that should be good. it's tuesday january 10, 2017. "squawk box" begins now. ♪ ♪ shot through the heart and you're too blame, darling you give love a bad name ♪ live from new york where business never sleeps, this is "squawk box." ♪ >> good morning welcome to "squawk box" on cnbc live from the nasdaq market site in times square. let's check u.s. equity futures at this hour. we were further away from dow 20,000 yesterday, but futures indicating a slightly higher open with the dow up 24 1/2, nasdaq looking to add about 4, s&p looking to add 2.5 points. in asia, china producer prices rose to a five-year high in december. the hang seng rising by 0.8%. shanghai down by 0.3%. in europe, this is the

highlight. the ftse 100 looking to set a ninth all-time high. looks like it's on track for that up by a third of a percent right now. green arrows across the board except for spain. crude oil prices, recouping some losses with wti higher by 0.75%. corporate stories this morning, yahoo announcing that marissa mayer will be stepping down from the board once the verizon deal is completed. that's a key component of the headline which is getting missed. five other directors will step down after the nearly $5 billion sale of the core internet business. yahoo! will change its name to altaba, altaba, however you want to do it. i like to ski at alta, which is a combination of the words of

alternate and alibaba. the remaining assets will include a 15% stake in alibaba, and 35% stake in yahoo! japan. the announcement comes amid uncertainty over whether verizon will follow through with the deal after yahoo disclosed two separate data breaches last year. in a filing, yahoo says those instances could become a material event which could allow verizon to terminate or change the terms of the deal. marissa mayer is expected to remain with the company once it becomes part of verizon. look at shares of yahoo and verizon. you are looking at both of them, both marginally up on the expectations that this deal gets done. and that this filing is a signal that it gets done. two ways to think about it. one is that it's a signal, the other is this is a prefunctory

that has to happen. >> all of the stories yesterday said in a signal that the deal is moving ahead, yes, as if it hasn't stopped yet. you're yaho praying it moves ahead, marissa mayer has said she would like to stay. but it's not saying they have a role for her. >> i saw a headline that she was leaving. she is leaving the board. >> leaving the board of yahoo. >> okay. >> and she was never offered a role on the board of verizon. separately let's give you other news. jack ma was in town, saying alibaba would team up to take in time retail group private.

in asia trade, the move is an effort to extend online presence into physical stores. the deal still requires shareholder and court approval. and i think you got a little bit of news on jack's visit with the president-elect. >> speaking of alibaba, jack ma meeting with president-elect trump yesterday to discuss bringing 1 million new jobs to the u.s. ma said the expansion would focus on garments, fruit and wine. fruits also with a special focus on trade between the american midwest and southeast asia, like farming and agriculture. specifics are unclear. alibaba saying in a statement that the job creation will focus on creating small businesses to do these things. which will sell american goods to china on the alibaba platform. >> we'll be seeing jack.

i'm interviewing jack in davos. >> ask him how far of a departure -- i don't think it's far, from the stated goals of alibaba back in 2015. this is all along the lines of when they went public. at the launch party he was talking about selling washington state cherries to people in china. this is all part of their vision already. >> altaba? >> like alternate? >> altaba or altaba. >> is no pronouncer key in the filing. there should ab pbe a pronounce key. >> it primica or -- and what about the verrazano bridge. >> why is that so hard? >> when it came out it was. >> mondelez. >> mondelez. >> when ver rrazano came out --

>> is there a pronouncer key on tomatoes and tomatoes? >> you see one of our people on cnbc.com wrote a story about the davos globali isism bubble. >> you know what i did yesterday? i wrote a column similar to that. >> will you take that personally that as davos man, will you take it personally if davos becomes less relevant? >> i will not. i do not. >> if people on their private jet jets circling around davos are not able to solve income equality and global warming, who around on the private jet jets can't, who is? >> how do you feel about it? being a davos man yourself. >> are you a davos man? >> i'm a late joiner. i didn't leave my toilet last year, okay? >> your toilet. >> i didn't. >> because you had a stomach

virus. >> had an issue. how far away is our set from where you got to go to take care of business? it's like the outhouse in the old days. you have to go through security. i'm wired up. got mics that was scary. on today's political agenda -- >> too much information. >> really a lot at this time of morning. >> the political agenda senate confirmation hearings will begin today. lawmakers will consider alabama senator jeff sessions for attorney general and retired general john kelly for homeland security. we'll get a report from eamon javers in washington in a couple minutes. president-elect trump and house speaker paul ryan meeting with several top advisers last night to discuss one of the biggest republican projects of the year, tax reform. the talks were private, included many top members of trump's team, steve bannon said the meeting examined two provisions of ryan's better way tax

blueprint, including a border adjustment measure. in the meeting they also focused on a house territorial tax proposal that would end domestic taxation on the foreign profits of u.s. based multinationals. in sports news, you know, that's the one thing about this life, a lot of missed things like this. clemson shocking bam mra to become the new national champion. the tigers came back from a 15-point deficit, and with three seconds left, the tigers threw a touchdown avenging their loss to alabama last year. it's the first time clemson won since 1981. a lot of stuff swirling around that lane skiffin left, sarkisin coming in. all of this thrown into question

at this point. we are have a guy here, what do you have, a pin in your neck from playing at penn state. >> my football days are long gone. >> tim freeman is here. julianne emanuel here as well. for more on war here the market are heading in 2017 -- before i get to this you went from the -- the agony of sc over your alma mater of penn state. but your son is when of the top quarterbacks in the country. he's in eighth grade. he's a friend of my son. eighth grade. named one of the top quarterbacks -- i'm not kidding, right? >> he recently made a list that came out. you have to put zorsoa zero empn that. >> please. >> i think the message to all young kids involved in sports, we do sports to develop the whole person.

and i think that we certainly put a lot of pressure on kids early on to perform and to think more adult than they should. we're rushing childhood. getting rid of childhood too soon. so my message to him and my message to all the kids out there and parents, let the kids mature, have fun, make sure they're out there having fun. >> i still think it's cool. >> he's a good little player. congrats to penn state. >> any way, this market has gotten up to 20,000. we are so short oriented, do the indicators you look at, does it look like we'll get through in the near-term or will we -- >> i'm fairly concerned with the way the markets are set up right now short-dated vix is way too low. it was in the 11.60 range yesterday. if you look at futures contracts

that trade out through september, those were in and around 19. so the spread between short-dated concern and long-dated concern is substantial. it's really a trump wild card. the election was an emotional process. we're still seeing that emotion in markets. you have clients -- we've seen selling, just trimming positions, setting up put positions year-end. those are more trading fast money accounts. the real money accounts have not come close to repositioning yet. >> she was over here doing something. you said vol. she went like this. suddenly it's like 5:00. >> if you look across all the metr metrics, short-term, implied correlation, credit spreads. >> is the spread between short and long dated vix, it's usually what? >> we're talking more 5 vol points. that's a bit more reasonable.

so seven is -- we're talking very excessive pricing. >> julian's eyes were glazed over. >> not at all. we're derivative folks as well. >> are you really? >> absolutely. >> can you give me anything i can understand? >> for us, the concern is we've been focused on 20,000 for two weeks now. it's the obsessive watch. it feels like it should be the watched pot that doesn't boil. that having been said, as we come into earnings season which starts with the banks reporting on friday, what we think is that as you go through earnings season you will need the laggards to carry you higher, healthcare, pockets of technology, pockets of consumer discretionary that have been left behind in the post election rally. the financials and the things that have run are likely to take a breather even if they report good news. >> this seems like the -- we're in the post-election

pre-inauguration phase. do you think once we get past january 20 th, you see these things happen, you think that becomes a new stage we're in? that could be -- you know, we'll start dating the advance from there, not from november 8 th anymore. >> it's very possible. essentially the market rode this sort of wave of euphoria. the wall of worry yoowe've had eight years seems to have crumbled. there's a lot of hope out there which speaks to the view on the vix being low. however, once we see things moving forward after the 20th, if there is a feeling that the agenda is going to be able to unfold in a way in which the market thinks, we move higher. >> when you look at top-line numbers what is stunning is we ha had this advance until the 13th, there there the s&p 500 has been flat. we achieved a new high last week, but we've been pretty much

sideways. within that we've seen rotation, financials taking a bit off, money into bonds and technology. is this a good sign for the markets or a bad sign we're not going further off of this advance? >> no, it's actually a healthy sign. if think about the setup coming in a year ago people wanted to trim winners as the fed hiked the first time, now they lihikea second time. the things that lagged last year, particularly that didn't participate in the post-election rally, it shows you there's an underlying demand for stocks. >> we have to go. thanks. tim, can you tell, from your work, whether this is -- is this people just holding on to stocks that they already have and not selling, or are people taking positions and want to buy? >> what we saw over year end was

a trimming of positions. people are long. they're going to stay long. pain trade for the fast money savers is going higher. >> we'll have this guy on a lot. >> i know he's great. fantastic. >> when you hear the words of wage pressure and pressure on earnings, high multiples, people want to talk don't market. but we don't know what trump will wind up getting in place. there's a lot of upside potential with policies. tax cuts, enormous fiscal spending program will not be bad for the markets. everybody la been faced with three rate hikes in 2017. rates have to go higher, equities lower, that may not be the case. >> thank you. >> do you do anything now that football is over? >> markets. all about markets. >> villanova plays xavier tonight. >> okay. >> you didn't know that?

>> i watch markets too much. >> he's watching "squawk box." >> he's watching "fast money." >> that your dream to be on "fast money?" >> let's get you caught up on news out of washington. confirmation hearings begin for president-elect trump's pick for attorney general. eamon javers joins us from washington. good morning. >> it is a busy day. look at the schedule for today. two of donald trump's nominees will be testifying on capitol hill. senator jeff sessions for ho attorney general, and john kelly will begin their confirmation hearings. in terms of sessions, we may see something today that we have not seen before. a sitting united states senator

will be on the hot seat here and testifying against him will be another sitting u.s. senator, it's been a long time if ever since that's happened. typically senators are differential to each other. today we will see cory booker of new jersey testifying againstever sessions. we will also see up on capitol hilt congressmhill congressman lewis, one of the organizers of the 1963 march on washington. both senator booker and congressman lewis are going to argue that jeff sessions simply is not up to snuff on civil rights issues and race relations in the country. john kelly, that nomination should be much less controversial today. watch for that sessions hearing to really have fireworks this is something we have not seen before, at least in my lifetime. jeff sessions, remember, was up for a federal judgeship before

the same judiciary committee years ago. he was rejected for that on racial grounds. we'll see where this one goes today. big day in washington. >> like decades ago. >> under ronald reagan. >> wow. >> we'll see whether these two -- it's a different senate, different political climate. the trump administration, you know, very, very different. the world has changed a lot. we'll see if jeff sessions has changed and the senate's view of him has changed. >> i think there's some inconvenient photos of sessions walking at rallies with lewis or one of the civil rights icons in the house, they're walking along, holding hands at a rally. inconvenient things for -- >> for lewis. >> just for labeling the old label, this guy is a racist. i don't know. we'll see.

