storm. there's a bad joke to be made here for those of us in new york city. the app is called the doorman. >> exactly. be very careful when you shovel your snow. >> yes, you got to be careful. >> because of issues with heart attacks. >> yeah. >> seize up and fine and all of a sudden they're laying in the snow and be very careful. anyway, you got the doorman to answer. don't worry about it. make sure, thank you. >> pleasure being here. welcome back tobeck ki. >> make sure you join us tomorrow. becky's back. "squawk on the street" is next. >> no, she's back on thursday. >> thursday. ♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. a very big week setting up for the markets. of course earnings season kicks off on friday with the banks, but until then we'll have one eye fixed on washington. donald trump confirmation hearings, futures are soft, europe's relatively red, oil's down about 2%. our roadmap this morning begins

with stocks and the march to dow 20k, as you know was less than a point away from making history on friday. plus, coke and p&g getting downgraded to sell this morning over at goldman sachs. >> and a busy week on capitol hill, confirmation hearings for the president-elect's cabinet picks are ready to get underway. first up, once again the dow will take a shot at hitting 20k. there's a call out of goldman not helping a pair of blue chips the firm downgrades coke and p&g to sell saying it sees headwinds from a stronger dollar as well as sluggish and market demand. not often you get two sells on two dow components from one firm in one day. >> these are companies -- these are great american companies. it's obvious that this is a call setting self up for much stronger economic growth. now, it is the wrong time for the call because interest rates are down big today. so that's going to put pressure on the banks. so if we're trying to get to dow 20,000, you may see on the tape in the bottom a lot of good

things, but you lose proctor, you lose coca-cola and you lose goldman sachs and you lose j.p. morgan, you're not going to get where you need to go. i'm predicting no special. >> you said friday it looks like we're asking too much out of goldman. >> yes. i mean, there's 12 companies need to increase double digits in order to get back to where they were. why do we keep asking goldman to do so much? first of all, they don't even have gary kohn anymore. >> no. >> they don't have a repeal of the volcker rule yet. >> not yet. >> i felt lloyd blankfein is probably sitting back watching the giants lose and say -- i just threw that in as a completely gratuitous reference. >> yes, you did. >> but how much do we have to do here? >> took you about 30 seconds -- no, actually, we're two minutes into the show. >> i tried to get it in earlier but you started talking about the downgrade. threw my game off. >> i did talk about the downgrade. but goldman has given us plenty, hasn't it? >> it's given us all she's got.

it's a scotty situation. not scotty wapner which i will be on again today for another gratuitous plug. >> i'll set my vcr. >> how do you program a vcr? we had the momentum going into -- that moment on friday, where do they get these hats so quickly? >> they've had them ready. >> i have an eagles cap. >> still waiting on that one. >> yeah, that's -- >> one thing both of these goldman calls is a reminder of forex head winds, right? >> yeah, it's about time. holy cow, people have really overlooked this situation. in the zeal to like what's going on, we forget that the numbers have to come down for a lot of these companies unless you get a tax reform immediately. and it's very clear that's not going to be the case. >> right. british pound. >> oh, my, the british pound. >> talking about currency. >> press conference was all about immigration. wasn't even about like economics.

it was like, listen, we have to do this now because of immigration. and immigration is code, i think, for saying what we're really after here is not better economics. we're here for fewer workers. >> yeah, that's a big move. when you see a currency down over 100 basis points as that is right there. >> shaky. i was shaking because i just look at this pound and i think what is going to happen? sara and wilf this morning talking about inflation in britain, but the wrong kind of inflation. i don't think that's so far off the market. >> the journal takes a crack at arguing whether the rally has just begun. >> did you see that? >> if you look at the outflows of bond funds from the beginning of '14 through october, 381 billion investors bought. they just bought this notion of secular stagnation. >> there were probably 47 articles about why nothing's going to happen and then there was that piece. >> i know. >> almost every article in conventional media has the same tone which is, look, this is not going to happen. there's this tax reform and it's

not going to end and i saw ken griffin talking about they had a code but nothing was going to happen. and then there's this article, hey, listen, we're only in the beginning. i looked at that piece and said where you bean, partner? quite a rally since the election there's been a -- this dow's had this big move. >> we have. we have. should it be scary for people who suddenly have been weighted more towards bonds during much of this rally and say now is the time? >> well, this is good timing. you have a nice rally in bonds if you want to try to exit, this is as good a time as any. >> it is. it is. and also another story today been very strong. >> look, i think things that matter are oil. and you don't want to see oil stalled. you need to see rates go up because this is a bank led rally. and you need to be able to see quick repatriation because the companies that have the most overseas have the most to lose from the strong dollar. and those are the things i'm thinking about away from takeovers.

>> all right. we're going to watch all of that of course we said earlier it's a big week for the president-elect. his cabinet picks head to capitol hill for confirmation hearings. tomorrow it will be attorney general designate senator jeff sessions and wednesday is rex tillerson. of course secretary, tillerson said to be the headline on this slate. >> tillerson, you have the headlines last week, president-elect admitted there was hacking this weekend. i thought that was interesting. but i do believe that tillerson is going to be a referendum on this notion of russia and friendship and notion of putting someone in state that has no state experience and really very much i think this is it. this is the hearing we'll talk about how quickly much of the agenda is going to go through? i got to tell you i don't really know. i know tillerson as a ceo, all right. and i know that's a mere

relevance, look at how they did in the downturn. this thing didn't blink. but that's not exactly what qualifies you as bog gi bottom. >> right. but shouldn't we be waiting until we really see the economic team take shape to sort of focus on the things that at least our audience for the most part has interest in and are the subjects we spend most of our time discussing? >> i debated that issue. i'm so glad you brought it up. i was thinking everyone was the economic team, whether it be poster or labor, tillerson or state, these are all economic teams. >> of course he could make decisions on weapons programs. >> that's true. >> that will have an impact. >> historically by the way he's a grunt, so to speak. he's not about big weapons. he's about training a force to be able to deal with precision. i've got to tell you -- >> your point i guess is if

lindsey graham and john mccain and perhaps the democrats entirely and one more republican decide to go after tillerson and that gets bogged down, then you could see the agenda -- >> right. >> delayed. >> that's the dominant fact that makes dow 20,000 talk would be off base. you've crystallized it better than i did. the senate does not have a lot of trump republicans, so to speak. and i think that those hearings last week were really in the face of a trump who was trying to have real politique. it seems to be not the theme of some of the leading republicans. >> yeah. politico has a nice parlor game this morning arguing -- or asking whether or not khon will outshine mnuchin in terms of getting all the attention. said one washington insider late last week, quote, if you're a

ceo or the head of a bank or whatever, are you going to pick up -- who are you going to pick up the phone and call? gary is someone you already know. you're going to call gary. >> mnuchin is an easy guy met in passing, but gary khon is a visible guy. >> much more broadly known than is mr. mnuchin within at least the community -- the business community. >> we have had moments where the treasury secretary -- george w. bush. >> looking, if you're looking to finance a film, mnuchin will tell you the ins and outs. things he did. no, actually, he did some things for the first time that are important that other studios are looking to do in terms of selling ahead part of the slate to get a financing deal for it to take risk out. things like that. >> are you going golden globes here? >> i am not going golden globes. i am just talking about that.

do you think cohn will be on the heads up in 2017? >> you are getting ahead of the story -- >> why is that ahead of the story? that's next year. >> because he just got this job. >> just thinking. >> i like the way he's thinking. >> sure. >> thinking ahead. >> first things first. when we come back, lots of deals to get to this morning including a well known american brand. also ahead the auto industry's future and the trump effect ford ceo mark fields will talk to us live from the detroit auto show. look at the premarket. you already know we got to 19,999.63 on friday. bit of a weaker start on this monday morning. more "squawk on the street" from post nine after the break.

