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 time. >> i know.

>> three months. >> nothing has happened. >> good people have filled in. >> quiet in the news cycle. >> new studio. >> i noticed. >> new president. >> yeah. >> new vice president. >> what else is new? >> you have a baby. >> i have a baby. that's new. this week. >> let's get you caught up on the markets. we've been watching this march towards 20,000 for the dow. this morning you can see the futures under pressure. dow futures down by 41 points. s&p futures down by six. nasdaq down by 13. let's look at what's happening in europe in the early trading there. or we'll start with asia. the nikkei down by 1%. shanghai was down by a half percent. as was the hang seng. if you check out things in europe, early trading there. look and you'll see -- never mind, we'll skip to energy.

never mind, we'll go to europe. the dax, down by a half percent. modest declines with most of the other markets. the spain ibex is up slightly. if you check out the oil market, this was interesting. wti rallying despite the idea that some supplies came in bigger than expected. there was news out that saudi arabia was going to be cutting back on some of its supply that it sends over to china. wti this morning up 39 cents to 52.64. brent crude up 55 cents with 55.65. >> look at you with your wti news. >> there's two phones back here. is one a direct line to the baby? >> no, no. >> what do you have two? >>business and personal. >> one is an iphone, one is a blackberry. >> still holding on to the blackberry. >> some people have just one phone for convenience. >> no. >> we can't relate gate that.

>> no. with your own private server. >> that's old news. >> see, nothing ever changes. >> that's right. >> let's get you through some of the big stories. overnight, the senate has passed a budget mechanism that will be allowing congressional republicans to repeal obamacare with a simple majority. it was a vote of 51-48, winning the support of every senate republican except rand paul. it's a first step towards the repeal of obamacare. it now goes to the house of the representatives. separately president-elect trump said he is preparing to offer a detailed replacement plan as soon as the senate confirms his pick. and kb home sales climbed, beating forecasts. kb home's backlog a gauge of housing starts rose 1 1%. on today's agenda expecting

results from delta air lines around 7:00 a.m. eastern time. ed bastian will join us after that to talk about it and weekly jobless claims for december, import prices at 8:30 a.m. eastern time followed by the monthly budget statement at 2:00 p.m. >> we talked about how quickly people are to embrace the notion that the rally is fading. the rally is fading. the fade continues. fade continues. so, yesterday -- i will tell you where we closed on the dow. 19,954. >> less than 50 points away. >> 45 points away. on january 6th we almost hit 20,000. we were at -- here are the headlines today. market watch, beware of the trump dump in stocks. >> >> the trump dump? >> easy. >> i know. >> rhymes. >> this stuff is everywhere.

european stocks slump, the trump press conference blunts the global rally. yesterday the narrative when he started speaking about pharmaceutical stocks, the market was up 100, went negative. that's where people would have liked it to have closed for the narrative, but it didn't. it ended up 100 points. >> i saw one story that drug stocks lo stoc stocks lost $25 trillion. >> dollar tumbles, bond wins as trump trade fizzles. those are just the top five news stories. >> you have to make things sound exciting. >> this is all bullish. this is all bullish. >> as soon as everybody is on board, it won't happen. >> exactly. >> apple is reportedly planning to build a new business in original television shows and businesses, this could help the

company offset slowing sales of phones and ipads, unless they produce a bunch of bombs. when general electric got into the business of making movies, they were like -- it's guaranteed you make money on this stuff, right? if you put in 100 million, you get back 150 million, right? someone said some of these movies bomb, and they were like, what? refrigerator sales go up 10% every year. light bulbs, we know -- you think -- you are confident that they can have a "breaking bad" or -- >> the creative process is difficult to manage. >> but i think they pick up people like you who bought into apple music. >> they don't create the content of apple music. will they start hiring bands, too? >> but they'll be like a netflix. that's what they'll end up

doing. creating a subscription service. they need a couple of hicks to make it work. >> netflix i discovered on maternity leave. amazing. >> welcome to the modern era. >> i never had time to watch tv before. >> i started about ten shows and stopped. >> "blood line" i love. >> got to watch that. >> finished the first season, not the second. >> let me finish this. programming would be available to subscribers of apple's $10 a month streaming music service. apple executives have reportedly told people in hollywood to offer scripteded content this year. i shouldn't complain. any additional content, because i'm having trouble. i've tried some of the stuff you suggested, it's not working. goliath i tried. did you like it? >> yeah. it was okay. >> i couldn't get through super bad or stranger things.

>> i was not in to stranger things. could to the get there. you have to be a goonies guy to get that. >> i need something i can watch quick limit. >> i need where something happens, there's a cliffhanger. >> walt myer is awesome. like the guy. lou diamond. >> but we digress. another goldman sachs executive will join the trump administration. dina powell will leave for her new role as adviser to trump. they served in the state department and was a white house aid during the bush administration. and her husband is a big politico type. mccormack. >> dave mccormack. >> could end up working there, too. >> he was on the list to be the deputy defense secretary. >> exactly. >> there was a moment he was up

for the treasury job. >> when you looked at me blankly, it was because you weren't listening to anything i was saying, not because you didn't know dina powell was married to dave mccormack. >> >> andrew has a new baby in the house. >> that's his excuse for everything. >> this week he gets to use that excuse. >> that's it, though. that's it. >> next week it's -- >> next week back to the tease. >> no excuses. >> yes. >> go for it. tell us about rex tillerson. >> why don't i? rex tillerson faced the senate yesterday in the congress -- confirmation hearings. he acts like a ceo. they give straightforward answers. if you don't like it, tough toenails. he did address foreign policy

between u.s. and china and rush cha. >> ultimately it will require a new approach for china in order for china to understand our expectations of them, going beyond what they have done in the past, which has fallen short. >> our nato allies are right to be alarmed by russia. we backtracked on commitments we gave to allies, we sent mixed signals with red lines that turned into red lights. j when asked if president vladimir putin is a war criminal, he said he wouldn't use that term. did you see rubio? >> yes. >> i saw the snippets of this. >> little marco. you got a guy who is being -- sort of grilled on whether he will be our top diplomat. >> yes.

>> do you expect him in congressional testimony that he will say that vladimir putin is a war criminal on his first day of testifying to be our top tip mat? is it possibility he might be diplomatic? rubio was on a soapbox like i have never -- then he gave this speech at the end about, you know, this is my passion, i look at what goes on around the -- every human rights violation occurring in the world right now is now on tillerson's shoulders. he better -- he wanted him to say something -- if we -- there's a lot of cross currents and enemies of our enemy -- >> this has been what establishment types have been saying, you have to be careful what you say. >> but these hearings are theater in one way and history in another way. rubio is just trying to put down his own marker for whatever goes

on in the future. >> and then they said will you not vote for tillerson? he said i'll do the right thing. that's not answering anything. if the right thing is voting for him, vote for him. if it's not voting for him, it's not voting for him. he was annoying yesterday. for someone that was -- he's -- i think there's 11 republicans on this committee and ten democrats. if you get ten democrats with a know, you throw him in there, he could derail it. >> andrew makes a good point, this is for stating positions down the road. i think it's setting the table stakes for if something good or bad happens down the road and his own political future. >> if he's setting his own political future through this, that's what's wrong with politics. >> let's get over to john harwood.

trump making plenty of headlines in his first news conference as president-elect. john has some of the highlights from yesterday. >> the news conference underscored some of the reports that was suggested on the report that you did by rex tillerson. donald trump made it clear that he intends to take a more confrontational approach with china than he does with russia. he responded to the question of russian hacking, said for the first time ever publicly that he thought russia was responsible for the hack of the democratic national committee and john podesta, but he said others may have been hacking those entities, but he was not eager to criticize vladimir putin. he said vladimir putin was doing what leaders of all countries do. and here's how he responded when the question was are you going to get tough with russia? watch this. >> we have a horrible

relationship with russia. russia can help us fight isis, which is number one tricky. if you look, this administration created isis by leaving at the wrong time. the void was created, isis was formed. if putin likes donald trump, guess what, folks, that's called an asset, not a liability. >> he also tried, the president-elect did, to get back to what he considers his core assets on the economy. he talked about getting tough on pharma and requiring negotiation, using the power of the government to lower prices. talked about going after companies that would take their jobs and move them to other countries. said all across the board this is going to be a different approach for middle class americans. take a listen. we'll create jobs. i said that i'll be the greatest jobs producer that god ever created.

>> biggest one that god ever created. that's a high bar. we will see how that goes, guys. >> all right. john harwood -- >> are we going to talk at all got other thing that happened? >> is this your -- you were tweeting -- >> i was tweeting about it. >> you were tweet flag when he decided how to handle his conflicts he didn't do what you told him do in your column and you were upset. >> no, i said he sort of did what i was suggesting. >> i would hope so. >> he didn't go as far as i was hoping he would go. >> probably just an an oversight. >> which was he would give the business to the sons, which we knew would happen. i was advocating a corporate monitor in there to provide public reports. >> ken fineberg. >> the ken fineberg idea. >> so he's hiring an ethics adviser, which i like. he will take any foreign profits, give them to the

treasury. that was a unique idea. >> because they'll use it so well. >> but the ethics adviser will report to the sons, there is going to be no public reports of any sort that we know about, otherwise he would have told us, if there's no disclosure or tax reports, you know profits, very hard to figure out what a real profit is. >> a lot of expenses in that business. profits? we didn't have any profits. >> so i thought to myself, it sounded great. as he was saying it, i was thinking this is good. this is good. the more i thought about it, i don't know if this gets you war you wanted to go in terms of the conflict issue. that's the only thing -- >> what else could he have done? >> dennis gartman is here. >> get a stop-loss order and get rid of properties. he want do that. >> he won't forget that he owns trump tower. it's tough. we never had a guy -- did vote for him knew these things. >> i just think the disclosure

thing would solve everything. >> he didn't release his taxes? >> he didn't. >> i'm stunned. >> stunned. >> he did say when he was on the campaign trail that he would release -- >> when he's noted a dated. >> is john still with us? >> he's gone. >> i think you have to. i think a year or two in -- >> i don't know. >> i'll do a little -- >> digging around? >> yeah. >> all right. you'll let us know when you -- >> i'll let you know. >> okay. >> the nasdaq coming off a new record high. with earnings season kicking off tomorrow, our market guest says that the cycle of quarterly results will help push the dow through the 20,000 level. joining us now is steve freedman from ubs wealth management resource. our guest host this hour, dennis gartman, founder and editor of

the gartman letter. what's got us up this far? it hasn't been earnings, it's been the prospect for better earnings. you think the news is not already in the market? good earnings will take us further? >> i think ultimately it comes down to earnings. the rally so far has been more on policy expectations. hard to deliver more in a short period of time. the earning s cycle is positive. q3 was a positive quarter. we expect that for q4. i think we should see a positive for the market. >> he's not president yet, so none of the policies have been put in place. however there's a lot of these measures and metrics, like consumer confidence, nfib, hiring what they plan to do with capital investment, so people keep talking about the animal spirits. will there be any evidence of

