today too. >> 10:00 on tuesday we'll have jack lew exit interview. you guys have a great time. some schnitzel -- >> i think we're taking the beef jerky with us. >> sausage, what do you eat? >> fondu, cheese fondu. >> bread. >> eat well. >> thank you very much. have a great weekend, it's a long weekend. we will be live in davos, "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange. faber's off today. huge friday. earnings season begins with the banks. got some big name upgrades. europe finishes the week strong. retail sales, wholesale prices mostly in line. our roadmap begins with the banks, j.p. morgan, b of a and others out with results, china responds to rex tillerson's comments on the south china sea,

plus more ceos head to trump tower. and another automaker, another emissions probe. we will fill you in on that. but it is all about the banks this morning. wells misses, j.p. morgan beats, b of a posts some mixed results. jim, you just tweeted enough with the binary trade. what do you mean by that? >> we're in a difficult situation here because there are people who've been saying the banks have run up so you got to sell them. that's trader talk. when i was at a hedge fund i would say i'll put out bank of america at 23 buy back at $22.88. these are unbelievable quarters, they're unbelievable because they've become growth stocks, coca-cola, they do not have the ability to run this organic growth. these are remarkable quarters and we just started. bank of america haechbt seen the gains yesterday. numbers i'm looking at i've calculated 100 basis points in fed increase, you get $3 billion more. just added on. do you think that proctor & gamble can put up that kind of number? $600 million baked in the next

quarter. wells fargo, all right, now, the american people, we love them, right? we love the american people. they had 6% deposit growth. they had deposit growth at wells, not outflows. what happens when people forget? this is like e. coli and chipotle. wells fargo gave you e. coli and people have already forgotten. >> i got to push back a little bit because deposit growth is up, but new retail banking business is down double digit year on year since the scandal. >> so was chipotle. >> so you're saying you don't need new customers, just existing customers to keep going? >> yes, i think because of the way we're set up with the fed wells fargo is not going to have a big decline today like it would the stock like you would have expected. the sooner people put this back and sloan is a good enough executive, people realize, wells makes loans, they're a good lender, the cross selling issue will be behind them. they've changed a lot -- i'm not forgiving them. what they did was terrible.

i use wells. but i would tell you that the american people will forget because the american people are forgiving. and wells will unless there's -- look, if the republicans had lost, we would have witch hunts -- i mean, the witch hunts would last -- it'd be like sa salem, as a matter of fact salem's in massachusetts, isn't it? >> yes, it is. >> but j.p. morgan was best in show. it was a remarkable quarter. >> record annual profit, almost $25 billion for the year. >> geez. >> did include a tax benefit of about 475, but they steal from wells, jim, the crown of r.o.e.11 versus 9 a year ago, that passes wells. >> yes, they did. they deserve that. i know some people at j.p. morgan had felt i was partial to wells because that's the way they play it. they're very convivial these guys, the different banks. i mean, they hate each other. so when you say something good about wells, they immediately come back with a fact. but the point is that j.p.

morgan -- it was the best quarter ever. and all i can say is they're going to be very many quarters ever and the key thing will jamie dimon have the luxury to be able to pay back a higher dividend, will trump's view filter through all the different agencies? i think it will. j.p. morgan did a great job. by the way, i would feel the same. bank of america they have way too much capital. but j.p. morgan's quarter was pristine. line by line it's amazing. by the way, also bank of america lowest credit losses in the history of bank of america. so you're looking at these things and saying, i'm, i'm going to sell them. what are you going to buy? i'm going to sell these and buy estee lauder? sell these and go buy southern corp.? yes, the nvidia guy is not going to -- because he never own bank of america to begin with. but i'm saying bank of america if you want to sell it what do you think is going to happen? there's going to be a bunch of rate hikes. their numbers are going up, bigger dividend, they boosted the buyback. and you're going to say -- oh,

yeah, i remember i sold it at 22 because cramer said that wasn't as good -- i'm not playing that game. >> i got ya. you mentioned dimon. he did make some statements on the economy. said the u.s. economy may be building momentum. looking ahead there is opportunity, he said, for good, rational and thoughtful policy decisions to be implemented which would spur growth, create jobs for americans across the income spectrum and help communities. and we're well positioned to play our part. >> yeah. that's true. >> echoes the comments from the bac's that impact the trump policy trade, it's more about waiting for rates to kick in, the impact to kick in in q-1. >> i think that's right. look, let's look at it this way. i think we've seen peak compliance costs. more people being added. there was a rush to build compliance. and they paid top dollar for people who didn't generate any revenue. if you could demonstrate that you were a compliance officer,

you were going to make more than a loan officer at j.p. morgan, that's changed. okay, we're going to slow that down. the other thing that i think is going to matter is technology. bank of america with just remarkable adoption of technology. so the costs keep coming down. so costs come down, rates go up, the estimates go up. estimates go up and they become growth stocks. they're no longer valued on book value. they're being valued on the possibility that they may be growth stocks. and i think they are. >> all right. so for those who say j.p. morgan's up 23% since the election, butte estimates are u 4. you say the estimates will now start catching up? >> yeah, the estimates don't include all these rate hikes we always talk about. i think when i look at these i try to figure out, okay, what would i rather be in? and i come back and i say, okay, listen, the guy who's in j.p. morgan, is he choosing between facebook and j.p. morgan? i mean, no. j.p. morgan is a totally defensible buy because it doesn't sell at a high multiple-to-earnings. now, here's what's remarkable,

carl, i haven't used a multiple-to-earnings for a bank in eight years. i've never cared. i've never cared. but what's say this sucker can make seven bucks, okay? let's say it makes seven bucks and i give it a 15 multiple because suddenly we can actually put a multiple on it? >> right. >> then it's not going to stop here. again, i think there will be people who say, god, don't listen to cramer, he's on some sort of sugar high. there's this big sugar theme. >> yes. >> i say, hey, send me some sugar, lend it to my neighbor here. the issue that i have is that the bank stocks if you give them price-to-earnings multiple, they're the cheapest of any group in the stock market. and i would sell proctor & gamble and buy j.p. morgan right now. >> well, a big part -- i think 40% of the growth expected in s&p earnings this year is going to be energy and banks. >> well, the energy stocks, i mean, there's no -- ain't no stoppin' those now. those companies at a $53 basis,

i mean, i saw wpx, i know people don't know wpx, a fabulous guy, used to be continental resources, he did a $700 billion deal buying permian, doing $600 million to pay for it in stock, there's more demand for it than ever. bank of america, i gave them such heat last year for their oil exposure, four of their loans went bad. i now feel like, i'm sorry, i apologize on air. but this is the kind of thing that's happening is those criticized loans went away. the bank loan -- i almost think they should make more loans because they have so few. if we want to have this country grow, mr. trump, listen to me. that's like mr. gosh -- tear down that wall. if you have a home with j.p. morgan and you want a second home and you have the amount of money to do it, j.p. morgan has to stop turning you down. they have to stop sending you to a story. >> yes. you mentioned trump. we have a week to go until the inauguration and now this