>> there will be some edge to that hearing today. >> probably will be. >> yeah. >> all right. cory booker, i don't know if you saw that. very rare for a senator to actually go on record against another. >> normally the senate is the oldest boys club in the world. these guys testified before each other, they pat each other on the back. one thing i noticed about senators over the years, they're such extreme extroverts by personality, they touch each other a lot, hug each other, grab each other by the elbow. it's a physical, huggy, touchy body. this will not be like that today. >> thanks. coming up, stocks to watch ahead of the opening bell, and facebook looking for a way to cash in on videos. details next. ches

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>> welcome back to "squawk box." donald trump's son-in-law, jared kushner will be named senior adviser to the president. he is the husband of ivanka trump and he will be working closely with reince priebus and senior adviser steven bannon. according to transition officials, kushner, who turns 36

years old today, will work on trade deals, middle east peace and overall government operations. to avoid conflicts of interests, he will resign from his position as ceo of his real estate comment and he will have to overcome the federal anti-nepotism statute. his attorney says the law does not bar him from serving. ivanka will not take up a white house position, at least for now, as she focuses on settling her children into their new home and schools in washington. there was debate yesterday on the show around his role in negotiations with the chinese and his role with the chinese and how that will work. i assume the kushner family will still own the kushner organizations, which will raise the issues that donald trump's organization would have. >> is it possible to be a ceo,

put it in a trust or diverse yourself and still have no ties, even if your last name is the same. >> bobby kennedy. >> yeah. >> that -- >> if you're going to -- it's tough to push the nepotism thing. he was a good attorney general, too. same type of -- >> on the nepotism piece. >> same uproar when you were a gleam in your mroother's eyes. and it worked out. he became a force of his own. he would have been president, too had it not been for what happened out in l.a. >> this could be the seeds of a political dynasty. >> this is absolutely that. i always thought it would be ivanka. >> 36. i saw you sort of, like, you had a pain back here in your back or something. 36 is young even to you. >> absolutely. >> right? >> it is. >> a little envy there.

>> got a couple years on me. >> yeah. >> the other way. >> i know. >> did you pit the big fohit th? >> i haven't. >> february, right? >> yeah. >> are you giving him a present? >> thinking on working on a schedule. a lot of things i'm working on. facebook wants to cash in on its videos. the company will be testing mid roll ads and videos on its platform. this will allow publishers to make money from ads. facebook is looking to play ads 20 seconds into a video lasting at least 90 seconds. facebook offing publishers 55% of the ad revenue. >> will they offer 55% of the revenue to any person who is posting their facebook live. >> right. >> not just the news organization, but all of us will be contributing to this. by the way, little mac sorkin

yesterday found his way on to -- started broadcasting on facebook live. >> oh. >> he was on an ipad using this thing called masquerade. you can make the masks, thand i get text messages from friends saying max is on facebook live. he figured out a way. he's broadcasting to people who are friends of mine on facebook. >> dangerous. >> very dangerous. >> so it alexa, which has been subpoenaed in a murder trial. because she'll spill her guts. >> open mic. >> what is the expression if you're 30 and you're not liberal, you have no heart. if you're 40, you are not conservative, you have no brain? i don't know what the cutoff is. >> is this coming in february? what are we going to do? >> i'm going to see if it works. >> thank you for throwing me the party in advance. coming up, clarity money is a flu app that analyzes your

bank account, finds ways to cut spending and save money. the company's founder will join us next. whi , e k f ft w

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♪ welcome back. you're watching "squawk box," live from the nasdaq market site in times square. good morning welcome back to "squawk box." u.s. equity futures at this hour, let's take a quick look. the dow looking like it would open up higher by 22 1/2 points. nasdaq up higher by 2 1/2 points, s&p looking to open

higher about 2.25 points. stocks to watch in the session today, l'oreal buying three skin care brands from baleant. the deal will double rev flews from its u.s. active cosmetics business. and baleant selling a cancer unit to a chinese company as it sheds noncore assets. the williams companies is offering a sale, the pipeline operator offering a stake in his williams partners unit, raising quarterly dividends by 50%. barracuda networks reporting better than expected third quarter results. it swung to a profit helped by a 17% rise in revenue that it gets from subscriptions. a new app is looking to help consumers simplify personal finances.

clarity money helps to create savings accounts and cancel unnecessary subscriptions. joining us is the founder of clarity money. this is different. it uses artificial intelligence, this app. how? >> we look at your transaction history and use data science and machine learning and artificial intelligence to find ways to improve your financial well-being. >> how many inputs do you have to put in for this to work? if you link your transaction accounts, credit card account and bank account, we use that information to mine your data for your benefit. if you think about it, credit card companies, banks have powerful engines that are good at selling to you, marketing to you and keeping you. consumers don't have an equally powerful tool. that's the mission of clarity money. >> how different is this than mint, which has been around for some time, aggregates say lot of your information and tries to find out where you're spending

too much money and offer too many deals. >> i was a long-time mint customer and was frustrated at how little you can do with mint. mint is good about telling you about your past, but not good at giving you a button at improving your financial well-being. >> what is the privacy we should be thinking about. any time you aggregate all of your financial information in one place -- there's a reason people have some money in one bank, then over here. once you put them all in one place, does it make it more susceptible to hacking? >> we use 256 bit inskrencryptie partner to make sure we keep customer data safe. we don't store log-in information. if you really think about security t comes down to

consumers understanding where the data is. and clarity money is a great tool to help consumers understand what's happening to their money. >> you've got all those different accounts because of the fdic limit. that's only 250,000, so you have 30 or 40 different accounts. >> in small parcels here. >> cash everywhere. >> to cover all that. >> you want to keep it insured. if you're over 250, how much do you need? >> i know where you're going with this. >> got it. >> too big to fail royalty money. >> i need to keep -- because i need to keep all those accounts in one place. >> ironic that the money came from banks failing. >> i'm curious, who, if anybody, is your regulator? is therer regulator steps in?

you don't take deposits but you give investing advice. might this attract increased regulation. >> we are big fans of transparency and advocacy on behalf of the consumer. we hope that our app helps consumers appreciate how many dollars they pay their bank, how many dollars they pay their insurance company, how many dollars they pay their credit card company. consumers would be surprised when they see those figures in aggregate. it's our hope that we shine a light on how consumers are treated by large companies. >> explain for the audience how this works in that my understanding -- tell me if i'm wrong -- you're looking through my financial pfortfolio and seeing i might be using a particular credit card charging a certain rate, and you go don't

use that credit card, use this credit card. you're not renegotiating my deem with time warner cable and calling them up and getting a lower rate. >> we do a couple things. we will help you find a lower rate credit card, we will lower your bills, you can transfer money, you can do all those things in the app at the press of the button. there's no other app in the world that enables you to do that many things inside the app. consumers don't want to have five different places to manage money. they want one place where they can see a holistic pir chore. >> what a picture. >> when you recommend to me i use x recredit card, i assume tt credit card company or bank is paying you a finders fee or something. is that how this works? >> correct. but we will never recommend a product that does not improve

your financial well-being. if you are paying an 18% credit card and we find one with a 0% introductory rate and 12% after that, that's better for you. >> if you find another credit card company and they're paying you, 0% short-term and 13% is better for andrew, you're still getting paid. >> we are not suede by twayed bs we get from partners. we find the best thing for you. if we lose the trust of the consumer, it's difficult for the consumer to continue to invest in us, to give us more information and use our app. we are focused on arecommendati is a le. >> this is a lead gen business. >> we have a similar approach to

google. what is the number one mistake consumers are making, i find? >> they spend a lot of money on accounts they don't use. when they borrow, they pay a higher interest rate than they need to. the most common mistake is managing your money is complicated. we're busy, we have a lot of accounts, things going on. staying on top of it is time consuming and complex. >> will you automatically game the credit card system for me? could you get me into the sapphire card now before the 12th -- you know about this? >> no if you don't have a chase sapphire card before the 12th, is it the 12th yet? >> no. >> the best deal going right now for a credit card. they're losing a fortune on it. losing $200 million on this card, they're giving so much away. they have canceled the amount of benefits after the 12th so get the card now. my question is are you able to get people into one card and then 12 months later move them to the next? that is when it gets

interesting. >> you would be surprised the fees you pay. and if we can help consumers understand that and make better choice, we'll improve their financial well-being. >> the 12th, becky would be here. >> yes. >> we will do a whole segment before the 12th on the chase sapphire card. >> fascinating. >> the poor bank is losing 300 million, get in there quick while you is skill get -- >> they're giving away -- you pay $450 for the card, they give you $1500 worth of travel benefits. they're getting so many people signing up for this card, they announced that they were going to take a loss on it. >> all my thing goes to united sky miles or whatever. >> it's a very good time for consumers, there's a credit war going on. attracting customers with low introductory rates is one weapon credit card companies have. importantly consumers also need a weapon to understand when those rates expire.

