before we hand it over to "power lunch." you never know. it's been great having you. kate moore with black rock. dow jones industrial average as you can see, 19,992. came within 0.37 points of the 20,000 milestone. "power" picks up that story right now. >> scott, thank you so very much. this feels to me like new year's eve minus mariah carey. >> exactly. >> i'm tyler mathisen. on the verge of hitting 20,000, coming within about a third of the point. let's get right to bob pisani on the floor of new york stock exchange. robert? >> 0.37. we kept going, what? it's got to go over that. and it didn't. we're close enough, folks. let's just evaluate where we are. the stuff that's pushing us right up against the door of dow 20,000, same stuff that pushed us since the election.

goldman has been the most important stock. i've said this for weeks, in the move to dow 20,000 since the election, that's up today. jp morgan. these stocks had paused for a while. also, big industrial names like united technology and boeing. they also paused. they're showing a little bit of signs. disney is starting to have a great year again. had a great year in 2016. got a great upgrade today from rbc. what's holding us back from getting to 20,000? johnson & johnson, laggards since the election. biggest disappointment, oil up, exxon and chevron down most of this week even though oil has stabilized. that's a bit of a disappointment and conundrum there. a bit of a mishmosh in terms of what's pushing us up. real estate, another big laggard. that's helping out.

banks, the big leader since the election, that is holding back. again, still doing well in the last couple of days. since the election, the dow is up about 9% and 1% this year. goldman sachs is the most important stock because of the price weighted nature of the dow. it's up more than 60 points. believe it or not that's 20% of the dow rally since the election. art cashin, who was here for many big numbers on the dow industrial average. they say it's just a round number. but you and i and everyone who watches this show agrees there's a little bit of symbolism here that makes it more than a round number. >> it will be on the front page of virtually every newspaper in the country. it will be talked about on every news show on tv. i would just suggest keep the champagne handy, folks. i think they're going to make another try at it pretty soon. >> we've been waiting for the next catalyst. essentially the markets have been moving sideways since the middle of december. no one is selling any stock. they're having a hard time

arguing about how much more they want to buy. if we get over dow 20,000, will that be an additional catalyst? >> well, it will certainly bring the stock market and its progress to the attention of a heck of a lot more people than now. it might bring new players in. that's hopeful. >> what decisively will get us through a new level? positive earnings guidance? everyone seems to feel that's the key right now. and yet there's indications the companies may not necessarily accommodate the positive rosie scenario everybody wants. >> i think that problem is they want to see how much of his program and how soon will the president-elect get his program? if i'm running a company and you're asking me for my guidance, i'm going to say to you, what's the tax policy? i really got to have more details about what's the tax policy and when will it kick in? if, instead, i might be delaying buying equipment and delaying doing other things. so, the waiting can have a slightly negative effect on the economy.

so, to really get through we need a little more clarity here. >> next week wells fargo will kick off earning season, bank of america will kick off earnings season. everyone is expecting earnings to expand for the banks with yield curve getting better. are they going to disappoint and say wait a minute we don't know what's going to happen? >> i don't think they'll be very specific. they'll talk about being hopeful. they'll talk about the changes in interest rates, how that might benefit them and how things are going. >> hey, art, it's brian sullivan, back at the studio. i say this with love. as a man who has seen a number of milestones yourself -- i understand the pros look at the 500. dow is just sort of a headline thing. do you actually see new buyers in order flow pickup when we hit these milestone numbers? is there any kind of a real impact from mom and pop and the retail investor? >> it can be, brian. it depends how it is played up in the mainstream media.

people don't usually talk about stocks because it brings people's attention. it will start conversations around the kitchen table about should we be expanding our 401k? how come we're not participating enough? it can bring other people in. it depends how it is played up in the press and elsewhere. >> what's your guess, art, as to what the reaction of traders of algos are when we hit 20,000? is there a lot of selling pressure? do you think we hit it and back off because programs say you say when we hit that milestone? >> there is that fear. the three alternatives are to burst through and then get short covering and a real push or to zigzag around the line, as we did with dow 10,000 for a while. the other one, as you point out, is to touch and repel. okay. we expended our energy. we reached it. let's go back and reconsolidate again. >> what are the biggest risks at this point to the big run we've seen so far?

>> i think the biggest risk will be how things begin to play out with the new administration's programs. if there appears to be a great deal of resistance. if, fox, it doesn't lor example we won't get tax relief, that will disappointment some people and change some plans. politics remains front and center for now. >> in today's action, art, what is maybe heartening to the bulls out there is that we're seeing the dow rise toward 20,000, s&p and nasdaq trading at record highs. tremendous strength and dollar index and rising rates. these don't seem to be headwinds here. >> no. in fact, it was the opposite yesterday when the dollar was weak. it hurt the financials. and we had a little problem with that. so, yes, things seem to be all going in gear. we'll cross our fingers and, as i said, keep the champagne handy. you may need it later. >> economic news has been very

much in the market's favor. today's number a little weaker, average hourly earnings up 2.9%, the best since june of 2009. more money in people's pockets. certainly a great prescription. and even though it confirms the idea for most people that the fed is going to raise at least three times next year, the market doesn't seem concerned with that. the market seems to feel they can handle it, the additional economic firepower it's going to get to possibly expand gdp will make it easy to offset those higher interest rates. >> i'm not sure they're still convinced about the three rate hike. i agree with you. what they want to see is some economic progress and if it goes in line with better stock prices, all the better for us. >> where else do you feel we go next? is there going to be -- next week we keep saying the financials are going to be reporting. will they be the ones now that will move the market forward? we all know -- we've been

flournding around with three weeks with no market leadership. it's very frustrating, watching nobody move to the fore here. what will be the sector that will move us forward? >> they'll all be important and a cluster of banks will be reporting next friday, which happens to be friday the 13th. i don't think they'll be specific, as we said before. they may be optimistic and that may be enough to push things over the top. >> guys, let's broaden this conversation just a little bit more and bring in cnbc ron instrada. kate moore as well. big team here to discuss what could be the next milestone. mr. mendel, 20,000. justified? >> i think so. >> why? >> markets have clearly embraced the inflationary theme globally. that's not a new idea started last year and accelerated after the election. the economy is catching up. past crisis range.

firm sentiment in manufacturing, services, consumer sentiment have all picked up and inflation is continuing to grind upwards. all those pieces are in place. for us, as asset allocators, we look at that as slightly incrementally favorable view. 20,000 is a symptom of that reflationary theme. it's not poised to end right now. >> being a third of a point away from dow 20,000 -- >> might as well say we would do it. >> we want the print. >> we didn't get the print. you can't show it until you get the print. for all intents and purposes we're there. and i would agree, global bond yields rise. six months ago $13 trillion of sovereign debt has come down to $10 trillion. you're seeing green shoots to a certain extent in europe, japan and a handful of other places. there's justification for the

rally. if you look at a two-year chart of the dow, this entire gain really comes since about november. >> right. do you know what seems to be different, kate, since the last time we really made a run at 20,000, we were just 13 points away a month or so ago. we finally have the participation of technology and health care. this week, 2017, was a very big week for health care and technology on top of the gains we have in financials. does this continue, do you think? >> i think we continue to have rotation throughout the market. different periods where sectors and industries change leadership. that's a very healthy and normal market. something you want to see. i think the big change, too, from four weeks ago or so is that we've had great prints for both consumer and business confidence. and i think we're going to start to see that follow through in terms of spending and investment behavior. >> what worries you, kate, about this rally? >> the thing that worries me a little bit is that most people are expecting big policy changes in the first part of 2017. a lot of the big policy changes

will take much longer to implement and maybe take longer to hit people's bottom line. >> that's sort of my intuitive thought. >> yeah. >> there's an awful lot of positivity built in and that it will not only happen smoothly, directly without a hitch and its effects will be felt. >> i would go the other way and say most things will happen more quickly than people think because a lot of it is already in legislative language that paul ryan has written. he will deal with mitch mcconnell and president trump once the inauguration comes. trade war, cyber war, shooting war. >> you brought up an incredibly important point. how the gains in the last month have been. i know the pros hate this talk of dow 20k. i get it. does this not show the importance of always staying invested? you try to time the market you might miss a 30-day period where you establish three or four years of return. >> yeah, i agree.

it's difficult to -- all the conversations we've been having are what are the catalysts? >> more buyers. >> can you be acute about timing? i don't think it's necessarily what you're worried about happening and the process of the next leg up. it's worrying about what's not happening. new normal crisis characterized by low growth. and now we're moving out of that, supported by economic growth and positive fundamentals. downside risk is being chopped off that can be the next leg up. >> you sit around here and look at this number away from dow 20,000. >> we've been around for 19,000 points. >> i was going to say, i started my career in financial journalism in 1982 in august. do you know what the dow was, its low that year? >> 1772. >> 1776 i saw. off by four points.