♪ welcome back. a number of deals to tell you about this morning. does it qualify for merger monday? well, you can decide. the biggest of which is the decision by veterinary centers of america or vca inc. to sell out to the mars family. now, when we hear mars you may think candy bars or wrigley c w

chewing gum, but the fact is that perhaps as much as 50% and soon without a doubt more than 50% of this company's earnings come from pet care, pet food and things of that nature. a growing area that my colleague, mr. cramer, knows a lot about. as for this deal this morning $9.1 billion cash deal, that does include debt of about $1.4 billion. if you're a vca shareholder, woof is the symbol. you'll get $93 a share. the multiple 18.5 times last year's ebitda. and that does rank as a significant multiple, the last deal done. those smaller and a lot of these hospitals that's what they own, vca is about 800 pet hospitals and then also testing facilities, lab facilities, which are a key as you might imagine for pets because they don't talk and so you really have to do all sorts of tests to figure out what may be wrong with them. the last deal done, jim, was

about 13 times. and, again, private equity been very involved in this. this will be the biggest player. mars already owns banfield. that is in a lot of petsmarts. these are stand alones. bob anton, the guy who runs this company founded it over 30 years ago has been running it all this time deciding this was the time to sell, i'm told they were approached at the end of november, a very significant premium above the current stock price. again, that multiple being as it was they said we will take the money. he though will go on with his management team to continue to run this company as a part of mars. which again you think candy but really you should be thinking pets. >> yes, and iams. >> yep. >> one of the things we've been emphasizing over and over again on "mad money" is the humanization of pets. henry shine which thank you introduced me to which is diagnostic. pets is probably one of the fastest growing secular story in the world and a lot of it has to

do with the idea that we spend more money on pets than anyone realizes. this is a breakthrough deal because what it does is confirm that thesis. i've liked vca for a long time, but my favorite has been idex. had them on two weeks ago. this is not that great for them because they'd be competitors, but it does verify the industry is worth more. vca a very fine company. the amount of money that we spend on hospitals -- remember, it's not like medicare. this is cash in the barrel. >> yeah, i'm learning that of course as a new owner of a puppy. oh, my gosh. >> david, you might want to be -- >> it is unbelievable. just two vet visits already, man, it's brutal. >> david, let me tell you something. one of the things i like about vca is pet university. they have pet university. it's very good business. >> they have teaching hospitals. >> online. >> oh, okay, pets at home. >> but this is an explosive area. and i have to tell you that idex

is the king. but the fact is that this woof verifies that people -- this is people sleeping with their pets. that's been the big story. >> right, the pet has moved -- or the animal moved from being on the farm to being in the yard to being on the couch to now sleeping in the bed. >> yeah, mine sleep with me and it's actually quite crowded in there. bug, everest and lisa and me. >> you've got two, right? >> yeah, one of them snores. it's a terrible scene. >> while you're talking it is the auto show week. and fiat chrysler made some news this morning saying they're going to invest $1 billion in u.s. plants, create 2,000 jobs, three new jeeps, mostly michigan and ohio. the president-elect tweeting a few seconds ago. >> really? >> says it's finally happening, fiat chrysler just announced plans to invest $1 billion in michigan and ohio plants adding 2,000 jobs, this after waiting for his follow-up, ford said last week it will expand in michigan and u.s. instead of building a billion-dollar plant in mexico. thank you ford and fiat c.

>> wow. this stuff is happening very quickly in terms of some folding, some not. it's not much of a stand because cruze isn't really imported here, but i do think some of this is working. some of the, i don't know, really con -- >> the jawboning? >> yeah. it's so much cheaper to make cars in mexico. one-tenth the cost in labor. >> yeah. overall cost about plant operating is 11% labor. >> what it is is currency. i think the president-elect is beginning to understand currency. i'm not -- i didn't mean that the way it sounded. being understanding currency is the big issue with china, with europe, certainly with mexico with the peso at 21. the fact it's not labor, what really does matter is this incredible, incredible advantage they have over the peso with the currency. and that's really the reason why

you're seeing just the headlong rush down there to the areas where the japanese and germans completely love to dominate. and they ship right up through ksu and union pacific. >> we're going to talk to mark fields of ford in a few moments. first, let's get to the bond pits and check in with rick santelli at the cme in chicago. good morning, rick. >> good morning, carl. we are continuing to see a drift in rates and a drift in the dollar although the dollar has been a lot choppier than many would have thought especially for the new year. look at intraday of ten, we're down a half a dozen basis points. if you look at a one-week chart, keep in mind, you know, we settled a year at 2.44, trading now around 2.37. we've been a little lower in yield. last week's basically one-month low yield close was 2.34. that's what traders are paying attention to against the backdrop of that big 2015 close right above 2.25. dollar index of course has been interesting but before we get to that, the spread between our tens and the overseas tens

continues to narrow. look at the chart since november 1st. many are continuing to watch as the tug of war between the opposing policies by central banks is taking a bit of a toll on the marketplace. if we go back to foreign exchange, an early november chart tells you about erg you need to know. since we went through 100 it really has been the type of formation where it's two steps forward, one step back. and finally, let's look at the euro versus the dollar. nothing cements the notion of where you're offsides better than this chart from november. 1.04 clearly the line traders are going to protect themselves against in the trade. carl, back to you. thank you very much, rick santelli. when we come back, cramer's mad dash, countdown to the opening bell, another look at the premarket on this monday. a lot more "squawk on the street" from the nyse straight ahead. one arge busineses the wlr

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♪ about six and a half minutes before trading begins here on a brisk monday morning here in the northeast. where are we headed? >> one of my favorite analysts on apple is katie huberty saying people are too focused on the near-term supply chain, meaning the iphone 7 is not that strong. she's talking about the iphone

super cycle, usually fear that word it's so bullish in china but cash repatriation, there's obviously a lot of hope there. and you've got a situation where u.s. tax reform could help, but not as much as others. david, the main thing about this piece is we forget it's a very cheap stock with a lot of catalysts. one of the things that's hurt the stock frankly is everybody recognizes that it didn't deliver. tim cook obviously on paid salary -- >> kpcompensation was not what might have been. >> 118 you do get that breakout. this is a dow 20,000 stock, you need this stock to burst through. >> what about the journal today a column talking about their lack of traction in a.i. despite originally with siri being seemingly ahead, they haven't done it and this column argues they need to. >> i often find that these articles are well behind the times. we all know about google and what they're doing. we all know about amazon and

what they're doing. so when i read that piece i did say, yes, that's verification of what we knew apple. has apple really fallen behind? apple has honed but some of the devices really are -- the amazon device is really quite exciting. a lot of people i know have got that. but what this says is stop worrying about near-term concerns you hear about the 7 not doing that well. focus on the 8. if you focus on the 8, then you've got a stock 12, 13 times earnings that's really, now get this, ten times -- ten times 2018. >> ten times. all right. well, that's not where the market is trading. much higher multiple there. we'll be focused on the opening bell a few minutes from now. e u

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heagilnoe aru lyprprti isetenng t ananr d t. r neng ring reretimetrad a as ast heagilnoe ini*adcave aru lyprprti ann isetenng t ananr d t. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in just about 90 seconds. busy day, busy week as earnings season will kick off with the banks on friday. pound's at a two-month low which we mentioned. rosengren, one of the great doves on the fed, not a voter, with some comments at the top of the hour saying the pace of normalization needs to accelerate this year. unemployment's at a target, inflation probably targets the end of 2017. >> music to j.p. morgan's ears.

obviously you have a stock that's done a lot of heavy lifting dow 20,000, that really needs those rates up because it doesn't cost them anything and they get this giant windfall. remember, they've been saying publicly four rate hikes equals $3 billion. and that would -- if you take a look at the stock, it's truly a parabolic move. you need to see rates continue to go higher. that's not happening today, but these comments certainly do help. >> he says three hikes reasonable. and that overshooting would put the recovery at risk, right? >> i think the dollar skyrockets. i hope we get some repatriation or you're going to see number cut. there are very few companies that can sustain this. coca-cola, by the way, which was downgraded, they are hedged euro and yen. don't freak out about the euro, but emerging currencies. >> we will see repatriation it would seem, just a matter of when. >> yes. when. >> we got that downgrade p&g at goldman, downgrade at coke, apple a top pick at morgan

stanley. >> very significant because the price target and the earnings big increase. they are connected with apple. they are very much connected with apple. >> let's get to the opening bell. [ bell ringing ] and the s&p at the bottom of your screen. at the big board, pama, at the nasdaq the muscular dystrophy association doing the honors. nvidia had a ton of news in vegas regarding a.i. cars, some delivered within a year they say. >> nvidia obviously had that bizarre spike on the second to last day of the year been trying to recover from, but nvidia's got volvo, tesla, audi is really the chief and once again with phil and what audi is willing to do. in the end remember this is a company involved with gaming and data center, artificial intelligence machine learning. if we focus too much on autonomous cars, we're going to miss the big story because

autonomous cars could be further out. the fact is three years ago when i met with the fellow that he interviewed today, they were talking about how if you smash open an audi, which would really be a crime, you're going to see a tremendous number of nvidia chips fall out. that's where they were first in. known as engineering marvel. >> report today in the journal also talks about alphabet's autonomous vehicle unit now creating almost sets of sensors that they will sell to others. >> oh, boy do they have chips. >> waymo. and lasers. or otherwise said lasers. >> but there were many stories about many research notes of late about how this will be the other bets quarter for -- >> google, alphabet. >> alphabet some people calling a value stock. i know that sounds facetious, but remember they have tremendous amount overseas.