>> thank you. >> thank you for having me. >> i want to spend money to get the miles. >> oh, to get the miles. >> because it means maybe get an upgrade occasionally. >> give me the card, i'll spend the money forhas the cards. >> maybe if i didn't spend so much, i could buy the first class. i have to think this through. when we return, larry som sr also weigh in on corporate tax reform. and mike jackson will give us his read on the auto industry and trump's tweets about auto manufacturers. later house majority leader kevin mccarthy will weigh in on regulatory reform in the new congress. stay tuned for all of this. you're watching "squawk box" on cnbc.

welcome back. welcome back to "squawk box"

time for the executive edge. small business optimism is soaring to a new high. kate rogers has details on this latest report. i think we feel it. good to get it quantified. >> this number keeps growing and growing. small business optimism continuing to hold strong post-election. the national federation of independent business out with its monthly read on sentiment. it hit a why not seen since 2004 of 105.8, an increase of 7.4 points. small business owners feeling particularly optimistic about their outlook for business conditions and real sales gains. those two categories accounted for 73% of the gain. despite this optimism, job creation remained weak as did sales. the single most important problem for small businesses in the survey are taxes followed by government regulations, red tape, poor sales and quality of labor. polls did point to small business owners supporting donald trump leading up to the election despite his plan for a formal plan to help them grow.

he did meet with jack ma on monday who promised 1 million jobs in the u.s. by helping small business owners sell their platform in china. we'll see if this goes higher. the top three problems, taxes, government regulations, red tape, those are the things donald trump said he will solve for the community. for me it has to translate into job creation for this to mean more. >> there's something to se self-fulfilling. you do things more, but sooner or later you need to see the concrete action that puts money in your -- more after-tax dollars, whatever it is this tax reform will do i'm thinking ahead to a larry summers segment where one of the questions we'd ask him is the markets are just totally wrong. he calls all this stuff voodoo. the worst stuff, like no better

than creationism in terms of whether it actually works. so that begs the question that the market is totally wrong about this, the market it has engendered, if you believe what he says, there's going to be a day of reckoning when none of it comes to past. some of it will work just based on beater fetter feelings. >> maybe this will come true. we'll have to wait and see. >> virtuous circle, instead of whatever we've had for the last eight years. coming up, up certainty driving a volatile trade in bitcoin, and made more dramatic by china's no unsment th meae a bitcoin is a commodity, not a

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♪ welcome back to "squawk box" this morning, live from times square. the dollar denominated price of the digital currency bitcoin

plummeting sharply during trading last week. at one point, the currency lost more than 20% of its value against the dollar. our next guest says bitcoin volatility is softening as the price discovery matures. for more on the year ahead, we're joined by adam white, the vice president at coin base. also, some news this week. some of the big banks have now taken on a crypto currency. we'll get into that. adam, walk us through what's happened. >> sure. good morning, everyone. what we saw from china was essentially a reaffirmation of the 2013 ruling which was digital currency exchanges are entirely legal to operate in china. however, those exchanges need to have standard know-your-customer and anti-money laundering law in place. >> in terms of the value of bitcoin, we saw it skyrocket, then we saw it fall all over

again, which raised all the same questions that have been around this currency from the beginning. >> that's true. bitcoin itself is a relatively volatile asset, but what we've seen over the last three to five years is the dampening or softening of that volatility. just last week i released an updated white paper that i co-authored. what we looked at was the volatility of bitcoin from roughly 2013 to present. it's only about 25% of the volatility as it once was. so that process of price discovery is happening. bitcoin itself is not nearly as volatile as it once was. >> who are the investors at this point? you say there's a softening of volatility, but we saw bitcoin fall in one session 12% from these highs that we haven't seen since the height of bitcoin. it's not necessarily a safe haven, is it? how do you market it? who's buying this? >> yeah, i think it's an emerging asset, right. it's one that is not going to perform similar to securities or a bond or fixed income. instead, it's a relatively new

technology that we see both retail investors and professional investors alike finding interest and recognizing value in this asset and beginning to add a little bit of their portfolio inside of it. >> so we're showing a chart, which i don't know if you can see or not. you look out over 12 months, how do you even think about mathing out what this could be worth one way or the other? >> i've learned one thing, and that's not to attempt to predict the price of bitcoin. what we instead focus on are the fundamentals of how the bitcoin network is performing. what we've seen, if you look back one year, we've essentially seen a doubling in the number of daily transactions on the bitcoin network. roughly $100,000 is processed through bitcoin every single second. this is a worldwide global payment system. instead of focusing just on the price, we'd like to look at the user adoption -- >> but let's talk about that. when you talk about adoption,

right, one of the big issues we used to report almost daily, probably a couple years back, we would report that virgin galactic was going to start accepting bitcoin. some website was going to start accepts bitcoin. it turned out to be a bit of a marketing gimmick for everybody just to say we're a modern company. but in the end, it didn't seem the adoption was real. has something changed? >> no, we're actually seeing great adoption. so bitcoin is a great option for merchants to use to accept because they don't pay credit card fees. it's global. there's no such thing as fraud or charge backs in that sense. so some of the coin base itself we do merchant processing for the likings of expedia, overstock.com, dell computers. >> and that's at the retail level or behind the scenes? >> exactly. if you pulled up dell.com, you could choose to pay with your credit card, paypal, or bitcoin.

>> what's the dollar amount you process? how has that changed over the years? >> that's not data i can share, but i can say -- >> or of magnitude, percentage growth. >> so we help facilitate average retail customers to buy and sell digital currency. part of that is allowing merchants to process those transactions. we've done just today broke $6 billion worth of digital currency exchange. the majority of that is bitcoin, but we support other digital currencies. >> that was the last question i really wanted to ask you. we talk a lot about bitcoin. that's the currency everybody knows about. really, this is so much really about block chain and the development of that technology. one of the big things that happened this week was the depository trust in clearing corporation, which manages a lot of money behind the scene, are starting to use some of this block chain. how is that going to impact bitcoin itself and the technology? >> eng that's a great question. i think bitcoin is misunderstood by many. it's kind of this novel new

approach to creating a worldwide payment network, similar to the internet. and block chain technology is really just an idea of a private version of bitcoin. instead of bitcoin, which is this openless, permissionless network that anyone can operate on, we see banks and financial institutions creating closed, private versions. that's certainly helped the general public, i think, start to recognize that, hey, bitcoin is just the largest, oldest public version of this technology. maybe this thing does have legs and i should look into it more. >> okay. thank you for joining us this morning. great to see you. >> thanks for having me. coming up, confirmation hearings for president-elect trump's cabinet kicks off today. we'll talk to senator roger wicker about that process. then former treasury secretary larry summers weighs in on the gop plan to overhaul corporate taxes. "squawk box" will be right back. b

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the trump trade. markets searching for more clues on what president-elect trump has in store for the economy when he takes office. and earnings season is creeping closer. where you should be putting your money. changing the tax code is high on the to-do list for president-elect donald trump. we'll speak to former treasury secretary larry summers about the president-elect's plan to overhaul the tax code and why he says the new administration may be going about it all wrong. that interview is straight ahead. plus, the buzz from the detroit auto show. auto nation ceo mike jackson joins us from the motor city to talk auto sales, the state of the industry, and what has him excited about 2017, as the second hour of "squawk box" begins right now. ♪ live from the beating heart

of business, new york city, this is "squawk box." good morning. welcome back to "squawk box" here on cnbc. we're live from the nasdaq market site in times square this morning. i'm andrew ross sorkin along with joe kernen. melissa lee is hanging out with us. dow looks like it would open higher, close to 15 points. nasdaq higher. the s&p up. we take a look at oil board -- or rather at the ten-year note. you're looking at 2.374. we'll look at wti crude as well. you're looking at 52.10 right about now. >> here's what's making headlines at this hour. major changes in store at yahoo! once it completes the sale of its internet assets to verizon. it'll change its name to altaba.

marissa meyer is among those who will no longer serve on the board. she has been, of course, the ceo of yahoo! since 2012. small business optimism is at its highest level since 2004. the number jumps to 105.8 last month, up from 98.4 in november. and valeant pharmaceuticals selling three of its skin care items to l'oreal. valeant has been selling assets to generate cash. the ceo will talk about the company's latest moves on "squawk on the street" at 11:30 a.m. eastern time. and some politics. donald trump's son-in-law jared kushner will be named senior adviser to the president. kushner is the husband of ivanka

trump and will work closely with incoming chief of staff reince priebus. also senior adviser steven bannon. anybody know going to be tough

wanted to upstage meryl streep. she already used all his lines. her trump-thumping ining act wa hard one to follow. i'm sure he'll give it the old college try. anyway -- what happened? >> they switched because you were jabbering. >> you used your time. >> done. >> it was well used. >> one and done. >> well used, sir. >> the dow is pulling back from its run to 20,000, but the nasdaq closing in at an all-time high. the futures right now are indicati indicating slightly higher open. our guest host for the hour, rebecca pather rebecca patterson. good morning to you. chris, i'll start off with you. we're entering a season of confirmation hearings. what's the biggest risk potentially for stocks?

>> the biggest risk, i think, is if trump's cabinet gets off to a slow start with appointments. there's always room for hiccupping in here because optimism is priced into this market. we're up sharply from the election. any little derailment could send the market down. >> so politics over earnings season. >> yes, yes. i think certainly the headline volatility is going to be more than what actually happens in earnings. >> you agree? >> i think they both matter. i mean, earnings season, everyone is expecting it to be relatively better than what we suffered through last year. that's priced. i think the guidance will be really important. do we continue to hear optimism from the corporate executives, do we start getting new worries about the dollar. it's around about 5% just since the election. does that become an issue again? so are they going to underpromise or overdeliver, is it going to be genuine optimism like we got in that small business report. that's going to be important,

the guidance going forward from the executives. i agree on the politics. everyone is rating for that tax reform and deregulation. if you see the cabinet and the washington folks bogged down by things that aren't going to help corporate america and aren't going to help the economy, i think there is a risk of some profit taking. >> in the short run, it's the politics, but in the long run, it's the earnings. the earnings are what really count. the politics will make a move in a day or two. earnings will make a move for the year. >> isn't it really -- is the -- the politics are almost the long-term story. >> there's news every day about the politics. meryl streep is going to move the market. >> did meryl streep really move the market? >> you're saying the dow retreated from its march to 20,000 because meryl streep trumped obama? >> there's some contribution there.

>> we don't want to see things like the independent ethics office be the focus for congress, right. we want to see them focus on things that the market is hoping is going to give us that lift to the economy. so -- like the meeting last night with trump on tax reform, that's great. we want to keep seeing meetings like that and progress like that. if the market is reassured that you are going to get tax reform this year, then i think you can see equities stay relatively better supported. if you see it derailed because there's three weeks on the supreme court or three weeks on one cabinet appointment that's really not that important for the economy, even though it's important for the country, i think that's where you could see investors get a little more nervous. >> when you look at earnings season specifically, what are you most concerned about in terms of sectors and guidance? if i'm a ceo and i've seen a massive run-up in my stock and everything is coming up roses in the eyes of investors, i would

say the dollar is a concern of mine, how fiscal policy shapes up is a concern of mine. i throw out the kitchen sink because it's my opportunity to lay out the potential head winds. >> for most major, it's going to be the dollar that's tough to overcome. you know, the more optimism that comes around from trump and being tough on trade, you've always got to look at the dollar. it will make it harder and harder for us to compete. that would be my biggest concern as a large cap ceo. >> we want a dovish fed. for this whole strategy to work, you need janet yellen. you can't be thumping janet yellen if you're donald trump. >> you don't want yeeds to rise, but you want yields to -- that was the fastest move in yields since the 2013 so-called taper tantrum. it's the speed of the move that

derails things. if yields rise and the fed hikes but it's smooth and slow and alongside growth, yahoo. >> rebecca's sticking around. chris, thank you. >> you can't say yahoo anymore. coming up, roger wicker on this week's big hearings on capitol hill and the trump transition. later, cutting corporate taxes. former treasury secretary larry summers is going to join us. plus, auto nation ceo mike jax frighten detroit. stay tuned. you're watching "squawk box" here on cnbc.