776 points on the dow. there's 20,000 of them. >> i joined in june of '84, dow was struggling to get back through 1,000. what was it, general foods was purchased by general morris. that catalyst threw the dow through 1,000 permanently after first having touched in 1966. >> right, and the high was something like 1200, as i recall the all-time high. >> i don't think it got that high. it touched 1,000 and took another 16 -- >> yes, there was a secular bear market that lasted 16 years. >> art, if you're still there, this whole conversation harkens back to the whole idea of, remember, the death of equities. that front page -- business week, the cover story. death of equities. nobody is in the market and that's precisely the moment you should have bought. it felt like for the long time, art, we had secular stagnation, lower for longer, things that -- we just have to live with it

forever. just when that became consensus is the moment when everything changed, art. >> yes, it did. and, again, i think people saw the possibility of policy changes from the election. and that's what they're hanging their hat on here, very much of it. and i agree that the vulnerability here is if those policy changes take longer or if, in fact, they are denied. but for now the market remains in a semi celebra tchlcelebrato >> i've seen 540 in the dow. >> i love that. >> steve liesman is standing by. we have you on to talk about the jobs report i guess we could wrap that into that. to what degree are we hitting dow 20,000 almost because of the jobs report? >> i think it helped. lot of up and down on the stock market. look at the s&p futures. two-year yield shot straight up

off the 830 number. it's a pretty solid number. revisions to november. decent numbers in december. most important thing is you had those higher wages. the market is looking for consumer spending going amid the uncertainty of what may happen when it comes to policy. you probably have a decent turn around when it comes to corporate earnings, single-most important and upside you talked about, possible upside on corporate taxes. whether or not that has an impact on the economy, it has a very strong impact on corporate earnings in and of itself, in that you reduce the tax burden paid by corporations as well as some of the import and foreign trade being talked about that ultimately could help if done right. >> this keeps the fed in its lane of between two and three hike this is year. jp morgan is out, stating that the fed stays at two hikes. for the markets that sort of, quote, unquote, certainty of

between two and three hikes is very meaningful. >> i'm not sure the market is right about that. >> okay. >> i think the fed is warning us in a couple of times, both in the minutes that just came out and jeff lacher just came out saying it may have to go up more than the market expects. this has been true, by the way, for the last eight years. coupled with high rates as long as it has the growth to go along with it, growth in profits and economic growth to go along with t ultimately the rates don't end up mattering that much unless they get to a place where the fed really wants to break or slow the economy. i think the market feels like there's a margin of error where the fed is a long way from wanting to break the economic growth. i think all it wants to do is play a bilt of catch-up where it's more positive, less distortionary. >> i wrote an op-ed piece. the fed, the fed, oil, ecb and

basically the fed. now significantly reduced back to earnings and guidance. would you agree with that? has the fed's importance for the equity market, not fiscal or monetary policy but for the equity market been reduced? >> the importance of the equity market for the fed is different than it was for the last eight years. >> it was everything, wasn't it? >> we need continuous support. please buy more assets. make sure you are providing a backstop. i think the equity market wants the fed to continue normalizing. if they don't and the growth data looks good we'll have the same questions we had before. what are we missing? is there something not good in the u.s. economy that the fed is -- >> sorry to interrupt. has the whole dialogue then flipped? it used to be bad news was good news because the fed would stay low. s that flipped now where if they stay low for too long that's a bad thing? >> that's a concern of mine for sure. i think the fed needs to continue on this path and to ensure the market, growth extra

inje -- trajectory we're all hopeful for is on track. this divergence between central bank monetary policy will actually come into play in 2017. >> let me take another perspective on that and what's priced in. markets may not be freaking out regarding a rate hike and projected acceleration in rate hikes is the fact that it's largely priced in already. the process of pricing it out has already taken place. look at the components of a ten-year treasury yield, just the path of short rates going forward and extrapolate that out ten years, we're basically fair on that portion of it. what's really expansive or low right now is the premium. bond purchases, ecb and boj to affect that. >> what does that mean, global term premium? >> it means that what investors are compensated for holding duration. and so above and beyond the path

of short-term rates is going to be. what i think has become clear over the last few years is that that component of the treasury yield is a globally determined factor. >> because everybody buys it? >> hey, michelle? >> yeah, go ahead, steve. >> i want to tell you, i was in the session earlier where charlie evans, chicago fed president, was talking and made some hawkish comments. i'm reading the reuters headlines, saying a burst of gdp could lead to more restrictive financial conditions, hoping nonpolicy makers find a way to boost economic potential, not just growth but potential. charlie evans joins the committee this year as a voter. talking somewhat hawkishly. we have an interview with him later. i thought i would mention that. we're going to talk to him. you have a situation where because of what's happening on the fiscal side the doves are becoming more hawkish or centrist over time. the market may want to be

rethinking this. >> ben was just telling us that he thinks a lot is priced in already. are you suggesting there could be even more than that? >> at the margin, michelle. i think that's right. i think the argument is not two or three, which all due respect to kate -- or no, melissa put it that way. three or four is probably the argument. does a quarter point matter if you're going to do 2.5% growth? i don't think so. does it matter that much on your mortgage rate? i don't think so. there are some traders who have to get their brain around that possibly. >> look at the sectors here that are leading higher, financials is one where we'll get a raft of financials next week. maintaining these highs, kate, will be on the financial sector next week and you have to wonder if we're going to see jp morgan blowing the doors off the barn with their report and a sell-off in the group later on in the week.

>> i think there will be volatility within financials. we've seen consolidation in the sector. so many structural and technical reasons. great stories from expanding margins, which will help to improve earnings. what is looking like less regulation, which could be very good. and if you look at positioning across the entire spectrum of both individual and institutional investors, financials are not a consensus. >> they're underowned. that's the thing. >> they got overbought for a while. we have had a bit of consolidation. there's a lot of room to rotate in the sector. >> ron, you guys have joked about how long you've done this. my esteemed colleague, bond duration and everything like this is important. let's broaden it out for mom and pop. individual stock ownership is at a record low. people have bought -- generations have lost faith in the stock market for a lot of very valid reasons. >> that's not true. >> it's not true? >> no. record low was 1981, '82.

>> it's in the high 50s. it's a 20-year -- you get my point. >> it was higher before the financial crisis. let's say that. >> people have lost their faith in the stock market. let's leave it there. you're all smart enough to understand my point, i think. here is the thing. does this reconstitute some confidence in the stock market for mom and pop? >> it should. unfortunate part is that they've missed the dow going from 6500 to 20,000. it was fairly clear that when the fed dramatically altered policy in 2008 and 2009 took rates to zero, launched an enormous program to bring down rates acres bell was rung to buy stocks. bank balance sheets repaired, corporate balance sheets repaired, stocks -- companies buy back stocks, raise dividends. cash flow was huge as the recovery grew more mature. at this level you don't want to say now you get in after you missed the better than tripling. i don't think the market is done but it's certainly not the first -- >> first time in a couple of

years we've begun to see some in-flows into domestic equity. >> by retail investments. >> by retail investments. >> by the way, it was zero before stocks -- >> would you agree with that, melissa? >> that sounds right, brian. but let's just say for argument sake that stock ownership is relatively low, historically, by the retail investor. even for those investors who have been in. bank of america had these figures out yesterday. 19% of large cap investors met their benchmark. people in the markets might not have even have seen the gains we've seen so far in 2016. >> i wouldn't swap out a pass -- too many headlines about how -- >> be inactive this year? >> absolutely. i would be in hedge fund this is year. >> because beta is -- >> hold on, steve. we've got breaking news. >> got to get to some breaking news, naturally, with sue herrera. >> here is what's happening,

everybody. out of ft. lauderdale airport, we are going to show you a live shot of that in a moment. nine people have been shot. one person is dead. msnbc, our sister network, reporting that the shooter is in custody. live shot a short while ago, a number of passengers on the tarmac taken off of a plane. we don't know exactly where the shooting took place. it could have been in the airport n some of these airports you walk downstairs on to the tarmac and up into a plane. it's not clear exactly where the shooting took place. nine people have been shot. one person is dead. the shooter is in custody. we're going to continue to monitor the situation. we are seeing ambulances go back and forth. there is a heavy police presence there, understandably, because we do have a shooting incident at the ft. lauderdale airport. i'll follow the story and get back to you as soon as i can with more information. i'll turn it back to you guys. >> thank you very much, sue. we should point out to the audience we've known about this the last several minutes and i'm sure many people on the trading

floor and the investing community knew there was an incident. we were waiting for confirmation. all of this to bring up the unseemly point that this has been in the market for 10, 15 minutes and although the dow has come off the highs of the day, it hasn't actually hurt it in any meaningful way, as you can be sure we're all wondering what is exactly happening in ft. lauderdale. is this a terrorist incident? what is going on? >> maybe we've become immune to news like this. >> ari fleicher was there. he said he heard it. steve liesman, sorry about that. >> i was going to ask whether or not you thought the ft. lauderdale incident was maybe keeping a cap on this and how physically maybe ron can talk about this. it works such that it seems like we get up to that 20,000 range and may blow through at any second now and the market seems to shy off of that.