do get hurt by the way by a weak euro. if they're able to do that. if ruth po rat able to see revenue growth in that end which has been very little, then i really think you'll see a stock take off. my travel trust owns it. >> we talked a good deal about of course that large m&a transaction in pet health care. but there was another deal today, and that stock also moving dramatically. ariad pharmaceuticals going to be acquired by taketa, a roughly 75% premium. you can see where the stock is up almost that much right now. it is cash deal as you might expect. total value including debt about $5.2 billion. this for a company that has commercial stage oncology drugs. they aren't there yet though. and for their part at suntrust

they say it represents about 2.6 times their peak revenue multiple that $5.2 billion number, just to put it in some perspective probably paying that kind of a multiple to peak revenues not going to see anybody else show up to try to buy this thing. big number. >> and what's really incredible here is that stock had a very big dip. why was it? because it does very expensive drugs. this is not a traditional bristol-myers, merck situation, they do have a hope for more than just orkin but people thought this would be under attack no matter who won for president. so this is perhaps verification we were too concerned about pricing away from generics. remember there's two kinds of price increases we're seeing. there's the price involving orphan and you'll hear j.j j.j. bienaime about hemophilia, but still first generic, no

relief on teva. a possible generic challenge which is really they're a key branded drug. >> right. >> i don't see any relief when it comes to pure generics. i see the orphan drugs people are saying, listen, those are worth buying right here. that's a very important takeover. a lot of rumors by the way on that last week turned out to be true. >> turned out to be correct. >> leading the dow this morning is american express which gets call at b of a, a call you said you like. >> yes. very much so. american express traded in the '90s when had same trading power. the idea that this thing shouldn't sell back at the same multiple it had in 2014 seems wrong given the environment is better for travel and entertainment. makes a huge amount of sense. i think the stock could go to 80 rather quickly. >> you mentioned the apple call this is ten-year anniversary of jobs unveiling -- >> how do you like that sfl. >> i was watching video this

morning of jobs on stage and he has pictures of blackberries which is what we were using at the time. he said we're going to get rid of all the buttons and a giant screen. >> i happened to be going through my drawers this weekend and saw my flip phone from ten years ago and just thinking -- >> was it a motorola or -- >> no, it was a shoe phone. >> what was it? >> it was a motorola. motorola solutions doing quite well. >> the largest deal google probably did was that motorola purchase, remember? >> i tell you, time flies. but i got to tell you if apple can break out here we're going to have to spend a little time tonight doing something maybe related -- i don't want to jinx dow 20,000 like jinxing the super bowl between the giants and pats, you don't want to get out there and say that stuff --

>> i think you just did. you mentioned a big part of morgan stanley's call on apple as you said, jim, china. >> right. >> also in the news regarding mcdonltd's today as they finally get a buyer in for their controlling stake in their chinese stores. >> it's funny that mcdonald's stock reversed heavily last friday after a downgrade. and i think that -- i'm not saying anybody knew anything, but i'm saying that mcdonald's is an exciting story if you believe that the -- that there can be an acceleration of same store sales. a lot of people feel same store sales have peaked and a lot of people recommending qsr, which is burger king. some people recommending wendy's. i'm still a believer in easterbrook, the stock did have quite a run but could go back to all-time high without a problem, but the problem is dollar is an issue and same stores. but problem i meant the fact animal spirits involved. >> worth mentioning in my old neighborhood of media that viacom has had a very good year so far. >> yes. >> up 10.4%.

i think this morning's it's gotten an upgrade or certainly some very positive comments over at j.p. morgan. stock up another 2.6%. of course remember they've got a new ceo at the company which will remain independent or so to speak certainly still has the same controlling shareholder but no deal with cbs. bob bakish has already done a lot of things there as ceo in terms of removing people he didn't think were getting the job done and putting in new people. plenty of challenges ahead for the company, but slate financing expected in the near-term there. i mentioned that earlier associated with our incoming treasury secretary mnuchin having done that. >> right. >> but this is something that gets done. i think viacom expected to do that at paramount for its upcoming slate. but beyond that, you know, perhaps some new momentum hoped for at viacom in terms of the networks, in terms of having a better relationship with their distribution partners being on the over-the-top platforms we talk so often about.

and being able to deal with a company that is still 3.7 times levered. so we'll have to do some things as it looks towards a roadmap of getting back to investment grade or getting to investment grade. >> cbs has a big move in the last few -- >> cbs had a good year last week. >> a lot of people talking to me about this this weekend, can you find out what does it mean when you have a tremendous number of lobsided games on this weekend for wild card weekend, does that impact things? a bcs game tonight if it is not exciting, does it mean anything? i know i don't have a quick answer to that. >> i don't think it does in isolation. it's sort of more season by season kind of thing. the questions on cbs are you too wedded to re-tran sports and then what's the year going to look like without political this coming year given the spending that went on last year. those are more of the questions there. but particularly retrans can you continue to put up those kinds of numbers on retransmission

you're getting. >> okay. >> and will sports continue to be the draw it is? or in this world we talk so often about where some say only 10% of households really want all that sports programming as you have disparate choices that can be made up of entertainment networks the likes viacom can offer without any sports along with many others, does that start to hurt? >> certainly worth keeping an eye on because i know this group we're always focused on acquaintances of trump and what will happen with time warner. because a lot of people feel what will happen as time warner goes away they'll leave that money available to go to viacom, to go to cbs and to go do disney, which by the way is up 109 -- well, it's moving. >> time warner, in other words if it gets bought out people will redirect the money -- >> yes. that's dedicated money. >> sometimes. sometimes it does. it will be very interesting. hard to imagine. we'll see if that deal -- if the

president being against it doesn't -- >> i shoui should reserve comment until we get there. there will be a department of justice. >> you've done a lot of work on that. >> as for whether they'll be an fcc i can't argue. but that deal doesn't really require much in fcc approval because there's barely any licenses to speak of. it's really about the doj. >> i feel when we look at disney i think about the optionalty disney went from a story at 93 worry about espn. remember that 100 million subs and subs keep dropping to an optionalty situation where suddenly espn is exciting because it might be in play, disney's stock a leader in moving the dow since the election. >> finally, on antitrust, just a quick look at our biggest m&a story of the morning, woof up about 28%, but trading about $2 plus below the $93 share price. not going to close until the third quarter of this year. and there are some who say is there any antitrust issue there.

>> right. >> apparently there are about 27,000 veterinary hospitals in this country. >> yes, exactly. >> a combination will represent about 1,700 of them. so they do not expect to have any real issues. maybe they get a second request, but on antitrust it's seen as most likely being fine. >> and people who do have pets know the brand sheba for cats, they know iams, don't realize how much money is spent there are countries where it's of course a big international company. you can expand countries like brazil -- >> global acquisitions are a big part of this. yeah, for mars. >> the one thing i think people have to recognize is mars has a balance sheet because it's a private company. >> i want to say brazil has the highest per capita concentration of dogs. >> yes. it absolutely does. >> rio it was a huge thing. people have three or four dogs. emp. >> and i think when they start spendsing on it the way they spend here it will really change things. i know that idex is the way to play it if you are not concerned

about, you know, mars coming in and taking share. and don't forget henry shine, which does diagnostics and a lot of this is diagnostics. it's a great market, the pet market, humanization of pets extraordinary how much people care. and the amount of money they spend per capita for pets every year goes up rather dramatically. >> yeah. dow's down 57. apple closing in on 119 now. let's get to bob pisani, bob. >> good morning, carl. happy monday everybody. going the other way on dow 20,000. and that's because i think modest geopolitical risks still out there. teresa may talking about a somewhat harder brexit over in europe causie ining little prob there. look at european stocks though for the moment. of course the weak pound helps out european -- british exporter. so you do see british american tobacco, anglo american, unilever, all doing a little better.