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download the xfinity tv app today. confirmation hearings begin today for president-elect trump's cabinet nominees. first up, senator jeff sessions for the position of attorney general. for more, mississippi senator roger wicker. it's good to see you. we hear bluster whenever we go through a lot of these things, but numbers are numbers. given the 2013 harry reid move on filibustering, are any of these appointments likely to get bogged down, in your view, realistically? >> i think they're all in pretty good shape. i have to tell you, listening to your previous segment, i feel pretty good about the markets for the coming months because i think what we heard is prompt confirmation of cabinet members will help the markets.

tax reform passed by the house and senate and sent to the president will help the markets. so all of that in the previous segment was music to my ears because i think we'll be able to accommodate your guests on those and other issues. >> well, you want to get that thing out of your ear before 7:30 because we have larry summers coming on to talk about how ill-designed and misconceived the corporate tax reform plan is. probably not a big surprise. we're not stopping the presses that he doesn't like the plan, but he's got a lot of concerns. a lot of worry about obamacare and what happens there. do you have any insight on whether it's possible to do this where it doesn't become trump care and becomes owned by the republicans? the democrats are licking their chops to try and move this albatross on to the other side. >> well, i'm astonished to think that the democrats would try to make it something political.

listen, obamacare was one of this president's chief accomplishments. it took them a full year to pass it. it was january 2010 before it was enacted. it's taken years and years to implement. clearly we're not going to be able to turn it around on a dime, but we're using reconciliation. we're starting this week, and we think we'll have a vehicle over to the house in a few days. i hope we can do as much of the replace part of obamacare on reconciliation as we possibly can. so by the time it's gone through the senate, the house, perhaps a conference between the house and senate, but back for final votes in the senate, i think there will be a number of items of replacement as well as the repeal of obamacare. and frankly, shame on us if we don't do it. we campaigned on this. the president-elect said this would be one of his chief goals

early on. and we're going to keep our promise to the american people. i think they want us to do that. >> how many repeals have there been? and it's been years ever since the 2010 one was passed. republicans have had the stated objective of repealing it. if they don't have a replacement idea yet, it's going to look bad, senator. >> well, there are a lot of replacement ideas. let me reiterate, this reconciliation bill, which we are voting on today, by the time it goes through the process and returns to us from the house of representatives, we'll have a number of the items that can qualify under the reconciliation and not defeat the privilege of a simple majority vote. there's some replacement items that can't fit in a reconciliation bill, and we're going to have to have consensus on those. it takes 60 votes on those. we know what we want to do. we want to repeal the mandates.

we want association health plans. we want to send medicaid to the states where we think they can run it more efficiently. so there are just a number of items that will come together in the next several weeks, and a lot of the replacement will be part of reconciliation. we could do that with a simple majority. >> you've got the democrats laying in wait for you to screw this up. i can just tell you. if you take 20 million people -- >> i'm really astonished that they would be trying -- >> yeah, i know you are. >> but thanks for letting me know. >> that's good. the sarcasm is loud and clear. you got 20 million people -- you know, the networks or the mainstream media, you get ten of them that lose their coverage, and that's good for six months of news every night on the national news. and you're talking about 20 million. >> that's good advice.

>> you're going to hear it all. it's pretty effective. it's almost booby trapped for you guys when you own this thing. it's ready to self-destruct on its own. six different republican senators are leading "the huffington post." that's the story today. another six senators, republicans say go slow, be careful. i mean, this is going to be a political football, senator. >> i think it's a good idea to be careful, and i've said all along we're not going to send anybody out to the curb. we're going to take care of those who, through no fault of their own, relied on the law as it was passed. we're going to make sure there's a soft landing. i think there's a better way to provide more coverage for the millions of americans who still don't have adequate coverage and are having the promises made to them broken every day. >> senator, i wanted to ask you separately about the hearings and nomination process that we're going to be seeing over

the next couple weeks. it's beginning literally right now. some of the questions about conflicts of interest and the ethics office, which has put out some information about how they don't feel they've seen enough from some of these nominees. is that something that concerns you? >> well, let me just say from our side of the aisle, there's a concern that we're being a little bit slow walked by the office of congressional ethics. but i would say that by the time there's a final vote on the senate floor, all of the information that has typically been provided to the senate will be available. it's not unusual to go forward with hearings without having quite everything ready. really, this is not much different from the process that occurred -- >> so when the ethics office says -- the ethics office has

s suggested usually they do have the information before the hearings. you're saying that's not the case. >> there's a concern, frankly, that we're not getting full cooperation from the ethics office, yes, sir. >> cooperation from the ethics office or the trump appointees' nominees. >> no, there's a concern that the ethics office may actually be slow walking some of the information. we're going to get to the bottom of that. but let me say again, by the time these nominees are voted on by the full senate, we'll have all the information that the american people generally have with regard -- >> that's a big accusation. the ethics office is not being ethical if that's the case. you're saying they're slow walking you. >> yes, i'm saying there's a concern. >> okay. we're going to have to look into that. >> senator, rebecca patterson. thanks so much for joining us today. i'm the investor who was talking in your ear about seeing

progress to keep the market supported. one thing the investor community is wondering a lot in terms of the affordable care act and changes to that is what happens to that 3.8% tax. do you think that's something that we could see in a package when it gets put together? could that tax be removed and could that be done through reconciliation? >> well, it certainly could be done through reconciliation. i'll tell you, i'm not on the working group that's involved in that. let me say also, there's going to be a need for some of that current revenue to be used for the replacement aspect of this. so i can't give you any assurance that it will or will not remain in place. >> senator, back to the -- >> it's a matter of discussion. >> back to the ethics office. i'm curious, how will you investigate this concern? who investigating the ethics office? >> look, we're expressing concerns to the ethics office

that they act expeditiously as we're being requested to act expeditiously. let me just reassure the viewing public, i think by the time this is all said and done and the senate votes, we'll have all the information we need and there will be a comfort level among the public and also our friends in the press. >> senator, is there an example that you can point to of a situation where you're aware of a nominee that's providing information to the ethics office that has not been provided to you or that ethics office has suggested has not been provided to them but actually has? >> i'm not going to be any more specific than that. there's a concern that the ethics office needs to speed up the process. >> are you looking into this concern actively right now? >> absolutely, yes. we discussed it among members yesterday. >> so cory booker is going to testify against another senator. that's rare. we've come off six years, or i don't know how long, the harry

reid sort of senate we've all gotten used to. is it going to be more the same in the trump administration in the senate? >> well, you know, cory booker is a friend of mine. i wish he weren't doing this. i think it's really atypical of him. i was listening early on some of the talk shows this morning. some of the issues being mentioned, voting on final passage of the violence against women act. i mean, there was a jurisdictional issue there involving native american reservations that needed to be resolved. a number of us were concerned about that provision. to take a vote on a certain peace of legislation and say that a yes vote or a no vote disqualifies someone to be attorney general, i think, is a leap. frankly, the senators have known jeff sessions for 20 years now. he was elected in 1996. i think they know his heart and know he'll be fair and he will

enforce the law as it's written. and i think there will be an overwhelming bipartisan support for jeff sessions. >> all right, senator. thank you very much. i hope to see you again. good having you on. >> thank you, sir. coming up, larry summers on donald trump's plan to reform corporate taxes. meantime, let's take a check on futures at this hour. we've marched a little farther away from dow 20,000 yesterday. we're looking at a higher open here. dow looking to add 16.5 points. n

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welcome back to "squawk box" this morning. we are live from the nasdaq market site in times square. among the stories front and center at this hour, bipartisan legislation will be introduced today seeking new sanctions on russia. it's in response to russia's cyber activities as well as actions in syria and ukraine. also, johnson & johnson will be issuing a report next month

detailing pricing of its prescription drugs. it's hoping it will be showing its price structure is a reasonable one. also, following last month's adp and government jobs numbers, we'll get another labor market snapshot today. the labor market releasing its monthly report at 10:00 a.m. a few stocks on the move this morning. wd-40's first quarter profit fell. results were hurt by the strong dollar. the maker of chemicals and sol gents generates nearly 40% of its sales in currencies other than the dollar. and barracuda networks profits swung in revenues from subscriptions. as we near donald trump's inauguration next week, tax reform of course high on the agenda. for more, let's bring in larry summers, former u.s. treasury

secretary and president emeritus at harvard university. we've been talking about this op-ed that you've written for how many days now, the past two days i guess. this is what you write. joseph, i want you to jump in. he's been giving you a tough time. you write, the potential reforms identified by house speaker paul ryan and president-elect donald trump appear likely to do significant damage to the tax base and to the u.s. and global economies. explain yourself. >> there are a number of things. b there's a big increase in inequality. there's potentially a huge spike in the dollar which disrupts the financial furniture, will cause debt crises in some emerging markets, will disrupt the american manufacturing base, will make us poorer as a country since our assets are heavily in foreign currencies and our debts

are in dollars. and we'll setting off a wave of reaction from the rest of the world that will see this as a protectionist plan. while you can argue the merit, almost all lawyers think it's pretty clearly a violation of the wto commitments that we entered into. so protectionism, a spiking dollar, a big increase in inequality, and all kinds of administrative uncertainties. this potentially is going to be crushing to retailers because they won't get to deduct when they import from abroad and will have to pay taxes on all the revenue they get. i think it's too much uncertainty. >> have the markets gotten it wrong? >> i don't think the markets think the plan in its current form is likely to pass.