influential chinese state run tabloid says the u.s. would be required to wage war to block off islands in the south china sea, that's in response to what secretary of state designate rex tillerson at the confirmation hearing yesterday. without elaborating, tillerson commented he wanted to send a signal to china that access to the islands is not going to be allowed. this was an op-ed in a newspaper run by the communist party, jim. but they said that any approaches like this in their words would be foolish. how much attention do we pay to that? >> well, i think -- okay, so maybe some american companies get hurt. maybe they do something to retaliate against american companies, but this is a different regime. i want to hear general mattis, i thought it was interesting by the way, russia is the biggest enemy, not china. but i think the chinese better get used to this. it's kind of like a brand new ball game where we don't think, you know what, they keep talking like that we're going to sell less prel. those days are over. >> fascinating testimony yesterday by mattis.

>> whoa. >> backing up nato. right? >> yeah. i mean, remember he was supposed to be played by harrison ford in a movie. i'm not kidding. you can google it. harrison ford supposed to play "battle for fallujah". >> let's take a listen in case you missed some of what the general said yesterday on the hill. >> do you believe that that world order is now under more strain than it's ever been? >> i think it's under the biggest attack since world war ii, sir, and that's from russia, from terrorist groups and with what china is doing in the south china sea. i think deterrence is critical right now, sir, absolutely. and that requires the strongest military. >> do you think we have the strong enough military today in order to achieve that goal? >> no, sir. >> all right. i guess we'll see if geopolitics rattles the market in any way. hasn't so far, didn't in '16. >> no.

mattis is in the military known as someone who felt that the government itself didn't backup the military. so that's a very important point because he often felt that our people were -- our soldiers were put in harm's way without any thought. and that if you do that again, mattis will be gone. he will not stand for it. >> really quickly changing gears, getting something on the record, the latest automaker swept into an emissions scandal. french prosecutors have opened a probe into wlo the automaker cheated on tests similar to volkswagen and fiat. what is going on with the emissions scandals around the world, jim? >> beyond me. i mean, these are things that younger people look at and don't want to buy the company. although volkswagen did have good numbers. >> yes. >> again is shocking. >> yes. and china buys half of their cars now.

>> that's a good point. gm sells a lot of cars there too. when i read these things i just think are eyes going to glaze over? i don't know. because there's now so many of them. but there is kind of a -- it's stunning. i mean, you know, these are big purchases that people made. and this is fraud. and i don't get it. >> yeah. >> i think we're all kind of stunned. i saw fiat actually go down yesterday. in a day when the rest of the motor stocks went up. so maybe someone's relating them. but right now we're in some sort of mode where you can say a lot of things about different companies and the stocks seem to reflect the animal spirits. >> yes. when we come back this morning, we'll take a closer look at the ceo parade at trump tower. only a week to go before the inauguration. take another look at the premarket. seeing some dollar strength after retail sales and ppi came in okay. china exports we'll get to, some comments on oil production. and it is friday the 13th, s&p up 57% of the time, better than average on the 13th on a friday.

more "squawk on the street" in a minute.

♪ all week long power players in business have been meeting with the president-elect at trump tower. most recently henry kravis, alphabet's schmidt, randall

stephenson. we had a good chat with david yesterday here, jim, about what you do when the president-elect is targeting a unit of a company you want to buy. >> well, we're kind of not used to it. look, i remember studying when the president said we got to take over the rails, truman, i remember when kennedy criticized the top four executives of bethlehem steel for making too much money. so it's not completely out of bounds. but, you know, we're in a new world of granularity when it comes to the president-elect and companies. and i think we got to get used to that. he knows who makes the jets. he knows who makes -- he's very hands on. i mean, when you look at that cabinet, i think that cabinet is intimately familiar with the actual way that we do large business in this country. better get used to it. he's got the names. i'm not just talking about paul. >> this morning tweeting about three hours ago totally made up

facts by sleaze bag political operatives, fake news in regards to the memos that we saw -- heard of this week. hillary clinton guilty as hell, should never have been allowed to run. a loss because she campaigned in the wrong states. does that need to go away in order for the market to stop worrying? is the market even worrying? >> i think the market is just separated it entirely. i think the market looks at people who've been picked, look at tillerson and say, geez, tillerson turns out to be more substantive than we thought. i think the market looks at gary cohn and says he's in there saying that's okay, you can say that, no problem. let's remember lower corporate tax, repatriation. the personal nature of the president-elect reminds me very much of when truman criticized "the washington post" columnist who didn't like the way his daughter sang saying he was going to punch the guy. so we do have that. that was in a letter, that was not in a tweet.

so, i mean, there is a truman like nature of this president-elect if you go back and read truman. he was very personal about these things. but he's taken it to a little further. >> gallup numbers out today below what bush had 61 going in, bill clinton 68 going in. do you think that matters when it comes to getting that policy done? we did have larry fink on this morning who said if the rollout of policy is slower, then in fact the markets are ahead of themselves. >> well, i think tillerson is going to be -- tillerson doesn't get approved, then we know that -- >> that's a proxy for -- >> i think tillerson's the proxy. not mattis. mattis if he isn't approved, there isn't an administration in the world that wouldn't be proud to have that man serve. but i think tillerson is the kind of test case. many of us i think many people who listened to tillerson felt, geez, he equipped himself very well. if tillerson is rejected, i

think a lot of what happens is going to be more dependent upon earnings. today was a good day for earnings, but there would be a lot of days where the dollar's so strong you have a bad day. >> funny you mention that. nomura today argues the donald trump honeymoon is over and we're heading into a period of dollar weakness. that was what some tried to allege yesterday. >> really? >> that somehow this was the beginning of the end for this big surge. >> i just don't see it that way. i just see that there's some sort of sense that washington may not be -- i'm old enough to remember reagan where he talked about let's get the government off the backs of its people and there were a lot of people who didn't vote for reagan but came around to the idea that when the dow started going up that maybe there's something new happening here. and i think that there's something new happening here when it comes to business versus some of the personal ways that the president-elect's handling himself is transcending for stocks. may not be transcending for all the other stocks, but for stocks

i think people are saying, okay, let's see, wells fargo, you know, the president-elect is not going to call them and say, you know what, it's time for you to be punished for cross selling. i mean, it's just not going to happen. and i think that when bank of america decides it thinks it should buy back more stock and it calls the government and says that, i don't think the president-elect trump is going to say, you know what, i don't like bryan moynihan's game here. i think he thinks, okay, well, brian's smarter than i am about bank of america. he should. so that's the tone. that's different. and i think people have to understand that the tone of weaving in business people is different. i always felt i remember during -- remember the great oil spill there were oil executives who came to me -- i have acquaintances in the oil business, and a lot of them said, listen, i call the president, i wanted to speak to the president about how i have solutions from acondo but they didn't want to listen to me because we're oil executives. the demonization of business that occurred is over.