ron, who is really smart about this stuff, is it a program trading thing? are the programs essentially programmed or coded such that they don't want to get to that 20,000? they get there and sell off of it? >> i don't know if that's precise or if you touch it, the program kicks in and drives the market even higher. there are as many programs as there are institutions using them. you have to be a little careful as to making a broad statement about how each algorithmically program works. 1,000 touched it for 16 or 18 years. that was all human driven activity. these round numbers tend to, as he said, get a touch and repel in some instances. it's more of a psychological thing and those algorithms build in that kind of psychology. >> i would also put forth it does seem -- the highs in the dow, no surprise. highs in s&p 500 in terms of records and that may be prompting some of the algoes to

kick in. it's not necessarily programs tied to the dow action in 20,000. ben in terms of sectors? >> yes. >> what do you do? keep buying what works? >> you saw a very dramatic rotation at the end of last year. bond proxies and into cyclicals and financials, et cetera. a lot of that was tied to the rising interest rates. so i think part of the question of does that sector rotation continue, how much upside is there for treasury yields? one perspective which says, you know, it needs another catalyst from here, central bank action or growth surprise to the upside. another that implies room for improvement is that flows out of those factors and out of those sectors have not nearly reversed all the sort of defensive plays that were in place for years already. neutral upside on sector rotation continuing. >> you mentioned the roois rise

in interest rates as one factor. hand in hand with that, the dollar, too, i would assume. >> definitely. the dollar continues to rise, in our view. it's not the violent rise that it experienced in 2014 and '15. part of that comes down to relative growth rates. growth in the rest of the world are doing reasonably well relative to potential and the rest of the world as u.s. is growing slightly above trend this year. one of the factors that drove a discrepancy in global economic conditions and enhanced the dollar is not nearly as much at play. >> foreign exchange markets is what's happening in china with the yuan. being defended in a very aggressive way. capital flow restraints being put on, money leaving the country. overnight lending rate has surpassed 16%. how long can this be sustained? i think we should be somewhat

cognizant and the dollar's strength which is not only apparent but could keep this type of pressure on china. >> let's bring in -- >> hold on, steve. we're going to keep you in here. we're also going to bring in one of our other colleagues, dom chu, intelligent and handsome man but used to work as a mutual fund manager. >> i did. >> dom, take us back to your experience being in the markets when we hit a big round number, 10k, 15k, whatever it might be. did the phone start ringing? did it matter? or was it, hey, neat. let's move on. >> if you're one of the retail investors putting money to work, when it comes to mutual funds -- hedge funds to a lesser degree. it's investor flow driven. this idea that people put more money or less money into mutual funds or take money out. it all plays into whether or not big investors start to put money to work. we talk about the round numbers. it's posh to know, yes, art cashin was absolutely correct.

if we do hit this dow 20,000 ma mark, it's only a matter of time. it will be in all the headlines. does that promote people to call up their brokers, financial advisers and say ha i would like to put more money to work or do they advise their clients now is the good time to put money to work? money goes into mutual funds and by that mechanism, portfolio managers and traders take that money and deploy it with their models, with their fundamental analysis, with everything else. that ultimately pushes up these stock indexes. now the big issue will be the sentiment, right? we talk about this idea, is it a point where retail investors really feel as though they can capture upside given the move we've had in stocks? we already know that the stock market itself is in statistically improbable, unlikely, rarefied air territory just since the election. remember for a lot of stocks out there, people want to get in. they just don't want to feel like they're paying up for it

right now. it will certainly be, guys, something to watch as we see investor sentiment and investments trickle in and money getting put to work. >> sure. bertha coombs, how they're performing percentage wise, nasdaq is the strongest. >> big round number, nasdaq composite has topped 5,000. for the 100 biggest stocks to top that number, that is a pretty big round number that folks have been watching. it's especially interesting. today when you look at where the volume actually is, it's in some of the biggest names like amazon, which had sold off after the election. this week we're seeing this big rotation to some of those unloved stocks. volume today in amazon, facebook, netflix today hitting a new all-time high. this stock last year had really suffered going into the end of

the year. and we're seeing a lot more appetite for those kind of names. the cloud plays. amazon, the fact that amazon did so much better than the brick and mortar players over the holidays. just really sort of validates that business model, the fact that we're all moving in that direction. the other interesting thing i note today is that it's really these unknown names where the volume is. chip stocks had been big. not much volume there. also not seeing much volume on bioteches. although, bioteches today are strong. >> nobody is allowed to move. steve, ben, kate, ron, everybody stay where you are. we'll take a quick break. don't move. maybe we'll see dow 20,000 on the other side.

you're looking at a live shot there from our affiliate in ft. lauderdale of the airport. pete williams now confirming with several officials that three people are dead in this incident. at least nine people were shot. the incident occurred in the baggage claim area of terminal two. they were evacuated on to that part of the tarmac right there. there was some speculation, perhaps, that there was another incident in the airport.

we have no information along those lines. but nbc's pete williams is now reporting three people are dead, at least nine people have been shot in this incident at ft. lauderdale's airport. the shooter is in custody, according to multiple sources, telling nbc news. we do have a suspect in custody. the shooter in custody and we have, unfortunately, three fatalities so far. we'll continue to monitor the developments and, ty, i think i'm sending it back to you. >> you are, indeed, sue. thank you very much. we're watching a record-setting day meantime in the markets with the dow, nasdaq and s&p 500 all at record-high levels, on dow 20,000 watch. it has gotten just perilously close there. we welcome president and ceo. >> far cry from where we were in january 2009.

your reflection? >> give president obama and his administration some credit. the next president will inherit a far better economy. lower unemployment, stronger stock market, low inflation and a consistent, if you will, period of months where you've had job growth. i just checked before i came over here. it looks like president obama is going to leave office with a higher approval rating than ronald reagan, just short of where eisenhower and bill clinton were. all in all, it's important to ask this question. is the economy better off today than it was on january 20th, 2009? >> i think few would disagree with you that it is but that was a particularly low point in our economic history. i thought you would say that the president deserves some credit. but does the president-elect deserve some credit, in your view, for what the market has done since election day, and the

prospects of change? >> ty, if it's sustainable. when ronald reagan took office you had an improvement in the stock market and it was not sustainable. >> it was not immediate. >> drop over time. it's important that you judge leaders ultimately on the long term. and i think for the president-elect, the question will be four years from now, is the economy better off than it was the day when he took office? that will be the barometer. that's the benchmark not only for barack obama but should be the benchmark for all public leaders. >> what do you make of the fact that the market acts and investors act almost as if they have been unshackled? >> the market is based on a lot of speculation. a lot of forecasting and certainly a lot of optimism. i'm not an expert on the market. when you look at main street america. when you look at whether people are working again. you look at finally wages are

tipping up, those things point well for the average american. the stock market is just one barometer of the performance of the economy. >> then how do you explain the fact that it seems like an awful lot of working americans, hardworking americans don't feel that way? and they voted for mr. trump because they don't feel things are going -- >> i understand. there are working americans who voted for mr. trump. there are working americans who voted for hillary clinton. much has been said but that was a very, if you will, mixed vote among working americans. if you look at working americans across the board. they don't feel good because their wages are still stagnant. they don't feel good because since 2000, their wages have not kept pace with inflation. so the cost of food, the cost of housing, the cost of electricity, the things that people have to buy have increased but their wages have

not. and that's really going to be important as to whether, in the future, the policies that the president-elect suggests are going to have an impact on wages. >> i want to push back a little bit. michelle, you probably agree with me on this. wages haven't gone up. but every american worker at an american corporation has had big wages. company contribution to health care or cost of health care has been their raise, unfortunately. it doesn't go for paying for the groceries or in their bank account. look at the hr and health care costs a lot of companies -- we talk to business leaders all the time. they would say i would like to give michelle a raise but my health care went up and that's her raise. >> that's a nice point of view for people making six figures who are high up in the corporate -- >> no, no, no. >> in a corporate suite who say, but, by the way -- >> i'm talking about the rank and file. their raise was more health care costs. >> but that point of view that

that's their raise. that's not money in their pocket. >> that's his point. >> that's my point. it's not money in their pocket but the company, if they were going to give the raise of couple hundred a month, if it has to go to something else, they can't give it to the worker. >> i don't agree with that. over a period of time, income for companies, profits have improved. so the question is -- >> because share is down. >> is the average american entitled to participate in some of this upswing in economic growth when it comes to wages? that's really the question. for the new president, right, the issue is whether he can sustain the pattern of job creation but whether the lingering problem of stagnant wages is going to be addressed not only by him -- >> i take your point on that, that wages have not moved until very recently. >> in the last year or so. >> in the last or so they have moved a little bit. what happens moved, though it's been concentrated, is wealth. wealth has risen.