i think there are also some big problems with the idea of eliminating the deductibility of debt. they say -- they recognize you can't possibly do that for banks, but there's no alternative plan that's in place yet. >> what are the markets reacting to then? >> markets are reacting to the sense that there may be some other form of substantial corporate tax cut that will have issues about it associated with inequality but not the issues of disrupting the economy that the plan in its current form has. >> so the broad stoke of lowering corporate taxes, that is great for the markets, but the border adjustability tax, that's not going to happen. >> it raises a variety of questions. i think the markets -- if you look, it's heavily regulated

sectors that have disproportionately benefitted. if you take away environmental controls, it's bad for the environment, but it may be good for some energy companies. if you take away financial regulation, in the long run it means quite likely another financial crisis, but in the short run, it can be good for some financial institutions. if you take away regulations in health care, it means higher prices for consumers, but it may mean for profits for companies in those sectors. so i think it's reacting to the regulatory change to a significant extent. >> in terms of corporate tax reform, for someone who's been talking about secular stagnation for so long, fundamentally you must be 100% behind a plan that may be designed differently. >> this was the first sentence of my op-ed and something i've been saying for years. corporate tax reform is

something we need, but we don't need corporate tax reform with this extra protectionist financial disruption twist. we need to preserve the corporate tax system we have and cut the race and broaden the base. that's what ronald reagan did in 1986. that's a proven record for creating successful tax reform. we just need to not do it this way. this isn't about being pro-business or anti-business. this is about being smart about business. i've said this on the show before. joe, look, the consequence of what has happened so far been that the dollar is 15% stronger against the mexican peso. that means for any business thinking about locating in mexico or the united states, mexico now has a 15% cost advantage that it didn't have

before. that dwarfs all the phone calls to ceos. >> i want to go there with you, larry. you were treasury for mexico and asia. you've dealt with a number of currency crises in your time in government. here we are, mexico for domestic reasons you have looting, riots and social unrest. when we think about your op-ed, i would agree with you on this piece that there's a lot of externalities. the dollar has been strengthening since 2011. we have swap lines with the fed. but the countries are more interlinked with the u.s. do you think an emerging market crisis is more likely today or less likely if we get this big

surge in the dollar? does the interlinkage globally -- is that more important than the safeguards the countries have put together? >> i think the most important thing is you have more emerging markets that are integrated into the system. more latin american countries, more countries are a larger part of the system. so i'd be very surprised if we had a pervasive emerging market crisis of the kind we did with the latin american debt crisis in the 1980s. but i would also be very surprised if we didn't have at least some pocks of major problems of the kind that we saw at different points in the 1990s. in any event, it doesn't seem like a smart risk for us to be running as a country. not to mention the risks of an excessively strong dollar to the very heartland of our country.

so when i was treasury secretary, i was for a strong dollar. nobody can devalue their way to prosperity, but that's a different thing than pursuing this kind of thing. you know that a policy is not the right one when its advocates agree they're for it but can't agree why. all the tax experts think the dollar is going to go up 20% and therefore it's going to be okay for the retailers. all the other political experts think the dollar is not going to go up and that's why it's going to increase the competitiveness of u.s. exports. well, they can't have it both ways. >> whenever we talk about this, philosophically, the two sides always seem to talk at each other about income inequality and when we're cutting for the high end. i always -- for me, i come back to if you're going to cut taxes, you need to cut taxes on the people that are paying taxes. we know about -- we have a

progressive system. so the 10% just by definition is going to -- some of the benefits are going to accrue to them because that's where a lot of the taxes are being paid. >> that's right, and there's certainly people who exaggerate and skip over the very good point that you made, joe. on the other hand, a cut on corporate taxes is going to be disproportionately among all those who pay taxes on those at the very highest end. so among the different things you could do, this is a particularly regressive one. but i agree with you, that if you are talking about tax cutting, since it's the high income who pay taxes, they're going to benefit disproportionately almost for sure but not at nearly as disproportionately as they will benefit from --

>> and the last eight years, income inequality, in my view, has been exacerbated by not having pro-growth policies, which has left the fed as the only game in town so that they've tried, you know, quantitative easing. maybe we try some pro-growth stuff in an inverse way that helps income inequality by getting rid of regulation and shrinking government. is that totally naive? >> yeah, pretty much it is, joe. >> we've tried it this way. all we've gotten is income inequality. >> the question is whether you have a pro-growth policy that you want to advocate that isn't either largely targeted at giving money to people at the very highest end or removing basic regulatory protection. there are a set of very important pro-growth policies. opening foreign markets,

investing in the kind of infrastructure we have so we can ship goods in the way that other countries are able to ship goods. we've lost the ability to do that in the united states. investing in the education of our people at a time when we always led the world in the fraction of people who graduated from college. if you look at the generation of my kids, the generation in their 20s, we're not in the top ten of the fraction who graduated from college. so there are plenty of pro-growth policies that are also pro all the participants in the economy. what really hasn't worked, i'm afraid, is the kind of trickle-down approach. with the enthusiasm of many people like you, there was this tax cut in the early bush years for the companies to bring all their cash abroad, and they all promised that it was going to be invested. and there were studies done by

conservative republican economists who said essentially none of it got reinvested in the united states. so i think we got to be careful about how we do this. as enthusiastic about growth as anyone, but you have to think hard about what will work. >> let me ask you about repatriation then, which is a big part of this tax plan and maybe not a repatriation holiday but a territorial tax system. is that something you would ultimately advocate, recognizing that you're right. most of the ceos who come on this show have said i don't plan to create a new r&d facility here in the u.s. i plan on doing $30 billion in buy backs and $30 billion of m&a. and they're open about that. >> i think people who say that that's some kind of big revenue raiser that will pay for other thin things, whether it's democrats saying it will pay for infrastructure or whether for republicans who say they'll pay

for more tax cuts are probably making a big mistake. if we did it in the right way, which would include a basic minimum tax on global income so that all global income, whether you brought it home or not didn't completely escape taxation, with the right global minimum, it's a good idea. without a global minimum, it's a dangerous and bad idea. and the debate in the political compromise needs to be about what the right global minimum is. but look, it can't be right that if you look at the foreign profits of american companies that destinations where they're largest are not places like china or j.aapan. they're places like ireland and the cayman islands. we have to find a way to collect some of that. >> doesn't necessarily mean it's a bad thing. at least it's back here. >> i'm not disagreeing with

that. >> you sure? >> you need a minimum. >> we can tax the minimum. what, 2%, larry? >> no, no. the proposals are low double digits. >> before we let you go, i want you to explain one last piece. you've come on this show a lot and advocated for infrastructure spending. yet, at the brookings institution recently, you suggested that trump's billion-dollar infrastructure plan was a, quote, village of nothing. >> it's a gaveaway to the contractors for the pipelines they're already going to build. there's nothing that makes it be new infrastructure, and there's nothing that makes it be more infrastructure. and there's nothing that makes it be the most important infrastructure, which is fixing and maintaining the bridges that are collapsing, the airports that still use radar and vacuum tubes and the highways with

potholes that cost 70 cents a gallon for american motorists in the extra damage that's done to their cars. it's a giveaway for people who build pipelines. it's entirely ill-designed relative to the problem. the only worse piece of economic analysis i've seen is the same authors, ross and navarro, repeating the oldest cliches about protectionism in their so-called economic analysis of trade, which is the economic equivalent of denying climate change or being for creationism. >> so just to button this whole thing up, larry, when you look at consumer confidence at 15-year high, small business optimism at 12-year highs, the mark at record highs, how would you characterize this? >> sugar high. and that can last for a while. when regimes that were in some

ways similar, highly nationalist, highly interventionist with a bit of an authoritarian aspect have come to power in latin american, it was often a very good economic period with a strong currency before the thing fell apart. so i don't know what the timing will -- >> who are you comparing trump to in that metaphor? >> there's no single person, but there is a tendency in nationalist, populist economic policy. the idea that you start with a strong currency and reduced inflation, so everything felt terrific. >> we have enough things undone. you'll be able to come back and say i was wrong. if it does work, if it's a

reagan record for eight years, above 3% every year, you'll be able to say, wow, i misjudged this. we'll have time to see. >> we certainly will. i'll be happy to come back. we'll begin by looking a little harder at what the facts are on the reagan record, which don't actually correspond to what you said. >> every year is above 3%. >> well, i think it was a more complicated story than that. >> okay. larry summers, the one and only. we appreciate your time this morning. great to see you, sir. >> thanks. >> so you've already agreed to come back. anyway, auto nation ceo mike jackson joins us right after this break.

fresh off a record-setting year for u.s. auto sales. car makers are rolling out some highly anticipated cars and trucks at this year's auto show. we're joined by mike jackson, the chairman and ceo of auto nation. how are you doing, michael? what does it feel like there? does it feel like the same type

of positive sentiment we're seeing in so many sectors now since the election? >> well, joe, good morning. greetings from chilly, snowy detroit. i've been going to auto shows for decades. this is the first one i would say is a twitter auto show. we can't even get to the vehicles because everyone is hanging on the next tweet. now, the general mood, of course, is optimistic. we're coming off another record year of almost 17 million -- actually, exactly 17,500,000 units. there's a lot of buy in and support for trump's vision of a pro growth u.s. economy. they also believe his diagnosis of what's wrong with the u.s. is correct, that's it's been shackled with onerous and overwhelming regulation and the tax system is broken. the list can go on and on. they think trump has put

together a cabinet that can address these skill sets. now, the tweets that everyone's hanging on, of course, are tweets about tariffs at 35% or discussion about border adjustment tacks of 20%. that would be extremely disruptive to the north american production model that's been built over the last couple decades. factually, the vast majority of the vehicles sold in the united states are produced in the united states. that's every major manufacturer. the actual numbers are 13 million vehicles are produced in the u.s. you have another 3 million from mexico and 2 million from canada. so tariffs and border adjusted taxes on the margin could be really disruptive to this production system that exists, and that is the topic of conversation here at the detroit

motor show. >> is anyone at this point with what they've decided to do in working with the trump administration, future trump administration, has anyone hurt their competitiveness yet, do you think, mike? there's a reason ceos make decisio decisions. they don't like, i think, sending jobs overseas, but there's a lot of criticism that maybe we're bordering on sort of statism or central planning or something. do you think there's been any risk to that yet? should ford or fiat chrysler, should they have moved the plants instead of doing what they decided to do in working with the president-elect? >> first, it's understandable with the nafta treaty in place why there's been a number of plants that have gone to mexico. because mexico went out and did 40 bilateral trade agreements around the world. you can put a global plant in mexico and ship to all the major markets in the world duty free. you had wilbur ross on your program a few weeks ago who says

that's his vision for trade agreements, rather than these big regional agreements. we need to do bilateral agreements. our industry totally embraces that. i don't see any conflict or alignment about pro growth and having high levels of production in the u.s.. the auto industry is committed to producing where it sells to the greatest extent possible because that eliminates all exchange rate risk and they want to be part of the communities where they are. so i think there's alignment there. using a sledge hammer of 35% tariffs or major border adjustment taxes that would come rather quickly would be disruptive and over time the industry would have to adapt. >> mike, i know we want to memorialize just quickly mrs. h. we both knew her and loved her.