and i think that changes things. >> yeah, certainly being echoed and comments early in this earnings season and i'm sure we're going to hear more. >> not only demonization, i don't see or hear a lot of people saying that moynihan he's making too much money. i think they're saying, oh, bank of america's making a lot of money. >> yes. when we come back we'll get cramer's mad dash, count down to the opening bell and talk more about the trading day ahead as earnings season does kick off. back in a minute. ♪siotice.yo notr 35es rs fhearede we we.re

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just about six minutes to the opening bell. let's get to cramer's mad dash. a lot of upgrades today. tiffany, comcast, netflix and -- >> and facebook. i'm glad you put it in that context because this is the first day where i feel like the analysts have said, all right, i'm not going to fight it. i see comcast over 70, i see tiffany acting better, netflix is on a roll. sell to hold deutsche bank. but the call i want to focus on is raymond james going buy to strong buy facebook, better channel checks. this is the second one we've had this week which is really about how the money advertisers continues to go to facebook. and this idea that don't forget there's instagram, so the younger people -- i mean, there's this thesis going around which is that older people don't like facebook. they do love instagram. and the money's going that way and they're finding more ways to monetize. so i think this is great. the reason why this is such an interesting call is let's put this number out there. 30 times 2018 earnings would

take this stock to 160. now, 30 is not that expensive for a company that's generating a lot of cash and has really grown quickly. >> yeah. >> so the multiple has shrunk. the stock does deserve to be higher. did have a lot of to and fro there. when i was in hawaii recently where markz zuckerberg stays -- major asset for heaven's sake. but i think he's pretty involved. >> ray j. says there's three debates, add debate, engagement but also expenses. how much do we worry about that heating up? >> i really felt they gave comfort on the expenses. i think that the ad load which had been such a downer on the conference call made me feel like, wait a second, that was all much adieu about nothing, to invoke shakespeare, what i feel more importantly is they have momentum among advertisers.

it's interesting because you don't really hear the tv losing share. but, boy, did i feel after i read that report that facebook they don't have enough people answering the phone to handle the orders that they're getting. >> yeah. 100 million hours of video a day. >> isn't that something? >> unbelievable. >> i'm doing a facebook live today for "mad money." >> we'll get the opening bell in four minutes. don't go anywhere.

you're watching cnbc "squawk on the street" live from the financial capital of the world, the opening bell in about a minute. busy friday. busy friday the 13th. got e con data and retail sales, bank earnings are kicking off earnings season. there was some discussion in the banks, jim, about debt issuance versus equity issuance. it seems like companies are more willing right now to issue debt while it's cheap rather than stock. >> yeah. and that's going to be until the companies that issue the stock or the companies that are the oils where it would be prohibitive. they would have to charge there the rates would be much higher. to take advantage of this is a fantastic opportunity so they're going to keep doing it.

rates are low. they're going to issue. >> let's get to the opening bell here and get you the s&p at the bottom of your screen. at the big board it is founder and ceo of shark tank host. we'll get to him in the next hour. over at the nasdaq, it's willie geist, host of nbc sunday today, the "today" show celebrates its 65th anniversary. what an institution that show is. >> it was on why you got dressed. there wasn't -- that's the way life was. i don't know. it was always on. >> our congratulations to all of our friends at "today" and to willie as well. so what do we need to watch for at the open here, jim? >> i think we have to take a look to see if we can have more than one group rally. can we have the banks rally and the techs rally? we've been kind of ham strung

lately. it's been narrow. we had the biotechs until president-elect trump decided to talk about the drug stocks. we need to see a little broader leadersh leadership. and if we can see -- techs and banks are a lot of the s&p. they can do it. i would like to see -- don't forget, i mean, we've been having these interesting situations where the dollar or oil, the dollar was calm, oil was up and i thought we'd have more of a rally yesterday. but i do think that we can be set up if you look at the pan plea this week, katie holmes, i know numbers were great, i went over the delta call, united airlines, very good call, you got the facebook call, bank of america, bank of america is really about lending. j.p. morgan about lending. it's hard to feel as negative as you might about the so-called sugar rally when you actually go through the numbers. so there's a lot of readthroughs for the three companies i just mentioned, for the banks and for

the airlines and for housing. lots of readthroughs. >> yep. >> very positive readthroughs. >> financials are going to help lead at the outset here. got jpm, wells, lincoln and others. fifth third up there along with some retailers, jim. this tiffany upgrade is worth taking a look at when you pair it with the reesh mont numbers earlier in the week, luxury, people are feeling a little bit better. >> isn't that interesting? because that had been -- i have don wood on tonight from federal realty, a large shopping center company. the companies that are doing well in these shopping centers are the luxuries. it's the companies that make -- a fendi's doing well, some of the companies my wife sends me the names of that i have to buy presents doing well. and that's where that end's strong. and i think tiffany ever since they got the cfo and really starting to get organized it's a good situation. remember that's also huge u.s. business.

and it's funny because the dollar's so strong you would think maybe it wouldn't be that good, but yeah, i think the rich people are spending. brunswick, by the way, boats, that stocks keep hitting a new high. that's rich people spending. the kb homes, the rich people are buying rich homes. you know, the rich, they're not like you and me. let's go a little fitzgerald. >> do you think they're betting on a tax cut that we don't know much about yet? >> yes. i think they are. i think much like when reagan was elected president rich people started spending. and you couldn't figure out what were they doing before. but the interesting thing was they were hunkering down. and i think that you're going to see wealthy spend more. i don't think it's reflected yet in high end real estate up in the east because it got a little too supercharged. but i do think that they'll be areas like the midwest where housing has not been that strong that i think is going to get strong. >> yeah. some news on some smaller companies today. pandora cutting 7% of workforce, but they do say q-4 revenue is

going to beat prior guide. >> and pandora plus is doing a bit better. i thought that was important. i think a lot of people will keep thinking pandora's going to be sold. these numbers made me feel that is less likely that they will be sold. so i think that's important. i think when i see some of these tech -- you know, steve liesman is doing a lot of stuff on the border. and i'm just thinking, boy, peep just keep talking about restaurants -- i'm sorry, retailers in that, tech could be hurt very badly. i'm very conscious of the fact tech companies bring stuff in. i need to see a skyworks solutions recover from yesterday. i need to see people stop fretting about the near-term apple, and that hasn't happened yet. there are some analyst meetings and some talks that have moved stocks like monster beverage a company i've liked a lot that's been moving. boeing won a big order we didn't expect they could win. there's a lot of news coming out. i need to see if you gelt banks

and financials and health care, then you're going to get a special tonight. tonight's not a special night because it's friday. >> you never know. 20k is -- >> i'm available. i'll tell the bosses right now. i am avail -- the whief is still away. one day she's going to come back and i won't be able to do the 20,000, but she's away and 20,000 will play. >> it's hard because we're oncall night essentially. >> every night. that's why i get chicken from king's. i never go out to dinner. >> you mentioned 100 jet order from an indian based budget airline. >> right. >> on the mac737, an option for 50 more. you got boeing, mentioned apple too, that war over 119, we're closer now to 120 than we are 119. >> it's such a battle and the company of course silent about anything. every day there's a new guy that says this is no good. every day there's something who says, hey, listen -- peter thiel, they're finished. i'd like to be finished with $40 per share overseas.

