good morning. the trump trade. the president-elect speaks and the global markets respond. his comments, wall street's commentary and the stock reaction coming up. washington watch. the senate takes the first major step towards repealing obamacare. we have the details straight ahead. and the city of angels, why another major sports franchise could soon call los angeles home. it's thursday, january 12, 2017, "worldwide exchange" begins right now. ♪ good morning. welcome to "worldwide exchange"

on cnbc. i'm sara eisen. >> i'm wilfred frost. happy throwback thursday. throwing it back with some of the queens of rap. >> kicking off with missy elliott. >> i was putting in my request for our producer for the only female british rapper. if you can find one for later in the show, that would be great. >> global markets this morning. after stocks did eke out gains yesterday. the nasdaq closed at a record high for the fifth session in a row. little soft this morning. dow futures down 44. s&p futures down 6.5. nasdaq futures are down 13 points. no catalyst cited from the trump news conference to fuel the reflation trade. talk of infrastructure, corporate tax cuts which helped fuel the rally over the last five weeks was lacking in that news conference. we'll dive deeper into that in a moment. that's been the general word from strategists and from

investors overnight. you're seeing futures sell off a bit. the ten-year treasury note yield, a pull back on that selloff we have seen in recent weeks, and some buying today with the ten-year treasury note yield back down to 2.32. we go back to november levels here. >> lows since november, an important point, because that came in line with equities holding up yesterday. we saw the bond yield retrace, which over the last several weeks led to equities retrace. that didn't happen yesterday. >> dollar down, too. >> exactly right. let's look at global economic data. new numbers show germany's economy grew by 1.9% last year, a bit above the 1.8 forecast. and shows a recovery towards the end of the year following a tip in the middle of the year. also the best annual pace since 2011. we also just had in the last couple of minutes, eurozone indust ram output rising 1.5% in november. much stronger performance than expected. we were looking at a forecast of

plus half a percent in terms of the year-on-year growth, we were expecting 1.8. we got plus 3.2%. >> led by france, where output jumped by 2.2% on the month. >> so a weaker euro helping that industrial output clearly. that said, markets still in the red, which is the same as before the data in europe today following a decent day yesterday, which also saw the 12th positive session in a row for the ftse 100, another all-time record closing. looks like we might break that, the unlucky 13th day they can't crack. >> still holding near recent gains. the rest of the world has been a strong story. copper has been rising. it's near a three-month high, soin sign of a better global economy. >> strong story, yes. fred neumann's analysis of that yesterday. investors are taking the data as great, we can forget about asia

for 2017. still a lot of hurdles to come. japan's cabinet office released its economy watcher surv survey for november, as for the action nikkei, did not like that dollar pullback against the yen. shaved about 1.2% off of that market. shanghai closing lower by a half percent. hong kong breaking its multi day winning streak over there, closing down a half percent. >> also point out we'll analyze trump's comments yesterday, but also two mentions of japan in reference to how the u.s. is losing trade. >> which probably makes them uncomfortable. broader markets, oil prices had a decent day yesterday. up nearly 3%. and energy the best performing sector on the s&p yesterday, up 1.2%. today a little bit more of green for the oil prices. 52.5 on wti.

let's look at the dollar. yesterday, it was down 0.3%. but really pronounced weakness in the dollar today. a percent move for the yen around a half percent of strength for both the euro and the pound. interesting to see the mexican peso today rebounding a bit. it's been very soft recently, but one might have thought with this rhetoric yesterday that we're going to see more candidate trump rather than president-elect trump, more trade wars than you would have seen continued weakness in the peso today. that's not the case. the peso is bouncing back. >> hit a record low yesterday. >> exactly. >> in general the theme today certainly one of pronounced dollar weakness. >> a look at bitcoin as well. >> which we added into our daily check. >> some way away from the 1 110

levels, down 2% today. 763. gold prices, they gained about a percent yesterday. three positive sessions in a row. looks like we'll hit four. >> yesterday the president-elect held a news conference for the first time since the election. his comments had market moving implications, starting with pharma. the biotech sector taking a hit when trump said the pharmaceutical industry in his words is getting away with murde murder. >> the drug industry has been disastrous, leaving left and right. they supply our drugs but don't make them here. they're getting away with murder. pharma, pharma has a lot of lobbyi lobbyists, a lot of power. and there's very little bidding on drugs. we're the largest buyer of drugs in the world, and yesterday we don'ted by properly. we'll start bidding. we'll save billions of dollars. >> pharmaceutical firms reacted to the president-elect's