she's a big-hearted gal, married to wayne for years, the founder of auto nation. we lost her, unfortunately, way too early. >> joe, it's very -- it's extremely sad. she was wayne's greatest partner ever. she was his secret sauce. she brought so much joy to wayne's life and gave him so much drive. she was an inspiration to all of us here at auto nation, and her big heart will be dearly missed. >> you know, places we love, down in georgia, everybody, a lot of people with a heavy heart. it was a couple weeks ago, wasn't it? >> last week. >> all right. thank you, mike jackson. >> thank you, joe. good to see you. >> appreciate it. coming up, repealing regulations, house majority leader kevin mccarthy joins us with a to-do list once donald trump takes office.

then, the ceo of ilumina. meg terrell brings us that exclusive interview in just a bit. "squawk box" will be right back. ckngraco

markets pulling further from dow 20,000, but futures pointing to a rebound at the opening bell. we'll check in with a 30-year veteran of the barron's round table. just ten days until president-elect trump officially takes office. confirmation hearings set to begin today and house republicans are working to roll back regulations. we'll talk to the man leading the charge, house majority leader kevin mccarthy. plus, decoding the human genome for just $100. dna sequencing pioneer illumina. the ceo will be here to explain as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." good morning. welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times

square. i'm joe kernen along with melissa lee and andrew ross sorkin. this is not your chair at 5:00. >> this is my precise chair, my precise position. i will just stay here all day long. >> you don't need to move. >> keep the seat warm. >> you're just going to be here all day and night. david blaine. >> do you see the latest thing, he was trying to catch a bullet in his mouth. >> he has a cup thing that he puts in his mouth so the bullet doesn't go -- apparently the thing behind broke. it didn't work. he thought that he -- he literally felt it in his throat. >> how do you practice? >> it was on abc. >> it didn't really happen. >> no, it happened. >> if it didn't happen on nbc, it didn't happen. >> that's one way to think about it. >> the futures right now are indicated up six points on the dow, if you're keeping track. actually, now one point on the

s&p. up a point and a half on the nasdaq. treasury yields moderated again. 2.37i 2.37 earlier which i checked. if i understood that, maybe i wouldn't be here. supposed to be going up. it's not. let's look at oil prices. 52 -- in a range between 50 and 55. not a lot happening. among today's top stories, yahoo! will change its name to altaba after the nearly $5 billion sale of its core internet business to verizon. it's a combination of the worlds alternate and alibaba. the company also announcing ceo marissa mayer will step down from the board once the deal is completed. she's been the ceo since 2012 and is expected to remain with the company once it becomes part of verizon. senate confirmation hearings for president-elect trump's cabinet will begin today. lawmakers will consider alabama senator jeff sessions for attorney general and retired general john kelly for director of homeland security. it's a light day for economic

data. the labor department's jolts report and wholesale trade figures both out. stocks to watch this morning. valeant selling three skin care brands to l'oreal. separately, the company also announcing it plans to sell its cancer business to china's sanpower for $820 million. now, quick programming note. you don't want to miss this. ceo joseph papa will join the halftime report at 12:00 eastern time. and united health's optum unit is buying surgical care affiliat affiliates. surgical care runs outpatient surgery centers and a few surgical hospitals. and our favorite mexican place these days, for me, chipotle. i know you're a taco bellman. >> you're back? >> i'm all in. >> is your nasal spray keeping you from getting sick at chipotle? you said it kills bacteria. you can go back to chipotle. >> i love either a good burrito

or the salad bowl. all of that. anyway, chipotle shares are under pressure ahead of an investor presentation today. >> just spray your nasal spray all over your mexican. just squirt it. >> for those of you who missed the show a couple weeks ago, was it exclear? >> it's clear. >> it's not just called clear. >> the producers are saying clear. >> anyway, get the nasal spray. chipotle gave preliminary fourth quarter earnings and revenue, coming in below street estimates. it noted a higher than expected cost. most importantly, a higher cost for avocados, which are a very good -- what is that? a fruit, a vegetable? >> it's a fruit because it has a seed. >> look at you. there you go. >> like tomatoes are fruit. >> the fat is good for you.

>> semantics. they need a salsa flavored exclear nasal spray. >> it's the max version. i'm telling you. now to politics. more politics. house republicans are gearing up to introduce legislation later this month to repeal a series of obama administration regulations. joining us now, the man leading the way, house majority leader, congressman kevin mccarthy. i like calling you leader. you ever feel weird when people say, hey, leader? that's a lot of responsibility, isn't it? you up to the task, leader? >> we're up to the task, but nobody in my house calls me leader. >> we know who the leader -- anybody who's married knows who the real leader in the house is. >> i don't make that mistake at home. >> what time is the swearing in? is that at like noon on the 20th? >> i think we do it before noon. >> 11:15?

so which does this start with the deregulation? honestly. >> we're already starting. you know congress and senate is already sworn in. you've got to think about what has transpired in the last eight years. just in the last five years there's been 82 major rulings. the definition of a major ruling is new regulation that costs at least $100 million has been enacted. just since the last election, meaning just this november, the president has put up 145 new regulations. he has enacted more than $16 billion of new regulations just since november. so there's a couple ways to deal with this. one, you got to bring back the article one powers of the constitution. we have regulatory accountability act being voted on this week that brings greater transparency and tells the agencies to pick the one that costs the least amount. we did the reins act, which means no major ruling. those that cost more than 100 million can be enacted without a

vote in the house and senate. so the people could have a voice in this process. then the next step will be a congressional review act. this is a bill that was put into place back in the '90s that allows congress to take a look at any regulation that has been imposed in the last 60 legislative days that we can move to repeal that with 51 votes in the senate. that all becomes privileged around january 30th. keep watching from january 30th, those first two weeks in february, you're going to see a lot of those bills, meaning congressional review acts, being moved across the house and senate because we've got to get this country working again. if you look at regulations and tax reform, we really can move this economy in a new direction. >> with great trepidation, many republicans are looking at what happens with obamacare. that seems to be the conventional wisdom right now, leader, is that somehow, you know, the republicans in the past different times have

snatched defeat from the jaws of victory in different ways. they always seem to find a way. i was watching mcgurn last night on a a competing network. he really looks at this as an unbelievable opportunity where if done right, not only does it release some of the shackles from the private sector that we know obamacare -- a fifth of the economy was taken under government auspices. if you get it right, you improve on what we had before obamacare and obamacare itself. it could be a huge boon for the republican party. do you feel like it's in the hands of the right people to do this? >> there's a number of people who have been working on this for a number of years. tom price, who's a congressman, who's nominated to become hhs secretary. he understands this backwards and forwards. i thought that was a tremendous pick for the trump administration. he's going to go through

confirmation. hopefully he'll be sworn in on the 20th as well and confirmed. that would be a unique ability for us to start this work. and remember, if you do nothing, what will happen? well, your premiums have gone up. obamacare created 23 co-ops, 18 of them have already collapsed. you've got in more than 1,022 counties in america, and there's only more than 3,000 counties, there's only one option. you've lost choice. you want more people to come back into the marketplace so there's greater choice. you want to bring the premiums down. there is great opportunity here to make america healthy one more time. you can do it with republicans and democrats, but this idea you can't deal with this, that you should just take a step back and wait, i think is wrong. if you wait, this whole health care system is going to collapse upon itself. >> leader, other big issue of the moment, the border adjustment tax. where do you land on that right now? >> i look at it from an overall tax reform. i want to see tax reform because

we have to get this country moving again. the one thing that i take this election, this middle class has been left behind for too long. you've got to get growth in this country. tax reform can make that happen. the border adjustment tax is a way to deal with that, focus on other manufacturing jobs in america. think about it. we tax different than the rest of the world. the rest of the world builds something in their country, refunds the tax from that country as they send it over to america. america taxes you when they build it and sends it to another country and gets taxed again. >> middle class people who go to walmart are likely to pay more. >> i look at the overall too. if you're lowering the rate and taking away deductions, i think it's going to be a level playing field. i don't think you can look at border adjustment by itself. you have to look at the overall tax reform. that's the way i'm approaching this. >> the other thing i wanted to touch on, we spoke to senator

roger wicker earlier this morning about the ethics office and these nominees and appointees and hearings they're having. the ethics office has suggested the trump transition team has effectively slow walked them in terms of the information they've gotten on some of these nominees. he said it's actually the ethics office that's slow walking congress and the senate. what's true? >> well, i'm not in the senate, so i don't see it all. i will tell you this, we should create a government -- yeah, we want strong ethics, but we should not punish somebody because they've been successful out in the economy. i want the very best people to work in government. i don't want government to be large, but i want the very best people. and i don't want to eliminate people from that opportunity. i will tell you people are giving up a great deal to come for the service of their country. i want to see those people be able to do it. >> i don't think anybody's disagreeing with that. i think just on this specific issue of who is slow walking

whom, if you will, what is truly happening behind the scenes? there clearly is some debate about it, at least according to the conversation we had this morning. >> well, i would limit on the senator's side. the senate has all confirmation. house doesn't have any power behind that. i've not been engaged in that part of it. it would be unfair for me to judge, but i know mr. wicker very well. i would go on to his side. >> so congressman, to end things here, first it was, you know, michigan recounts. i don't know. then it was talk of the electors, getting them to switch the vote. then it was wikileaks, russians, all this stuff. now it's going to be these appointments. they're going to focus on one, probably. do they have a chance of borking someone, to use a term with a supreme court nominee. but do they have a chance of doing that? who used the words you lost and

it's going to be my way? some other guy used that word. >> i think rahm emanuel used something to that extent. the way i look at it, joe biden, when we were doing the electoral college inside congress, when people were trying to object but couldn't and it was democrats doing it, joe biden said to them, it's over. i think that is -- you may go through the different processes of getting through losing an election, and i've been on that side before. but i think now is the time is when you come together, put this country first, and i believe all the nominees of what i see today get through. remember, the democrats are the ones who changed the rules where it only takes 51 votes to get them through. and they're going through the process now. the sooner that the individuals get in, the sooner we can start working. why do you want to hold up their ability to do the job. >> joe will still be around. he told the president-elect to grow up. i guess he doesn't want to kick trump's ass in a bar anymore. wasn't that his line? he wanted to kick his ass in a

barn. >> behind a barn. >> i don't know. maybe they both need to grow up. andrew? >> leader, before you go, where did you sleep last night? we have a picture of you from our last conversation when i was with you. this is where he normally sleeps. >> that's exactly where i slept. >> did you see that image? that's you on the couch. i thought it was fascinating. liter literally on his couch. god bless you, sir. >> thank you. >> we still got to get you a better bed than that couch. at least a fold-out couch. >> next time you should come spend a day in the life of a congressman. i got another couch. you can stay over there. >> thank you, sir. >> i'm uncomfortable right now. i don't know. >> a pillow fight. >> i'm comfortable. we got a lot more ahead on "squawk box" this morning. >> tickle fight. >> it's that time of year again. it's earnings season. s&p global's mike thompson is

going to join us on what we can expect this quarter. plus, exxonmobil ceo rex tillerson will be facing the foreign relations committee for his confirmation hearing. that happens tomorrow. and then later, we head over to san francisco where the annual jpmorgan health care summit is under way. we'll talk to the ceo of illumina. stay tuned. you're watching "squawk box" here on cnbc. aren