mostly on the downside particularly true among italian stocks and european banks there you see the flipside of that argument about brexit. here in the u.s. bonds up, stocks generally to the downside. that's putting some pressure on banks. but we're also seeing some pressure on some separate groups here. energy is weak here as we've seen oil down and natural gas down. and that's putting a lot of pressure on the natural gas names, your chesapeakes, southwesterns are also weak. and industrials and materials are weak as well. look at some of the big industrial names. industrials have done better recently on some hopes and beliefs, some evidence that the global economy is improving. if that becomes an issue here, those stocks are going to reverse and here you see most of those big industrial names to the downside here. what's going to take us to the next leg permanently over 20,000 on the dow. well, a lot of people are talking about earnings. they begin in earnest on friday, see big banks here they'll all

be reporting on friday. and the question is how you get over that -- this dow 20,000 level here. s&p 500 earnings right now going to be up about 11% for 2017. that's the hope right now. that's a 10% gain. but this has not changed. the estimate since before the election nobody's increased their earnings because no one knows how to model the trump rally right. and that's part of the problem that we've had. people who are making guesses, leon cooperman was on our air last thursday and said 132, well, we could do better. we could go to $140 in the s&p 500 if the full package of tax cuts infrastructure comes through. that's an educated guess on his part. a lot of people think so. and that might be very important overall. right now the dow jones industrial average average down 60 points. guys, back to you. >> all right, bob, see you in a bit, bob pisani. when we come back, ford ceo mark fields live at the detroit auto show. dow's down 58 being led lower by some of those stocks that were downgraded today like proctor and coke, but actually exxon is the worst performing dow component. back in a minute. at t opi 'sin l.

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world's biggest automakers gathering in the motor city for the detroit auto show.

our phil lebeau is there with ceo mark fields of fords. >> hey, carl. let's bring in mark fields. behind us the new f-150, but you made a new announcement, return of the ranger and bronco, tell me a little about that. >> well, we're going to be bringing back the ranger in 2019. we're bringing back a name plate beloved by a lot of our customers and a vehicle that is affordable, is functional, is more maneuverable. >> little smaller. >> and a little smaller. and of course built ford tough. we also announced we're bringing back the bronco, our 4x4. >> did you wait too long on the ranger? because that market, the mid size pickup truck market has been red hot. general motors has had a lot of success there, and toyota. did you wait too long? >> not at all. we have a number of priorities like redoing our f-150, our new

super duty allowed us to grow that business, 40 years in a row of leadership. we just finished the launch of the super duty. >> we talk last week about you japing plans for the new plant in mexico. how much does this continued uncertainty about the trade policy, what's going to happen with nafta, does it cloud the possibilities of what you're going to decide to do? in other words, are you guys in meetings saying we think this is going to happen, we're going in this direction, but let's be honest we're not sure? >> well, in our business we're a long lead type, you make investments and two or three years later they start coming to fruition. in the case of the canceling of the plant in mexico, we did that simply because we didn't need the capacity anymore. small cars were coming down. as we plan our business going forward, we look at a lot of factors, one is the trade environment and also tax policy. and we have to take that into account. in the meantime, we have to make decisions. so, you know, we're in meetings and we're talking about these

things. >> if the tax policy is redone so that there's more of a tax credit, if you will, for exporting vehicles from the u.s., would you build more vehicles in the u.s.? or are we looking at it's cost prohibitive to a certain extent. >> well, first off, we have to step back. we don't know how the tax policy is going to be reformed. we think there's a good likelihood it will. but wooe we're a global multinational, we have facilities around the world. we want to use them. at the same time though we think the tax policy, the blueprint that's out there with border adjustability, that's interesting because we are the number one producer of vehicles here in the u.s. and a top exporter. >> and jim cramer has a question for you, mark. jim, go ahead. >> mark, always good to see you. enjoyed your commercials this weekend in football. i need to talk to you -- >> oh -- >> i'm sorry, go ahead. >> i love those commercials. >> i know. they were throwbacks. autonomous cars, i went out to see your lab out in stanford, there's a lot of people who say, listen, autonomous driving, this is something that's going to

happen within two years. and there's other people who say forget about it, this is five, seven years out. mark, obviously there's a lot riding on this both for the semiconductor technology industry and for ford. could you just tell us how realistic is everything involving autonomous? >> well, it's a great question, jim. first off, it's real. but i think in our industry the word autonomous is being used very, very liberally. there's different levels of a autonmy. we said a level four vehicle in 2021, no gas pedal, no steering wheel and the passenger will never need to take control of the vehicle in a predefined area that's been mapped. that's what we're shooting for. >> geez. >> at the same time you're talking about the city of the future. you had mayor bloomberg on. >> uh-huh. >> you're going to be talking with him and some other leaders today. i hear back from people on wall street there's so much investment that's being thrown out there, i'm not entirely sure

how to value an automaker. >> well, these days. >> valid point? >> well, these days, actually, i think any company should be valued on having a point of view of the future. and then making sure they're putting strategies kp plans in place to be able to grow the business and create value over time. that's what we talked about today. we talked about our vision for the city of tomorrow and how we can bring assets to help solve societal issues but also open up growth opportunities for us. >> and in your eyes you have the growth that can be there, not just as an automaker but other forms of transportation? >> yeah. this is looking at new business models for us. for many years our business model was selling a vehicle. you know, every couple of years. now our business model going forward is that, but also how about the usage of our product and how do we gain recurring revenues that maybe are more stable through cycles and are just added and accretive to our business. >> mark fields, ceo of the forld motor company. jim, you liked that commercial, only thing you liked this

weekend. lions lost, giants lost -- >> know what the conclusion would be. everything else was foregone. [ laughter ] >> incredible. >> phil, thanks to you. and fields, thanks so much. when we come back we'll talk more about these markets. dow's in a narrow range to start the day down 55. don't go away. thatro

time for cramer and stop trading. >> a piece out today by ubs, could be turnaround story of 2017. can you guess which stock? it's salesforce. wait a second, turnaround? company reported a blowout quarter, went up to 77, came down to 67, now working its way back. what i think is interesting is if they can take m&a off the table, sorry people who are on twitter because that's what wi the of, then they talk about a repurchase, talking about a price target of perhaps 124. this would ignite a whole section. i don't know how you get to 124 without m&a and a takeover bid. i think this is an important piece because this is the group trying to make its way away from f.a.n.g., the cloud business, and i'm surprised this stock isn't up because it's one of the most bullish pieces i've read in

a long time. >> what's on mad tonight? >> we have jci. i'm trying to feature some of these industrial companies that people are so excited about. we've seen emerson get upgraded today, rockwell, eaton. well, johnson controls should fit that profile. but i'll tell you, you got to have numbers first. so let's see if they do have the numbers. >> yeah. got a new all-time high on rockwell. >> what an exciting time. i got to tell you. i just cannot believe apple finally breaking out. that's very big. >> jim, see you at 6:00. >> yes. >> "mad money" on cnbc. when we come back we're going to go back to the detroit auto show. live interview with toyota north america ceo jim lentz. dow's down 53.

♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at the new york stock exchange. couple things working against the markets early on this monday. couple high profile downgrades of p&g and coke. oil is down more than a dollar but a big week still ahead. fed speak, earnings begin on friday and confirmation hearings in d.c. our roadmap for the hour

begins with a pause to the march to dow 20,000 pulling back this morning after coming within a point of making history on friday. we'll talk market strategy straight ahead. >> and as carl said it's going to be a busy week on capitol hill as confirmation hearings for the president-elect's cabinet members get underway with just 11 days until the inauguration. >> donald trump tweeting at the automakers we're going to go to the detroit auto show, talk with the ceo of toyota north america. but first, with just 11 days until president-elect donald trump is sworn in, the dow pulls back from that historic 20,000 mark. we're joined now at post nine by chase economist anthony chan and cfra's investment strategist lindsey bell. good to see you both. >> nice to see you. >> lindsey, why does the market have so much trouble hitting that big round number of dow 20,000? >> well, it is a really big round number, but let's not forget the s&p 500 hit a new all-time high last week. so we are overall positive on the market for the year. but we think it could be a bumpy road ahead. for instance, one of the first

hiccups could come after inauguration. there's a significant amount of uncertainty about the policies and how they will play out. and when you think about that and you couple that with the fact the s&p 500 is up over 6% since the election day, that's three times as fast as normal by historical standards. trade k at premium valuations here and fourth quarter earnings period should be all right, but risk remains towards the outlook. we're a little bit cautious right now. >> yeah, some high expectations certainly, anthony. do you agree that there are also some pretty high uncertainties and maybe the market got ahead of itself? >> there are some uncertainties out there, but as lindsey pointed out not only is the market up 6% from the election, but if you counted before the election and saw the big plunge after the election results came out, so all of this is playing there. we obviously are digesting what happened in britain. we are moving a little bit closer towards a harder brexit. we're obviously seeing some geopolitical risk in asia. so there's a little digestion

that's going on. but there's no doubt in my mind that with all the things being proposed even if more than half of those get proposed -- actually get enacted we will see in fact things working out well for this market. give you a number, if you look at that corporate tax rate going from 30% to 15%, every percent adds at least a $1.25 to earnings. i know the numbers on the street are between $1 and $1.50. i'm going to do $1.25. >> some say 15% not so realistic, more like 20. >> that will be a bump to earnings of about 10%. the other one it would be a bump closer to 21%. these are still big numbers and these are all incremental numbers. >> but earnings for 2018, right? >> these are numbers after this happens we look 12 months into the future. but as you know, carl, the market anticipates what's going to happen. they're going to start pricing -- it's such a big number, they'll start pricing it in just like last year the s&p went up 9.5% and of course with dividends 12%, did we get 12%

earnings growth last year? absolutely not. they're starting to price in all this stuff for the future. >> there could be some offsets to those positives. like you guys have spoke a lot about the automakers coming out with their conference this week there could be trade tariffs that hurt. there's obamacare. there's a lot of puts and takes that we're going to have to watch as the year unfolds and these policies become reality. >> you talk about the market getting ahead of itself, lindsey. in particular the bank rally has been quite stunning since the election. we're going to start to get earnings at the end of this week from j.p. morgan and some of the other big banks. what's realistic in terms of policy expectations there? and also what they're betting on a steeper yield curve in terms of what will actually come to fruition next year. >> yeah, there's certainly a lot of optimism around the financials. this fourth quarter should be the second quarter in a row for double digit earnings growth for that sector, which is certainly a positive. people are going to look to hear what those banking management teams have to say about the outlook. and i think with the fed that's more hawkish going into this

year it certainly could be a positive thing. but these stocks are up substantially in the last couple months. >> you mentioned the downgrades this morning of goldman. goldman's downgrades of coke and p&g. is that part of all this downgrades of megacaps that have big forex exposure, slow staples? >> forex is an issue we'll have to contend with in the next year. in the fourth quarter it's not really a big problem, u.s. index up 2% on average for the quarter overall. that is one of the risks to the outlook. >> to carl's point the signal on the consumer not to mention the news we keep getting on retail, limited closing all 250 of its stores adding to the announcements we heard from macy's and sears last week. consumer confidence spiked after the election, but what's the outlook for consumer -- >> i don't think the outlook is negative for consumer. what you're seeing is a transition consumers are moving away from brick and mortar to other areas like obviously the online situation. you don't hear amazon complaining about sales.

you may hear some of the brick and mortar complaining. but with regard to that forex, look at the last 12 and a half months we've seen the foreign exchange dollar up more than 5%. that subtracts from earnings, but we haven't even talked about ruk in personal income tax, reduction of -- even if 65% to 70% of that comes back we're still talking about $1.7 trillion after taxes $1.5 trillion, what did they do in 2004? close to 7 0% or more was used to repurchase stock. that's almost 5% of the total market cap -- >> but anthony, we've also been talking about the border adjustment potential tax on imports which could have a punitive effect on a lot of retailers, automakers and anybody who imports some of their products. we haven't talked about tweets, policy tweets ordering different companies and industries to manufacture in this country. >> well, first of all, that border adjustment tax we're not certain that's going to happen.

in fact, right now if you look at what the political pundits are telling you is that it's still close to a 50% probability or evenless. even if that happens you're getting a lot of other offsets on the other side. net-net it's still a positive. >> a lot to debate in the coming year. guys, thank you for kicking off the week for us, anthony chan and lindsey bell. of course it is a big week in washington as confirmation hearings get underway. republicans have set at least nine hearings for the week beginning tomorrow with senator jeff sessions who is the president-elect's pick for attorney general. let's get to eamon javers in washington to talk about the few days ahead. hey, eamon. >> good morning, carl. they are definitely flooding the zone here, team trump is in washington, d.c. with all of those confirmation hearings scheduled for wednesday, the same day donald trump is going to give his news conference. that's going to make it difficult for any single piece of neg etf news out of any of those hearings to dominate a news cycle like it would on a day when the confirmation hearing was the only news story that day. donald trump will be sort of providing political cover for

all those nominees. take a look at the schedule here and you see what i'm talking about. starting on tuesday, tomorrow you see jeff sessions, the nominee for attorney general will be up on the hill along with general john f. kelly, retired u.s. marine corp general. he's the pick for homeland security. wednesday's the big day january 11th, rex tillerson for state will be up there, jeff sessions possibly for his second day will be up there, michael pompeo for cia in the wake of that russian hacking report by the intelligence community. he'll be up there. betsy devos on education, elaine chao on education, expect that to be a relatively smooth hearing, all of that happening on wednesday as the donald trump presser. on thursday we'll see will lur ross at commerce on capitol hill. james mattis secretary of defense on capitol hill along with ben carson and andrew puzder for labor. all that happening this week at

the same time trump is gearing up for inaugural next week. clearly a big week and the idea is jam them all through now. one of the things to watch is expect democrats to complain a lot of these nominees haven't finished their ethics forms and disclosures. so with a lot of these wealthy billionaires and hundred millionaires, democrats want to see where the assets are and where the possible conflicts of interest might be, guys. >> we're going to keep our eye on that, eamon, as we know you will. our emg amon javers in washingt. let's get to phil lebeau in detroit with the ceo of toyota north america jim lentz. good morning, phil. >> thank you, carl. jim, it's been a busy show, we all know what everybody's talking about here, donald trump. you guys were on the target list last week. he targeted you for the production planned in mexico for the corolla. have you talked with donald trump or his administration, or has mr. toyota talked with donald trump? >> we have not. i mean, the reality is we're in the process of moving corolla from canada to a mexico

location. that doesn't mean we've stopped our investment in the u.s. this year marks our 60th anniversary. we've already invested $22 billion in the u.s. and over the next five years we'll be investing an additional $10 billion in cap x right here in the u.s. >> ford ultimately said we're going to scrap our plans for mexico. any chance you do that as well? >> no. >> that the heat continues and at some point you say it's not worth it, we'll pull out of building this plant in mexico? >> it would be difficult for us to do because this is just one piece of the puzzle as we are realigning all of our north american footprint. so to do that would impact our suv strategy. and right now the market's red hot on suv. we've got to continue that strategy as well as additional pickup trucks as well. >> you know that the concern is that we ultimately see some type of a trade war break out. and anybody who manufactures outside of the united states is going to pay the price. you have a large presence in canada. is there a chance that you're going to have to say we're building more in the u.s. simply

because it's the only thing that we can count on? >> it's difficult to do. i mean, these decisions, this decision to go into mexico it's probably about six years to the point where we actually broke ground. so to make those kind of changes, to disrupt the manufacturing flow, to disrupt the flow of our suppliers would be very, very difficult. and actually cost jobs most definitely in the short run. >> you think it would cost jobs here in the united states? >> i think it would. i think even when you look at border tax, which is another type of tariff. >> right. >> if that comes into place, it's going to raise the cost of all vehicles in the industry regardless of your name plate name. >> the argument from trump's team and his supporters is but if you manufacture more in the u.s. and you export from the u.s., it's ultimately going to work out better for you. >> that's true, but it's a global industry with global suppliers. so you look at a vehicle like camry. we're launching a new car today. that vehicle has the most domestic content of any vehicle

in the industry, not just car, any vehicle. that would probably see about $1,000 increase in cost. >> so is there a possibility though that you might ultimately have the suppliers because they change nafta, guarantee an x percent of the parts are manufactured in the united states, not just nafta, but in the united states, is that a possibility? >> we'll have to see what the trade policy ends up. and we'll react to whatever that policy is. but we think it's in the best interest of this industry to be able to produce as we're producing today. employment's going to go up. and we need to make sure that we are competitive in a global industry and we take care of our customers. >> quickly, let's talk about the market. you've got strong consumer confidence, record sales, but also rising gas prices. any concern that those gas prices as they move closer to $3 a gallon finally put the brakes on that demand that's out there? >> i think the natural demand is going to fall a little bit this next year. we just came off on industry at