i'd like to be finished with the idea this thing is irrelevant. i would love this to be irrelevant. i would love the watch to be irrelevant. but unfortunately i'm tethered like millions of other people around the world. and we may think this is a huge loser, but we do everything on it. this is not a smith corona martian typewriter. there, i said it. >> thiel got pushback from some. i think it was bill george on our show yesterday said he's getting too much publicity because he hasn't built anything in a while. >> the car, i guess they're going away because the model t -- the model a didn't really follow-up that well. goldman sachs also doing better. that's also a key because jim stewart, who i guess is not on today unfortunately. >> i don't think so. >> but his goldman sachs piece reminded us that when i worked at goldman, the bosses would come in and say what are you doing for the public? and of course goldman became part of some sort of i don't know octopus, squid, whatever the negative thing was, we all forget, but there was a great list of all the people from

goldman who are in business. and goldman reports next week. there is kind of a sense that goldman stock has moved upmost. that will be the next big test in the financials. >> b of a has a note on the dollar out this morning. title is the first -- waiting for the first 100 days. beyond the very short-term the outlook on the dollar they say will depend on what the new administration will deliver in the first 100 days. in our view a clear message from trump's press conference is that he wants to get things done fast. big story's going to be his penchant for speed and the institutions built into congress that are meant to slow things down. >> boy, you got it. i mean, that is the story. it's better than any way i've been able to put it on "mad money." that's the story. the breaks in the system. the checks and balances like we learned when we took civics class. they're all stacked up against what he wants to do. but they were stacked against fdr and obviously fdr came in in a much worse situation. this is one where things are

kind of okay in the economy so we really wonder whether he can jam everything through. but he's got all houses of congress. it's not like he wants to pack the supreme court. >> yeah. he did say nominations for that probably in the first couple of weeks. there's a lot to get to. >> yeah. i follow twitter to see who's going to be the next person. i hope -- geez, i hope that -- what do you think schwarzenegger's rating's going to be this weekend? does a beatdown help or hurt the tax cause? >> j.p. morgan leading the dow -- >> j.p. morgan it was the best quarter ever from a bank. okay. and i'm not just saying that because -- hi, jamie, because jamie's watching, i'm saying it because it is. some of it's because jamie's watching. no, i don't want to get invited to the parties, but it was a great darn conference. it was a great call. it was a great report. it was, wow, they did it. and sales at 14 times earnings.

that's wrong. >> let's get to bob pisani see what else is moving down on the floor. good morning, bob. >> little bit of a reversal, carl, good morning everyone, from the recent trend. little bit of a rehearsal. dollar's up, bond yields are up a little bit. that's encouraging. and we're also seeing the stock market up as well. take a look at the sectors that are moving. and it's encouraging. and we are happy that banks are leading because it's been a problem now for a number of weeks. not so encouraged about everything else. consumer staples not great. industrials are doing nothing. that's kind of disappointing. materials are doing nothing although they've had a good start to the year. and energy another dud today after days and days where energy stocks have been doing absolutely nothing. so let's review where we are right now in 2017 where the leaders and laggards are. technology has had a very good start. that surprised a lot of people because semis were so strong last year. usually try to sell them, but that has not happened. good news. health care big laggard last year. that's been rallying. there's two major headwinds --

tailwinds, excuse me. but cyclicals have been slowing, industrials haven't been doing anything, even global economic data is better that's been slowing and banks and energy have been lagging. other than technology and health care not much in the way of leadership here. we've talked a lot about the banks. we won't belabor the numbers, all beat on the top line and bottom line except for wells fargo. but you see here these are nice numbers. exactly what you want to see up 1.5%. the important thing here is we're doing okay on the numbers. the commentary is decent. let's take a look at the kbe. here's the problem that i have with the banks. we've moved up 20% or so since the election. this is a lot to ask because now we're anticipating 2017 earnings numbers are going to be terrific. the guidance is very, very limited. we're not getting that much here. here's jamie di monmondimon, th conference call will begin just a few moments here, but dimon said this morning u.s. economy may be building momentum,

looking ahead there's opportunity for good, rational and thoughtful policy decisions to be implemented which would spur growth, create jobs for americans across the income spectrum and help communities. and we are well positioned to play our part. again, we should hear very shortly a little bit more of the conference call it will be beginning shortly. bank of america not surprisingly didn't say much, though the cfo did say one interesting thing, this is in the press release, recent rise in interest rates came too late to impact fourth quarter results, we expect to see a significant increase in net interest income in the first quarter of 2017. okay, it's not a number, but at least it's an acknowledgment. they did reference that again in the conference call. the conference call is ongoing right now. mr. donofrio said expect a similar tax rate for 2017, that would be 31% for their average excluding unusual items. that's about their tax rate in 2017. so not a lot, but we'll monitor and see if anybody else has anything else regarding 2017. overall i think it's important to note that it's been a tough

year for earnings overall. we are closing the fourth quarter out getting numbers, but here's where we are on earnings per share up 0.9% for the entire s&p 500. remember something, folks, the s&p was up almost 10% in 2016. and what this tells you is almost the entire gain from last year came from a multiple expansion. it did not come -- s&p did not advance almost 10% because earnings were up. it came because the multiple expanded. one of the big problems, i'm not making excuses, but when you have a major sector like energy and the earnings are down 77%, you're going to have a hard time getting much in the way of advancement. obviously if you take out energy overall the numbers were a lot better. i am not in that camp let's take out the stuff we don't like. and i'm not trying to make excuses, but i would point out that there's very high expectations for 2017. overall numbers are 12%, but we have double digit expectation gains for technology, double digit for bank stocks, double digit for materials.