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

download the xfinity tv app today. welcome back to "squawk box." earnings season kicking off. delta airlines, bank of america, jpmorgan reporting this week. for more on what to expect, let's bring in michael thompson, managing director of s&p global. michael, good morning to you. i think people are looking to financials. we've seen a huge run in the financials. have the consensus estimates gone higher? there's this great expectation that the fourth quarter was a blockbuster one when it comes to trading. >> i think you're going to get the strongest earnings growth for that sector. you're going to get double digits. financials run away with it in this quarter. they're going to be the most prolific sector. i think you are going to get some good news.

overall, the s&p at last we're going to call that we're the at the end of this single-digit earnings. right now we're going into the earnings season. i guess alcoa reports tonight. expectations are 4.4%. judging by the way that behavior is with analysts and companies, you probably can see a good solid 7% earnings growth for q-4 of 2016. not a bad close. >> what i was trying to get at with the financials question, have the markets run up ahead of what expectations are? have the consensus estimates risen to meet the enthusiasm with which financials were bid up in the fourth quarter and to date? >> you know, melissa, i think it's hard to say. i'll tell you what we're seeing. we're seeing growth overall, whether it be financials, everything else, starting to catch up with the lofty level of valuations. valuations have been elevated. this was something we've been concerned about for the last few years. before we had expectations and actually have visibility that we're going to get to double-digit earnings growth. we had historically high p.e.

multiples on a forward basis, okay. what's happened now is you've sort of seen -- although the market has improved, earnings growth has exponentially improved and the gap between what you consider normal between forward expectations of earnings and current valuations are actually a little bit attractive. so even though we're almost at 18 times next year's earnings, right, we're going to see next year likely four quarters of top-line double-digit earnings growth. that makes you feel a little better because you have way above historic estimates there driving those values. makes you feel good about that. >> which sectors concern you the most? >> i'll tell you, you know, i think you're going to get -- there's not a lot of concern, but i think what you will see is some sectors will outperform. sectors that could be the most disruptive because of stroke of the pen risk, is health care. i think the consumer was

interesting. after 28 quarters of actually just limping this economy along, this is the weakest quarter in all this time, seven years. you got only 2% growth right now calculated in. that would be something i'd watch, but expectations are that's going to bounce back and be comfortably in the double digits throughout most of next year. >> michael, thank you. good to see you. coming up, popular gaming app pokemon go. do people still do that? >> yeah. >> one of the most downloaded apps. >> people still searching for those things. you don't even get anything when you find one. >> i don't get it personally. >> it might not be rolled out in china any time soon. we'll tell you why. later, don't miss senator john barrasso. he'll join us at 8:30 a.m. eastern. we're coming right back. anplfudl

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welcome back to "squawk box." a vote of confidence for the uk despite the brexit. snapchat says it will make london the home of its international operations. the company sales from the country where it has no local entity will be booked in britain rather than rooted through lower tax jurisdiction like ireland. snapchat said the uk's strong creative industries make it a great place to build a global business. >> okay. apple is looking to conduct high-tech manufacturing now at one of its american plants,

according to a federal government filing. the company's requested to make finished products at its facility in mesa, arizona. it currently has permission to make just components there. apple and other companies are under pressure from the incoming trump administration to build products at home. trump has said as president he's going to create the incentives to get apple to build a big plant in this country, in the united states. coming up, the race to repeal and replace. senator john barrasso will talk about the fight to dismantle obamacare. that's next. let's look at how u.s. equity futures are shaping up. it looks like we turn negative on the dow. stay tuned. with the xfinity tv app,

anything with a screen is a tv. stream 130 live channels. plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. good morning. welcome back to "squawk box" right here on cnbc. we're live from the nasdaq market site in times square. among the stories front and

center at this hour, it's going to be a busy day for confirmation hearings on the hill but slightly less busy than expected. a confirmation hearing for congressman an cia director designee michael pompeo has been push the back to tomorrow. no specific reason was given for the delay. we'll keep an eye on that one. also, small business optimism now at its highest level since 2004. monthly index from the national federation of independent business jumped from 105.8 for december from 98.4 back in november. and bankrupt retailer american apparel has a new owner. canada's guild and activewear won a bankruptcy auction. it won't keep any of american apparel's 110 remaining stores but will own the brand and take over some of its manufacturing operations. i don't know if you had followed this whole bidding process, but amazon was one of the potential bidders for this company. some people thought that actually owning american apparel the brand and manufacturing

american apparel would be helpful to amazon in its conversations with the trump administration. >> oh, that's an interesting idea. >> given they're one of the larger clothing manufacturers in the united states. one stock to watch this morning, goldman sachs getting downgraded from a neutral to a sell following the recent run-up for the financials. the stock is down 0.7%. basically if there is deregulation, how much more revenue can goldman sachs actually generate off the back of that. citi still likes the money-centered banks on a play on the steeper yield curve. but this could actually be an impediment to our march to dow 20,000. we are seeing the futures here turn negative as we're seeing the premarket trade in goldman kick in. okay. tomorrow secretary of state nominee rex tillerson will be on the hot seat as his confirmation hearing begins. joining us now is senator john barrasso, serving on the foreign relations committee. good morning to you.

>> good morning. >> help us try to understand what you are going to be trying to understand and seek in terms of information tomorrow during this hearing from mr. tillerson. >> sure. all of us in a bipartisan way want to make sure our country is safe, strong, and secure. foreign relations is such a key part of this, especially over the last eight years where, in my opinion, we're less strong as a nation and less respected around the world. so i believe those are the questions that rex tillerson is going to get from both sides of the aisle. he knows the world, traveled widely, obviously ran a large corporation, and i want to talk to him about the use of leverage to get what we need for a safe and strong america. >> senator, i don't need to tell you, but the headlines on rex tillerson around this confirmation hearing have all been related to his relationship with russia and with putin over the years, along with exxon's huge investment in russia. how do you think about those things? >> well, i visited with him for

45 minutes last week. we had a lengthy discussion about russia and other places around the world. because of rex tillerson's background in energy, he understands, as does vladimir putin, that energy is called the master resource for a reason. it powers our economy. it powers our military. it's important for jobs. putin uses energy as a weapon geopolitically. i believe the united states ought to be using our energy as a geopolitical weapon. i'm going to talk to rex tillerson about that tomorrow. >> one of the other questions that's come up this morning, as it happens, we had a conversation with senator roger wicker earlier about the ethics and compliance office, which has suggested some of the nominees and the transition team has slow walked the senate in terms of the information they've gotten. he said actually it's the ethics office which is slow walking you. what's really happening? >> well, i've read the records. i know that the director of the

ethics office is an obama appointee, but we are on schedule right now in terms of the hearings, as they were when president obama came into office when president george w. bush came into office, hold hearings before inauguration day so that a president can have a working cabinet. right now, especially in national security force in place on inauguration day. i know by the end of january, eight years ago president obama had essentially his full cabinet in place. we want to do the same thing for president-elect trump. >> back to russia for a second. what's the relationship you think this country should have with russia, that we should have with putin? >> well, i think that putin specifically has been a thug, a bully. we know about hacking, but we also know that it's way beyond what happens in the cyber world. he has been very aggressive over the last number of years, and i think that it's because of the

weakness shown by president obama in terms of deterrence. we have not deterred. we had the capacity to deter, but president obama has not shown the commitment, nor has he communicated a willingness to deter what's happened around the world. we've seen it with north korea. we've seen it in syria. i just think that we have been showing and demonstrating and communicating weakness instead of strength. >> senator, you just used the word thug. you used other critical language to speak about putin. president-elect trump has used much more glowing terms. how do you feel about that? >> well, president-elect trump will be the president come january 20th. he is going to have a relationship with leaders around the world. what i've seen as a member of the foreign relations committee over the past number of years and been to nato nations and actually been to russia,ive great concerns about vladimir putin and what his personal intentions are to restore the

former soviet union to what he believes is great glory. >> so senator, in terms of repeal and replace, what's the key thing on the replace? what can be done immediately to allay the fears of many that say you should just let it die a slow death itself instead of owning it? because if you repeal, it becomes -- is it trump care or trump-o-care? what do you think? what will the word be? probably trump care. that's frightening to have to fix something that you didn't break in the first place. >> well, joe, it's been six years of obamacare malpractice that got us to this place where eight out of ten americans say we need to either repeal and replace or fundamentally change the health care law. obamacare has failed, costs have gone way up, choices have gone way down. so we need to do something.

we agree as republicans on the fundamental principles behind it. in terms of eliminating the mandates, in terms of freedom in the insurance markets so people can buy insurance across state lines and they can buy what works for them and their families, not what president obama said they have to buy. we need to do medicaid reform, get the decisions made at the state level, and back at home with individuals because as a doctor, i'm focused on patients, putting resources into patients' hands, not more government control. >> okay. senator, we always appreciate speaking with you and your time this morning. wish you luck at the hearing. >> thanks. thanks for having me. >> great to see you. up next, the annual jpmorgan health care conference under way in san francisco. meg terrell will join us live with the ceo of the largest maker of dna sequencing, illumina. that's next. plus, we'll talk to a long-time member of the barron's round table. y ni.