17.55 million, we think it's going to be about 17.2 this year. i think it's being driven more so by used cars coming into the marketplace off lease. i think that's going to compete on the new side. but interest rates are going to start to creep up, gas prices are going to start to creep up, so all of that's going to be a little bit of a headwind to the industry this year. all that said it's still a strong industry. >> and you'll take it. >> all day. >> even with the twitter in chief in washington? >> no problem. >> no comment from jim lentz. understandable. guys, we'll sentd it back to yo. >> very interesting, phil. of course a lot more to come on all of those topics. thank you. coming up, the future of obamacare in the spotlight as well as the new administration gets ready to take the reigns. ceo of eli lilly will be ahead with us, david ricks. unint earnl n

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the dow backs farther away from that elusive 20,000 level after we got oh so close on friday. plenty of calls out of goldman sachs not helping a pair of dow blue chips this morning. the firm downgrading both coca-cola and p&g to sell saying it sees headwinds from a stronger u.s. dollar as well as sluggish and market demand. the common theme here, guys, actually it's not set to be a very good period for the

staples. they pay high dividends and that's why they've been in vogue over the last few years. with interest rates rising with market perspective and fed raising interest rates, that makes them less attractive. they've been dealing with slower growth barely any top line growth for a long time now. and each of these two companies goldman highlights some particular concerns. for coke for instance goldman prefers faster growing drinks, beer, energy drinks instead of the carbonated beverages, slow growing, coke's portfolio even more so than its competitor pepsi is exposed. and with proctor & gamble they say the valuation was stretched. a big winner last year, there was a turnaround in place from the new ceo, david taylor, but they say now it's at a ten-year high that is the p/e valuation. and there's a lot of hopes baked in. it's not a particular winner from any tax reform cutting corporate tax because p&g already pays such a low corporate tax. it's one of those exposed multinationals that takes advantage of overseas tax rates as well. >> yeah.

interesting. i mean, you'd think they were both macro calls, but the proctor call they talk about the failure of promotions to translate into share gains. market share vulnerability. you can somewhere read in there perhaps amazon's entering private label. so it's not just world events that are driving these calls. >> this has been a problem for p&g for a long time now losing market share to online start-ups like dollar shave club, for instance, on the razors. it's happening all around them. also with consumers increasingly going on mobile and online to buy, this is a company that's been fighting for years for the best shelf space and for the biggest shelf space. and it's a completely different model. and p&g ever really since the financial crisis has been dealing with the off price, the private label kind of brands as well as consumers get more conscience. >> they point out p&g has a fairly low tax rate and not a lot of international balances. of course when you think about companies that do have large

amounts of cash overseas and will be able to repatriate conceivably those funds at a very low rate as well. they're not one of them. >> same with coca-cola of course. those big multinationals. the i will say the one risk to all of this what could go wrong for this goldman call is your world, m&a. i mean both of these companies, they're big, and they could -- but they could potentially find themselves in some sort of deal situation, slow top line growth. we know for instance that there's a lot of food and beverage in m&a. >> almost likely as the acquirers very hard to imagine either one of them being acquired. >> right. >> though i mean people have speculated the guys in brazil would love to do coke one day if they could figure out a way to do. >> it ultimate sort of beverage behemo behemoth. >> i don't think our president-elect would like that very much. >> but has capped some of the valuations and consumer companies high. >> yes. >> an exciting place for deal making. >> yeah. interesting calls driving the market to a down today. when we come back we'll be

joined by the ceo of eli lilly, david ricks. we'll get his take on the future on obamacare. a lot more ahead. stay with us.

35th annual j.p. morgan health care conference underway in san francisco. it's always the biggest event of the year and our meg tirrell is there sitting down with the ceo of eli lilly david ricks. meg, take it away. >> david, thank you so much. and to our other david here, thank you for joining us. >> thanks, meg. glad to be here. >> you've been in the ceo of all of eight days so far. what is job number one of eli lilly? >> for us it's a year of execution. we rolled out guidance at the end of december which told the street really we plan to grow the top line by mid single digits and bottom line by mid teens. we're launching a number of products right now, very exciting products for cardiovascular disease, and cancer and psoriasis, and more are coming. we're focusing on executing rollouts of new medicines for serious conditions. >> probably the biggest overhang

on the industry has been questions around drug pricing. you guys were a target of bernie sanders last year who wants the government to investigate collusion and insulin pricing. how do you respond to that specifically that kind of pressure? >> well, we did respond. i think a lot of that focuses on list pricing and branded pharmaceuticals which our biggest argument is that's not the focus we should have. it should be abt patient affordability. the system is not designed in health care or medicines for people to pay list price, yet under many of the new plan designs, high deductible copay plans patients are subjected to full list price. so big shift hasn't been the pricing behavior in insulin. it's been patients are being asked to pay the list price more and more. we've announced a partnership with exsuppress scripts actually in december as well which people can sign up via this blink health platform and get a rebate right at the pharmacy counter if they're a cash payer or have a high deductible plan up to 40% off right at the counter. which is similar to what rebates

we provide to managed care organizations. so we're trying to innovate to solve that problem. >> are those kinds of solutions kind of taking one thing at a time? is that going to solve the problem? or does the industry need to fundamentally do something different when it comes to price sng. >> we do think longer term there's other changes needed. first of all to recognize there's an imbalance today between what people pay out of pocket for medicine versus the rest of health care. it's about a 4-to-1 relationship, people pay about 20% of their medication bill, about 5% of their hospital bill. why is that? we think medications are one of the best deals going in health care and that should be balanced. patients should participate in their own cost of care, but why is that relationship there? the other thing we'd like to move to as a whole health care system is more value based pricing scheme. rather than a list price and all these deals and rebates, whereby preserved days out of the hospital or better hbac1 rates for people with diabetes, that's

how we figure out the renumeration for the inventor. a lot of work to do to get there. we need changes in washington as well as innovation with commercial paying partners, but lilly is trying to lead the way. >> speaking of washington, president-elect hasn't said much about the drug industry but has said he doesn't like what's happening with drug prices and wants to bring them down. what are your expectations for what trump means for the industry and is everybody holding their breath to see who he's going to tweet about? >> we'll engage with the new administration as we would any new administration. and chairman price who's the new hhs incoming secretary knows a lot about health care. to try to solve the problems i was just discussing, which is how do we make medicines as affordable for patients as we can and more balanced with the rest of the health care services and products people consume. we think if we do that people realize medications are a great way to invest our health care dollars, eventually most these medications become almost free because they go generic. that's unique for pharmaceuticals, other services in the health care system don't have that feature. so we're happy to partner with

them to try to solve these problems, value pricing is another theme we've been after. >> well, another thing that has been talked about potentially under trump is a tax holiday. what would you do with -- do you want to see that? what do you want to see in terms of taxes? what would you do with that money? >> we need to see the specifics of any new tax program, of course we're all for looking at the corporate tax system we have in america which puts us at a disadvantaged as a u.s. based company whether that be to buy other biotech companies because we have a higher tax rate or just how we have to run our operation to manage cash around the globe. so we welcome comprehensive corporate tax reform. if there is a repatriation vehicle to that, of course we'll look into that. and we've got an ongoing stock buyback program we would like to increase our dividend. we've said that. and of course use capital to run our operation and look at business development. >> well, i want to ask you about alzheimer's. you had some news at the end of last year that was disappointing in your lead program, but you seem committed still to this strategy and target iing it as

way to solve alzheimer's. >> of course a big event for the company. there was a trend toward positivity on almost every measure. so we think the hypothesis is worth continuing to study. most experts we've talked to so far also agree. we have a number of other programs looking at that similar mechanism to reduce the rate of decay people experience with alzheimer's. base inhibiter which is in phase three in partnership with astrazeneca. we're also looking at other approaching like tao. >> another protein. >> yeah. different approach, not exclusively looking at -- i think the data is encouraging in one sense. it was a big study, it was well controlled and patients did a little bit better, but just not enough to justify a submission. but we're committed to alzheimer's and helping patients with that condition. >> given the need i think everybody is rooting for you on that one. >> absolutely. >> dave ricks, thanks so much for joining us.