these animal spirits in the current quarter? is it too early or do we already see this better sentiment playing out in either consumer spending or some type of confidence measure somewhere? >> i would say the confidence numbers, consumer, small businesses, that's good for earnings for the year as a whole. i don't think you'll see a big impact of that right away. >> so it just moves the market? it is not manifest in the underlying economy? >> it's forward looking. this is telling you about the behavior a few quarters out. what's driving earnings now is pretty basic. you have the headwinds from the energy sector going away. this is the first quarter where energy is not a drag on the markets in terms of earnings dynamics. you'll have financials with some support from higher interest rates, and the other sectors doing well. >> you saw that nfib thing. that was off the charts. >> of all the data points the

last several weeks, that number was the most interesting. the animal spirits are, in fact, growing out there in the flyover land. >> isn't it self-fulfilling? >> it may be. that's not such a bad thing. >> i want it to happen. is it already happening? >> it is. >> will we see it in any of these reports this quarter? >> you go to virginia, ohio, indiana, drive through illinois, you see help wanted signs in the windows. >> it's a matter of the business confidence translating into hiring. >> it is. it is. small business predominantly. that's not a bad thing. >> quick point of clarification, presidents do not have to did -- >> i told you that. >> nixon started doing it. ever since nixon they did. all the presidents have done it. >> he was not a criminal. >> every president's tax returns typically audited. so the -- to the extent that that excuse is out there, it will continue. >> you need an excuse when

you're running. you don't need an excuse when you already won. >> you're saying he should disclose it then? >> no, i'm saying he can do whatever he wants now. wrap it up i've been told. okay. thank you. >> thank you. >> did you hear that? >> i heard it. >> wrap it up. >> you'll be here? >> amazing, you guys are allowing me to be on set for another 45 minutes or so. ratings will suffer. >> that's wild, isn't it? >> it's matching. >> you didn't buy them at the same -- >> my lovely bride found this in california and said you have to have it. >> they come together. there's a little yellow down there and there. >> oh, yeah. yeah. >> i made a mistake here. coffee. >> muss startard. >> it looks like it works. >> it does. when we come back, smartphone wars. we'll tell you who is gaining

ground on the battle of apple versus android. "squawk box" will be right back. l e? l

welcome back. welcome to chairs. we have some stories we've been paying attention to today. facebook is working on a way to read brainwaves that could let you send your thoughts to people. this is stuff i thought would never happen. they're investing money on it. it's a public company investing money on this type of research. >> i read it. i didn't read the details, because i know that -- it seems like a blunt instrument, what we know about thoughts, we can see little things on a scan. >> how do you translate that -- >> when we're all on a chip in the loud, they can read all of our minds and talk to each other. i don't know. >> i was watching something last night about alexa. >> yeah. >> and how dangerous it really is. >> why? >> because it is being -- it is getting subpoenaed for things. the guy was saying -- >> does it record everything you

say? >> unclear. >> a gentleman who was retired, he said for me, not a big deal. he pointed to somebody else, saying someone like you, in the game still, with all these potential conflicts, for you to have alexa, you have to be out of your mind. i want you to turn off your alexa. >> i mute it at home. there's a mute button. >> so they say. >> we're not hearing anything. no. no. not hearing anything. >> did you get all those e-mails yesterday how we were controlling peoples alexas at home? by saying alexa? alexa, slap your owner. alexa search -- >> alexa, turn on the music. >> it will do that. >> alexa, turn on the lights. >> how are you? >> billionaire, trump backer, peter teel who met up with maureen dowd. >> yeah. >> style section article. >> yeah. >> says silicon valley is too

politically correct when it comes to sex, of all places. in an interview with the "new york times," he said one of my friends has a theory that the rest of the country tolerates silicon valley because people there just don't have much sex. they're nerdy -- he didn't say this. i'm putting that in. >> he did say this. >> they're not having that much fun. not having that much fun. do you watch "silicon valley" the hbo show? >> no. >> have you ever seen the scene -- you would know the scene. >> why? >> there's an animal involved in it. the two horses? no? >> i didn't confirm this, but the first record proven between two widely different species having sex, a macau monkey and a deer. that was -- google it. >> how did they -- >> i don't know who was doing

what or how it worked. apparently they were getting along pretty well. it's not unusual for similar species that are -- at least in the same ballpark. that happens all the time. >> monkeys don't surprise me. >> yeah, monkeys. anything with a pulse. >> can i have that beer? looks good to me. yeah. hey -- except the deer said, you see these horns, those are -- no. >> andrew, what did you see that caught your attention? get us out of here. >> you didn't see this? >> no. >> that happened in russia? where did that take place? it was a joke. >> i see -- i know. >> iphone is gaining ground on android. at least in the u.s. new data from canter world panel saying that sales for the last three months ending november 30th favored apple this time around. the iphone 7, 7 plus and 6s accounted for most of the

smartphone kasales during that point. the market share for android phones dropped from 60% to 55% in the last year. a lot of this could be the samsung 7 barbecue story. >> i've been in apple stores twice in the last month. it's insane. great news for wall street they're selling this stuff, as a customer, oh, pay attention over here. >> you need to call to set up an appointment and go in and ask a question. >> you don't call them. >> they have great people working there. >> you go on the app. >> genius bar. >> i called. >> you called. >> i called. >> old school. coming up, tomorrow is the official kickoff to earnings season with reports from bank of america, jpmorgan and wells fargo. wilfred frost will tell us what to expect. and improving financial literalcy. john hope bryant will be here. as we head to a break, a look at

yesterday's s&p 500 winners and losers. w 5 m

welcome back. you're watching "squawk box," live from the nasdaq market site in times square. good morning. welcome to "squawk box." a look at u.s. equity futures at

this hour as we inch closer to 20,000. dow will open down today, about 34 points. nasdaq off by 10 points. steve mnuchin will step down from 42 different positions he holds in various trusts and other endi ientities. mnuchin is a former partner at goldman sachs. but hasn't been a partner for about ten years. maybe more than that. >> earnings season is upon us. you know this. the first of the big banks are reporting tomorrow. bank of america, jpmorgan chase and wells fargo. wilfred frost joins us now with more on what to expect from the earnings. good morning again. >> good morning again. here are the three key things to watch. first, trading revenues. indication is that this has continued well in q4 as it did

in k 3. again, with fixed income leading the charge, albeit stronger markets following the election should help equities. second is rates. here we expect net interest margins to be up. the question is how much. and jamie dimon said sensitivity to rates could be higher than expected. third thing to watch, credit. we're in a far better position than this time last year. it's a potential wild car to keep an eye on that could derail the current positive sentiment towards the sector. given that shares have run up so much, there's caution, too. here is steven chubak on "worldwide exchange" earlier. >> 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. so anything that's more measured in terms of the nii outlook, commentary suggesting declining

backlogs in investment banking, given trump uncertainty that should drive some pause. >> bank of america will get the ball rolling tomorrow morning at 6:45 a.m., live on "squawk box." >> one thing we've been talking about is looking at earnings season, trying to figure out what we'll get from the guidance. a lot of moving parts in washington, that makes things complicat complica complicat complicated. what do you think we'll hear from the banks? >> there's a disproportionate focus this quarter on forward looking commentary than the quarter's earnings. the forward looking commentary from the goldman sachs conference was positive. if that continues, given the pause in share prices over the last several weeks, we could see share prices pick up again. jamie dimon was positive on the

outlook on what the growth means for trump and inflation. clearly share prices have run up in advance of that. >> nobody probably knows that. now that you said it that may affect things, wilf. i don't know if anyone saw that. >> well, i listen and watch all commentary coming out, joseph. >> all right. >> there you go. >> don't discriminate. >> talking about a competitor. >> i can deliver the information. >> you can say you just heard that. watch the way the "new york post" reports anything. >> but joseph, the reason -- >> never put the word cnbc in a sense. >> the reason i'm happy to say it, that interview was pre-earning, so he couldn't say that much. the bigger interview is with you guys and jamie dimon next week at davos. all five of the big ceos. >> as it should be. >> all of those interviews will be post-earnings. >> very good, wilf. >> very first in davos. >> it ends well.

wilf, rates are supposed to be higher, yield curve steeper. i think some of the moves in all of these, we're assuming we're off to the races. now, i don't know. >> that's the important thing to note, joe. we've seen this week a little bit more caution from analysts on some investment banks, citi downgraded, goldman sachs, because the things that benefit them, deregulation and tax changes, we have not seen yet so there's political risk as to whether that gets delivered. the interest rate move, the steepening of the yield curve, we have seen. so people quite comfortable on the wells fargos and bank of americas of this world that benefit from that part of the post-trump move. >> you want to weigh in on that? >> you have not seen a steepening of the yield curve. the yield curve never steepens as the rates go higher -- >> that's what's happening in the last two weeks. >> dennis, that's what's happened in the last couple of

weeks. it ceased to move, but before the trump election -- >> nothing does banks better than having a positive slope to the curve. it turns banking idiots into geniuses over a long period of time. >> but the initial move was rates going up and steeper after the election. the last two, three weeks that ceased to be the case. >> wilf, i've been telling everybody to get this new chase sapphire card, which jamie dimon says he will lose a fortune on. how much money will they lose on that? is this a win or a loss? >> i said credit is something to watch. the numbers on the chase sapphire card have been extraordinary. they offered up huge incentives to sign somebody up. bank of america doesn't have the same impressive consumer credit card loan growth numbers, the fear is that they give incentives, do they get the right number of spending, and down the line do they have credit risks. their numbers in consumer loan growth have been strong.

they say they're taking the right among of risks, but bank of america -- >> it's not the credit risk, it's the giveaways. if you wanted to get the sapphire card -- >> i can't get it. i can't get it because my credit e. da rating in the u.s. is still not good enough. >> you're kidding. >> i only have a year's worth of history. the one year is good. they like a deeper profile. even if you interviewed the ceo, you can't get one. >> no special favors. >> you know how long those bills that you don't pay, you know how long those stay on your credit app? those are never coming off. >> i always paid them. >> i love this music. i've been listening to all country. coming up, a cnbc exclusive. st. louis fed president jim bullard will be our guest host at 7:00 a.m. and delta air lines set to

report. ed bastian will join us on a first on cnbc interview. later, the trump transition. senator jerry moran will be on. stay tuned, you're watching cnbc. g peurur s. g peurur s.

welcome back to "squawk box" here in times square. operation hope is merging main street and wall street with the goal of improving financial literacy. the non-profit is partnering with major banks and bringing financial counselors inside branchs to give advice on how to start credit, get a home. john bryant joins us now, founder of operation home.

