look around, talk to companies about how hard or easy it is to hire people compared to a year, two, five, and ten years ago. i think you'll find out the labor market is getting tighter and getting better. >> can i make two points? >> two? >> one, they benchmark them to the actual wage records. we know how they are. secondly, we also have the payroll survey, which is done completely separately by going to employers. >> the household does not benchmark to the wage service. >> the household is benchmarked to the real world. >> now i'm getting bored.

hold on. liesman, for my birthday, you and rick almost -- you stopped. you were getting there. for my birthday, you guys -- >> that's because my mike was turned off! it doesn't count. it doesn't count. >> you want us to fight for your birthday? >> that's what i ask for, for my birthday. >> do not fight. >> let me say one thing. >> hold on, joe. i got something to say to rick. >> no, we don't have time. management doesn't really like it. >> now my ear piece is turned off. >> do you remember the republican debates? do you remember when trump would turn to someone and call them little marco or -- i mean, the ratings are like 30 million people. liesman and santelli, people watch. they stop. they stop what they're doing. >> well, i got three words for rick. i want to say three words to rick. >> maybe this will work. >> all right.

rick, you listening to me? >> i love you. >> he is. >> happy new year. >> there you go. >> happy new year. happy new year. and you're going to have a great 2017, steve. >> have a beautiful year, my friend. >> the country's going to have one. you too. the economy is going to have a beautiful year too. >> let's hope so, rick. >> i just wanted to reference it, andrew. i didn't want it to get out of control. >> joe, happy birthday. >> thank you, steve. thank you, rick. thank you, david, ryan. is this you? you thank everybody. >> thank you, everybody. thank you, thank you. okay. when we come back, this morning's top stories. plus, bye-bye to traditional radio. we're going to tell you why one country is switching off its fm radio station. "squawk box" returns in just a moment. cust cond tesesor.ithealthar

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welcome back to "squawk box." the futures right now after this number, they are now green. >> pretty flat. >> they're flat, but they used to be red. >> okay. >> can you not -- uh-oh. see, that's your attitude. your attitude has us red again on the dow jones. we're still trying for 20,000.

>> i know, i know. don't say it out loud. watch pot, never boils. >> just stop talking. now we're going to go. now it's going to be green. if you don't poo-poo it again. stocks to watch, jcpenney reporting a same-store sales decline of 0.8% in november/december from the prior year. the retailer says business improved after weakness in the first three weeks of november. got a little better. the company specifically cited weakness in women's apparel. gap reporting a surprise 4% increase in same-store sales in december. the numbers were helped by demand for its gap and old navy brands. another one is banana republic. that's still hurting apparently. that's what andrew said earlier. he knows. he's our clothes guy. >> yes, he is. >> saw those shoes, right. >> very nice. >> where is he? >> he went to the bathroom. coming up next, we head down to the new york stock exchange. jim cramer is going to join us

live. then later, don't miss steve liesman's exclusive interview with fed president charles evans. watch that at 3:00 p.m. eastern time here on cnbc. in the meantime, stay tuned to "squawk box." we'll be right back.

tame now for your kensho stat of the day. which sectors outperformed in january? utilities lead the way, up an average of 2% t

oh, please. let's get down to the new york stock exchange, where jim cramer joins us now. we were little bit negative and lately we're a little bit positive, jim. we talked all about the labor market today. the gains are smaller, but supposedly the pool's shrinking and the skill mismatch. so we're in a different place than we were a year ago or two years ago or even a year ago, i think. >> well, look, wages going up consistent with interest rates needing to go higher, consistent with the bank rally, which i think is yesterday was contra was not about the bank rally. the banks have led this market. so i think this is on target. we actually like this number if you're a bull. could maybe reverse some of the money that started going back into the highest growth stocks from the nasdaq. we want to see this market led by j.p. morgan going into j.p. morgan's quarter.

>> time to buy the gap, jim? >> you know what, the old navy numbers were extraordinary. i also like the international numbers. it's been one of the most inconsistent companies out there, but there's no denying that old navy number is too big to think it's just one-off. it would be amazing if it came back because when you go to the mall there's really not a lot of people in those stores. >> where does a frustrated eagle fan go now? >> to cincinnati to wish happy birthday? i don't know. >> giants, you hope -- >> yeah, you do -- look, i'm a seahawks fan. i always default to the seahawks and r. sherman because i like the way they play. but, you know, i got the giants going to the super bowl. >> it's defense, isn't it? seattle's defense, giants defense. >> yeah, it's defense. look, i remember when they went to green bay before. that was brutal for green bay. green bay is a hot team, but i love that giant d. they really used that cap money well. >> all right. looking forward to the games this weekend, jim. >> me too.