>> it has risen but wealth has risen but been very highly concentrated for people like the people sitting around this table. i would include myself. those at the top of the economic ladder. the challenges are going to be there. i'm hopeful that job creation and job growth will continue. and what i'm hopeful is that this issue of wage stagnation is going to be at the top of the agenda. so whether we discuss tax cuts, whether we discuss regulatory policy, the question that ought to be in that discussion is a real analysis of whether it's going to have an impact on the wages of the average american worker. >> very clear on his campaign. that was going to be his focus. >> okay. thank you, mr. mayor. always great to have you on. happy new year. >> my pleasure. >> rick santelli, you're standing by, right? what's going on with yields as we see the dow approach 20,000 here? >> you know, to me, looking for

the dow to hit 20,000 wasn't necessarily easy to predict. but early on, after the number, when rates in the dollar did their u-turns higher -- and we could debate why -- you could just feel that there was going to be a magnetic draw to the equity markets. indeed, there has. hopefully i'm on the air when it happens. it's fascinating. steve liesman mention this had a few minutes ago. the two-year is doing something important. it isn't on the day. on the day all yields are up. the tide goes to fives and tens, each up seven, eight bases points. twos are up. all the other maturities are down. i find that interesting. in many discussions what's going on with the markets, that's the bottom of the food chain. the fed, i continue to say, is clinging on to this. and the market is going to make appropriate adjustments. the fed job is going to be easy. just don't screw it up and shadow box the market, which has put three janet yellin

tightenings into place. >> rick santelli, thank you. we are climbing back toward dow 20,000. 19,992 is where we're at right now, 7 1/2 points away from the 20,000 mark. let's get to jack who is on the phone. >> there are a lot of trader os ut there who worry that retail investors have limit orders at 20, 20,000. and, you know, they could invoke some sell programs. so i think other investors are trying to out fox those 20,000 sellers and trying to sell just below that number. and i think, you know, there is a little gamesmanship going on. witness we clear the decks -- we've been doing this the last three, four weeks. once we clear that, we'll break through. >> we've got a big week ahead of

us in terms of earnings, perhaps setting the tone as to whether or not we'll continue to sustain these record highs. as we're counting down to dow 20,000 here, s&p and nasdaq are sitting at records pretty much. in terms of earnings season do you think it backs up these record highs or we face challenges in terms of our levels? >> it has to. i think there is a huge leap of faith out there that we're going to get, for example, 13.5% earnings growth in 2017 and that's where -- so that's where pes are positioned. that's where analysts are. and so valuation is really dependent on some very strong earnings growth numbers and so i believe because of that leap of faith that's out there, we're going to need to see something right away. i think investors, if they don't get anything that beats expectations in this quarter, i think we're going to see markets pull back. >> 2 1/2 points away from dow

20,000. jack, which sectors will be the most challenge and which ones have to show me when it comes to the earnings? >> i think investors are willing to give financials a bye just because there are so many -- sector that thrives on higher interest rates. they should hold in okay. health care is still problematic. industrials there's a big leap of faith going on there. so, i would be somewhat concerned there. of course, now as we saw with the blood bath in retail yesterday, discretionary, you have to be pretty careful. >> can you finish this sentence for me? not trying to throw water on the fact that we're 5 1/2 points away from dow 20,000. finish this sentence. the market is not overvalued because -- >> the only way the market would be not overvalued is through the lens of bonds. the fact is that if you take the

earnings yield -- the earnings yield predicated on former earnings, this earnings growth that analysts are expecting, this huge number and you compare that to triple bond yields, forward pe, earnings yield is trading at about 1.8% premium to triple b bonds and historically those trade on top of one another. stocks are expensive. bonds still remarkably expensive. and there's still a little wiggle room for stocks to do okay as long as bond yields don't rise 2%. >> at 20,000 on the dow, 2280 on the s&p 500. where do you think we stand one year from today? >> you don't want to ask me, guys. i'm not as bullish as you guys. >> that's why i do want to ask you. >> we're got bullish. we're just -- >> that's why i do want to ask

you. >> we're just here. >> my most likely case scenario for s&p 500 is lower a year from now than it is. >> why? >> i think because -- i think that -- look, the market has moved 10% since trump. there's nothing wrong with that. but i do think there's certainly a lot of luster and enthusiasm that goes with it. and because of that, now expectations are high. >> too much group in a word? >> i think so, yeah. look, there's -- the market is essentially the intersection of reality and expectations. and when expectations are really high, it means reality really has a big hurdle to jump over. i just don't know if -- >> jack? >> -- reality can surmount those expectations. >> if you tell me the averages are lower a year from now i'm assuming it's because tax reform failed. didn't happen or wasn't very

good. are you baking that in or am i wrong on that? you're saying regardless of what happens? >> i just don't know if we can, you know -- i don't know if we can get 13.5% earnings growth over the next four quarters. look, the other thing that i worry about -- and i know most people don't talk about this. the price-to-sales ratio. relative to revenues, s&p 500 prices are now two times revenues. we have not seen the price-to-sales ratio, s&p 500 over two since the tech bubble. we know how that ended. like i said, i'm not looking for -- look, i'm not looking for a crash or blood bath. i'm looking for, you know, sideways market at best to perhaps slightly lower. there are other markets. i think mid caps are more favorably priced. i would buy s&p equal weight versus s&p cap weight. i would look at emerging

markets. i think there's a nice cushion there. they're cheap. nobody expects anything to happen there. there are places to play in the equity market. but i don't know. s&p 500. that's been -- you know everyone has been banging that drum. i think that expectations are a little too high there. >> so, jack, let's assume that you are investing according to this thesis that the three major indices will be lower a year from now. what do you buy? >> s&p equal weight, mid caps. >> sectors? how about sectors? >> sectors, you know, within the s&p, i think financials do okay. i think interest rates trend higher. dollar probably doesn't go as strong as most people expect. as the fed drags their feet. i would stay really short in interest rate maturities and

focus more on credit. so i like floating rate bank loans, high-yield bonds. i would emphasize emerging markets, emerging market consumer. we'll see. so, in terms of the sectors, i think the financials do okay, consumer staples do okay. better than expected because the dollar doesn't go as high as people expect. >> this may be a bit of a tangent. you say avoid reets for interest rate reasons. i wonder if one of the things that concerns you is all the talk of store closings and awhat that will do to those in the shopping center business. >> i wrote about it on your website yesterday actually. how the -- this department store, brick and mortar department stores are running

head long into the internet and it's not pretty. i talked to a couple clients who are big ret players, some that do some investing there. and they're concerned. you know, if you've got a top class a mall you'll always find somebody to fill your spot. but if you're a second or third tier player, it may start to get difficult. just walk down the street. the kinds of stores that you see generally walking around the neighborhood are types of companies, businesses that aren't replicated on the internet. it's hair salons. it's food. it's services of that kind. you no longer see, you know, office supply stores and record stores and things like that. so, i think it will change. it will evolve. but department stores, it's a very, very difficult thing.

think about this. one reason people don't buy clothes on the internet is they're not sure how things are going to fit. if a company had exactly your size and do it pretty well and you could point and click and buy something and know that it was going to fit you that's a game-changing -- >> oh, yeah, jack. i've already figured that one out on certain brands. >> if you know the brand -- >> absolutely. >> and you know that you're -- >> i avoid walking into a retail store at all costs. i can't remember the last time i've been in one. drugstore. >> is that right? >> unless they're giving it away. unless there's tons of promotions. >> i was thinking about toilet paper extensively this morning. honestly, jack -- we're bringing in jim -- jim cramer is joining us, giving me the craziest look. you might agree with us. the biggest generation in america right now, millenials,