and rob jordan is here, partnering with john. how did this come about? and i missed you on that end. >> we didn't introduce brad. >> i'm sorry, all caucasians look alike. brad is here, head of consumer banking at sun trust. >> they do look alike. >> i know you're kidding -- >> john, let's start with you. how did this happen. >> we're finishing with where abraham lincoln started. he thought the most important thing he could do after the civil war was to bring blacks into the free enterprise system. he and a black man named farley douglas worked together to start this bank. we want to keep this going, moving credit scores 124 points in 20 months. we think nothing more changes

your life than god, love and moving your credit score. that gets the banks out of the no business into the yes businesshabilitating 100 million americans. >> how does this work in practice? you have people inside your branches working with people and talking to them about how to improve their credit score? >> i met john, 2 1/2, 3 years ago. as we came out of the financial crisis, we were looking for a way to strengthen the economic fabric. this was a partnership that allowed us to expand across our franchise, and to do it in a repeatable and cost effective fashion. and it works. so we basically offer the funding for the person in the branches, we provide the space and we provide marketing and support, then we work in partnership to help folks who have been hurt in the final crisis, and repair credit scores, provide counseling, and trying to expand the base of

bankable customers in the marketplace. we view the nature of our work, the strength of the entire economic fabric. we don't do well if communities don't do well. >> brad, what's different about this, these counselors can offer different advice than bankers can. >> that's right. because people face different s. the important part of expansion is bringing together people with financial confidence, and that only happens when people get the information that's important to them. >> what are you allowed to do that a banker couldn't do? >> it's about expanding what banks can do about recognizing that people are going through this stress, counselors can help them improve their credit score. stress comes in different shapes, financial credit counseling is one way to get credit scores up. helping people start savings fund for emergencies is another way to get that done. >> banks are not allowed to do that on their own? >> we can't go through and go

line item through line item through somebody's score and say how do you repair this and deal with that? what john and his counselors do, they go line item by line item, investigate individual items and work with creditors and credit bureaus to remove those items, take credit scores and step them up. >> how does it work? someone comes in -- does it usually happen that someone comes into the bank, tries to get a loan, can't, and then you move them to somebody -- an operation to talk to them about this? or do they come in on moment one saying i know my credit score is not as hot as i want it to be. how do we fix it? >> the answer is yes to both of those. since i first announced this with you guys, 1,000 locations, people laughed at it. this is not charity, this is not a land-out program. we have 15 branches with them. as soon as i came in, we have had a flnumber of examples.

a leade edwalks into a sun trus branch for a mortgage, she gets turned out. he can't say why she's turned down. she walks over to our desk, we go through her credit report. is this yours? no, that's not mine. it's an error. we get that taken off, it's a 40 point pop. she walks in at 580, and it goes up to 620. that's a credit pop. is this yours? yeah, that's a divorce. the debt don't exist anymore. we call joe's finance company what do you want? 100 bucks. i'll give you double. why did you pay me double? you give me your phone number, your e-mail address, you write a

letter to the credit companies, her number goes back up. she's in the game, 650. we work with her again, to 675, we walk her across the hall, she is not only now a back borrowers, she's a green before r borrower. what is the first thing you tell somebody that should change? >> your attitude. this seems like an amazing thing. have you gotten calls? you need to get a couple of massive banks to get involved in this. >> would be great to have massive banks? most of our orders come from super regional banks, which is fantastic. we're at 15% of his entire net

worth. this is the largest bank in tennessee, we have 15 branches with them. rural and urban. black, poverty and white povcy. i am getting order calls for people saying give me six at a time. american banker made us innovator of the year. that helped. >> this expansion will let us help up to 150,000 people. >> thank you. >> wilfred frost's phone number. >> thank you. >> business development. >> when we come back, more from our guest host, dennis gartman. g

welcome back, everybody. it's time for our parting shot from our guest host today, dennis gartman. dennis, you always talk to us about the markets you find most interesting, most concerning. right now you're really focusing on the foreign exchange market. >> yeah, there's a lot going on. just overnight, for example, you've had the dollar-yen move

almost two big figures. you move dollar-yen from 116 -- actually, 2 1/2 big figures. you really shouldn't be moving the foreign exchange market 1% or 2% in the course of any one day, but you're doing that. bitcoin last week, for example, which i have no interest in bitcoin whatsoever other than the fact you moved it almost 12% in one day. something is going on out there that's atypical. the foreign exchange market is the biggest market in the world. nothing comes close to the amount of liquidity that exists there. what's happening? i'm concerned about the volatility that's suddenly been resurrected in the foreign exchange market. >> and as a result, you stay steer clear? >> i'm discomfited by the fact the foreign exchange market is doing what it's doing. overnight with the japanese yen getting that strong, the stock market got demonstrably weaker. very important to watch. nobody's paying much attention. >> dennis, it's been a pleasure. always great to see you. >> great to be here on your first day back. welcome back. >> thank you, dennis. when we return, our guest host for the next two hours is

st. louis fed president jim bullard. he's going to talk interest rates, jobs, and yes, the trump administration. 00ofg g g as p

trump-o-nomics 101. >> i said i will be the greatest jobs producer that god ever created, and i mean that. >> the president-elect speaking out about his plans for the economy, taxes, jobs, with just eight days to go until the inauguration. our special guest this hour, st. louis fed president james bullard. earnings alert, delta rolling out quarterly results. a cnbc exclusive interview with the ceo straight ahead. plus, getting down to business. president-elect trump distancing himself from his global empire >> i hope at the end of eight

years i'll come back and say, oh, you did a good job. otherwise, if they do a bad job, i'll say, you're fired. >> 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 and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin and becky quick. becky quick is back. >> welcome back. >> thank you, guys. >> he was out two days. you were out -- how long was that? >> yeah, i had a slightly different job in birthing a baby than he did. >> there are still differences, aren't there? >> yeah, there are. >> you couldn't wait to get the hell out of there.

>> this is not true. >> you were back in two days and you were calling the day after to see if you could come in. please. >> i wanted to make sure that you were not left by yourself. >> you missed me. anyway, it's a big day for us. and in my mind, the -- it would be appropriate if the dow hit 20,000 today. sort of a celebratory -- >> that would be nice. >> we all have delusions of grandeur. that would be the right response from the global marketplace. for you. >> my personality, right. >> i thought it was going to happen on my birthday, on january 6th. i thought, let's watch this. this will prof what i've been thinking all along. anyway, let's get a check on the markets. >> doesn't look likely today. >> it's early. things can change. we're only 45 points away. we need to get back that 39. then we'd need to have it go higher. when you move that, it turns

off. it makes it much harder. anyway, nasdaq is now down 14, s&p is down 5. the ten year has been moderating. if we only had a current fed head here to explain all of this. >> oh, wait. look off to the side. >> one from hopefully a state in the midwest where they're more down to earth and probably understand the middle america better than most. thank you for coming in. i can't wait to thave you here. >> jim bullard is here. >> fed president. take a look, a big day yesterday in crude. continuing today. up another 1%. 52.87. delta airlines was just out with earnings. reporting profit of 82 cents a share for the fourth quarter, matching estimates. revenue beat street forecasts. delta also says that profit margins should begin to expand in the second half of 2017 and that a two-year decline in revenue -- passenger revenue per available seat is likely to end

this quarter. chief executive officer ed bastian will join us with phil lebeau at the bottom of the hour. i don't think we've interviewed mr. bastian. >> this is our first time out. >> hopefully we'll have a good relationship with mr. bastian. or at least he'll be able to tell us exactly what's happening at delta. and you love airlines. >> i love airlines. i love the story. all right. let's tell you about some of today's other top stories. this morning we're getting a fresh read on the labor market with the labor department issues its weekly look at initial jobless claims. that happens at 8:30 a.m. eastern time. and economists are looking for 255,000 new claims for last week. that would be up 20,000 from the prior week. apple is planning a significant move into new television and movie content. that's according to dow jones. the content would be available

to apple music subscribers. apple executives are reportedly hoping to roll out the new offerings by the end of this year. also, home foreclosures were down 14% in 2016 from the prior year and down 70% from the depths of the housing crisis back in 2009. okay. now to politics. president-elect trump holding his first news conference since the election. his comments had some market-moving implications. john harwood joins us from washington this morning. >> morning, andrew. i want to clarify one thing you were talking about a minute ago. joe, are you saying that the quick rally is going to overcome the trump dump and get us to 20,000 today? >> yeah, yeah, we did say trump -- you heard my comments. it was up 100 points yesterday. that doesn't matter. don't -- you know, the guy that won it was going to write it. >> saving that one? >> trump dump, saving that one.

takes on a whole new meaning lately. >> anything that happens today is going to be ascribed to becky quick's return. becky, welcome back. glad you're back. >> thank you, john. great to be back. >> let's talk about this news conference yesterday. donald trump did talk about some core economic issues. he said, yes, i'm going to build the wall. he said, yes, i'm going to make pharmaceutical companies negotiate on prices. yes, i'm going to stop manufacturers from shifting jobs overseas. but the principle focus of this news conference was about russia and the controversy swirling around that. for the first time, donald trump seemed to accept the conclusion of intelligence agencies that russia was behind the hack of the democratic national committee and john podesta's e-mails, although he said others may have been responsible too. he was not eager to criticize putin. he said having a good relationship with him would be an asset, not a liability. and he had very harsh words for the intelligence community, which he accused of leaking unflattering information about him.

take a listen. >> i think it was disgraceful, disgraceful that the intelligence agencies allowed any information that turned out to be so false and fake out. i think it's a disgrace. and i say that. and that's something that nazi germany would have done and did do. >> now, interestingly, a few hours after the news conference, donald trump said he had a great news conference that had some fake news organizations there. he was referring to buzzfeed, which published the contents of the raw intelligence with the allegations against him, and cnn, which broke the news that he had received briefing material about those allegations. on the other hand, subsequently, james clapper, the head of the department of national intelligence, put out a statement at night saying he had talked to donald trump, that the intelligence community had not leaked that material, but he indicated that it was important for policymakers to have the information. that was a signal that he was

confirming what cnn reported, which was that material was given to both president obama and president-elect trump. question now is going to be, will there be anything come from investigations by the fbi, by other agencies of the united states government, and will congress establish a select committee to look into this? john mccain has asked for one, but it does not look at this point like that's going to happen, guys. and that would be, if it doesn't happen, that would be good news for trump and the republican agenda. a select committee would suck up a lot of political oxygen that otherwise would move the republican agenda forward. >> i thought nbc reported that trump didn't get it, it wasn't delivered to him. >> no, the nbc report was that they could not confirm that it was briefed or leaked to him. everyone agrees that the material, printed material was in the briefing that was given to him. >> i thought it was the opposite. i thought they had mentioned it

briefly orally but not -- >> no, no. what is unknown is whether this was discussed aloud at the briefing, both for president obama and president-elect trump, but it is clear that the information that was derived or a summary of what was derived from that dossier that buzzfeed published was given to president obama and to president-elect trump. >> okay. >> all right, john. thank you very much. again, john harwood. let's get to our special guest host this morning, jim bullard is the president of the federal reserve bank of st. louis and, of course, our very own steve liesman is here as well. jim, thank you for being with us today. >> great to be here. welcome back, becky. >> thank you very much. while we were just coming off talking about donald trump, it occurs to me that the world has changed a lot in the few months i haven't been here. the last three months, a very different place. a lot of different ways of looking at things. that has to extend to the fed as well. donald trump has a couple of people that he gets to put on to

the fed. there's been a lot of talk that he may very well change the makeup of the fed, maybe not as many academics, not as many economists. i just wonder how you all at the fed kind of look at that if you talk about it. is it something that's discussed or is it something that goes without saying? >> you know, i think it's great to have a mix of people involved in the fed. one thing about the open market committee is it's a big committee. full strength it would be 19 people. you don't want everyone to be a clone and have exactly the same background. you want a variety of backgrounds. i think we have that now. we could get more of that. i think that would be a strength for the organization. >> is it something that's discussed in the room, or is this something -- >> it's been a long-time issue in washington and often comes up when appointments need to be made. you know, how much of it do you want to do macroeconomists like me and how much do you want people with business experience and have met a payroll.