>> thanks for having me. >> meg tirrell, david ricks, thank you both. when we come back, just 11 days until president-elect donald trump is sworn into office. he'll be joined by billionaire gop donor stanley hubbard next. much more on "squawk on the street" with dow down about 50 points. stay with us.

good morning everybody. i'm sue herera. here is your cnbc news update at this hour. iranian mourners paying their respects to the late iranian leader akbar hafsanjani following his death over the weekend at age 82. hundreds and current and former iranian officials attending a farewell ceremony. he was the leading reformer pushing for better ties with the west and the united states. a funeral was held today for one of the israeli soldiers killed during sunday's jerusalem truck attack. the soldier laid to rest during a ceremony at military cemetery in jerusalem. four soldiers were killed, 17 wounded in that attack. millions of commuters facing delays and frustrations as a strike by london's underground workers shut down much of the city's subway network. transport unions are protesting job cuts and ticket office closures citing safety issues.

and 16 people were arrested in france in connection with the october armed robbery of kim kardashian west. more than $10 million worth of jewelry was taken from kardashian. police tracked down the suspects through dna evidence. and that's the news update this hour. carl, back down to you. all right, sue herera. thank you. i'll take it. checking in here on the markets the dow down about 52 points, s&p is down about a quarter of 1%, just fractionally. the nasdaq actually remains positive doing the best of the bunch. just looking in terms of the dow winners and losers right now, dupont and apple are on top in terms of percentage wise gains, guys. chevron and exxon at the bottom of the list. oil prices of course declining and you've got that story. also talking about some of the movers like coca-cola and p&g on a pair of downgrades. nike interestingly is lower. it was the best performer of the week last week up 6%. the biggest loser of the dow last year. so potentially that theme some

of the losers turning into winners as we continue to see this rotation in and out of stocks. >> reversal of the rotation we saw late in the year of course away from technology and growth names and to more cyclical names given what you just said. of course the nasdaq comp up about 2.7% thus far this year. this morning not being led by what it has been google and amazon, facebook is up, and apple actually one of the better performers up almost 1%. >> you know what's not up right now? >> no, what. >> british pound. >> we talked about that earlier. we talked about your show too. jim covering -- you guys covering it. 1.1 or 1.2% decline, right? >> yeah, goes back to the october low for the pound against the dollar. >> take you to trump tower this morning getting a look at senate majority leader mitch mcconnell coming in probably missed him going into the elevator. but we are told that he's meeting ameet ing ostensibly with the

president-elect. his wife elaine chao one of the many designates to be in front of hearings this week. you mentioned oil and rates. two important things to watch. oil is down almost a buck and a half. and despite rosengren's relatively hawkish comments earlier this morning saying fed needs to accelerate the pace of normalization to avoid this recovery being put at risk, ten-year note getting down to 2.38 guys. >> and one of the bright spots in terms of retail, just in today's session, is gap. near the top of the s&p. had a nice comeback here in the last few months and week. it's up about another few percentage points. hearing more anecdotal evidence november and december sales disappointing last week gap came out with actually better numbers. we're going to get the monthly retail sales report on friday. friday is a big day, sort of a light week but on friday we'll learn more about what shoppers did during the holidays.

>> we'll get ppi on friday. until then it's a little slow, right? in terms of data flow. we'll get to heart attacker and fed speak -- >> it's talk. it's fed talk. it's conference talk. a lot going on. the aumptomakers all talking abt policy and trump, sort of taken the spotlight away from new models. >> not to mention health care. >> there's a big consumer industry conference tomorrow as well. >> where -- >> in orlando, florida. >> okay. >> icr, all the big restaurant companies, retail companies which should be very interesting because the question is the restaurant in retail recession over? >> you're going? >> i'll be there tomorrow. >> enjoy the weather. >> it's going to be cold. >> really? >> we feel so terribly for you. >> sorry, guys. >> when we come back the march to dow 20k continues, but not this morning. about 90 points away at 19,911. we'll talk about that. conflicts of interest coming to light about a possible business

deal between china's insurance giant and the president-elect's son-in-law jared kushner. you might have read that piece in the times over the weekend. we'll talk about that after the break.

one of wall street's biggest bulls reveals where he sees value this year. what sectors are on his radar? find out, plus very interesting acronym on where to invest at tradingnation.cnbc.com. more "squawk on the street" coming up.

welcome back. crude oil declining more than 2%. that's weighing on some of the energy stocks in the broader indices. dow down about 51 points. nasdaq outperforms, it is still positive. joining us to talk about where we go next cowen and company's head of trading and cnbc contributor and familiar face david seberg. good morning to you. >> good morning, sara. >> so whether we hit dow 20,000 or not or when we hit it, it's a good opportunity to sort of look at where we are and whether the big number represents the next

stage in this bull market run or a sign things are topping out. what's your take? >> look, i mean, things don't feel like they're topping out for the long run. i see short-term pullback? no question. too far too fast we hear that consistently on this show. we've moved too far in different sectors. there was a massive repositioning rally that occurred especially in a lot of these financials in particular. have the banks run too far too fast in the near-term? possibly. but i think for the long term investor you have to stay involved in these things. rates are going to continue to creep higher. looking at possible reform for the banks which will allow lending to open up quite a bit. so i look at the banks in general and say we're probably only in the second inning here of a real rally. i mean, you remember when all these tech names blew up when the dot com bubble burst, it took ten years for a lot of these names to really come back. we've seen a ten-year lag from a performance perspective in these financials. i look at it and say we could be

at the beginning of a real cusp of a significant move in that sector. >> i'm not hearing you say though that valuations are not stretched, david. >> look, i think for the near-term we may be a little bit ahead of ourselves. let's put it in perspective, right? what are the implications going to be from tax reform? we're not sure yet. what are the implications going to be from dodd/frank reform? we're not sure yet. so i think we're putting a lot of, you know, we're paying forward for a lot of what-ifs. i think a lot of that digestion needs to come forward. look at like this wednesday trump has a press conference. we're going to hear probably a lot of really crucial information from that press conference. i can't imagine the press not asking questions about, you know, the affordable care act, about, you know, tax reform, about the impacts of -- or possible reform with dodd/frank. so i look at it and say we could have a lot of really important questions at least for the short term answered this coming wednesday at that press release. we haven't heard a lot out of

donald on that front recently. >> again? >> david, are you seei ining mo flowing out of bonds into stocks? >> i'll tell you what we saw, when we saw the big shift repositioning trade, it was interesting to see you bring the financials up or talk about the financials in particular where people completely underweight. we saw a rush with buyers without positions really in the financials looking to gain exposure. and then we started to see, you know, slowly people had core positions or had positions on add to those positions. but we've seen the initial surge or frenzy in buying subside quite a bit. so right now what i see is a lot of back and forth between hedge funds, not necessarily new positions being taken or adding to positions right now. it's really just trading around positions for the near term to see what comes out of this potential reform. >> we did get a few multibillion dollar deals announced this morning. what are your expectations this year on the m&a front? and do you think we'll see more ipos than what was a pretty

pathetic year last year? >> yeah, i mean, look, health care in particular. i know j.p. morgan has their conference going on right now. we saw a couple deals, i think three announced this morning. in general i think you'll see a lot more m&a within the biotech sector especially in the masmal to mid cap portion of that space. i got to tell you i think that's an area to really kind of remain focused for the near term. i think that massive under performing last year, out of the gate really positive start this year, do we maybe pull back a little bit after j.p. morgan? historically we have during periods where it's rallied into it. but i think biotech could be a real outperformer this year. i'm looking for a more second half rally and i think you'll see a lot of deals to follow. >> a lot of what you're saying sort of the optimism has to do with the policies and you're not alone certainly from what we can expect from a trump administration or republican congress. mitch mcconnell in trump tower right now, is this going to be a market that is so sensitive to every comment from members of