75 million people between the ages of 18 and 35. they may not go to macy's but they're going to need car tires, hopefully use toilet paper, toothpaste. is there a long-term bullish -- by the way, welcome. hi. >> well, thank you. >> long-term bullish view based on stuff that you can't amazon? >> that's not true. i have a rite aid a block down from me but always order the toilet paper and scott paper towels by amazon. >> still made by kimberly clark. >> stuck here with a 3% yield. not going to have a good quarter. >> dow 20,000, what do you make of this? we're not there yet by the way. >> goldman sachs is doing great, visa doing its job to get us there. home depot is not. we're all worried about retail. jp morgan next week will have to really carry its own weight. >> you they have to blow the doors off. >> absolutely. rate hike, $3 billion without a

problem. they have to be able to talk about big loan, no dollar exposure. some stocks aren't playing the game. apple is playing the game. we need apple to go through -- >> i wouldn't call visa retail. >> no, no, home depot is retail. >> no. you're absolutely right. it's funny. people ask me -- i wrote that story for your website yesterday and someone called me and said does that mean you don't have any retailers in your portfolio? i said no, we have lowe's and home depot. people aren't going to buy two-by-fours on the internet. >> no. they have a great website, by the way. >> you agree with jack on that. there's a very different thing here. home and cars, if you're buying a house you're probably not going to go to macy's and buy clothes because you're spending so much on your home. everybody seems to be dumping retail. >> home goods is good. ellison said home goods is good for home goods, tjx. those all work. you can say that -- some people

don't like sherwin williams. but the ones that i'm looking at that are kind of shocking, nike bottomed. that could be tweetable. cross border. what's emblematic today is mcdonald's, real bad downgrade. no good catalyst. that's what matters. >> do you find optimism in that? >> yes. >> high profile downgrade and the stock goes up. >> trim of facebook price target and the stock has not looked back. >> that's called the washout. >> is that good or does that worry you, jim? >> it doesn't worry me. fang had to recharge. they're recharging. good stuff about how value stock. >> we have a value investor, nancy, always talking about that's her favorite -- >> we need to see other vets do better. ruth has gotten rid of a lot of things that weren't working but

now she has to show revenue growth coming from the part that's not core. that's really key. i like it here. i tell you, i like it here. intel, j & j participating more. coca cola can't get off the schneid. dupont has a big meeting with european authorities. that could do really good. >> jack, comment on this as well. let's say we hit dow 20,000 today. we go to the weekend. it's all in the newspapers. everyone is talking about it at cocktail parties. i have a feeling there will be a now what, then what aspect to this, right? what do you do now? >> well, look, plenty of stocks that haven't participated. it's not like you're sitting here and saying, you know what? every single stock has gone up. stocks that have been resting, stocks that have done nothing. this last leg is stocks that have done nothing since december. >> fang. >> yeah. >> how much is the last thousand points is goldman sachs?

>> it's huge. gigantic contributor. big boost today price target. one that is so far above book, as is bank of america. jp morgan. we've got to start seeing home depot go back to 140, intel break out. i thought that was a shame. i would like to see them come back. ham strung by the dollar. there are issue notice dow stocks. united technologies. >> we'll thank jack for now. thank you so much for phoning in, spending time with us on the phone. >> thanks. >> health care, jim, has been a winner in 2017, the few days we've seen 2017 so far. does that continue, do you think? >> 730 on monday morning or 10:30 our time. if they guide up, we'll get a good tone. pfizer will speak. j & j, mostly about acquisition. amgen will take numbers up. in the afternoon they'll talk more about the cholesterol drug.

it's going to be very subdued. allergen is going to speak. they'reg going to say we're sticking with 9.9 because he's afraid of the tweet. health care will be tweet versus numbers. >> we had an event, an issue down in ft. lauderdale, terrible shooting. >> right. >> there was a time when that kind of thing might have really derailed the market. how much is it affecting it today? is it one of the reasons we haven't gone through 20,000 or have we grown immune to these kind of incidents? >> it's aye do think that what's happened is that there's been such a plethora that we just kind of say it's part of the -- >> which is unfortunate but -- >> but there's a lot we don't know here. >> true. >> if we do find out that this has a political connection, i would suspect you would see -- >> or terrorism. >> yes. >> i'm surprised that there -- when i say political i mean terrorism. >> i'm sure trump will say something.

>> yes. >> sure. it can't go higher without three rate hikes. >> 2:00. welcome to "power lunch." if you're just joining us, we're watching the dow approach 20,000. we were about a third of a point way. 13.5 points away now. jim cramer of mad money, squawk on the street is with us. bob pisani is on the floor of the stock exchange. >> you're reading that right on your lower third, .37 points a little more than an hour ago on

the dow. old leaders are helping us get right up against the door. i'm talking about goldman sachs, jp morgan. goldman, the most important stock. in the last leg of this dow rally. helps from other sectors. fa for example, industrials like boeing, united technologies that sort of took a backstage after the initial part of the trump rally. disney had a great 2016 t looks like a great 2017, upgraded rbs there. laggard, the usual consumer names holding back. the biggest disappointment is exxon and chevron. with oil up a point or two would have made a difference and gotten us over but they're not. they're down several days in a row even as oil has stabilized. that's getting a lot of attention on the floor. sectors for the week, big problem, meanderring around the leadership. teches doing okay. real estate another laggard to the floor. banks are helping as we see

yields move to the upside. dow, huge move we had, outperforming the s&p, up 9% since the election, a little more than 1%. goldman the most important stock for the rally. 28%. i mean 448 of the 1600 dow points since the election have come as a result of goldman sachs. there you see it right there. essentially, 160 to 245 since november. since november 8. we are just points away still waiting here. art's here. i'm here. i have dow 10,000 hat, 10,0002.0 hat and 20,000 hat. art is standing by. we're all just waiting. guys, back to you. >> jim cramer is with us. julian moore joins us. forgive me. talk to me a little bit about goldman. has it gotten ahead of itself? >> i thought it had. it should have never been below

160 at that point, tangibles had been scrubbed clean. deregulation. they'll be able to trade again is what people think part of the volker rule goes away and they have tremendous count base. animal spirits of the marketplace to a lot of different goldman business. >> you'llian, let's broaden that out. i asked whether goldman had gotten ahead of itself. has the market gotten ahead of itself and is it vulnerable to disappointment or more vulnerable than it normally is? >> it is more vulnerable than it normally is, by virtue of the math trading 19 times, last month's earnings, coming into an earnings season, particularly financials where growth expectations are on the order of 21.5%. we like that group on a long-term basis. it's almost as if you want to see a pause in those issues. as jim was talking about moments ago, some of the other stocks, health care, some of the lagging consumer discretionary names

which typically work, the laggards, in the prior year. you want to see them participate in the new year and they are, to a certain extent. we want to see it more. >> jim pointed out that nike seems to have bottomed. that's the kind of stock you would like? >> exactly the type of stock in the consumer discretionary space, which is a function of the fact that, you know, not only are financials ripping but consumer sentiment is ripping. it is at multi-year highs, a very positive message. >> jim, we've talked about a lot of stocks in this run to 20k. goldman sachs. the name that we have seemingly ignored -- >> stopped talking about entirely -- >> is apple. the donkey pulling the cart for years. >> i'm not a technician. 118.38 takes it out. you would start to see people saying, finish the double top. we're fine. apple said about their revenue

stream, service revenue stream, can you extrapolate what they said about the app store to the service revenue stream, fortune 100 business this year if you can get it to where it's higher that's important. they had gigantic repatriation play. 40 bucks per share with no tax comes back here. >> three bucks a share with no tax? >> if they had no tax. >> now we're talking dow 25k. >> seriously. >> alphabet cisco and apple are the three big in terms of what you need for repatriation. those are the ones that would most benefit. based on iphone 7 weakness, nobody cares. they said nobody cared about mcdonald's. people cared about nvidia ran up to 118 and came back. hottest stock up 220% last year. apple is the one that could actually put you over because it's one no one talks about

anymore. when you back up the cash, talking about nine times -- >> earnings out on 24g9 th of january. do people look through that, this great eight that will be out later this year? >> someone came out -- i won't mention a name. came out with the iphone 8 super cycle. we want to hear other revenue streams. that's what we want to hear. virtual reality is playing a role in the service stream. no, i'm not kidding. pokemon go. you probably didn't play. it's a lot of fun. >> i tried. >> you need the 7. it ruined your battery if you had the 6. >> they'll make so much money on replacement air pods. >> very high in price point. >> why have we ignored apple so much? >> we got sick of it zblfr day we talked about apple for years. >> we talked about pfizer every day. they talk about breaking the

company up. on monday at jp morgan, that could help, if merck bought it up. >> goldman, is cat tractor -- >> they're now slower. >> stocks up 40% in 12 months. >> why not? goldman put a sell on it at 68. >> now we talk about amazon almost nonstop. >> have to. >> right. >> terry london, interview with street.com. we talked about it literally is -- it doesn't expand the pie. online does not expand the pie. it doesn't help. >> another way of getting the products. >> right. and the rents are too high. we talk more about sears. >> julian, one sector you love this year, one sector you loath? >> we think health care presents an opportunity. it has been considered as totally off limits by investors for the majority of 2016. and, again -- >> big area. what's going to do it?