i actually have also met a payroll but in a different way, i guess. >> why don't we talk about what you see happening in the markets. we looked at the ten-year yield. again, that's another thing that's changed pretty drastically since the last time i was here. where do you think we're headed right now? what do you think of the ten-year sitting right now at 2.3%? >> it's come off a little bit in recent days, but yeah, there was a sharp increase after the election. i think there was a feeling that the growth prospects had increased and probably rates should go up in response to that. now i think things are probably settling down, and trump and the republicans will have to deliver on actually seeing faster growth. >> jim, i think it's great that you're hear when becky's back. joe, jim is the first ffosb. first fed friend of "squawk box," who's quicker than becky quick. we went to st. louis and set up

shop in there. >> seven years. >> seven years ago? >> no. >> maybe it was, i don't know. >> 2010. >> but i think it's worth pointing out what an odd bird jim bullard is. from an interest rate perspective. i want to put up a graphic that shows where the fed is and where jim bullard is in their forecast. what you see on this graphic is that the fed goes like this, and there's jim. we think it's jim. we're pretty sure it's jim. jim has owned up to being the orange line there. it's because jim has a very different way of looking at the world and what interest rates to do. i call it, jim, the ronco. set it and forget it. tell us why you think we should go to 90 basis points, or is it still 90 basis points, and stay there for a while? >> yeah, i think in a nutshell, we're in a low real rate environment. it's a global low real rate environment. it's been going on for eight years.

and we're also in a slow growth environment. it's been 2% growth or slightly over that over the last eight years. i don't think you're going to break out of that, but it's just snapping your fingers. i think you should take that as the baseline, that that's our basic situation, and we should expect that to continue. it's possible that some things will happen here that will help us break out, but you've got this global low-interest rate environment, and we're very close to target on inflation. we're very close to target on unemployment. there's really no reason to dramatically move rates at this point, unless something big happens. i realize the trump election -- and we can talk about that, but unless something big happens -- >> is something big going to happen that would knock your numbers up further? >> i think there's some upside risk to my numbers, to the extent you think inflation is all the sudden going to roar back or you think growth is going to pop up. but i would say this on the

trump agenda. i don't think you can do too much on economic growth in 2017. most of that is baked in the cake from past policies already. if you're going to see something, it's going to be 2018, 2019. for the purposes of the fed and the purposes of monetary policy, we should think in terms of, okay, we've got quite a long runway here, it's a low-rate environment, we'll project that we're going to stay there, and we'll keep an eye on things and see what happens. >> do you think the trump administration could do things to spike growth, it just won't happen right away? >> they have a deregulatory agenda. i've talked here and said that i thought that, you know, might have some impact on productivity. i think that the tax changes might spur investment, especially corporate taxes. we were talking about this before the show. lower corporate tax rate might spur investment in the u.s. that might increase productivity. and you've got this infrastructure thing. we'll see where that really goes. in principle, that could help. >> isn't the great irony of all

this is that trump talked a big game about janet yellen wanting to raise rate, wanting to get rid of her. ultimately to make all of this work, he's got to be much more dovish ultimately. isn't that how this is going to have to happen? >> if we raised rates because growth was higher or inflation was higher, in a way that would be very good news. we'd be raising rates because this was all working. i think they kind of work more in tandem. >> i think the animal spirits we're seeing right now will definitely be, you know, a factor in 2017. you look at the nfib, look at consumer confidence. you guys spent how long trying to conjure up animal spirits to increase asset values, thinking it would feed back to the jur d underlying economy by staying at zero. it's up 3,000 points since the election. this asset appreciation isn't going to help the underlying economy, but when you did it, it

did help the underlying economy? that isn't logically consistent. >> no, i think it's a good development, you know, but the -- >> i know exactly what you're saying, but -- >> the extent of the rally market from 2009 up until this election is much bigger than what's happens since the election. >> you're arguing about size, but in terms of -- you're basically saying animal spirits have nothing to do with whether the underlying economy can actually improve. >> here's my line. the corporate tax rate looks like it's going to be cut. i think that by itself would revalue the u.s. corporate sector. i think that's a lot of what we've seen since the election. >> jim, i want to get at this. this is the perfect split between the market and economists right here. you're willing to trade on the come, on the possibility that there will be, and you guys -- >> i have no problem with that. i think for monetary policy, you

shouldn't bake that in right now. >> that's the point. they won't bake it in. joe is baking it in. >> but you're supposed to be forward looking. >> it's going to be hard to get the growth rate in the first quarter -- you know, we're until the -- we're in the first quarter of 2017. >> you can't change the forecast based on, what is it, perceived changes coming to fiscal policy and the tax regime. is that right? >> i mean, my preference is to keep my baseline the way it is and understand that there's some upside risk to that, as opposed to saying i'm going to raise rates and then have downside to that. >> that's significant about '17. if it don't happen in '17, you can't bake it into the forecast. this is great. this is really the big tension in the market. >> but joe, i'm not saying

there's no chance of it working. >> if the feds' forecast for the last five, six, seven years have been anywhere near accurate, maybe i wouldn't change anything i'm doing. but looking at how bad -- >> that influenced me, that chart that was there. if you look at that in all the previous years, they were all wrong. so i changed because of that. >> what if after 2017 is over we're at -- let's say we do 3.6% or some crazy positive number. >> that would come on board. that would definitely come on board. >> you're totally not seeing that. what if it happens? >> i'm saying the baseline is two and we'll see. >> can i add one thing, jim? one difference here. because inflation is low, is it right to say you guys are okay being a little bit behind the curve here? if you were talking about 3.5%, 4% inflation, you'd be much more nervous about joe being right on this. >> i'm not a phillips curve

person. i'm not going to put a lot of weight on curve arguments that 3.6 growth is bad or is going to lead to a lot of inflation. that relationship has not been very strong empirically over the last decade. i do look at inflation expectations, but market-based inflation expectations are still on the light side, i think. we got a ways to go. >> so there's festivities after the 20th. let's see, what if on the 23rd all this deregulation comes to pass. that doesn't need to be -- that's not tax cuts. that could add half a point. >> i think deregulation is a great thing, and that's important for the u.s. economy. it's a very broad thing over many, many areas. there's a lot of details. >> just go up a half. just for me. just go up a half. >> two hours, you're going to pound him the whole time. come on.

>> i got one increase for this year. i'll call it the joe kernen increase. >> a half a point. a lot still ahead on "squawk box." for me. >> two hours, joe. >> up next, president-elect trump took another shot at lockheed martin at his news conference yesterday. we'll tell you what it could mean for the future of the defense industry. plus, a cnbc exclusive interview with delta ceo ed bastian. then don't miss former secretary of state p.j. crowley at 8:00 a.m. eastern. this is a celebration of becky coming back, i guess. great guests. you're watching "squawk box" on cnbc. blnonoig s

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president-elect trump taking another shot at defense contractor lockheed martin. morgan brennan joins us now with more on trump's impact on the defense sector. all focused on the pharmaceutical sector, but got to watch all the sectors. >> that's right. defense is on the defense as well. defense stocks are falling. the ita aerospace and defense etf closing down almost 1% yesterday. that's after president-elect again took aim at the f-35 joint strike fighter for being over budget and behind schedule, saying he's going to, quote, do some big things to the plane, as well as the f-18 fighter jet to cut costs and, quote, have some

competition. so shares of lockheed martin, that's the f-35's contractor, tumbled, as did top suppliers. boeing did close higher. lockheed responding that it understands trump's concerns, that, quote, we've given him our full commitment to drive down costs aggressively, adding that the f-35 price has already fallen 60%, with another significant price decrease expected next contract. boeing, too, saying it remains, quote, committed to working with the new president and congress to provide affordable, capable boeing uproducts and services, but this debate is expected to continue today. we have defense secretary pick james mattis appearing before the armed services committee at 9:30 for his confirmation hearing. f-35 is definitely expected to be in focus. top line discussion about defense spending and what the budget could look like and bringing down costs. also, russia is going to be in focus, nato, so many security issues. >> how do you bring down the cost and get a better plane? is that real? is there a view on what that

meant? >> we've looked at whether you can say, you know, replace an f-35 with an fa-18 super hornet. you really can't. it would take years and billions of dollars. one is stealth. the super hornet is not. that being said, there's now some debate about going sort of, for lack of a better term, under the hood on the plane and what it could mean in terms of striking competition between some of the suppliers. things like the ejection seat. things like the engine. and whether you start talking to a company like ge about coming up with, you know, competitive engine, along those lines. so there's some debate about whether you could start deconstructing the actual insides of the plane. >> how much could you wring out of medicare? >> i think you could wring out a lot. he said yesterday at that press conference we're going to pay less and get better planes. i want to understand how does he get there. >> it seems like a toilet seat is $1400. it's going to cost that, make a decent toilet seat. but you may be able to get that

down to $800. >> there's no question we're being gouged. >> a lot of times they're not watching things quite as close. when you see james, don't you feel like saying james "mad dog" mattis. such a good name. he doesn't really like it, supposedly. >> one of his other nicknames is the warrior monk, which i also like. this is a man who's very celebrated. he almost has a cult-like following in the military. he's very scholarly as well. >> he's unbelievable. it's great. >> a lot of respect. both sides of the aisle. >> thank you. when we come back this morning, delta just out with its earnings. don't miss our exclusive interview with ceo ed bastian. that is next right here on "squawk box." stick around. time now for today's aflac trivia question. what was america's first national monument? the answer when cnbc "squawk box" continues. ou ahks n ninit bg.