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welcome back to "squawk box." we want to check out shares of valeant surging in the premarket session, up by 12%. the company selling three of its skin care brands to l'oreal for $1.3 billion in cash.

programming note here, do not mis miss the valenat ceo joseph papa at 12:30 p.m. eastern time. it is day two of the jpmorgan health care conference. meg terrell joins us from san francisco with a special guest. hi, meg. >> hi, joe. joining us now is illumina ceo. quite a lot of news from you late yesterday. your stock is up quite a bit this morning. you've announced a new machine that can potentially get the cost of sequencing a human genome down to a hundred dollars. tell us about where we are now and what the timing is. >> it's hugely exciting. we have a new architecture for our sequencesequencers. this puts on a path that allows us to radically reduce the cost of doing a whole genome. that's really important. as we talk to researchers, as we talk to clinicians, they keep telling us that although we've made a lot of progress in

genomics and we've started to see the health benefits, there's still a lot of research we need to do to understand the biology and how it impacts human health and human disease. so by lowering the price of sequencing, we can do much, much bigger studies to understand genomics and biology better. we can do much deeper studies. that's really important for applications where you're looking for these rare events. you're looking for cancer dna, a few molecules of cancer dna in the blood. and also, you can do much broader sequencing. instead of just looking at specific points on the genome, you now have access with this power to do whole genomes in a way you couldn't do before. >> the previous milestone, i remember, was the thousand-dollar genome. now you're talking about the hundred-dollar genome. where are we on that journey? how close are we? >> we're on that path. and you're right, it was only in 2014 that we announced the $1,000 genome. we moved the price of the genome in the last couple years before that from $10,000 to $1,000. and the architecture allowed us

to do that. we believe this new architecture has a line of sight into the technology capabilities to get us a few years out to the $100 genome. there's still work to do to get to the $100 genome, but we understand what that work is. every part of the architecture, we can see what it would take to get from where we are today to a few years out with the $100 genome. >> tell me about the business of this. you have several customers saying they plan to use these machines, replace the older machines with these. that'll be a big boon in terms of revenue. what about expanding the market and the number of institutions buying these machines? >> absolutely right. there are two big parts of what's going to happen. one is, you know, we have about 800 customers that have bought our high seek platform. that's the previous sequencer we had. those customers are all going to look at upgrading those machines over time . that's going to drive a lot of business. but in addition, every time we've launched a new sequencer, whether it was the previous version or the one before that, we've opened up new

applications. we expect the same thing to happen here with novaseq. there will be experiments that can be done now because you have so much power that couldn't have been done before. so we expect to see more labs, more organizations doing whole genome sequencing, when before they couldn't have access to this technology. we expect to see a lot more tumor normal sequencing in cancer settings, when before you may not have had access to do it as deeply as you could have. we'll see new types of experiments. a single cell is a great area of research, where researchers are trying to understand how cells are very different from each other, even if they're the same type of cell in a particular organ. now you can see large-scale single cell studies being done in a way that you couldn't before. so we expect novaseq to open up all these different exciting areas of research. >> interesting. joe, you've got a question. >> i just don't understand -- maybe i haven't kept up with the field enough. what do i get for $100? do i just get all the base

pairs, or do i know which are genes? how much of the actual genome do you know are actually coding for proteins and doing things? is it just as, cs, gs, and ts with absolutely no sense to make of it whatsoever? i mean, that's what we need to figure out, right? >> you know, you get -- you get a whole bunch of things for the $100 once we get there. what you get is the entire genome. so not just the regions that code for proteins. >> i don't want that. >> the whole genome. >> i don't want that. it's useless. i don't even need that. >> you get much, much more. >> give me -- what do you do, just compare what might be aberrant to what you might have, or one of your tumor cells and see where the differences are in the base pairs or something? no wonder. sounds like a shotgun approach. >> you get the whole genome. so it's not actually doing the shotgun to get parts of the

genome. >> i don't want the whole genome. it's useless. >> then you're comparing it to what is the reference. okay, what are the variations that are in your genome compared to the reference set. that could drive a predisposition to some genetic conditions. then you can actually compare different cells. you can compare the genome of a tumor cell in a body to a normal cell and say what are the mutations in that tumor cell, and then you can look even more deeply to say, okay, which mutations are actually actionable. do we have drug targets that target those mutations, and which drugs would actually be most beneficial for this patient. so you start by getting the bases, as you said, but you move so much further with the interpretation and then the clinical decision support. >> you can't say anything about gene expression or post -- it's a very blunt instrument that you're talking about right now. that's why we need years and years -- >> not at all. you do get gene expression. you get the whole genome. one of the big uses is to see which genes are being expressed.

you can see what genes are active, either higher or lower than normal, and that could actually be a source of therapeutic insight. so those are exactly the kind of insights you want to be able to get from a more powerful machine. >> yes. hurry up. hurry up. >> and then connect them all. >> i know. that's what we need. hurry pup. this is a lot of information. we got a lot more analysis, obviously, that needs to be done. very exciting. i just want it to happen quicker. thank you. >> wow. that was education. you should teach a science class, joseph. >> all right, guys. we're going to thank frances. thank you so much for joining us. >> thank you, meg. >> we have a lot more coming up on day two of the jpmorgan health care conference, including on "squawk on the street," the athena health care. >> meg, thank you for that. we want to turn to a long-time member of the barron's round table for a forecast of what to expect for the markets as we enter a trump presidency. joining us now is the ceo of

zuloff consulting. he's been a member of barron's round table since 1986. good morning. >> good morning. >> we've had a lot of debates around this table this morning about what's about to happen, including larry summers. i don't know if he thinks the market is off per se. >> sugar high. >> where do you stand? >> i think it's going to be an exciting year for traders. big moves, up and down. >> that's easy. up and down. give us a direction here, sir. >> i will get more specific. i think the ground work is that the world economy is improving since middle of last year. it's on an uptick at very low growth still that will not change much. i think bond yields are going to go much higher. 3% ten-year treasuries. i think that the wall of worry that we have seen in the marketplace in equities for the last few years is beginning to crumble.

you see confidence going through the roof at the highest consumer confidence level since 2007. actually went a little bit above. and since the election, you saw that huge amounts of money has flowed into equity products. that is going to coue i see the first half of the year up to 10%. >> so we have an overshot. we had another guest on yesterday who said if you look at any given calendar year, there is always a better time to enter the market if you were to actually try to time this than the beginning, right? in hindsight. that was the argument. the expectation is there's going to be a meaningful pullback. did you say a pullback of 10%? 5% to 10%. >> between the high and the low of the year. >> i think we'll probably see some pullback, but it will be shallow in the first two months, february, march. then higher, next leg up. then an overshoot and that's it for the year.

>> we're going to have an overshoot. >> then in summer, when bond yields go much higher, to 3% or even a little bit above for ten-year treasuries, that will crack the market. then we go down and probably close negative for the year. >> wow. hold on. you're like -- he's like the investors' almanac. why the summer? what happens? >> i think you'll see the next leg up in bond yields during the summer period. that's going to break the stock market. >> does that mean the bond bubble officially pops? bill gross just put out an investor letter. if the ten-year yield goes above 2.6% that will signal the death of the bond bubble. >> we have seen the low this summer, in july of this summer. we had a low in 2012. that was the beginning of the secular bottoming process, which is a long, long, drawn-out process. we had the second low in 2016,

slightly lower. and the next low is 2020 but higher than in 2016. so the next 2 to 2 1/2 years, it's up for bond yields. and that is going to be bad for stocks. felix, we have to have you back, see if this turns out to be the case. >> okay. >> thank you. appreciate it. good to see you. >>cramer will join us live from the new york stock exchange. we'll get his take on the top stories. "squawk" comes right back. a loofplilil th.isbo a an a loofplilil th.isbo a

time for your stat of the day. a week after the start of the jpmorgan health care conference, bio tech and the health care sector we need to be ready for whatever weather may come our way. my name's scott strenfel and i'm a meteorologist at pg&e. we make sure that our crews as well as our customers are prepared to how weather may impact their energy. so every single day we're monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe. learn how you can be prepared at pge.com/beprepared. together, we're building a better california. and they're absolutely right. they say that it's hot... when really, it's scorching. and while some may say the desert is desolate...

we prefer secluded. what is the desert? it's absolutely what you need right now. absolutely scottsdale. get to the new york stock exchan exchange. jim cramer joins us now. i've heard it twice from different people, jim, sugar high. this is a sugar high, and it is not going to endknow. nobody knows, i guess. >> the so-called sugar high, it doesn't really matter. if it turns into something more substantive, if president-elect trump gets his way on appointments, if it boggs down, the sugar high might lead to an end. i look at the sources of the sugar high. really, the same people who don't like it didn't like it.

people who didn't like trump don't like trump. there is something to be said about the people who are subject to the market. and the objectivity, if you get repatriation, tax reform, these are very big. deregulation is huge for the bank. there is a change. and i think the most important change -- what is the most important number this morning? the small business number, 2004. those are the companies that hire. you continue to hire, get better auto, better housing. these are not things to be overlooked. they're not just numbers thrown out that don't matter. i saw the small business number and said, geez, that's big. >> yeah. >> i have to think about that. i mean, we have surveys that matter. then we have people who don't like trump. >> right. the latest was, i think, bill gross. it is like the fourth piece he's written about, don't underestimate the downside to this. this one was that it is going to be a sugar high and you better be ready for it. these are people that, prior to the election, were sure we'd be down 3,000, 4,000 points by now.

>> joe, i have to tell you, when someone comes out who has been bullish and says, wait a second, we've overshot -- >> that's different. >> i don't mind that. people who hate it and come out and hate it, we give them credence by talking about them because they're nice people and we like to have them on, they're visible people. at a certain point, we have to say, hey, pal, wait a minute. >> i like it. i like it, jim. tell us what you mean. say what you mean. i like >> thank you. >> don't miss the ceo of lululemon. >> he was here the other day. >> standing right there. >> yeah. >> "squawk on the street" we'll practice our downward facing dog. k nt at fic

wingininerthah, liwhr wa one?

if you are writing in after the interview with former treasury secretary larry summers, cot 6960 tweeting, larry summers tried to tie a gordian knot. here's the razor to -- check it out. there it is. what you can't see there is that

first line -- actually, you can't really see it. gdp on the right. the very bottom part of that chart is 3%. and the average for the eight-year period, when reagan was president, is in red. the median is in green. so you're talking about somewhere about 4.5% average for gdp growth during the eight years. i want to -- you watch star trek. have you seen when they go back in time? somehow, i want you to go back to 1981. live with me -- we don't have to live together but in the same period -- and leader mccarthy are going to share an office or what. but we can go through it and see it. you come up with, was it 4.5% because he blew out the narrative, or you have a narrative that it doesn't count. maybe the deficit was larger but we just added 10 trillion to the

deficit now and got 1.5%. if he blew out the deficit and got 4.5%, at least you're getting something for it. >> we'll have larry summers back on the show -- >> in a couple years. >> no, from thefrom the alps ne wednesday. >> tying the gordian knot. >> we have sophisticated viewers. >> we do. >> join us tomorrow. are you here tomorrow? >> yes, i am. >> you'll be here? >> yes. >> "squawk on the street" is next. ♪ congratulations to the clemson tigers on their national championship, first in 35 years. good tuesday morning. welcome to "squawk on the street." i'm carl. we keep our eye on two things. quarterly guidance from big companies presenting at