congress when it comes to these policies instead of a market so sensitive to every fed president and every comment by janet yellen, is that where we're going? >> yeah, no question. i mean, look, we have like i said paid forward a lot of expectations. so you have to have earnings keep up. in my opinion with expectations, right? so we're probably going to hear more. it's not fourth quarter, it's more first and second quarter earnings and guidance that are super, super important. so, look, keep an eye on it. i mean, whether or not earnings are actually going to -- you know, these companies are going to project to see this in their guidance is super important. and, again, any sort of relevant commentary out of trump this wednesday at this q & a i think is going to be super important for the market overall. >> wednesday is going to be interesting. one last thing, david, on 20k, does the impact on sentiment change the longer it takes to crack it? >> no. i mean, i think in general what you have is you have a lot of electronic trading right now going around that. on the institutional side, carl,

that's a great question because we don't hear a lot of our clients talking about it in particular. they're not looking at that as a line in sight to whether they're going to be taking on new positions or setting positions. so from the institutional investor pers pektive, it's not that big of an event. not necessarily focused on the dow 20k, whether we blow through it or not doesn't really change their opinion. >> well, it's awfully proving pretty tricky to get over that hump. david, thank you for joining us. >> i know. thank you guys. >> david seaburg. well, let's send it over now to jon fortt to give us a look at what's coming up on "squawk alley," jon. >> well, david, it's been ten years, can you believe it, since the iphone made its debut? seemed crazy at the time, but it has taken over tech in a big way. we're going to look at the past and more importantly what's next. also, the ceo of mercedes benz usa is going to join us with a look at trade policy and the future of autos. and dan niles, the famous

investor, is going to give us some picks in tech for 2017. all that and more coming up on "squawk alley." ys, w w er athhes h t all?l?t n on twi p

said to be in talks to invest in a project to redevelop a flagship building in new york city that is owned by kushner companies, the real estate business that is owned by the president-elect's son-in-law -- or run by his son-in-law jared kushner. our robert frank joins us now with more on the story. robert. >> good morning, david. well, he is one of the most powerful advisors and gatekeepers in trump's center circle, but now the business dealings of donald trump's son-in-law jared kushner are coming under scrutiny. in the week after the election kushner met with the head of china's insurance group in talks to partner with kushner on one of new york's top office towers which was bought for record $1.8 billion in 2007. they've been in the news for

aggressive u.s. buying spree and concerns over its opaque ownership. bought new york's famed waldorf astoria for just under $2 billion. but deals to buy starwood hotel chain and hotel chain in san diego both collapsed collapsed amidst questions over national security and the company's ties to the chinese government. one of kushner's other lenders, an israeli bank, is under investigation by the justice department. ethics lawyers saying kushner's business ties and his role as adviser to the president could pose potential conflicts of interest. kushner's attorney says in a statement that "jared is committed to complying with federal ethics laws" and may resign from his family company and would recuse himself from matters that would affect his financial interests. the kushner companies not as well known as the trump companies, but in some ways, they are larger. they own 20,000 apartments and over 14 million square feet of office space in the u.s. they have made more than $7

billion in acquisitions in recent years, much of that in downtown manhattan. and guys, much of the scrutiny now on where the money for that $7 billion in deals may have come from and who those big lenders might be. guys, back to you. >> yeah. is his father still involved with the company, too, robert? >> charles is involved. remember, he went to prison after a scandal involving campaign contributions, ironically, to democratic candidates in new jersey. but charles had taken a back seat as jared took over the company sometime around 2008-2009. now if jared steps back, perhaps charles would become the formal ceo. that is unclear, but charles has retained an important role in the company. and if jared steps aside, big questions of who would officially run it, whether that's charles or maybe jared's brother. but like the trump organization, this is a tight-knit family business that is a little difficult to unwind and extract one family member from.

>> yeah, not to mention, of course, anbang, of all the companies, shrouded in a lot of mystery. >> exactly. >> i tried to learn a bit about it when they were a bidder for starwood. of course, then they just left the scene on that deal, allowing marriott to come in. but very interesting stuff, robert. thank you. i know we'll be following this as we move along. >> absolutely. thank you, david. >> robert frank. apparently, sara, jack maw has also entered trump tower, or at least is said to be meeting with the president-elect. of course, he is the founder of alibaba, speaking of chinese companies. it's one of the largest, by far, of course, certainly the most important when it comes to the chinese consumer and one we follow closely here, having gone public here at the new york stock exchange not long ago. unclear, though, what they might be talking about. mr. ma is certainly -- >> trying to grow the business here, right? >> as we take a look at -- those are not pictures from today. >> stock footage. >> yes, that is stock footage of

mr. ma, here on the floor, actually. but yeah, although not much of a presence here in the u.s., he does own a lot of land up in the adirondacks. they are trying to have more of a presence, perhaps, with alibaba here in the tou.s. to a certain extent, but it's not their focus of markets outside of mainland china. >> president-elect trump has made china a cornerstone of his america-first policy, has gone after mexico. but for global investors, a bigger deal is he's gone after china, the second biggest economy in the world, one where a lot of u.s. consumer companies and all sorts of companies have a growing presence, and there's been some tough talk when it comes to china and some tough appointments that indicate that there is going to be a more confrontational stance when it comes to trade and business with china. so, potentially, for those that are worried about that, seeing jack ma go into trump tower suggests that he has sort of a china voice on the ground

whispering in his ear the other way. >> yeah, no, listen, a reasonable argument can be made it's the most important economic relationship our country has, and if it becomes one that is more tenuous or difficult, that could be very negative, broadly speaking. >> maybe he's there to talk about what the chinese authorities would do if donald trump does -- >> we can sit here and speculate. >> there's so much op eds, editorials in the state media out there lately talking about retaliation against u.s. companies that operate in china and the fact that they say china would win a trade war. so, maybe there's a little more color on that. >> i'd love to know. perhaps i can even do some reporting after he exits and we can find out what was discussed. but it is interesting his connections into silicon valley. generally, though, he did have that big meeting or not that broad. peter thiel sort of representing for him, his sort of point man on it. it will be interesting to find out what it was. jack ma and -- >> maybe you can use your little handy phone on set while we toss it off now to susan li.

>> i think jack's going to let me know. i'll text him. >> susan li has a "market flash." >> i'd love to know as well. let's look at shares right now. outperformance in a weaker retail environment, francesca's surging this morning. this morning they have raised their fiscal fourth-quarter earnings outlook, revising it upwards. its sales outlook as well. and the company says that "we are pleased with our solid holiday performance which came on top of an 11% comparable sales increase in the fourth quarter last year." and shares, as i mentioned, have been up some 50% over the past three months. they have also revised upwards now their same-store sales guidance for next year from a decrease to an increase for the fiscal year. back to you. >> susan li. susan, thank you. we're also watching shares of mcdonald's. it is selling a controlling stake in its china and hong kong operations to the carlyle group and state-backed siddic for about $2.1 billion.

mcdonald's as part of the deal will keep a 20% stake. it plans to add more than 1,500 stores in the region over the next five years. this was something that was anticipated and widely expected. it looks like they got the deal done. little reaction here on the share price, david. >> and as a quick follow-up, we are told by people close to alibaba that jack ma's meeting is to discuss his latest expansion plans in the u.s. and his -- >> commitment to -- >> -- intention to create 1 million new jobs over the next five years in the u.s. not clear how that will happen, but could be very interesting. everybody going -- >> another ceo going -- >> yes, he's trying to outdo one of the largest shareholders, softbank in alibaba, who also went in with his plan to create jobs. >> getting it out of the automakers in detroit. all good pr for trump. >> certainly is. coming up tomorrow, as i mention, i'll be heading to the icr investment conference in orlando, florida. we've got exclusive interviews there with the ceos of

sodastream, lululemon, wingstop. we've got a great fast-food roundtable. find out what's really going on with consumer behavior after the election, what they're expecting on corporate tax rates, and a whole lot more. big lineup starting 5:30 a.m. eastern time on "worldwide exchange." much more ahead here. stay with us. r. ouily trspse e esid is pfen.si g g ow!ot re...wh six. d ean ouily trspse

quick check on markets here at this hour. we're seeing some weakness, although the dow's cut its losses in about half. it is only down now 27 points, so off the lows of the session. s&p 500 still down about less than 0.1%. some of the energy names are hit the hardest with the decline in crude oil. nasdaq out-performs, up about 0.2%. and we'll leave it there for "squawk on the street." over to you, carl, for "squawk alley." >> thank you, sara. it is 8:00 a.m. at google's wamo headquarters in mountain view, california, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