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now the answer to today's aflac trivia question. what was america's first national monument? the answer, devils tower,

declared in 1906 by president teddy roosevelt. good morning, everybody. welcome back to "squawk box" right here on cnbc, live from the nasdaq market site in times square. among the stories that are front and center this morning, the senate has passed a budget mechanism that will allow congressional republicans to appeal obamacare with a simple majority. that measure passed just before 1:30 a.m. it passed 51-48 with the support of every senate republican except for rand paul. in other washington news, reports say that the obama administration is expected to launch a complaint against chinese aluminum subsidies that the world trade organization today. that complaint is expected to cite artificially cheap loans from chinese banks and

artificially cheap electricity, coal, and other inputs used for chinese producers. s s also, the bio tech sect taking a hit after president-elect trump slammed drug makers. >> the drug industry has been disastrous. they're leaving left and right. they supply our drugs, but they don't make them here. they're getting away with murder. pharma has a lot of lobbies, a lot of lobbyists and a lot of power. there's very little bidding on drugs. we're the largest buyer of drugs in the world, and yet we don't bid properly. we're going to start bidding and save billions of dollars over a period of time. >> the pharmaceutical lobby has responded to trump's criticism, saying that it is committed to working with the president-elect and congress to boost u.s. competitiveness and protect jobs. >> you can't have it both ways. you got to love that about the -- you've been wanting to do that for years. >> i love it. >> so give your president-elect a big thumbs up and a kudos from andrew ross sorkin.

>> thumbs up. i like it. >> he's over there silent. >> i'm not being silent. i love it. do you love it? >> i'm not crazy about it. here's the thing. i'm fine with the negotiating part. i just think -- i don't want to hurt innovation. it's a slippery slope. i definitely don't want to go down the hillary care. >> okay. >> we can agree to disagree. >> yeah, we're trying. our guest host this morning has been james bullard, president and ceo of the st. louis federal reserve. one of the big questions i wanted to ask you about relates to trump and his policies in terms of productivity and economic impact in this country, this border adjustment tax and what that ultimately means to the economy and to our growth. >> yeah. well, i think we're still getting used to it. i had never heard, frankly, of a border adjustment tax until it started coming out after the election. >> but he seemed to suggest even in the press conference yesterday, sort of alluded to making sure there's going to be

one. >> okay. so i'll tell you what i know. when you go to a country today, a lot of other countries have e.a.t. taxes. when the good comes out of that country, they get the v.a.t. tax back because they want to compete effectively on the international market. okay. that's allowed under wto rules. you could say what about all other kinds of taxes, all kinds of taxes and subsidies going on elsewhere in the economy. why aren't we making adjustments for those? i think the history of this is that the wto said only a direct tax, you know, can be rebated in this way. but when you think about it, you could say, well, countries have different corporate tax structures. so therefore, there should be some kind of leveling of the playing field internationally when a good goes across the border. >> what does it do to the consumer? retailers, of course, are screaming about all of this.

>> sure, they are, because you're going to change the tax structure. it would be -- but i think we're scrambling to understand exactly what this would mean. but let's think about the u.s. the u.s. is a free trade zone, but the different states have different tax structures. so you could say there should be a border tax adjustment at every state line in order to level the playing field across the whole country. that's the concept. whether you could really do that considering the totality of taxes, you know, i don't know. >> did you think, by the way, that during the press conference when he talked about mexico paying -- he said mexico will pay for the wall somehow, that the intimation it was it would be through a border tax? >> that's what i thought. >> it's not a fence. >> a wall. >> it's a wall. not a fence. >> okay. james bullard will be sticking with us for the rest of the program. when we come back this morning, a cnbc exclusive interview with delta ceo ed

bastian. that's next on "squawk box." we'll be right back. r fu t

welcome back, everybody. delta out with the quarterly results earlier this hour. phil lebeau joins us from atlanta with a cnbc exclusive interview. phil, good morning. >> hi, becky. welcome back, becky. bringing in ed bastian, the ceo of delta. coming off of fourth quarter numbers, you match expectations in terms of eps. better than expected revenue. let's talk about the end of the quarter. that's really where you noticed an improvement in the business environment. what happened in the last half of the quarter? >> there was no question post the election we saw an improvement in consumer confidence. you see it in the marketplace. you see it, i think, in some optimism with respect to starting to get things done in washington. we saw it in our results. >> a dramatic improvement in terms of the number of people flying and the revenue picked up, et cetera. >> absolutely. we had a strong holiday period. fares were decent.

fares are starting to stabilize. the outlook for '17 is looking good. >> let's talk about that outlook. what's getting the most attention this morning, especially on wall street, is your forecast for first quarter passenger revenue. you're now saying it's going to be flat to up 2%. >> right. >> is this finally the end of negative passenger revenue per seat mile because you've been dealing with lower fares? >> we believe so. the last two years our fares have been down. in fact, cumulatively over the last two years they've been down about 8%. while fuel prices have been down, which is a good pass through for consumers, as fuel prices have started to rise, as labor costs have started to increase, we need to improve our fares. fares are stabilizing. we think in the first quarter, our unit revenue is going to be up somewhere between 0% and 2%. >> andrew? >> i wanted to talk about the implications of donald trump and his administration on trade and particularly on the airlines. i know you've been in battle with american airlines,

yourselves, and unite the against emirates and qatar in terms o of the some of the things they've been doing. how do you think that's going to change under trump? >> well, we're optimistic. our new president-elect ran on a campaign of protecting u.s. jobs and enforcing u.s. trade treaties. we don't think there's a more important industry that's been violated with respect to trade treaties and the potential loss of jobs than the airline industry, given the rise of the middle eastern carriers. we look forward to having the opportunity to make our case. >> mr. bastian, it's great to see you. i don't envy you trying to replace a guy with the same name as maguyver. but something you just said was really interesting. earlier i asked whether we'd see any positive effects from the election, or is it too soon? obviously we don't have any of the legislation or any of the reversing executive orders, any of that stuff.

but i posed that question, whether you could really see it. so you are confident that part of the -- there's actually pennies per share that derive from more consumer confidence following the election? you feel confident making that connection? >> no question, joe. just to put into context, in our third quarter, our unit revenues were down 6%. in the fourth quarter, they were down between 2% and 3%. in the first quarter, we're looking for it to be up, somewhere up to positive 2%. it's not only the election being behind us. certainly capacity and some of our pricing strategy has been part of it. but consumer confidence is much stronger than we were seeing through the summer. >> ed, this is jim bullard. how much of that do you think is market share where delta is beating up on its rivals, and how much of that do you think is industry wide? >> i think it's industry wide, jim.

our capacity in the fourth quarter was up only about 1%. i think all the airlines are facing that same dilemma of rising fuel prices and need to be able to pass it through. >> mr. bastian, we did talk about berkshire hathaway and warren buffett making an investment in many of the airlines. have you spoken with warren buffett or anyone from berkshire hathaway about that investment? >> first of all, welcome back, becky. good to see you. >> thank you very much. >> we have not spoken to mr. buffett. he's made an industry bet. it's not just a delta bet. as a result of that, while we did place a call into his office, he's not speaking to us. >> got it. >> ed, i'm curious from your perspective, when you look at the airline stocks, they have had a heck of a run, particularly over the last three months. when you look at peak to trough valuations, you guys are pretty close to the peak right now. i think you're at ten. the valuation peak is 12 for the

sector, and a lot of people are saying these stocks are getting ahead of themselves. there either has to be an improvement in terms of overall valuation, in terms of p.e. ratios stepping up beyond where they usually do, or you're not going to be able to match the expectations of the investors. do you think that we're going to see that improvement, that expansion of the valuation? >> i think so. looking on any historic bay circumstances i -- basis, i'd agree with that comment. we've been in the top under every metric. earnings returns, profits per share, et cetera. we still trade at a 50% discount to the s&p industrials. so i think going forward, our story here is about sustainability and durability. this year we posted a profit of $6.1 billion, a pretax profit, highest in our history. second year in a row west virginia been in that $6 billion range. i think in '17 we'll also be in

that $6 billion range. proving the durability and the industry structural change that's happened is what's going to drive. i do think we'll see a ratings bump. >> andrew has another question for you, ed. >> ed, i'm going to get in trouble for this. i hope not to get you in trouble. if you watch the show, you know we've had a big debate for many years. becky is going to have to chime in. babies in first class. there was a story at the end of december where on delta there was a baby apparently crying in first class, and you asked the mother and the baby to go into coach. i'm sure you had to deal with this. tell us what happened and what your reaction was to all of that. >> andrew, i don't want to get into the specifics to protect the innocent, but there was a complaint about a crying baby. the baby should never have been asked to move. the mother should never have been asked to move. we've apologized to the customers involved. it's part of the air travel system that we manage. >> was andrew on the plane?

>> i was not on the plane. >> i don't know. that's why i say -- >> ed, that was the wrong answer. the rating answer was, yeah, that damn thing was crying and we're putting it all the way in the back. if it happens again, andrew, you can count on it. that was the wrong answer. >> i'm not sure if andrew was on or not. >> it was a good answer. >> ed watches "squawk." he knows we've been having this conversation for years. >> go ahead, phil. >> guys, we'll send it back to you. ed, thanks for joining us exclusively. >> appreciate it. >> mother's name was rose mary. >> ed is a good sport. >> by the way, are you on the same plane to davos? >> i am. >> guess what i'm bringing. >> i know what you're bringing. >> i do want to talk about what he just said. transports are ahead of everything else. they can instantly react. i wonder what -- remember, before the election, people weren't going to olive garden, they said. they're worried about the election. maybe we see something this

quarter already. >> i know what seat she's sitting in too, by the way. jt r ed jt r i t ir♪

welcome back to "squawk box." let's look at stocks to watch this morning. walt disney was downgraded to hold at pivotal research. the firm citing soft tv audience trends and the erosion of espn subscriber base. among other factors, there's clearly some disagreement on the street about disney's prospects. jpmorgan this morning raising its price target to $124 per share. got to decide on who you want to bet with there this morning. when we return, what's next for the trump empire. the president-elect outlining plans to turn over his business at his news conference yesterday. we've more details on that when we return. and in the next hour, kansas senator jerry moran is going to join us to weigh in on the president-elect's border tax threat. we will be right back in a moment. ovceocdes aent peoeofou'

president-elect donald trump was joined by his lawyer at his news conference yesterday to discuss how the president-elect is planning to distance himself from his various businesses. robert frank was there. he joins us now with the details. robert? >> good morning, andrew. well, sherry dillon saying trump should not be expected to destroy the company he built just because he's president. trump saying he legally doesn't need to do anything, but here's what he is doing. he's going to put his company into a trust that will be managed business i had two sons, eric and don jr. he's going to have limited information about the company's

activities. the trump org will hire an ethics officer and compliance chief to make sure the company is not receiving special favors or favors as a result of its ties to the president. it's going to give profits from the hotel that come from foreign governments to the u.s. treasury. it will not do any new deals or prok projects overseas, but it can do new deals and partnerships in the u.s. there are some unanswered questions. we don't know if this trust is easily reversed once he's out of office. we don't know who the beneficiaries of the trust are. we don't know what kind of income he's going to get from this business or where it's coming from. the director of the office of government ethics saying today the plan falls short of what trump's own cabinet is doing and, quote, we can't risk creating the perception that government officials would use their positions for profit. other ethics attorneys saying the plan will ensure years of questions about his business dealings. >> he cannot retain ownership interest in the business and say that he is free of conflicts of