>> jim just alluded to it. large cap pharma. biotech. >> that's what we need to see. >> not health insurers? >> places with cash and yield on one hand and on the other hand, biotech, the innovators. technology. both lagging. >> our data team, gina francola, sending us that the biotech index is on the best pace since november 11th, led by lexion. >> unbelievable. their own internal audit committee. let's see what the s.e.c. says. i like the am gechlt n call. that is a big drug. that cholesterol drug could be big. and repatriation. >> i want to know what happens when you say alexion to your amazon echo. >> i played that game and it didn't go well. what did you say? >> gilead. if they do an acquisition stock,

it goes up 20 points. why haven't they done it? i don't know. i would like to find out. j & j. >> hold on a second, guys. update on this news out of ft. lauderdale. we're watching the dow and want to keep an eye on what's happening down there. sue herrera has the latest. >> a shooting incident at ft. lauderdale airport, law enforcement official now confirming to cnbc news 14 people have been shot, 4 of those are dead. the shooter has been taken into custody by airport police or by a police officer who responded to that scene. the shooting occurred in the baggage claim area of terminal two. 13 people shot in total, 4 of those are dead from that incident in the baggage claim area in terminal two. that airport handles about 73,000 passengers per day. they have now reopened, according to the sheriff there. the upper level of the airport.

that implies that the lower level is still closed. and i think that's a pretty fair assumption. they had suspended all operations at the airport earlier, but apparently that is now changing. the death toll has gone up, unfortunately, by one. 13 people shot. 4 of those dead at ft. lauderdale airport and baggage claim number in terminal two. we're continuing to monitor the situation. it is developing rapidly and we will keep you posted. back to you guys. >> sue herrera, thank you so much for keeping on top of this developing story for us. meantime we want to continue talking about biotech, favorite sector of both guests on set, jim cramer and julian emanuel. biotech is on pace for its best week since november 11th. what has changed in sentiment to the investors you talk to every day? >> basic thing is rebound off a very really low valuation.

we underperformed by 20% in 2016 and people are looking for the sector to do better in 2017. >> how important is the amgen patent win as pcs canine cholesterol lowering drugs? they struggle to gain momentum in the united states, considering costs and questions about the east fficacy. >> it will double from $2 billion to $4 billion. much better position. price increases on that product. that could be -- this is a big win for them if it holds. >> jim cramer. let's say they raises numbers off an old drug and raising numbers because of price increases. is this one of these things where you have to start worrying about the tweeter in chief? he comes out and said i've seen these companies making money but all they're doing is raising price on old drugs? zblaes always something to be

concerned. we'll tell the investor not to buy too much in that rally. tweeter in chief acting. you've got this issue with the first quarter. drug companies. everybody's high deductibles during the quarter. it's a bit of a head fake. we think they will fade away and see the sector doing better gradually as we enter the second half. you almost have to assume it will be headlines on drugs that the president will respond to those i think it's a pretty fair assumption something like this will happen. >> you sound less bullish than you. >> no, no. >> you talk about the valuation. to see large cap biotech trading single digit multiples when the market is trading at 19 times and the earnings expectations are very subdued this year. it's all about in a market like this, where there is elements of froth and pockets of froth. we have to acknowledge that, where expectations are subdue sd where you're going to find the

upside. >> ronnie, you wanted to say something? >> i don't disagree with that completely. i just don't expect it to happen overnight. couple of good quarters of reportings. nothing happening on the government side. we'll see a rally. just don't expect it right off. >> 26th of january will be a very big day in terms of earnings. a flood of them, ronnie. ahead of that in terms of getting the attention away from drug pricing. do you think that the companies are helping themselves? a report out earlier from raymond james saying they're tracking drug price increases and found that they're still going through at similar rates. in fact, some companies are being much more aggressive about price increases such as biogen with their ms drug. >> how much you get realizing after you give all the discount to the payers. it's a debate around how we price drugs in this country and who pays for them, which is a serious problem. it will have to get resolved. marma guy also put their own

plan out about how to address this meantime, there's going to be headlines on drug pricing but probably not as bad as 2016. >> the truth is that brent saunders put one out for allergan and thought there would be really a course of saying yes, we're going to go with that. and he just ended up being out there by himself. i know that the -- medicare is not happy with at all. and ooh that's why i'm saying if you put threw big price increases and trump sees that the government is paying for them you'll see negative heat. value when they speak on monday, roll back some prices. when plt papa was on "mad money," which ones we put to -- then what happened? 30 billion in debt no, one is talking about rollback. i'm not just talking about rollback today when they do that february 17th patent. >> would the market respond well to a rollback? could it? it seems counter intuitive. >> i think what's happened is that everyone is so nervous that

there's going to be a tweet that if you just -- if they all just sign brent saunders' pledge i think that health and human services would say these guys are being responsible. and they would start talking to -- they're not. >> gesture would go a long way. >> wouldn't it? >> i think it would. ron, thank you so much for joining us. appreciate it. let's talk about financials. that's been a very hot sector. banking analyst with morgan stanley. good to have you here. >> thank you very much. >> you're bullish like everybody else i can see from the notes. make the case. >> we are overweight, large cap banks. part of it is a function of what's happening with the rate environment. rates are up quite a bit over the last three months, as you all know. that explains about one-third of the move that stocks have had already. we think there's more to come. we think there's more to come on rates, loan growth and clearly tax discussion, tax reform as well as lighter touch on regulation. those are all part of the bull case.

>> those aren't baked in yet? >> correct. we do not bake in tax reform or material regulation changes on our base case. >> financials have been a leadership sector within this market and so that's got to be one of the things that has to happen. do you agree? >> we just need to see the current forward curve come throug through. >> coveringing money centers, credit card companies and, frankly, a yield curve helps everybody except the credit cards. credit cards, frankly, are help bid better consumer confidence,

like you were mentioning earlier on the show here, as well as in the bull case. >> don't understand the leverage of these situations, regional banks fifth-third. comerica, so many issues with regulation and also because good deposits. we're starting to see good upgrades there. why have so many analysts fought this tooth and nail? >> i don't cover those stocks specifically. my mid cap bank colleague covers those. to your point people who are more negative on the group overall are thinking is that we've come a long way quickly. let's see action and start see management talking about how this big shift in the yield curve will play through throughout 2017. and is there anything they're doing differently on balance sheets with regard to moving cash, taking more duration?

those kind of things, i think, we need to hear from management for people who might be more negative than i am. >> julian, jim, so consensus to be along the financials in this environment it make mees nervous the minute everybody agrees it's usually the wrong time to be someplace. is there anything wrong with this story? >> in the near term when you see a sector outperform s&p 500 by 1100 basis points you can expect a pullback. lot of new money has come into the financial sector since the election. the embedded psychology against financials since '07 is so pervasive that big investors don't own the group yet. >> you're nodding your head, jim? >> when it was valued below

book -- i worked at goldman sachs. it was an insult to goldman. kind of ridiculous that it was. they started talking about goldman going private. they're way too big. bank of america is the one i'm worried about, gone so quickly. wells, though, isn't even up. i think that one could have a move. bad oil and gas. that's gotten much better. >> julian, thank you. jim, your producers -- we got to go. >> i have another show. >> betsy, thank you. >> disney. i really have to see united health come back again. verizon not doing well. walmart. come on. >> four points. can you wait three more minutes? regina. >> chevron going up. >> kevin on the cnbc news line. he has his hands in everything. also running, remember, dividend

business. verizon has not been one of the participants in this market the last week or two, kevin. are you a buyer of verizon? >>. >> i own verizon. what business model can sustain dividend and growing its free cash flow? i just had that conversation about financials and all the animal spirits come back in. i want to remind everybody of something. let's go to the regionals first. eyre get the goldman story and i see a lot of junk moving and i see a lot of low-quality coming

into that story. >> fair enough. >> but can we flip it around? one or two year, holy mackerel, look at the gains in zion bank. a ten-year chart you could say wow, they were higher eight or nine years ago and got massacred. aren't they just kind of, kevin, in some ways coming back to where they belonged and that they were too low? maybe now they're not too high? >> that's the bull and bear argument. if the story is we're going to get better spreads on yields, i don't think the ten-year will get past 3% this year. optimism around change and reforms on dodd/frank is extremely optimistic. not even on the top of the list that president-elect is talking about. they're going after obamacare first they don't give a damn about the banks right now.