and get this, 350% expectation of an increase for the energy sector overall. exxonmobil, the expectations are for the earnings to double in 2017. my point here is this is a lot to ask for the market. that's why we're watching very closely for the guidance right now to see if we can get those earnings information closer to where the stock expectations are right now. 53 points, we're 55 points from dow 20,000 once again. carl, back to you. >> bob, thank you for that, bob pisani. got a new record high for the nasdaq. let's get to the bond pits as well. rick watching the dollar and bonds. good morning, rick. >> yeah, 20k not too far away either. you know, rates are coming back pretty quick. the dollar to some extent with respect to where they closed last week. if you look at a one-week of fives, we're up three today. we are down two on the week. if you look at a one-week of tens, we are up four on the day only down two on the week. you know, let's go through something real quick. we're currently around 147 on

threes, that's about where they were auctioned. it's a push. but if you look at the other maturities, if you look at tens, they went off on the objection at 2.342, we're currently at 2.40. you lose -- i guess i'm on camera stage left, it's a losing trade at least based on where the flows are going to be when that gets settled up with the auction. 30s the same way, they went off 2.914. currently hovering at a higher yield. as a matter of fact they're at 3%. another loser if you participate in the auction. now, let's look at a chart from the election of tens minus bunds. fascinating because there's so many things that work whether you call it hope or call it more than hope regarding the layout of what may occur in 2017 legislatively and politically, even though rates are pretty lofty all things considered when you think we're at 1.35 in july, the spread between us and europe has narrowed quite a bit from the top it was 235 basis points.

it's now 206. on the election it was much lower, and this is really significant. it was 167. that's something to factor in. it's all about foreign exchange this week. look at one-week euro versus dollar, euro stronger, dollar lower on the one-week chart. on the peso the peso the dollar keeps for the most part forging ahead. and it is at all-time records with regard to that, but the dollar index settle at 102.22 last week. and even though it is well off its sub 101 intraday lows, currently at 101.50, it's still a bit down on the week. you want to continue to pay attention both to 101 and last friday's settlement of 102.20. carl, back to you. >> rick, thank you very much. rick santelli. got some comments from the opec secretary general today, jackie's watching that at the energy desk. jackie. >> hi, carl. we're watching prices very closely this morning. you can see across the commodities complex we're a little bit lower here. crude prices trading at 52.93.

now part of this is the strength in the dollar that rick had mentioned, but also it's sort of the traders standing back and watching this market very closely. we've got all these earnings coming out. we have a lot of political news flooding the marketplace as well. it's sort of like a cat waiting to pounce. one trader described it to me as watching it and just sort of surveying the whole scene trading these ranges very tightly. yesterday we closed at 53.01 and shows you just how precise it is. that was a key technical level. so today we're expecting to see a little bit of a pullback. at 1:00 we're going to get rig count numbers. you're probably going to see here in the united states that those rig numbers went up again. that's a problem when it comes back to the fundamental story. so right now these prices are volatile. and watching a lot of different factors. but, again, a close over 53 again if we can make it today still will give us a loss on the week of a little bit more than 2%. back over to you. >> all right, jackie, thanks so much, jackie deangelis. when we come back we're going to tell you who's giving apple a vote of confidence and why. and later today, the cfo of

wells will be on "closing bell" this afternoon. dow up 55. 54 points once again from 20k. back in a minute. wi t ht& blngrirm thtrav, evismaa thr val et yoo yak.rsakk icngio neik

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♪ apple getting some good news after an aboutface by consumer reports. the publication now recommending the latest macbook pros after previously rejecting them because of battery woes. consumer reports says the problems were addressed with a software fix released by apple earlier in the week. we were just talking about the stock, right, about 119.55. >> right. i think apple is very much -- when you see netflix go up and watch twitter feed people say why doesn't apple buy netflix, this is something many times i've suggested for them to do. they're just not going to do it.

they believe in making it themselves. and if you don't like the stock, then i suggest you get out of it, okay. i think that this is -- you own it, you own it because it's very inexpensive, you own it because the 8 will be good, i don't care that the 7 seems to have maybe gone down a little bit, but the service revenue if they did augment would be so easy they bought sirius. i feel like -- i've made my point today. >> you sound tired of lecturing people on apple. >> well, candidly i think they're very smart guys. a lot of times when you tell people, look, i think you should do this and they make the most company of any in the world, they have a right to be able to say thank you, jim, that's very nice. >> funny you mentioned their inclination to do things in-house. that's one reason the journal says today if they're going to do video, they got to go all-in, right? they can't do these little surgical entries into original content. >> i think tim cook likes a good -- you know, i think he likes a good narcos, do one of these things.

look, you can develop these. they're obviously very much as reed hastings told me from netflix, they're very algorithmic, did you like sc scarface, breaking bad, you'll love narcos. amazon's been telling me they've been sending me more stuff about nazi germany, i'm like, okay, sure, i'll take the 5% discount. that's machine learning. and apple could do really well with machine learning. >> we're going to get stop trading with jim in just a moment. dow's still up 52. by the way, tuesday right here on "squawk on the street" outgoing treasury secretary jack lew will talk with our own steve liesman only on cnbc. back in just a moment.

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time for cramer and stop trading. >> i want to highlight a stock of a company that's on tonight for "mad money," first horizon. this is what's going on. first horizon is a small bank -- well, medium sized bank that reported a number that on the surface didn't look that good. people say it was a miss in the earnings. but the net interest margin was up. and this is what people have to recognize all we really care about is how much are they making on your deposits? we never cared about earnings or

stocks would have been much higher. this stock has had such a big run and it turns out, yes, they can make a lot on deposits and deposits are growing so people are buying first horizon. that's why this rally which i said was not necessarily done is going to continue. because the stocks are inexpensive when you think that the fed's going to raise rates. and they're expensive if you think they won't. does anybody think they won't raise? they told you over and over again they're going to. anyway, bryan jordan will talk about that. i've been patient with bryan because i knew bryan was going to deliver. boy has he ever delivered. that's been an amazing stock. >> one last question on the pace of hikes, did yesterday's fed speak convince you there's enough dissension to make that uncertain? >> i think that the economy's going to be going at a clip that they'll look silly if they don't. i mean, this isn't funny because mr. bullard's a great guy, but this economy's going to develop a head of steam. >> you think the doves will come around? >> i think that small businesses -- i've been on every

conference call of any company that's reported and december was insane in this country. insane how strong. >> good long weekend, jim. >> yeah, i'm going to tell the wife, listen, we'll go out saturday night i'm not going to watch football because that's probably going to be the worst game. otherwise i'm glued. >> "mad money" tonight 6:00 p.m. eastern time. when we come back we'll talk cyber security and age of trump with shark tank's robert herjavec. dow in the early going up 29. a 4 eairitorththath lk? tfwaca,jueat gstt ey