comments. allergan saying it is aligned with the priorities of the incoming administration. we want to create more jobs in the united states to fuel the economy. the pharmaceutical lobby also saying it is committed to working with the president-elect and congress to boost u.s. competitiveness and protect jobs. this was a great example, sara, of what people weren't expecting since the election. he felt he was being more constructive. >> he did make that comment in the time person of the year article, that he would go after high drug prices. this was much more specific. >> yes. also comes off the back of biotech and healthcare playing catch up at the start of the year. so perhaps in the short-term more room for negative price reaction in those share prices. >> also the idea of bidding for medicare and medicaid, those are the u.s. systems bidding for brug prices to try to get prices

lowered and more competitive. that's an idea that's been pushed by democrats. so, perhaps investors took it as something realistic that could happen if the democrats are on board. it's something that republicans traditionally have pushed back against. the currency to watch out of this is the peso. crossing below that psychological key level of 22 pace so hes to the dollar yesterday. after the president-elect warned once again that u.s. auto companies would face a high tax for products made south of the border. he also reiterated that the u.s. would start to build a southern border wall and said mexico would reimburse the costs. mexico's president saying they would not pay for the wall, and that they were negotiate trade, security and migration with the trump administration. when you talk about trade, he also did mention, as he said earlier, japan and china. and we saw the dollar weaken by

the end of the day because of that. >> and a big move in bond yields. i think overall what is interesting is clearly one of the fears during the trump rally has been will we get a lot of protectionism. yesterday, lots of rhetoric towards that, expecting we'll get the wall, we'll get some issues with japan. and yes we saw a reaction in the dollar and bonds, but we didn't see a reaction in equities. that's encouraging, it's constructive. we saw slight gains, the dow up half a percent, positive moves for the s&p. healthcare was down, but in general that's positive. >> they held up. >> looking at the front pages this morning. this was the top story, not just for business and markets. the "new york times" calls it a chaotic form where russia was probably hacked that picture of his news conference where he was calling on reporters, bashed cnn and refused to take a question. trump on the offense says "usa today" amid controversy.

all of this paynes spaints a mo confrontational stance. after all of it stocks remained higher. >> the only other point i'll make, aside from today's move where it's universal that we're seeing dollar weakness, the story of 2017 compared to late 2016 and the currency market, it's not a simple dollar story. it's individual currency pairs doing different things against the dollar. the big laggards, the peso, lira, british pound. and big winners like the aussie dollar and the russian ruble. it's not apart from today where it's a broad move, it's not simply saying we'll get a stronger dollar or weaker dollar. 2017 will have divergence performance. >> yeah, turkish lira in free form. day three of confirmation hearings on capitol hill. mike pompeo, james mattis, and

rex tillerson will be returning to the hill after hours of testimony yesterday. this is day two of his confirmation hearings for te s secretary of state. weekly jobless claims out at 8:30 a.m. eastern time, followed by the monthly jobless claims, patrick harker will be speaking today and james bullard. he is also guest hosting "squawk box" this morning. janet yellen is holding a town hall with teachers this evening. she will be speaking next week, which is something markets are looking to after the trump press conference was the event of this week. next week, we have yellen. delta kicks off fourth quarter results for the u.s. airlines before the opening bell. landon dowdy has three key things to watch. >> delta expected to land

earnings of 82 cents a share versus 1.18 a year ago. beyond the numbers, here are the three things to watch. passenger revenue. data will likely show an improvement compared to guidance but earnings growth will be modest. second, fuel prices. delta faces a fresh test of its financial resilience amid rising fuel prices and labor costs. the carrier warned that higher costs will shrink its operating margin in 2017 from last year's solid performance. also listen for impact of labor costs because of the new contracts with the pilot union. and guidance, airline stocks have taken off since the election of donald trump. can they continue to soar? listen to what management has to say on outlook, demand and booking in q1 which is typically the slower quarter of the year for airlines. looking at the stock, shares of delta up more than 30% in the past three months.