interest. he's not. there are going to continue to be serious legal problems and national security problems connected with this business empire. >> the other problem he could face here is because of the paula jones precedent and clinton. he could face private litigation as a result of his ties to the company. that could distract him for a long time. >> there was a panel at brookings on this yesterday afternoon with all these ethics lawyers who were talking about that issue, that he could just be living in sort of plaintiff's hell with all sorts of people bring lawsuits constantly. then there's a question of who pays for the lawsuits of those defenses. by the way, he's going to be dragged into deposition after deposition about this. then he's going to need lawyers. >> to me, that's a bigger concern than the fact the media that will predictably always criticize him for this. he's never going to be doing enough unless he sells everything, which is not practical. that's less important to me than the fact that plaintiff's

lawyers, it's going to be open season on the president. because of that precedent, he can be subpoenaed for anything related to his company, particularly if this trust is not an irrevocable trust, if it's easily transferred back to him, then they could argue it's just a sort of temporary shell game and it's his once he leaves office. i think a lawyer could use that to constantly distract the president with litigation. >> what do you make of the idea of taking the foreign profits and giving that to the treasury? >> well, it's important to distinguish here what he's doing. it's just for the hotels. so he's just saying it's just the profits. you made a good point earlier about how you account for profits and revenues. so any government can buy a golf course. a foreign government could buy a golf course or rent a golf course or perhaps even do a deal, a taiwanese businessman could buy a building in the u.s. and then people would say, what about your position on taiwan, is that affected by that? so leaving the u.s. open to

growth, new deals, new partnerships, i think, is going to be an issue. >> to me, by the way, the surprising part was just being at that press conference, he says, oh, yeah, my friends offered me $2 billion over the weekend to do a deal. i decided not to do that. >> let's be fair. he is giving up a lot of -- he made the point, i don't have to do anything. he is giving up a lot of money. he's leaving a lot of money on the table. >> do you think somebody's going to challenge this? who has standing to challenge it? >> congress has standing to challenge it under the emoluments clause. this is an ugly word because it sounds technical, but they spent a lot of time on it yesterday for a good reason, which is that the legal issue in which he'll be attacked will be the emoluments clause, which says a foreign government can't give something of benefit to an elected official. but congress has to enforce that. the only way to enforce it is through impeachment. that's not going to happen. >> where did you find the brookings debate? is it a podcast or something?

>> i happen to be on this great thing called twitter. all the sudden i saw this link. they had a live thing. you could just press play in this new world. it was fascinating. >> what a bonus. i think i was watching "gun smoke." actually, i was watching tillerson and sessions. you're watching a podcast of a brookings panel?

the squawk reserve. >> we're in a low real rate environment. i don't think you're going to break out of that by just snapping your fingers. >> an exclusive conversation with st. louis fed president jim bullard. and we're just getting started. breaking economic news, jobless claims and import prices hit the tape at 8:30 a.m. eastern time. here to react, a familiar face we haven't seen in a while. >> release the cracken. >> economist joel prakken is here. plus, apple is setting its sights on original content. 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 and welcome back to "squawk box" here on cnbc. as you can see, that was the outside of our building, the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin. the futures, we haven't looked at them in a while. they were improving a little bit. we were down over 40 when the show started. now down 33. if we got to unch, we would be about 45 points from 20,000. this is a good day for it. the quick assault on 20,000. we became within a third of a point on friday. that's weird. >> which would have been your birthday present. >> would have been my birthday. andrew wasn't interested, but i told people -- joe granville back in 1982 caused a market crash that just happened to be on january 6th back then.

caused a market crash. the dow was at 1,004. after all the blood in the streets, it was at 980. it was down 24 points on 93 million shares. that just goes to show you. >> now 200 points is a percent. >> exactly. on a percent or point basis, it wasn't a lot, but he loved moving the markets. he's not with us anymore. that's how far we've come. i'm a young man. in my mind anyway. treasury yields, take a quick look. look how far it's moved. from 700 or so to 20,000. >> what did you say, that was '82? >> yeah, 1982. ten-year note, 2.33. the dollar, the euro recently hit session highs again against the dollar, just today, on some ecb notes. there's a lot of things in the

world that seem to be starting to align with a more positive global economy. am i wrong on that? >> you think it's more positive globally? >> you add in the u.s. -- the u.s. is going to be more positive, but i think you're starting to see things improve everywhere. can't we export some inflation to get those people off this, you know, like in japan, off the 20-year snide they've been on? >> i think there's some potential for the growth rate in the u.s. to improve. you think that's going to push up inflation? >> i hope that we export some. >> that's a phillips curve story. i don't like phillips curve stories. business confidence is up. you might see more investment. you might see tax changes. they got to all materialize. details matter, but i think that could improve. investment in the u.s., we were talking about airlines earlier.

consumer confidence is up. maybe people are flying more. it's really investment you want, business investment. that's what's been low over the last two years. >> that can't be reflected in airlines. >> the airlines could be buying more planes. >> it has to be common sense that eventually you see, you know, prices firm as wages -- >> wages don't predict inflation. >> never. >> well, the relationship is very weak. they tend to be a lagging indicator. they tend to come behind inflation. >> so prices go up and then people complain. >> but if wages are up and they're typically behind, does that mean we're behind the curve on the potential inflation that comes? >> are we behind the curve? no, my argument is that we're really not. i think we've got the luxury of

time. we have a low inflation environment. it's been very sluggish over the last few years. you can afford to be patient here and see what happens and see how much of this really transpires. >> okay. in the meantime, let's get you caught up on headlines. oil prices are rising. some key members of opec are starting to cut production. forecasts of strong demand growth in china. wti crude at 52.92. then in washington news, the senate passing a budget mechanism earlier this morning that's going to allow congressional republicans to repeal obamacare with a simple maj majority. president-elect trump says he's committed to offer a detailed replacement plan. and apple planning a significant move into a new tv and movie content. this coming according to dow jones. the content would be available to apple music subscribers.

executives are reportedly hoping to roll out the new offerings by the end of this year. i imagine apple music will become apple media or something, given it's going to be a multi -- got music, podcasts. >> growing menu. >> video. >> podcasts. >> skeptic, are you? >> that'll be the day. >> big business. podcasts are becoming a big business. >> but you're sitting there watching. >> i wasn't watching a podcast. i was just watching a periscope live -- it's like facebook live video. >> i'll take your word. former exxonmobil ceo rex tillerson facing a barrage of questions during his confirmation hearing to become secretary of state. russia one of the main topics of additi discussion. eamon javers has more from washington. good morning. >> good morning, becky. it was a long and at times contentious hearing for rex tillerson, the former k eer exxl ceo. it was expected democrats would

be hostile to tillerson. it was not necessarily expected that republicans would as well. but marco rubio really came out very aggressively against tillerson, asking him about his relationship with russia and his views of vladimir putin, including a question about whether or not he thinks if vladimir putin is a war criminal. take a listen to that exchange. >> is vladimir putin a war criminal? >> i would not use that term. >> what's publicly in the record about what's happened in aleppo and the russian military, you're still not prepared to say vladimir putin, his military, have violated the rules of war and have conducted war crimes in aleppo? >> those are very, very serious charges to make, and i would want to have much more information before reaching a conclusion. >> i find it discouraging, your inability to cite that, which i think is globally accepted. >> rubio saying there he finds it discouraging. at the end of the very long hearing, he told report erers t

ultimately he hasn't decided yet how he'll vote on tillerson. this gets technical, but there's a process by which the committee could pass tillerson on to the full senate even if they don't have a majority of votes. they could report it out unfavorably and send it to the senate. that would be a very rare thing here. so marco rubio has a lot of power here in sort of determining the fate of rex tillerson's nomination to be donald trump's secretary of state. >> eamon, that was a full-on gotcha question. that first one. do you think he's a war criminal? there's no way a guy that's being interviewed to be the leading diplomat and to be diplomatic, there's no way he's going to say yes at a congressional hearing to that. so you knew that he was in a box. the only thing he could say was dance around it. so rubio knew that he was going to then be able to self -- just bloviate. he went on about the philippines and duterte. he got him there.

and on saudi arabia, which all led into a soliloquy from marco rubio about his foreign policy expertise and human rights around the world that allowed him to just pontificate that more needs to be done by the u.s. in standing up for human rights, rather than saying, well, we got these interests in this country. it was bizarre. it had nothing to do with rex tillerson. it was all to do with marco rubio. >> well, i think you're exactly right, joe, except that it was not bizarre. senators have a lot of power during confirmation hearings. they can ask leading questions. they can set themselves up for speeches, and they do it all the time. rubio also asked him about whether he thinks putin murders his political opponents back in russia. tillerson said he'd need to see more classified information, have more evidence.

rubio said this is not a matter of any dispute. these people are dead, sir. so it was dramatic moments. senators know they have the spotlight in that moment, and they use it. >> but tillerson was a prop. could have been anybody. could have been in any context. that was all about marco rubio giving us his world view on human rights. fine. >> there are politics in washington. >> eamon, thank you for that. we're going to continue this conversation. p.j. crowley, former assistant secretary of state in the obama administration, joins us now. also author of the new book "red line: american foreign policy in a time of fractured politics and failing states." we appreciate p.j. being here this morning. help us understand. if you were sitting there yesterday, what was the right answer in that context at that hearing? >> i don't know that there's a right answer, guys. rex tillerson was in an awkward situation for a number of reasons. if you think about the last four

first-term secretaries of state, james baker, warren christopher, colin powell, hillary clinton, all had served in government, all had an established track record. so it's much easier to make the adjustment from, you know, a previous role to being the secretary of state. certainly rex tillerson has relevant experience to be the secretary of state, but his challenge yesterday was to convey he can make the shift from the executive suite at exxon to foggy bottom. the backdrop is the russian hacking. normally you would think that his knowledge of russia, first-hand dealing with russian leadership would be seen as an asset, but he was walking into a political context on capitol hill. they're much more skeptical than the president-elect on russia. they want to punish russia for the interference in the election. and he had to find a way to convey the seriousness of the issue, you know, without

necessarily boxing in the president-elect. very, very difficult challenge. >> do you think there's a chance rex tillerson does not get approved or confirmed? >> i think he's got a narrow margin of error. i think it's still more likely that he will be confirmed, but obviously on a bipartisan basis, i think the senators are going to look for some greater leverage that the trump administration is going to cooperate in terms of a new round of sanctions once they take over. >> and do you think it's an asset that he has the experience he's had in the business world related to russia or not in this instance? >> you know, he's obviously a global player. he's got an established world view. he's got a contact list both in the middle east and in europe that is significant. ironically yesterday, probably his most significant stumble, you know, involved how to -- how he responded to questions about what exxon did or did not do