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♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, mike santoli at post nine of the new york stock exchange. here we are again wondering if today is the day for dow 20k. 80 points away. a lot of this happening on the back of the banks. j.p. morgan and goldman are the two best dow components at the moment. >> we've got more breaking economic data at this hour crossing the tape. rick santelli in chicago has those numbers for us. rick. >> thanks, sara. now, maybe november business inventories isn't your favorite number, but there's a couple unique things here as it jumps up 0.7% month over month.

it is november. up 0.7%, you have to go all the way back to january of 2013 to find a higher month over month change for business inventories. and i find that fascinating because at the end of the day inventories are a good indication if you're building widgets. maybe it's in the rearview mirror. but really the best question that this doesn't answer is are those widgets going to be purchased or is this going to be another inventory cycle? that will be key given how lofty some of these valuations have gotten. now, let's go to our january preliminary read on university of michigan sentiment. 98.1, a little cooler than expectations, but sequentially follows the final read for 2016 at 98.2. so it's only one-tenth lower there. we will pull this when we get our final january read, but just to give you an idea the last time 98.1 was a final read in terms of lofty or not lofty, we don't have to go back very far. 98.1 is pretty high.

and when you consider that the last read at 98. 2 was the best since january of '04, we haven't fallen much even though it failed against expectations. currently atlanta gdp now for the fourth quarter is 2.9. today's date especially retail sales a price subtract a bit away from that. sara, carl and the gang, back to you. >> rick, thank you very much, rick santelli. as we said earlier big banks kicking off earnings season, wells, b of a, blackrock all reported this morning. happening now the j.p. morgan earnings call just underway. we're going to monitor that and bring you any headlines as they develop. in the meantime, wilfred frost digging through the numbers this morning joins us with a lot to get to. some fascinating story lines embedded in all these companies, wilf. >> absolutely right, carl. as you said earnings call just starting but we just had a conversation with marion lake and jamie dimon ourselves, but overall sale prices were initially soft due to high expectations and one or two soft prints such as wells fargo

reported eps and bank of america, j.p. morgan numbers either way strong across the board but shares have moved up as focus has turned towards 2017 as opposed to the fourth quarter itself. here's brian moynihan, ceo of bank of america, talking about rate increases and the way that will play into earnings in 2017. >> these rate increases were late in the quarter. they didn't benefit the fourth quarter number, that's significant. but we look forward to first quarter '17 when expect increase all things remain equal by approximately $600 million per quarter despite having two less days in that first quarter. >> on the fourth quarter itself, j.p. morgan comfortably beat bank of america in trading revenue. having just spoken as i said to j.p. morgan's cfo marion lake, she said the trading performance was, quote, pretty broad across products and throughout the quarter, combination of affirming growth globally as well as notable political events during the quarter. jamie dimon was also on that

call and on president-elect trump's appointments he said, he is putting real professionals in the field. mnuchin is talented. ross is talented. tillerson is talented. give them time and they will do the right thing for america. he also suggested he was as bullish as he was around about a month ago. he's not bothered by market moves. he said he was neither euphoric nor depressed. as for wells fargo, the operational performance was fine despite a headline eps appearing to miss. the sales scandal update showed pressure still in year on year terms, but the trend on a monthly basis is improving. all in all across the three banks these numbers are good reassurance for the bulls but not necessarily any new positive surprises. guys. >> wilfred, any word on bankers' expectations as far as regulation potentially rolling it back? it's been a big part of the bull thesis. or is it just too soon to tell? >> none of them really want to be drawn on that, frankly.

i get the sense they're optimistic but they don't certainly say that on the record. the interesting point if we look at both bank of america and j.p. morgan is they are planning and indeed already doing increasing capital returns even before we see any possible change in capital requirements or regulation roll back. on bank of america's point there's a very big increase almost doubled for q-1 and q-2 in terms of share repurchases suggesting we've already got the worst of meeting current requirements behind the banks. they're now managing their expenses, they're growing their revenues and we can start to see capital return even if we don't see that extra boost. again, the way i coined it in, this is again a bit of reassurance for people for the outlook of 2017 is pretty positive. >> wilf, thanks for that. appreciate it. >> pleasure as always. >> wilfred frost back at hq. joined on the phone this morning by gerard cassidy, head of rbc capital markets, gerard, good to have you back. >> thank you, carl. >> this is shaping up pretty much to the playbook you gave us

in december. is the timing of this happening sooner or later than you expected? >> actually, i think it's working right in line with expectations as wilfred pointed out, the fourth quarter results are actually quite good and they're setting up for a stronger 2017. and if we get the changes that we think we're going to see in the economic policies, the revenue growth should be strong for the banks. >> when do earnings estimates start to match the appreciation we've seen in share since the election? >> that's the $64,000 question. many investors are looking at that. and i think we're probably going to see that ntd second half of the year. but in the meantime, again, as wilfred pointed out, the capital returns that the banks are giving their shareholders we expect those numbers to be very strong. we get those results in june, so we'll see higher dividends, more buybacks in the meantime, and with margin increases bank of america pointed out on their

call we are seeing revenue growth impact from the fed's actions in december. >> how are you extrapolating for goldman sachs and morgan stanley, which we'll get next week? i see goldman adding 18 points to the dow, biggest contributor to the gains right now, again. >> i think when we look atd the j.p. morgan's trading results they were very strong, bank of america's less though and that is filtering in on the trading today of morgan stanley and goldman sachs. so we would anticipate that both those companies, particularly goldman, will put up strong results when they release them next week from these tratding areas. >> gerard, is anything as important looking into 2017 as how many times the fed raises rates and the shape of the yield curve for the earnings path of these banks? i guess what do you think is priced in to the big bank stocks in the way of fed action? >> certainly there's some pricing of additional fed fund rate increases. the fed has already come out and said we're going to raise three times in '17. but you might recall in december of '15 they said they were going

to raise four times in '16 and obviously that did not happen. so i would expect that the prices reflect at least two fed fund rate increases in 2017 and also in the maintenance of the steeper yield curve that we've been seeing which is going to benefit the banks as well. >> we had some discussion this morning, gerard, about equity issuance, weakness in trading in the last part of december, is that even material given some of the bigger macro themes we're talking about? >> i would say it's important. material's a good word to use. fic trading is far more important for most of the banks, not so much for morgan stanley of course. but certainly a strong calendar in 2017 would help the capital market players. and it would boost their results maybe even better than expected because it's so hard to predict the calendar. and we have some big ones lined up as you know coming in the spring some big ipos, hopefully

they come through at the valuations people are talking and that could bring more business later in the year. >> yeah, one specific to wells. we had some discussion this morning about how you can have new retail business down so much year on year and yet have deposit growth like they're having. how is that happening? >> i think that's a factor of existing customers of course will leave the deposits with the bank even though the nuz business has been weaker as you pointed out. we have to remember rates are still very low. and there's a lot of what we call lazy deposits both on the commercial side as well as the consumer side. that is going to be something we're all going to watch later this year as rates rise if banks don't pass on the higher rates to depositors, they may not see that deposit growth as deposits leave and go to other sources of higher yields. >> gerard cassidy, you set us up nicely for a day like today awhile back. we appreciate it. see you soon. >> thank you. >> banks leading the charge in the s&p as well. we've got some breaking news now on retail. let's get to courtney reagan with that.