on a programming note, don't miss delta's ceo on "squawk box" for an exclusive interview at 7:30 eastern this morning. moving on to more stocks to watch today. kb homes fourth quarter revenue rose 27%. results still narrowly beat forecasts, kb homes and housing starts rose better than expected. up 11%. the stock is up 2.4%. still to come, the nation's banks getting ready to roll out quarterly results. we'll bring you the key things to watch in that. first, as we head to break, here are yesterday's top dow performers. merck at the top at 2.85%. >> had good news on a lung cancer drug. had a much stronger earlier rally, after that trump conference it was cut. still ended in the top. >> pfizer on the other end. >> "worldwide exchange" coming back. t dailea a a aur

id

will be reporting quarterly results starting tomorrow. wilfred is getting ready, we're pregaming on "worldwide exchange." when you think of the trump rally, this is the number one sector. >> with that big rally there's a big difference coming into the fourth quarter of 2016 earnings for the banks compared to the prior three quarters. both share prices and sentiment improved drastically, thus there is room for disappointment. here are the key things to

watch. trading revenues. the indications is this has continued well in the fourth quarter as it is in the third. with fixed income leading the charge, albeit stronger markets following the election should help. second, rates. net interest margins will be up. the question is by how much. jamie dimon suggested in december that the sensitivity to rates could be better than expected. on the flip side watch for revenue impact, are loan volumes down because of high rates? and third thing is credit. it's a wild card to keep an eye on that could derail the current positive sentiment. overall, given the extraordinary change in sentiment since the election there will be a disproportionate focus on management commentary and what they expect from trump and more broadly because this is them announcing their 2017 guidance and forecasts. >> what they expect on the economy as well. the steeper yield curve helping

for profitability. and if the fed does raise rates three times that would also be key. >> definitely. interesting in the analyst community over the last couple of weeks, they remain positive on the banks geared to the interest rates rise, and a slight more cautious on those delivering on policy. so a downgrade from citi on goldman sachs, most people remain for the wells fargo and bank of americas. so optimism and expectations are still pretty decent. italian bank unicredit will book $8.6 billion in additional provisions for bad loans, part of a leanup of its balance sheet which it unveiled last month. the bank will launch a $14 billion rights issue by the end of march and will cut thousands of jobs. didn't give much relief to the stock. those italian banks still dealing with bad lone problems.

a former director at barclays has been sentenced to five months in prison for an insider trading scheme. he repeatedly tipped off a friend who worked as a plumber about impending mergers underway at bank. he admitted he provided the inside information to ingratiate himself with the plumber to get a less stressful job outside of wall street. barclays, one of the names outside of the u.s. that's benefited heavily from the trump rally. up 50% since its mid year post brexit. coming up, the senate takes the first major step towards repealing obama care. details on that next. as we head to break, here is the national weather forecast. >> good morning. kind of a wet start across the northeast once again for today. but very mild temperatures. we will see rain showers mainly in the morning for the big cities along the coast. but the rain will continue

through the day today across the ohio river valley. a bit of freezing rain for you in chicago. little snow into central parts of wisconsin. very cold air pushing back in to the upper midwest. that will hook up with the moisture in the southwest and bring an ice storm across the plains states starting late tonight and continuing on through the weekend. let's look at the temperatures across the region. looking for a high around 37 degrees in denver. look how warm temperatures will be across the south. we could see some records in the southern plains as well as into the northeast. ur shi

welcome back, let's look at u.s. equity futures, they are lower this morning. about a quarter percent. 0.2%, this follows gains yesterday despite some trump rhetoric which derailed both the dollar and the bonds. we did see equities hold on to gains. half a percent for the dow. the dow reclaimed its leadership position among these three. positive moves for all three indices yesterday. as i said, despite some negative sentiment towards the dollar, as we started to expect more of a candidate trump than perhaps the president-elect trump, we saw a bit of dollar softness yesterday and pronounced dollar softness today. 4% of decline against the yen and about 0.4% of a decline for

the dollar against the euro and the pound, which is stronger. the mexican peso is also stronger today. dollar weakness across the board by 1%. that's after hitting a very big low yesterday. touching 22. so short-term rebound in the peso. the u.s. senate passed a measure early this morning taking the first step towards repealing president obama's healthcare law. the vote was 51-48. one republican voted no, senator rand paul. the measure will allow the gop to dismantle the affordable care act with a simple majority. the process could take months, but they're under pressure from president-elect trump to act fast. in fact n that news conference yesterday, he got a question on this. what will we see in terms of replacement? he said it will be simultaneous or near simultaneous to get repeal and replace.