relevant to previous rounds of sanctions. he suggested that exxon didn't lobby against russia sanctions and a couple senators said, well, yeah, you guys called me and he had to convey, well, we talked about the impact of sanctions without necessarily taking a position as to whether they should or should not be imposed. >> there were a couple sin stances where he said he wanted to know more information or they didn't have a dearth of experience with. for example, he was asked about the cuba topic. was that beneficial to him to be able to say, you know, i don't have the experience? that's what i was trying to understand, whether it helps or hurts him. >> i think that's the normal approach that nominees take. they acknowledge the interest that congress has. they promise to come back and work with congress on developing a national policy, but they try to, you know, find the safe area

that, yeah, this is an issue, i plan to look into it very significantly if you confirm me, but i'm not going to try to tell you what the president's policy is going to be before he actually is in office. >> is the climate issue an issue when it comes to rex tillerson, do you think? >> i think the climate issue is an issue. that's one of those areas where the president-elect has obviously expressed skepticism about climate change. rex tillerson himself has kind of hedged. he said, yeah, there's an issue here. but as he suggested yesterday, he doesn't think it's a national security issue. that will yield some skepticism, particularly on the democratic side. but that's one of those larger issues. you know, on the campaign trail, you know, donald trump said that he needs to strengthen american leadership around the world. yet, given the reality of the paris agreement and what the obama administration has done, i

can think of no -- if the trump administration comes in and either actively pulls out of the climate agreement or just goes into benign neglect, you know, that's one of those areas that could very significantly undermine perceptions of american leadership around the world. it's a very significant issue, and where the trump administration comes down on that i think will play a significant role in setting the tenor for its relationship with major powers around the world. >> were you satisfied or unsatisfied with donald trump's comment at his press conference yesterday relating to his relationship with russia and what he called it being an a asset that putin likes him? >> i mean, i think he's inching towards a more balanced position, but he's been doggedly holding on to that position that he personally can reset the relationship with russia. i think that's going to be the most contentious area when he actually is in office. >> okay. p.j., thank you. >> a pleasure. >> appreciate it.

when we come back, much more from st. louis fed president jim bullard. we'll get his take on the new year and the economy under the new administration. plus, at 8:30 eastern time, some breaking economic news. weekly jobless claims and import prices. and then later, it is all about capitol hill this week and cabinet hearings. republican senator jerry moran will join us from kansas. we'll get his take. stay tuned, you're watching "squawk box" on cnbc. with the xfinity tv app,

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welcome back to "squawk box." this morning is a critical time for the fed. steve liesman is here with fed president jim bullard. >> i want to review the bidding. >> for 2017? you're saying 4%? >> 3.6. you said 2. >> i said 2. >> joe said 2017 is going to be off the charts. you said nothing in 2017. >> then delta came on and said they already saw earnings go up because of the election. >> i want to give you a chance, jim, to change your forecast one more time. >> begging you. >> you're going to stay even? >> these are important policy changes, but if they have an

effect, they're going to have an effect in 2018, i think. i do think -- i appreciate that equities have been revalued here, but i think that's because of the promise of a lower corporate tax rate primarily because we're talking about going to 25%, 20%, 15%, something like that. that would revalue the u.s. corporate sector. >> okay. so the equities being higher, interest rates being higher, the dollar being stronger, are those realities already that you have to factor into your forecast? >> i think the market's a little ahead of itself because they're putting things like the dollar already 5%, 6% stronger based on a prospective outcome that i think is really a 2018 outcome. that strikes me as getting the cart ahead of the horse a little bit. >> let's talk about your best guess for next year. you have the one rate hike built into your forecast. the median fed person is at three. looks like the market is at two.

are you thinking about changing your forecast here? >> no, it's served me very well. the s.e.p., which is the fomc's -- >> summary of economic projections from the fed. >> that's been wrong for five, six years in a row. so i think you're better off with my framework where you think in terms of low interest rates and think in terms of unemployment being about at full employment and inflation being about at target. that's where we are. if we get some of these impacts from these new policy, that'll be great. but i think that'll show up a little bit later in the forecast horizon, more like 2018, less like 2017. >> can you speak to how you value some of those tax deductions and what that means in terms of -- do you score things dynamically, for example? >> absolutely. you're talking about corporate tax rates. there's double taxation of capital already in the u.s.

it should really go to zero. okay, we're not going to do that. so go to something lower, put it on a more even basis with ore countries. you get more investment in the u.s. that'll drive productivity in the u.s., drive growth rate higher. you really want to drive productivity higher in the u.s. so that you get a sustained growth rate at a higher level than what we've had over the last eight years. >> jim, i want to just let people know first of all you do a great public service, the st. louis fed. i was not required to do this, folks. the f.r.e.d. website, which i'm not sure what it stands for, is a public website where you can get any economic data you want. download the app. it's very cool. but i want to ask you this question. is it time to reform the federal reserve, how it does business, how it makes its monetary policy decisions and its structure?

>> republicans have a plan. they're working on it. i think we'll see legislation probably this year, but exactly what's going to be in that, i think, is an open question at this point. so i think we will see some things. a lot of it is revolving around transparency. a lot of these things we could do ourselves. we could have press conferences at every meeting. we could have a quarterly monetary policy report. we could report in terms of monetary policy rules, which is something that republicans have wanted, and we do anyway. i think we could frame our discussion in terms of those policy rules and why -- >> i've been watching the hearings. he asked you is it time. is that a yes, mr. bullard? is it time? >> i think there will be some action this year. >> half an hour for joe to get bullard to raise his forecast. >> and you're happy about that?

>> i'm happy with many of the things in the proposal. coming up, breaking economic data. then we're going to release the prakken. stay tuned. you're watching "squawk box" on cnbc. ere,l reghces,ur fve thi

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we're now about ten seconds away from the weekly jobless claims and import prices. a quick look at futures right now. we're going to get to rick santelli, who's standing by at the cme in chicago. rick, the numbers, sir. >> all right. the numbers are -- let's start out with initial jobless claims, shall we. last week, 235, moved up to 237. add ten, 247,000. on continuing claims, last week a bit under 2.12 million. now we're a bit under 2.09 million. import prices, month over month for december, up 0.4. year over year, minus 0.2. here's an interesting fact. this year over year minus 0.2 is the 29th negative year over year import price in a row. now, i know there's a lot of energy mixed into that, but it's

something to ponder. in terms of that up 0.4 month over month import price, last month minus 0.3 gets shaved by a tenth. we're hovering right in the low 230s. we zoomed through 227 and never looked back in november. it's an area to pay close attention to. you know who's conducting the orchestra today, and you've been talking about it, weak dollar. down about 0.7. >> all right, rick. thank you very much. steve liesman is here. you've been poring through the numbers too. >> just so everybody know, the reason why the import prices are up is because of petroleum. food, feed, and drink down, just covered up by opening up my program here. down 1.4. capital goods down 0.2. anyway, everything is negative inside the petroleum sector. jobless claims number remains relatively low.

247 was the big surprise. i think we want to get to mr. hartger from philadelphia, new philadelphia fed president, a voter this year, making se inin comments today. he sees three rate hikes this year. he thinks the economy is displaying signs of strength. he's also saying that inflation expectations are starting to rally. and he's saying that demand for labor remains strong. he sees skills shortages, but he does see inflation picking up. that's the story from the new voter, mr. harker, from philadelphia. >> we have jim bullard on the set here. the st. louis fed president. what do you think of harker's comments, talking about three rate hikes that he thinks are appropriate this year? >> president harker has been a great addition to the committee. i respect his views. obviously i'm a little bit more on the softer side for rate hikes for this year.

i guess we're looking at the same data but interpreting it differently. >> we're also joined this morning by joel prakken, the co-founder of macroeconomic advisers. joel, let's get your take just on the economic numbers that we see today, what we've been seeing recently. it has been very strong economic numbers when it comes to confidence, when it comes to a lot of these things we put into it. how do you take all that and decide where you see things headed? >> i think this morning's numbers are consistent with the recent pattern no both unemployment claims and inflation. i like to look at the nonpetro prices because of the depreciation of the dollar over the last year and a half. but going forward, pretty solid growth. maybe a little above trend. unemployment rate continuing to climb. upward pressure on inflation through the early part of 2017. >> you said the question you're getting most from people right now about these border adjustments for taxes. >> it's true. so we're trying to help our clients work through the

implications in the outlook of the various proposals of president-elect trump. number one on the list, taxes. we've got a republican plan that includes tax cuts but also elements of tax reform. and one of the key elements of that tax reform are the so-called border adjustments. if your viewers don't foe what that is, under this proposal, imports coming into the country would be taxed, exports leaving the country would not be subject to tax. on the surface, that looks like it would encourage a shift in demand towards domestic i wiall produced goods and services. tax theorists will say the dollar will appreciate by the amount the corporate tax rate, which in this case would be the proposed 20% or so increase that's in the republican plan. and that rise in the dollar would essentially negate all of the impacts of the changes in the tax code on trade flows. the problem is that the businesses we talk to just can't get their hands around that

theory. for example, consider a refiner on the east coast that imports oil from the north sea. at 70% of their costs. they say to themselves, my gosh, i'm going to have to pay a tax on these oil imports. that's going to crush me. but supposing you're caterpillar and you praoduce a lot of heavy equipment and export a lot of it and you're not going to pay a tax on that, you like that. with the winners and losers, as they perceive themselves, descending on washington to fight it out, is this going to be something that delays the progress of the tax bill through congress. i heard you say -- >> i want people to know, among the reasons you're here is you're a great and smart guy, but the real reason is you guys at m at macro advisers have one of the best models for figuring this stuff out and the effects on the economy. i want numbers. when you plug a border adjustment tax number into your

model, what do you come up with for gdp? >> i think that when you plug that into the model, what you see is a strong upward movement of the dollar, but not one that would immediately offset the impact of the change in the taxes to pushing up import prices. so you would get a modest inflation push here in the united states. it would undermine real disposable income, slightly weaken gdp initially. maybe later, because of the change in the taxation, you could have some pickup. >> we only have a little time. we're trying to get bullard to raise his forecast. have you upped your forecast? have you plugged this fiscal stuff into your model and come up with better gdp models? >> yes, we've run a simulation of the entire tax plan, not just the border tax adjustment. it is a tax cut, so it is a stimulus. >> what about the tax reform, infrastructure, all the other stuff? >> all that stuff, okay, it would be a boost to aggregate