courtney. >> hi there, sara. so the national retail federation is out with its holiday sales number. they are saying that holiday sales grew 4%. their forecast was for 3.6%. so this would be better than expected. non-store sales, so that's internet but also catalog or over the phone grew 12.6%. the national retail federation had been forecasting growth of 7% to 10% for non-store sales. so you can see that was clearly much stronger than expected. and mirrors what we've heard from many other sources about the strength of online really helping push that total number higher, sara. >> yeah, we saw that in the monthly retail sales reports this morning as well. courtney, thank you. >> thanks, sara. when we come back, we're just one week away now from inauguration day. we'll break down what the first 100 days under president trump will actually look like. plus, cyber security front and center these days as the president-elect vows to make it a top priority. we'll discuss cyber security with an expert robert herjavec,

you recognize him from "shark tank." much more ahead from "squawk on the street." the dow up 30 points.

we are just one week away from the inauguration our own eamon javers joins us now with a look at the key issues that the president-elect is expected to tackle in the first 100 days. eamon, certainly investors are paying attention to this. >> absolutely, sara. we all heard a lot of this rhetoric on the campaign trail. now it's going to be donald

trump's opportunity to turn it into a reality. this is donald trump's contract with the american voter, which he put out during the campaign. and forget the first 100 days for a minute, talk just about the first couple of hours of his first day in office next week. here's what donald trump has promised the american voters he'll do on that first day. he said he's going to announce his intention to renegotiate or withdraw from nafta. he's going to announce the withdrawal from tpp which is effectively a dead letter at this point anyway. he's going to label china a currency manipulator, that's something the obama team has avoided doing for fear of provoking a tit-for-tat game of retaliation with china. clear a pathway for the keystone pipeline, another thing the obama administration was reluctant to do. he'll start the selection of supreme court replacement for justice scalia. he says he's going to cancel all visas for foreign countries that won't take those immigrants back. he's also going to suspend immigration from terror prone

regions. he's going to have a hiring freeze on federal employees. he's got an amendment for term limits on members of congress, which may or may not go over very well up on capitol hill. and he's going to create a requirement for every one regulation that's added, he's going to have one eliminated. and he's got a five-year ban on officials becoming lobbyists after they leave office. so all of that donald trump has said he's going to accomplish on his first day in office. it's largely doable simply through executive action, most of this won't require congress to participate in any way. so that means those are things that he can do on the first day. and there is talk that donald trump will actually have a shortened inaugural parade from the capital building where the swearing in is down to the white house so he can get to work right away. he's also going attend fewer an august ral balls that evening, trump saying he's very much focused on getting work done, guys. >> we've already seen him working before he even gets inaugurated. >> and tweeting. >> eamon, thank you. tweeting, you're right. let's bring in morris reed and former senior advisor to marco

rubio, gop strategist alex conant. let's start with one of the tweets from this morning. donald trump tweeting, all of my cabinet nominees are looking good and doing a great job. i want them to be themselves and express their own thoughts, not mine, exclamation point. morris, let me start with you. as a democrat, do you agree that the cabinet picks are doing a good job and the ones we've heard from so far will get confirmed? >> well, i think they are speaking their mind. and when you're on the hot seat in front of congress, you can't really worry about what tweet has come out or what position he may or may not have. i think what they're doing is answering very honestly because they want to get confirmed. i think by and large majority of them will get confirmed. i think there may be one or two problems, but you tend to let the cabinet get in place so you can get the wheels of government working. i think this will be okay. most of the people will get through. >> do you think, alex, rex tillerson will get through? i'm asking you specifically as a former advisor to rubio who

challenged mr. tillerson. that was kind of a heated exchange. and senator rubio didn't sound too impressed with the answers that tillerson gave on russia, even though they were more hawkish certainly than president-elect trump's. >> it's a good question. i know marco is continuing to look at the nomination. he takes it seriously. i mean, secretary of state is one of the most senior level positions in the united states government. he's doing his due diligence. i know he's not made up his mind yet on which way he's going to go on tillerson. but as you said, the hearing itself i think was concerning to those of us who are concerned about russia. a lot of us believe that russia is not acting in the united states' interests certainly when it comes to eastern europe and threats to nato. and so it's important that the people in the trump administration are clear-eyed about those threats. >> yeah, alex, actually i just sort of wonder how much that is going to play into what's really a pretty ambitious legislative agenda, at least on paper. we don't really know what the

specific priorities are going to be initially in terms of economically relevant bills and all the rest of it. do you think congress is going to be receptive to sort of whatever order of priorities the president puts out there? >> in a word, absolutely. i know that the republican leaders on the hill, mitch mcconnell, paul ryan, are working very closely and working very well with president-elect trump and his team. just this week you had vice president pence and reince priebus up on the hill meeting with republican leaders. and there is a lot of excitement amongst republicans about everything that we can do in the coming months. doesn't mean we're going to get everything done in the first week. i mean, legislating does take time. some of this will take time to get done. but there is general agreement on things like overhauling the corporate tax code, repealing and replacing obamacare, there's a lot that republicans can do. and they're excited to get started on it. and the trump administration will be signing a lot of legislation this year, i can guarantee that. >> you know what's interesting, i actually think that the guys are going to have a good 18 to 20 months. there is a lot of excitement.