could come within the same hour. but he did not outline what the replacement looks like. cramer yesterday in his show said united healthcare, hard to figure out what it means for all the insurers, but that's one he sees as a winner. >> he was very excited about that, that he found a winner. >> it's confusing without the blueprint as to what it will look like. reports say the obama administration is expected to launch a complaint against chinese aluminum subsidies with the world trade organization. s >> i love how you correct me correcting you. without me stepping in. >> i know. that's because of all the words, we just spell that one different. not just pronunciation. >> and now you're here, it's aluminum. to sports, another nfl team is headed to los angeles.

espn reporting that the san diego chargers will announce as soon as today that they are moving for the 2017 season. the chargers would join the rams who moved from st. louis to l.a. they both would play at the l.a. coliseum. the rams are building a new stadium nearby. san diego, major newspaper here, the tribune, attributing it to the lack of a budget resolution passed during the election to raise taxes and enhance that stadium. they're moving to l.a. >> smaller move than what the rams did. so maybe the fans can follow a bit. >> i don't know. >> geographicallgeographically. coming up, steven chubak of nomura has his take on which banks to buy ahead of earnings. first, as we head to break, a look at yesterday's best performing s&p and nasdaq names. the nasdaq outperforming. five record closes in a row.

good morning. the president-elect speaks and the global markets respond. a live report from washington coming up. and earnings central. the banks ready to roll out results. a financial analyst joins us on set. and alec baldwin could bring his version of donald trump to a new stage. all the details coming up. it's thursday, january 12, 2017. you're watching "worldwide exchange" on cnbc.

♪ good morning. welcome back to "worldwide exchange" on cnbc. i'm sara eisen. >> i'm wilfred frost. happy throwback thursday. throwing it back to some of the queens of rap. i don't think we have had any british ones yet. >> there isn't any. >> there is at least one. >> as for u.s. equity futures, stocks managed to close higher yesterday. little softness this morning. dow futures down about 38 points. s&p futures down a little more than five. nasdaq futures down 12, this after a global selloff or at least the rally takes a pause. a lot of people attributing this to the thank you news conference yesterday, not giving that growth trade fuel in terms of

corporate infrastructure spending or tax cuts. as for early indications in europe, trading is negative. the dollar has reversed, treasuries reversed, they're higher. some buying in that market. the dax down a half percent, even though we got better industrial production numbers out of europe. german gdp for the year as well. >> the ftse improving, trying to have its 13th straight day of gains. benefiting by the weaker pound. >> that's why we have some red on the ftse 100, it has done better than haan hour ago. >> as for the asian action overnight, let's show you what happened here. big decline for the nikkei, down 1.2% on the back of that weaker dollar, stronger japanese yen. trump mentioning japan with his list of trade sort of partners that have, as he mentioned, taken advantage of that.

japan, china, mexico, big trade deficits. japan going to fight back against that one. as for the shanghai comp, down a half percent. hong kong breaking a multi day winning streak. >> as for the broader markets, oil prices up 2.8% yesterday. extending that today by a half percent. 52.5 on wti. that gain for wti yesterday pushed the energy sector to be the best performing sector on the s&p. ten-year treasury note, the yield has slipped to november lows now. so definitely a retracement from the highs we saw in the first or second week of december. 2.33. dollar softer yesterday. about 0.3%. marketedly softer today, about 1% move against the yen, the mexican peso is stronger. universal dollar weakness today. albeit more of a slight rebound following record lows hit in the

last couple of days. a quick look at bitcoin, it was hitting all-time highs a week ago, but a sharp pullback since then. 764. gold prices remain just above $1,200. there we go. let's get back to politics. the reaction to trump's first news conference as president-elect yesterday. we've been talking about the market impact. now as for the political impact, john harwood joins us from washington with more. he's had time to digest what was an interesting and unusual news conference. >> very interesting, sara. you guys were talking about the market wanting to hear things about infrastructure or tax cuts, it was always going to be hard for that material to break through given the message he wanted to clever about his

business, which he is turning over to his kids, not divesting or getting rid of the business, but he also wanted to respond on russia to the allegations about hacking. also to the news that broke the previous day about the potential for russians to have information about him that gives them leverage. now, he denounced that information as fake news. he 5:nacknowledged that russia hacked the dnc and john podesta, qualifying that later saying maybe others did, too. he wasn't eager to criticize russia. he said a good relationship with vladimir putin was an asset not a liability and his sharpest words were left for the u.s. intelligence community which he accused of leaking information against him. >> i think it was disgraceful that the intelligence agencies allowed any information to be so false and fake out. i think it's a disgrace.