they'll get to it eventually. i don't see the reform coming in 2017. >> do you see the economy improving, kevin? that's a huge thing. give that the kicker of higher gdp, you don't need deregulation necessarily dourks, to justify these devaluations? >> baked in, 25% increase. no increase by one analyst, zero and 25% increase in the price earnings ratio to regionals. i'm saying -- calling that out is the highest risk of junk in the market and right now i think -- i've done this already. now that i have hopefully a lower tax coming in at 2017. we don't know yet i sold down to nine and all the regionals. nobody makes that much money in 26 days and doesn't pay for it down the road.

it's not possible that those company companies individually in this quarter. when we report q1 in the middle of q2 watch how people will look at those regionals and say wait a minute, where are all the earnings i was promised, optimism that management telling me things are better? it's not happening. >> not based on a three to four rate hike of which in this case all your cash flow numbers would be wrong and they all go up. >> extremely optimistic. >> but that's why they're moving off of that. >> baked in. 27% increase in basically six weeks on these names. i can't find a time in my investing career where that's

occurred. >> between february 20th and march 28th? after the war. >> here is the thing. what's it based on? will earnings increase their cash flows by 20%? >> in the case of first horizon perhaps. verizon, no. comerica possibly. pnc, yes. >> i think it's important to think about the risk you're taking on when you own those regionals. and i haven't gone short yet in the way i think i might. i'm watching this animal spirit. i hate to be short. it's kind of unamerican. >> honestly, if you have four rate -- look, it's a rate hike story. jp morgan does make 3 billion extra on rate hikes. if there's only going to be two rate hikes the group is overvalued, absolutely.

>> when everybody tells me it can't go wrong and it's the place to be, yeah, i think i -- >> everybody has downgraded these stocks. it isn't like everybody is upgrading them. they're downgrading them. first time upgrade was today on zion. not that great of a bank. >> you're picking names and that's cool. i'm willing to go short the whole -- >> wow! >> i don't do that stuff. i'm talking about companies. earnings months. >> kevin o'leary, love you. appreciate your point of view. thank you so much for joining us, especially on short notice. good discussion about financials. said he would short them all. >> just trying to scratch out a living. >> somehow you're getting by, kevin. >> he was at 40 a couple of years ago. >> randomly picked z oichlt n. got the call. by the way, before you go, big show tonight. what will be the focus of "mad" if we don't hit 20? >> i'm going to have to revert to talking about some of these stocks that have been crushed in the last few weeks that didn't

come back and buy. not everything is up. you have to find opportunities in stocks, individual stocks that give you a chance. >> you're supposed to buy low. >> plenty of stocks that are not high. >> haven't played. >> mathisen, buy high, sell low. >> my timing is exquisite. >> i'm disappointed that market dropped while i'm out here. what is that all about? thanks for nothing, doug mcmillan. >> one day. >> all right. >> sometimes they hyphenate your name. sometimes they don't. >> do your part. health care division. >> ceo 3m. >> thank you very much. >> dominic chu will rejoin us. legendary now dominic chu. you heard our conversations of financials. >> i have.

>> good debate there. as a former fund manager you're not buying a stock -- i don't want to go after kevin o'leary. he made the argument basically if you're up 20% are you going to see a 20% jump in earnings? you won't buy a stock for one year of return, right, dom? if you're going to buy a name and a long-term investor it's because you anticipate that whatever change, whatever paradigm shift there was could benefit you for multiple years out. we don't have to look at a 44% run of goldman sachs as some type of short term optimism, do we? >> no. my belief is if you're a longer-term fund manager you won't sell shares wholesale because you think something has changed in the short-term point of view. core positions maybe in financials, small scale on if you are a long-term investor in some stocks. certainly not if you're an index stock or fund family type situations. a lot of that trading is driven

by fund flows, whether people go into stocks or not and place money with a fidelity, vanguard or t. rowe price. the idea is, if you got financials that will kick off this earning season -- eight s&p companies reporting next week, half are financials. we're talking about jp morgan, wells fargo, bank of america and the regional, pnc financial reports on friday next week. those are all going to be huge keys here. the reason i mention this is in the whole scheme of this dow 20,000 story, goldman sachs are trading at decade highs. and by now every one of our viewers knows that goldman sachs is probably the single most underlying story with the dow 20,000 because it's the most

heavily weighted stock. as goldman goes so far today it's up near its highs right now. we'll see if it keeps its momentum. ty, back to you. >> chief investment strategist with wells. nice to hear your voice. we highway robust discussion about financials. do you like them, not like them? if so, which ones? >> i do. i still like the overall market here. i think we've got, you know, a renewal of optimism in general that will carry this higher. a big part of that is a rise in interest rates. normalization of monetary policy, lifting rates away from zero, endi inin ining deflation. it's not just the fact that yield curve is steepening or revenue flow on deposit liabilities. it's also the fact that you've got corporate -- or, you know, bank lending going up 7% to 8%

year on year again after being absent earlier in this recovery and as we go to new highs in stock market you're going to get more interest in deal activity and there's going to be more expansion mind-sets among corporations that will look to financial organizations for help. i just think the story is early yet in terms of the rebirth here of that group. >> you know, you mentioned the return of optimism certainly in the investment community. probably the return of some optimism among consumers. they seem to be feeling better and putting money back to work through equity mutual funds. jim cramer was mentioning a number of stocks to which there have been negative comments, downgrades and so forth yet they've seemed to have shrugged those off. are those comforting or worrisome that are reminiscent of past times where we tended to ignore some bad news at our own peril? >> well, tyler, you know, i guess what reminds me most of

2017 is 1987. we went -- we came into 1987 after two years of the economy slowing down, inflation falling to its lowest levels, long-time bonds falling to decade-low, pessimism. we went into '87 and it was the birth of animal spirits for the first time in the reagan recovery. and we had an explosion in the stock market and in bond yields. and i think on a much lower magnitude, we're experiencing a similar phenomena. we have never had animal spirits arrive in this eight-year-old recovery. i think we're finally pulling together some things, including the return of employment, including the fact that recovery has finally reached main street in america, including the fact that the recovery is broadening out across the globe, showing up in various parts of the world, end of deflation, start of the earnings cycle, lifting yields away from zero, electing a

pro-biz leader is awakening animal spirits. i think there's a lot left. we may correct but from higher levels some time this year. >> to finish your thought 1987 had the largest crash in stock market history. >> it sure did. i'm not saying we're headed for the largest crash in stock market history but i could see stock market that runs farther ahead this year, bond yields that back up even more and then at some point we do have a correction in the stock market from higher levels. >> jim, it's topical. it's timely and it's very difficult to talk about. which is we have to confirm five dead from nbc ft. lauderdale shooting, a number more injured. we believe the situation is over. we're not sure. conflicting stuff coming out right now. i want our viewers to know obviously we're not ignoring it. we've got multiple things we need to do here. but as a guy that buys and sells stocks and bonds and everything

for a living, and unfortunately this is getting to be kind of a semi common news type event these day. >> yes, it is. >> trying to say this with some emotion but we get sort of numb to at some point sitting on this side of the camera. how much does it mean to you from an investing perspective? i don't mean to sound cold by any means at all. we look at the national psyche, consumer spending, everything, does it fall into your thinking? there's no -- i know everything i said sounds terrible. there's no way to ask it. >> yeah. you know, it's a horrible situation that it's becoming, as you mentioned, almost muchlt ndane to hear another tragic shooting of that type, isis or some other terror group. and i thank it doesn't enter day-to-day. i think i've always kind of

approached those events more like you diversify your portfolio before you do anything else. and once you've done that, you've done about all you can do for events like those unexpected terror attack. >> is there some kind of risk premium built into this always? should there always be? >> i think that the market has adjusted to news like this. and i think it's already in the markets, in pricing. there's realization that we're going to see more of this. >> yeah. >> not that they couldn't -- not that it couldn't be a big enough event to have real impact on the financial markets. it certainly could. but it's so unpredictable, brian, the only thing you can do is diversify and then try not to get too focused on that from your investment standpoint. i think it will take you down a bad road. >> we can point out at this point no indications at this

very minute that this has any connection to any kind of international or domestic terrorism. that, of course, remains to be seen. jim paulsen, thank you. we appreciate your time. wooench "power lunch" returns after this.