>> wow. his face got so dark when you brought up the eagles. dark, dark. >> i know. i wasn't trying -- i was just trying to figure out where do you go when it's clear -- coming up on "squawk on the street," don't miss u.s. labor secretary tom perez at 9:30 eastern. is he going to be the guy? we'll ask him that too. >> big final shot. >> he may be the dnc guy. "squawk box" will be right back.

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yeah, they bring -- >> welcome back. we are in the chairs this morning and a couple of just little news items to talk about. we're going to talk about radio in just a second, but donald trump tweeting, again, this time in the nbc family talking a little trash actually. he just wrote, wow, do we have this on screen? wow, the ratings are in and arnold schwarzenegger got swamped or destroyed by comparison to the ratings machine dgt -- >> djt. >> djt, i apologize, so much for being a movie star, compare him to my season one, who cares, he supported kasich and hillary. so talking a little bit of smack. he happens to be the executive producer of that show and i think gets points on the back end. hopefully he won't talk too much smack, but that's a little bit

of what's going on. >> hard to guess what's more -- i don't know. you still think he's -- every conflict he's trying to make a couple extra bucks, but i don't know if he really cares -- >> maybe all publicity is good publicity. >> it's kind of funny. >> it's funny. it's very funny. >> it's twitter. >> will arnold respond? >> if he knows what's good for him he will. i think it would raise his profile. >> maybe. i'm hoping for the best. >> yeah. >> for "the apprentice" because it's nbc. >> sure. >> but other people have tried -- >> you know, they say you've been terminated, not -- >> you've been fired. and the other people says you'll be back, you'll be back, you'll be back. because that's his other famous. h hasta la vista, baby. >> yeah. >> the other big story of the morning, i don't know if it's a big story -- >> really? any segue you get -- here's the

other big story of the morning. >> go for it. >> going to be nor way becomes first to switch off -- can carry more radio channels after the switch. 2 million cars on norway's roads are not equipped. >> "squawk on the street" is going to focus the entire show -- >> on this big story. >> because they focus on technology. >> the other big story of the day. >> in norway it's the biggest. this is the biggest story in norway. >> i guess i'm really old, i remember the switch from am to fm. >> i do too. so much cooler listening to webn. >> yeah. >> now you listen to satellite. >> now i do. that's true. >> the next time you call customer service, the person on the other end of the line may know a lot about you. companies like sprint and cae r

caesar's are increasingly monitoring -- start-up affinity has been installed in more than 150 call centers by dozens of companies and examines data bases tied to land line and cell phone numbers to determine the best agent to answer each individual call. companies say matching like this can result in more satisfied customers and more sales. >> and proctor & gamble is cleaning up for the super bowl. two of the company's home care brands, febreze and mr. clean making ad debuts at the big game. both get 30-second spots. proctor & gamble spent $23.4 million in the past year versus $140 million for febreze. super bowl ads valued at $5 million this year. who's doing it? i don't remember, it's not nbc, i think, is it? i don't remember who's doing it. >> i think it's abc. is it abc? >> you'd know if it was football, if it was soccer.

no, actually, you wouldn't. >> not really. i know the premier league is big. >> it's big. >> what is it? it's fox this year. >> oh, it's fox this year. >> never heard of it. >> just ask alexa. >> or our own producers. >> and a final check on the markets this morning after the jobs report, the futures are now positive. don't you say a word. keeps look foo fooing. >> i suggested while you were away that the markets were still flat after -- >> now they're green. they're green. >> and he says -- >> more positive. >> drives me crazy, 20,000, 20,000. >> it's bad luck. macbeth. >> i kind of agree. >> do you? >> i'm a little superstitious that way. >> take a look at europe and asia and i'd like to look at the other boards. the dollar, dollar really is more important now although it's come down a little. take a quick look at the dollar now especially the euro.

we'll see 1.05 here, 1.03 a couple days ago. ten-year looks like onwards and upwards, back in the 2.3 area. >> does it worry you? >> i don't know what it means. we're so interconnected with all the other stuff. >> okay. a final thank you to michelle for hanging out with us. >> see you on monday. >> see you on monday. and a final happy birthday to you. >> congratulations to sydney queen, what a family, two twin boys and little girl. are you done? >> this is it. the finale. and it's our finale. join us on monday. "squawk on the street" begins right now. ♪ happy birthday, joe. congratulations, andrew. good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. final jobs number of 2016 comes in 156, that's below expectations. wages up