i say that -- and i say that. that's something that nazi germany would have done and did do. >> you had a fascinating subsequent series of events. donald trump last night tweeted out that i had a great news conference, a couple of fake news organizations were there. that is a reference to cnn and buzzfeed. buzzfeed published the entire contents of that dossier that had been presented in briefing papers. then you had james clapper, the head of the department of national intelligence put out a statement last night saying he talked to donald trump and assured him that the intelligence community was not the source of that dossier, but he confirmed what cnn reported, which was that he had felt it was important to let the president and the president-elect know this information. that's why it was included in the briefing papers. this will keep playing out, especially as congress decides whether or not and what kind of

investigation they want to mount into this effort. we'll learn more in coming days about whether or not there are results from any internal government investigation like from the fbi and others of these allegation allegations. >> what are you hearing about the testimony of rex tillerson which was also heavily focused on russia. he had some clear, i would say, opinions. he warned of the dangers of russia. he wouldn't call them a war criminal as senator rubio was pushing to do. overall, what are the reviews for him? >> i think they were mixed. that was a long and difficult day, especially when fellow republicans like marco rubio, who has always identified himself with a hawkish approach to foreign policy and a tough stance towards russia, challenged him directly. there was a striking moment when rex tillerson said he had not talked about russia with

president-elect trump. we do not have indication of crumbling republican support of the kind that would endanger his nomination. marco rubio did not commit either way. he said i'm prepared to do the right thing. i think if i were laying down odds, i would say rex tillerson was likely to be confirmed. we'll have to let this play out more and see if that's verified and that no moderate republican senators, the susan collins, the lisa murkowskis defect and drag him down. >> john harwood for us live in washington. let's get back to the markets. financials coming into focus, as they have been for the last couple of months, particularly this week as they start reporting earnings for the fourth quarter tomorrow. joining us is steven chubak from nomura. great to have you with us. >> "worldwide exchange" debut. welcome. >> yeah. had to get up at the wee early

hours. >> that's when people watch around the world. >> fair enough. >> steven, to what the headline is to expect for earnings coming into the fourth quarter. the big difference from prior quarters over the course of 2016 is expectations and share prices have run up a long way. >> that's right. it's consistent with what you said earlier in the show, which is that we do expect fourth quarter numbers to be quite good for investment banks, particularly on the trading side. fixed income trading will be robust, up north 25% year on year. trading overall should be up 20. the reality is given the significant run we've seen in the stocks so far, it's going to be focused more on the outlook. what benefit will we see for 2017 in terms of higher rates, because the bar has been raised in terms of performance, we need to focus on what's driving estimates higher. thinking about individual stock games that we like the set up into earnings, morgan stanley is one that stands out for us. >> why?

>> they will highlight the strategic review. consensus estimates are right now around 323, 325. and they're going to reaffirm their roe targets. that's our expectation. we expect them to rise in terms of cost savings, even without the benefit of trump tailwinds should be able to hit those targets. that's certainly a name that stands out. >> also because they're sending out forecasts, it means james gorman is on the earnings call, which people focus on more than just the cfo. in terms of investment banks more broadly, there's consensus that the investment banks have run up more because they rely on policy of donald trump than the yield curve. what is your take on that? >> what a lot of investors are trying to do now given the

significant run is see which policy tailwinds are priced into the stocks today. one name we're constructive on is bank of america. where what's being priced in in terms of rates is currently reflected in the stock, but other tailwinds like tax reform, deregulation, more robust loan growth, that's not reflected in the share growth. you have other names like goldman sachs, you can look at individual levers, it feels like more is being priced in, beyond higher rates, you're pricing in tax reform and other levers such as a more robust trading environment. it's about identifying where the best risk/reward is. >> pending this commentary that we'll start to get out of the banks, broadly speaking is the bank rally just getting going or is it topping out? >> i think we need to be more selective here. there are certain names like b of a. i don't cover wells fargo, but that's one investors have highlighted as having better