welcome back to "power lunch." i'm sue herrera. you can see people behind those white cars, right outside terminal one. they are huddled behind those cars. the police have their guns drawn. so, there is some sort of situation that they are following inside of terminal one. we do not know what that situation was. the backdrop to this story was earlier today a gunman in baggage area number two, in terminal two, opened fire. now a total of five people are dead. a total of 13 people shot, of that five people are dead. it occurred in the baggage claim area. alleged shooter has been taken into custody by police. this is right on the tarmac outside the baggage claim of terminal one. so, we have people being evacuated from -- and running out of the parking garage of terminal one, also terminal one itself and baggage claim of

terminal one. kerry sanders is there. he is right outside terminal one. he says they heard, perhaps, an alarm from the parking garage. they may be looking for the alleged suspect's car at this point. but we do know that there are several separate incidents unfolding right now at ft. lauderdale airport. the president-elect we have no comment from the white house yet. the president-elect, donald trump, tweeted about the situation, saying he is monitoring the situation, that he just spoke to governor scott, that his thoughts and prayers for all stay safe. we're awaiting comment from the white house at this point. this is a very active scene at ft. lauderdale airport in several different parts of the airport. faa has come out and said that flights that are in progress 50 miles from the airport will be landing at the airport. they have a number of runways. even though you see people out there on the tarmac, a number of runways they'll dedicate to

those flights. other flights will be diverted, delayed or diverted to other airports if they have not yet taken off. obviously that situation has triggered a number of activities by authorities to either shut down parts of the airport. last we heard the upper part of the airport was open. that may be changing now that we have this developing situation at terminal one and also at terminal two. so, once again, 13 people shot. 5 dead. the shooter is in custody. the alleged shooter is in custody. we'll keep you posted and monitor this live shot for you all the way through. i'll send it back to you guys. >> just to clarify, we see people hunkering down behind cars. >> yes. >> in fear or trying to avoid something. >> exactly. you see from that shot when they take you back again, if they do, that's outside of terminal one. several police officers that drew their guns and motioned -- and i don't think you guys got a chance to see this.

but i've been monitoring the live shot. drew their xwuns and pushed people down behind the cars. so, there's obviously some sort of threat that they perceive coming out of that area. and that's the parking garage. as you look at this shot, that is the parking garage behind those people. there is speculation out there that we cannot confirm that perhaps the alleged shooter's car was found in the parking lot. again, that cannot be confirmed. kerry sanders saying that perhaps these people heard an alarm either in the terminal or in the parking garage but, as can you see, a large number of people are hunkered down and police did have their weapons drawn a short while ago. >> sue herrera, thank you very much. monitoring that for us. don't move. continuing coverage of the market in that situation right after this quick break. dow 19,975. 25 points away from dow 20,000 after coming within 0.37 earlier

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welcome back to "power lunch." i'm john harwood outside trump tower. president-elect has completed his briefing with the leading

intelligence officials of the nation. and he has just put out a paper statement. we don't expect him to come before camera. what he said was it was a constructive meeting with the intelligence officials. he did not publicly embrace their conclusion that russia had hacked the election accounts of democratic officials and attempted to influence the election. what he said was that russia, china, various other actors are constantly trying to hack into sensitive united states accounts and he asserted that there was absolutely no effect on the outcome of the election. he praised the work of the intelligence community and said as president he would direct his team within 90 days to come up with a plan to strengthen cyber defenses. that his leading priority is to keep americans safe. it will be interesting to see how the intelligence officials, who did not appear before cameras or stop and talk with us, how they interpreted the meeting with president-elect donald trump. he did not embrace their

conclusions. he did praise them and said there was no impact on the election. this is something that john mccain and his arm service committee hearing said was beside the point. the issue was another sovereign country attempting to interfere with our election. donald trump is not embracing that part of the concern from democrats and some republicans, guys. >> john, how will we find out? will it be more leaks? will we have to wait for to see how they feel about their side of the conversation? >> reporter: well, i think that the working relationship between the president-elect and the intelligence community, whether it's the cia, the fbi, the national security agency, is going to be crucial. and so there are two sides to that equation. we have heard from donald trump. in what form or whether we will hear from the intell officials, do not know. we know some of the people, like james clapper, who briefed the president-elect, are retiring. they may feel free to discuss their reaction to the meeting.

so is mike rogers, the admiral who heads the nsa. we doesn't know yet. >> thank you, john. john harwood outside of trump tower. let's bring in jerry castellini at castle management. good to have you on this day. once again we're on dow 20,000 watch. we got so close. what do you think about the market here? do you like it? >> oh, boy, do i. the fact that there's just so many classes of investors that are either, a, underinvested for where they should be for long term asset liability or, b, the number of investors in particular the millennial age group that hasn't really embraced investing in general yet. think about the milestone that 20,000 is for people in general and when that serves as a wake-up call to investors to say, well, why am i out of this thing? what am i missing here? we made these all-time records. we're doing better. the economy looks like it might

have the best year in the last ten and we're uninvested? this is a launch pad moment. and i'm afraid if we sit here and try to decide what one event negative in the economy and world geopolitics does, you're going to miss this entry point and you're going to look back in a year and go, gosh, this was the time. >> in the old days, we would have said, you brokered a seat on the front page of the paper and you're saying millennials will get it on their phones any moment now and this could be a moment that enlarges the investor base in america? >> absolutely. when you think about it, there's no purpose for staying -- an entire generation staying uninvested, right? that age group still has children to raise, college educations and retirement ahead of them. there's a lot of question marks in how they're going to finance all those. and what we all know is that you can't do those kinds of things at 2% to 3% interest rates. so as they keep knocking down

these barriers that we put up now for the last eight or nine years, there's some problem, there's some boogie man at night that's going to take their money away. each time that doesn't come to fruition, there's one more reason you're going to see this trickle through. and once you get -- we saw this in the '80s, and in the '50s. once there's a movement by the young generation into a market, it's very broad and it's very exciting. and it's typically the beginning of a five to ten-year upside move. that's what's interesting about this 20,000 point mark. >> we're already eight or nine years into an upside move. aren't we, jerry? >> yes, we are, but we're just -- we just broke out of some recent highs with the nasdaq. one with small cap. so i think in a lot of ways you're seeing things just break out for the second time. >> second stage of a rocket lifting off? >> yes, it is. so the boosters dropped but,

remember, things accelerate in that second and, quite frankly, third stage. and we're about to see the economy accelerate. we're about to see earnings estimates accelerate. and those will be the fuel, if you want, to drive this into the next level. >> you sound like to drive this into next month. >>. >> do they have a list? >> boy, the things that would always tell me. >> they're on the dow. we needed to get it.

that's where we're in. >> we'll be back we're a few points away from 28,000. ge the or ingecange an o! e vingerceoronnsaya t er

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>> in the meantime the oil market is there. at the energy desk. >> crude oil, it's across the

accounts. exon and chevron, you can see their trading mix here today. most definitely higher. >> i will say this. when you look at the 20 k from 10 k which we saw in late 2009, you look at how chevron and exxon performed, they were actually very close to the bottom of the list. exxon was last. energy was seen as a volatile movement and certainly in the last part of it, it helps to you. >> jackie deangelis, thank you very much. get to sue herera around a

shooting in fort lauderdale. >> there are people milling around. so we've got some people hunkered down behind cars with police. with that you are guns drawn. we do not know. >> there's a warning that

perhaps people heard an alarm. >> it keeps the lights within 50 miles of the airport. able to land. out of fort lauderdale. the president-elect has tweeted about this a little bit earlier saying he's just spoken to the governor and he offered his prayers for the victims and the vice president has tweeted as well. our thoughts and prayers are

with the victim. we still have those people. basically behind cars. the police have not allowed them to move. they have evacuated from the terminal. >> the main airport closes. >> they would not confirm that. >> it's on a year.

>> they have put out that tweet. >> basically started firing. it's a .9 millimeter weapon. reloaded it several times and fired randomly. he did not apparently say anything. the airport police.

the witness. >> as things unfold in fort lauderdale. closing bell starts right now. >> hi, everybody. welcome to the closing bell. >> i'm bill griffeth.