demand, but as jim mentioned earlier, this is occurring with the economy at full employment, growing close to trend, inflation close to 2%. the fed already thinking about raising interest rates. while there could be some faster growth from this, really, i think what you'll see is upward pressure on interest rates relatively quickly as a result of tax cuts. >> i'm trying to get an answer here for you. i'm working for you. >> you want a number, okay. >> the tracking estimates are sub 2% in the first quarter. >> they don't include the tax cuts. >> joe's argument is you're supposed to see things happening right now. >> i want a number. i want to be able to get a number and go with it. can we get to 3% next year? >> you could briefly flirt with 3%, but interest rates will be rising fate ining faster than, feds' current dot charts. >> i'm doing deregulation and the psychology. animal spirits. >> is that in there? >> three elements of deregulation. one is rolling back dodd-frank,

which would help growth. two is the president-elect has talked a lot about deregulation in the energy industry. that could be helpful, but gee, the energy industry is already going along pretty well. but another important part of deregulation, at least what i call deregulation, is undoing the affordable care act. it's not at all clear to me that's a plus for near-term growth because of the uncertainty that's going to create. >> we'll see. and my 3.6 was an arbitrary -- you know, i just threw that out. >> but you know what, joe, an arbitrary 3.6 may be just about as good as a well-considered and modeled any number. >> steve, i'll send you our piece on the macro impacts of the stimulus. it includes the tax cuts and an infrastructure package. have me back. i'll come talk about it. >> the fed used to love the wealth effect. now i don't like it anymore. we may hit 20,000 a day, jim. that was the whole idea, i

thought, that people feel wealthier and spend more. the underlying economy improves. >> that's a plus, but if you want to get the underlying growth rate higher, you've got to improve productivity. it's got to come through business investment. some of these things might, in fact, impact business investment. that would be good. >> all right. coming up, we're going to -- thanks, joel. you leaving? >> i'm gone. >> see you later. >> nice to see you. >> well, that was really lovely. >> you know i'll see you soon, tomorrow probably. we'll head to washington and check in with senator jerry moran. another big day on the hill with a lot of different confirmation hearings. we will talk about some of the nominees. plus, expectations for the first hundred days of the trump administration. stay tuned. you're watching "squawk box" on cnbc. ly uegydn'be

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welcome back to "squawk box." we just showed you a graphic called the trump rally, but listen to this. george sorros lost nearly $1 billion as a result of the stock market rally after trump's presidential election. that coming according to news from the wall street journal. he was cautious about markets heading into november and became even more bearish immediately after the election. as a result, some of the trading positions reportedly lost nearly $1 billion. he exited the bearish bets late last year. by contrast, druckenmiller racked up sizable games.

he predicted stocks would initially tumble after the trump election than rally. his bullish bets since election night have paid off. his family firm reportedly had gained of more than 10% in 2016. the big winner of all this was carl icahn, who left the party, the donald trump party, to go trade. apparently made about a billion dollars or put a billion dollars to work at that, you know, at that moment. >> soros over the last few years on cnbc we've made a big deal about his bearish bets on the s&ps. like three or four times. the market's been going up, right. they have not -- and we always make a big deal out of it. that's how we use it, as maybe a warning that something's going to happen. he always ends up covering at much higher level. >> by the way, carl came out publicly, repeatedly -- he always says the market is falling. >> you need to be carl in an

average market to figure out which companies are under value. if you're really smart, you can do it in any market. and he is really smart. president-elect trump doubling down on his threat to impose a border tax on companies looking to move jobs outside of the u.s. >> there will be a major border tax on these companies that are leaving and getting away with murder. if our politicians had what it takes, they would have done this years ago, and you'd have millions more workers right now in the united states. >> and joining us now to tell us how the president-elect plans to keep jobs here in the united states, kansas senator jerry moran. he's on the senate commerce committee. it's good to see you, senator. i've lived long enough to see these big pendulum swings. we're going to davos on sunday. you know, we're going to go talk about saving the world and income inequality with all the rich guys.

so globalization is still going on, but there's a shift. there really is a shift. suddenly when president-elect says something like this, we don't just go, wow, this is insane, we're thinking, we could use some more jobs in this country. i mean, the tide has turned to some extent. lik like an instant, in a year. >> absolutely my view as well. the news of the day is that the focus is on american jobs, upon middle class people. the idea that we're going to do everything we can to keep jobs within the united states' borders, that's -- as the president-elect said, that's something that should have been addressed, discussed, and taken an opportunity to resolve in the past. i love the fact that we're back to the word that's so important to americans. their job, their family member's job, their ability to do better in a new job. that's a good thing and different than what the economic

focus has been on for a long time. >> boy, there really is, though -- it's almost the 11th commandment. that is that the free movement of goods and services around the globe is responsible for increasing prosperity across the board. there are now a lot of footnotes and caveats and addendums to that notion now, obviously, because we're doing some things that could be seen as hindering the free movement of capital and goods. >> look, i mean, i come from a state whose economy is significantly dependent upon exports. agriculture, air capital of the world, general aviation. the things we do in our state are things that we sell abroad. and we need those markets. but that doesn't mean we're supposed to allow any country to take advantage of us. too often in our trade agreements, we talk mostly about tariffs and forget the other things countries can do, even though the tariffs become more level, the field has been leveled.

we fail to address all the other things countries do to keep our products out. i also would say that we ought not get away from the focus of regulation reform, tax code modification, affordable care act, the things that make it more likely that a country is going to economically make the decision based upon a greater return of their investment. we want to talk about companies leaving the united states. let's get rid of the things that cause them to start down that path in the first place. that's been absent for a long time. this congress and this president have the opportunity to deal with the regulatory environment, the tax code, and the things that drive up the cost of being in business in the united states. that's the key to keeping the underlying key to keeping business here and jobs in the u.s. >> snarenator, we've been talki this morning about one of those potential fixes, the border adjustment tax code.

it sounds like it would be a great thing for a state like yours, where you do have so many exports. we just had a conversation on set where we talked about the result might be that the dollar rallies as much as 20% to kind of negate that. i wonder what you think about the border tax adjustment and how you get your head around it. >> well, again, i think it's premature to reach a conclusion. the proposal is really at a moment a few sentences from the president, a few conversations he's had during the campaign and a press conference yesterday. it's a concept that we ought to look at. i know the house ways and means committee chairman and others have started that process of what that might mean, but the point that you make and that i would make as a member of congress who cares greatly about the future of the american dream, the analysis must be done to determine what the consequence is. it's certainly got to be examined in a way that's more than a slogan.

it's got to be examined by our economic experts and the committees of jurisdiction here in the united states senate need to spend a significant amount of time figuring out how we do the things necessary to keep those jobs at home and what role a border tax might play. it has consequences just beyond the opportunity for us in a 60-second conversation to know what might be the result. >> senator, this is jim bullard, st. louis fed. >> good morning. >> good morning. so you know, if you lower the corporate tax rate to a low level in the u.s., the corporations might naturally source jobs here anyway. then you wouldn't have to worry about border tax or renegotiating trade agreements. >> well, in my view, that's a place that i've tried to get congress and this current administration, the obama administration, to go. there's been lots of political efforts at beating up companies for bad behavior because they've

taken jobs outside the united states. we ought to be looking at congress and the administration. the federal government, the policy decisions that have been made here in washington, d.c., we ought to hold up a mirror when we are critical of making about where to conduct their manufacturing or what is imported or exported, we ought to be holding up a mirror to congress and say what have you done, congress, to make it a better business environment for businesses here, not for the sake of the business but for the sake of the people they do hire and the sake of the people they may and in the future will hire. >> trying to -- there's so many different things we could talk about from here. and i know how much time we have left, which is not a lot. we got to go? >> i appreciate the conversation. this is important topic. >> i was going to ask you obamacare last night, it's happening. it's unbelievable. it will happen this time. i'm just wondering what the replacement looks like. but we don't have time.

>> i'll be glad to come back. we'll talk about the affordable care act. >> where'd you grow up? then we got to go. did you grow up in kansas? what city? >> absolutely. born in great ben, kansas, grew up in a town of a couple thousand people called plainville. what else would you expect? >> i know hayes and russell -- >> oh, you're good. hayes has been our hometown. >> and i love the j hawks. anyway, thank you. >> i'm going to watch them play, i'm wearing my j hawk tie this morning. >> every year. anyway, thank you, senator. we'll see you. >> thank you. >> when we come back this morning, jim cramer will join us live from the new york stock exchange. stay tuned. you're watching "squawk box" right here on cnbc.

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let's get down to the new york stock exchange. i was looking forward to this, jim, because earlier i was thinking i was going to ask you to come on because we had delta on. >> right. >> so delta already said -- and, you know, i gave him a chance to say, well, i think it has to do with the election being over, but he didn't say i think it. he said it is because the election's over and there's these animal spirits. they posted better numbers and he was going to give me a per

share amount that helped boost earnings in the current quarter. so my question earlier, will there be companies that already see the benefit of what we've been seeing in the market in these fourth quarter results? and which ones would they be? for an airline you just book your flight, you know. it's not like you're building something or investing for the future. what other place would there be, restaurants, what else could do well? >> remember continental said the same thing the other day. you had two confirming. i thought phil's interview, i listened to it, i know a lot of people said delta rallied in advance. i get that. maybe a priceline could do better. i do believe that travel the one i would say is probably the most important, the biggest visible, the one that goes higher, american express. this is travel and entertainment. this stock is stuck in the 70s. i think it goes to 90. i think it's the cheapest stock in the dow. it does not reflect any of the animal spirits that have happened since the election. >> do transports always move before everything else? >> yes. >> yeah? >> yes.

and by the way i think the rails are moving in part because you have to take out the idea that coal is going to go away. not with gary pruitt being head of the epa. if anything coal can be very competitive, natural gas gets stronger. i think the rally in transports is so overlooked by the sugar high people who don't really care and just take a look and just say, you know what, nothing should have gone up. i say look at the transports. these do not go up idly. it was a very good quarter for both continental -- united, continental and for delta. and welcome back, becky. >> thank you, jim. it's great to be back. >> thanks, jim. we'll see you at the top of the hour. later on "squawk on the street" don't miss vanguard founder jack bogle. you're watching "squawk box" on cnbc.

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welcome back everybody. our guest host this morning has been st. louis fed president jim bullard. jim, we've talked a lot this morning about the potential policy changes in washington. you've said yourself you think a lot of potentially strong changes, good things, but you also think there are some risks. >> yeah. i think there are things that are going on that are very positive. i think the deregulation can do a lot. i think the tax changes can do a lot, especially i think this corporate tax change is a big

deal. but you've got some risks as well. you've got -- what are you going to do about health care? you know, what about this border tax? you know, so you got trade issues. you got a lot going on. so there's some risks as well. >> jim, it's been great having you here. >> thank you guys. >> welcome back, becky. >> thank you. make sure you join us tomorrow. right now it's time for "squawk on the street." ♪ welcome back, becky. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. focus changes today from fiscal to the monetary. no fewer than five fed speakers today. yellen with a town hall at 7:00 p.m. as the nasdaq goes -- tries to go for its first eight-day win in nearly two years. europe is mixed. ten-year yield down to 2.33. that's a two-month low after trump some say disappointed on the reflation theme in