prospects, given that it is more heavily geared to rates and is discounted versus history. but there are other names, like the capital markets names, you have to see more robust activity. >> goldman sachs has been a stand out. >> just quickly, what's the key risk what will investors be watching for that could, if it materialized in fourth quarter earnings, could derail the multiple expansion over the last couple of months? >> at this juncture it's about trying to give sufficient guidance or outlook commentary that can drive estimates higher given the move we've seen. anything more measured in terms of commentary regarding seeing declining backlogs in investment banks, that should drive some pause and maybe a correction in the stocks. >> of the big five, morgan stanley is your top pick? >> yes. >> steven chubak, thank you for joining us. >> goldman sachs up 56% in six

months. >> extraordinary. >> that's a dow mover. >> similar moves to british bank -- >> barclays. >> yes. >> time for our top trending stories. apple is reportedly planning to build a new business, an original television show and movies. programming will be available to subscribers of the streaming music service. apple has been in talks about buying rights to scripted television programs with the goal of offering content by the end of the year. alec baldwin may be taking his donald trump show on the road. the actor says he will continue to play trump on "saturday night live," but the impersonation may not be limited to the occasional appearance on "snl" as there is discussion of other venues. clearly this is something that's in demand for the next four years. >> big time. the other thing i didn't realize

he did, he is a game show host. >> alec baldwin? >> yeah. >> what game show? >> i forgot the name. i always assumed he's an actor. "match game." that's what we're told. >> oh. >> so he does multiple things. next trending story, miriam webster seeing a spike in searches for the world emolument after donald trump's press conference yesterday. the word used frequently by trump's lawyers means a payment or perk from one's office. it also got look-ups in november when trump's conflict of interests took center stage. >> they say the payments to trump's hotels do not qualify as emoluments, but nonetheless he will donate the proceeds. when we come back, today's must-read stories. first a look at european stocks at this hour.

the dax is down off the lows here. decent data out of german gdp and eurozone industrial production. stay tuned, you're watching "worldwide exchange" on cnbc. e l tued diag.. hoon esvarun

welcome back to "worldwide exchange." our must-read stories catching our attention, my pick is in the "wall street journal." sara tried to steal it as well. >> i didn't realize you picked it. >> tillerson for state.

mr. tillerson showed he's nobody's fool, that he has a good sense of challenges america faces and that the u.s. has paid a price for the obama administration's retreat to leadership, and that there should have been a show of force when the russians invaded crimea, and that the u.s. ought to give the ukraines the arms they need to defend themselves against russia. so giving mr. tillerson their endorsement, and in contrast to the other 24-hour show in terms of trump/russia relations, saying the quicker he is confirmed and is able to give advice to mr. trump, the better. >> they did pick, as you mentioned, a number of the quotes in the comments where untilerson made it clear that he had prepared and had some well-formed thoughts about russia. >> and wasn't going to be soft on russia as his friend. >> because he made big deals

there. >> john harwood saying there were mixed reviews. the "wall street journal" one of the positive ones. >> we're approaching the top of the hour. the team is getting ready for "squawk box." special guest today. becky quick is back. >> welcome back. >> she's back exclusively on "worldwide exchange." first on. >> this is a first time i've been on in three months, i can join you guys. thrilled to be here. great to see you guys. i did miss anything? >> nope. been really slow news cycle. not much going on. >> that's what i figured. walked right back in. >> just your average -- >> we managed to change everything, including the studios since i left. >> glad you found it. >> they did give me the address. somebody tweeted asking if joe gave me the address. he did. a lot of things coming up. a great morning. we're watching, as we still wait to see if we head towards 20,000 for the dow. dennis gartman will be here to talk all things markets. for the next two hours, 7:00 to 9:00 a.m., we'll be joined by

jim bullard, st. louis fed president. a lot of things happening in washington. change there. bullard will talk to us about what to expect from the fed, what we can see in the economy. so a lot to talk about. a lot of ground to cover with him. we'll be focusing on all things washington. you know about the hearings taking place there. we'll be joined by senator jerry moran from kansas, he'll talk to us about those issues. and covering the corporate front. the ceo of delta air lines, ed bastion will be here as well. it's great to be here. >> will you have baby pictures? >> i do. do you have a close-up? i have a picture here. i can't help myself but show this off all the time. if you can come in look at this one. can you see it? >> hopefully zooming in now. >> this is kaley. >> baby kaley, three months old. >> so cute. >> in winterwear. >> i feel like i need a hat like

that for davos next week. does it come in my size? >> i'll check it out. >> cute baby hat. >> if i find it, you have to wear it. >> deal. i shouldn't have agreed to that. >> i have my mission. >> "squawk box" coming in ten minutes time. still to come, busy day ahead as investors digest president-elect trump's comments and a look ahead to earnings season. we'll talk to michael farr. stay tuned, more "worldwide exchange" on cnbc.

welcome back. futures pointing to a lower open. dow futures down 43 following trump's news conference yesterday. his meant comments having far rg market implications. the trump rally reversing a bit here. let's discuss it with michael farr, a cnbc cribber. good morning. always nice to see you.

>> nice to be with you. >> you've been warning there's a lot of hope and optimism baked in to the trump rally. you've been skeptical of it. so, are you surprised to see a pullback here? how much do you think we have to go? >> you know, a lot of what the president-elect has proposed could be and may be and should be hugely stimulative for the economy if they all happen. but we're starting to get -- what i said was, you know, i think the stock market has moved up in anticipation of these things actually happening, but in washington things happen in messy ways, if and when they happen at all. i think we're seeing the beginning of the messy part of it. we're seeing overnight in the u.s. there was a vote around 1:30 in the morning about obamacare or the affordable care act. they're repealing it through a tax proposal but they don't have anything to put in place of it. speaker paul ryan says when they

actually do the repeal they will have something in place, they hope to have that in a certain number of days. yesterday at president-elect trump's press conference he suggested that pharmaceutical companies were getting away with murder. >> yes. >> we saw the reaction there. >> so all those stocks dropped. this process of making laws, getting to those goals he suggested is messy. and i think you'll see markets react and perhaps where we've seen too much enthusiasm we'll see prices go lower. >> michael, you have some interesting compare and contrast with market performance as we entered the ronald reagan administration. can you outline that for us? >> certainly. yeah. you know, when ronald reagan was elected, there was a great deal of optimism, particularly by markets, republicans will figure they were getting their day and that their laws would get passed. markets went up about 8%, between the day of the election and then the inauguration. about six months later we were

going into recession. that was 1981. by 1982, we begun one of the largest bull markets we had started. it doesn't mean we'll be awful. it means sometimes enthusiasm can outpace the facts that will support stock prices. so the earnings have not developed. earnings starting this week. tomorrow we're getting bank earnings in the u.s. we have to watch the numbers. >> the tremendous bull run in the '80s, that surely has something to do with the fact that the fed was lowering interest rates, volcker was fighting inflation, different back drop from what we're seeing now, which raises the question about what the fed will do this year and whether it does raise rates a few times and growth improves if it gets in the way of the rally. >> i talked to a fed president this week who tells me he predicts two fed rate hikes this year. he wishes that there would be more. he's a hawkish member of the fed. he thinks we can get a half

point higher. you know, i think it will be really fascinating to watch what happens between the trump administration and the federal reserve. donald trump has been critical of the federal reserve and their lack of transparency and perhaps their independence. but what happens when these stimulative projects like the tax cuts, like a repatriation of funds from overseas, et cetera, start to show a stimulative effect? the fed gets worried about inflation, starts raising rates, then president feels himself at odds with the federal reserve and starts to fight back. what will that do to the independence of the fed? all of these things and the sausage making of politics has my full attention. >> michael, great stuff. >> thanks, guys. >> about 20 seconds left. i'm watching the dollar. big moves today. moving south. but it hasn't so far derailed equities. >> i'm watching the nasdaq.

they've been up seven days in a row. five record closes in a row. >> that's it for "worldwide exchange." "squawk box" with becky quick up next.

good morning. breaking overnight, the u.s. senate taking the first step to repe repeal obamacare. the president-elect speaks and stocks respond. highlights from his news conference and the reaction on wall street. and the "squawk box" team is back together again. becky quick is back. it's thursday, january 12, 2017. families are growing around leer. "squawk box" begins right now. ♪ >> live from new york where

business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box," i'm andrew ross sorkin along with joe kernen, the music is playing because becky quick is here. welcome back. >> thank you. great to see you guys. >> welcome. >> i missed you guys. >> not really. >> i missed leaving the kids this morning. >> bring the baby over. bring the baby over. >> which baby? >> kaley's not here? >> no. >> you left her? >> i left her at home. i'm a terrible mother. >> i know you're thinking that. so cute. >> i am. it's terrible. you end up crying the whole way. >> you didn't cry this morning, did you? you're going to cry right now. you're makeup -- when other people cry, andrew cries. >> that is true. >> it is great to be back. i have missed you guys. i have. >> it's been a long