there's a lot of agreement. and so you also have an economy that's on a good footing and similar to what bill clinton took over from george h. bush, the economy was moving, he got the credit. the economy continues to move and if you look at the deregulation and some of the things that trump wants to do coupled with having a friendly congress, he should have a good 18 to 20 months. the real problem will become when you get the devil in the details. when you start to try to work out these issues and legislation and cut deals, that's when he would start to have some problems. but i anticipate he'll have a good first 100 days. and i'm expecting him to be pretty solid for about 18 to 20 months. >> alex, that's interesting. you know, they might -- in terms of policy alignment, the market wants to see speed. and this morning cramer's take was use tillerson as a proxy for trump congressional policy alignment. do you think that's fair? >> i don't think that's fair. i mean, i think that tillerson's just one nomination. i think that the vast majority

of these nominees are going to get cleared without any trouble. and we'll see about tillerson. he still very well may be confirmed. i think almost every republican has signalled their support for him, mitch mcconnell who is republican leader in the senate, the day that tillerson was announced came out and said he was going to support him and the chairman of the senate foreign relations committee bob corker strongly supports him. so i know there's a lot of support for him and other republicans including my former boss marco rubio are continuing to do their due diligence before making a decision on it. but i wouldn't put too much weight on any one nominee. i think the vast majority of them are going to go through very easter very easily. most have come across very well prepared in their hearings this week. and there really haven't been any hiccups. nobody has had a big vetting problem or anything like that. things we frankly saw with the obama nominees eight years ago where several of them did not make it through the process for vetting issues or bad hearings. >> there's no overwhelming reason to stop him from getting the job. everyone's alarmed about russia

given their activities or alleged activities, but there is really no reason other than his proximity and closeness to putin, which alarms some people. you tend to let the president get his cabinet in place particularly the top of the ticket, the secretary of state is very important. so you tend to get these things going so you can actually get to work. i don't think they're going to stand in the way of the president getting his cabinet in place. >> hey, morris, before wlet you go while we're talking about mr. tillerson, i think we have to bring up china. it's something investors are certainly watching carefully. these are the two biggest economies in the world. more tough talk from mr. tillerson during his hearings on wednesday, especially on the south china sea saying that china's activities is extremely worrisome. he compared it to russia's annexation of crimea a few years ago. china shooting back in state media overnight saying that the u.s. risks a large scale war if they want to, you know, go there on the south china sea and blockade china from moving in on that. are democrats going to be okay

with this stance and this increasingly confrontational position toward china? >> well, i think that this is tough talk at the moment. when you get into the seat and when you have the responsibility, that hea heavy weight of responsibility, you tend to be more diplomatic. i think you've seen china be quite frankly very reasonable as the trump administration in waiting has made certain comments. once they're in seat you'll see them get more aggressive. i think all in all we'll get around the table and figure out a way to continue to work with china. but donald trump has really put down a marker and said he's going to be tougher on china and some of our other allies than people in the past. so we'll see if that actually happens and what are the consequences for that. >> it's true. we don't talk enough about the geopolitical consequences of a potential trade war as well. we'll get to that another day, guys, thank you so much for joining us today. morris reed, alex conant. >> thank you. >> thank you. when we come back, cyber security in the trump era, the president-elect vowing a full report on hacking within 90

days. we're going to talk to cyber security expert robert herjavec. take a look at stocks, closer to the flat line now getting word president-elect will meet with lockheed's chairman and ceo hewson today. back in a minute. oth ndwa t tof bullci ccaabt y nr r vlyyw ieyoooloues .

fbi director james comey back on capitol hill this morning briefing house intelligence committee members on russia's alleged hacking attempts. meanwhile president-elect seemingly criticizing the intelligence community for this week's controversial leaks vowing on twitter he'll have a full report on hacking within 90 days of taking office. who better to talk hacking than cyber security expert and "shark tank" host robert herjavec. thanks very coming back. >> thank you for having me. >> in 90 days, what do you think he can get done? >> well, you can get a lot done especially if you're trump and a great cabinet. i don't think we're going to see anything fundamentally different in the report. i know the people that wrote the report from the department of homeland security. we've had a look at it. there's nothing there that isn't there. i think trump won the election fair and square. he is the president-elect.

cyber security's a big issue. it's a big issue for government, which we've all learned. it's a big issue for corporations. and i think that's why we're here today. we're trying to elevate the noise around it. >> are we spending enough on fighting it? are we spending the money the right way? >> well, we owned largest cyber security company in the world so of course i'm going to say, no, we're not spending enough. but it's challenging because people are the last bastian of security. and there's zero unemployment in cyber security. part of this tool is discipline and part is the people. >> how do you feel about the appointment or unofficial appointment of former new york mayor rudy giuliani who's going to be advising the president -- president-elect trump on cyber security? is that the right choice? >> you know, i didn't realize he was in the cyber security business. there's a lot of great people out there. i think he's part of a firm that has some experience in that. so, you know, any time we highlight cyber security, it's good for us. the first time the president

talked about cyber security was four years ago in the state of the nation address. today, it's part of the talk all the time. >> you know, it's interesting if you look at the fruits of the hack that allegedly russian cyber security folks went after, these are e-mails that wouldn't have any other value besides political value, right? >> right. >> or it was disinformation allegedly, right? so it's not something typically a company would say what are the things we need to protect most of all. so it seems like a different front that corporate boards are trying to fight along. >> what's interesting is that's a great point. we're seeing for the first time during the dnc hacks what we saw was data being used as a weapon. you know, in the past cyber crime was about stealing something, now what we're seeing is people are taking information to use it as a weapon against others. i'm not sure that the hacks really influenced the election one way or another, but certainly got a lot of information that was compromising to different people. >> who's doing a better job at responding right now, corporate or -- private or non-private

sector? >> i think the private sector is doing a better job, but the government's really coming along. a lot of my friends work for the government. they work for department of homeland security. their heart is in the right place, but budgets are tough. you know, the challenge with this environment is the best and the brightest people work in cyber security, and there's a shortage of talent. so the private sector can pay more, and the best minds are going into the private. >> from your perspective, is the u.s. losing the cyber security race, in terms of capabilities and attacks and counterattacks? is russia beating us? >> you know, i think it's challenging because there's other countries that have highlighted that as a weapon prior to us. i think we're now being caught up. i think a lot of people in america were surprised about the dnc hacks. nobody in russia was surprised about that. and many other countries nobody was surprised. so the goodness for me out of this as a cyber security professional is it really highlights the talk around cyber security. and i think it's really never

not going to be a priority again. it's a cold war. >> yeah. >> it's definitely a cold war today just like in the past. >> you talk about people being that kind of final line. is there any evidence of behavior changes among people in dealing with e-mails and companies? >> we're seeing all kinds -- there's a whole discipline around identity. because the perimeters are going away, traditional firewalls and things like that are difficult to enforce. the biggest growth discipline now is identity, proving that you are who you are on a network. and it's a brand new area, but you're going to see a lot of corporations, a lot of governments invest into that area. >> do you still use e-mail? >> i use e-mail all the time. >> you do? >> good or bad. >> so there's no channel of communication that you're shying away from because of risk? >> i'm not. convenience always trumps security. you can never put in security that inconveniences the user.

so we'll never not going to stop using e-mail, but we use authentication, we use encryption. nobody listening to this should be on a public website without two factor authentications. >> we have to leave it there. we want to listen now into the j.p. morgan conference call because ceo jamie dimon is taking questions. let's listen. >> is that enough for you to say you're going to invest a little bit more or hire some more people or expand a little bit more? and along those lines, how do you see market share gains potentially playing out? >> it's not going to change our plans very much because we don't really react that much to the weather. because, you know, when you grow ed bankers you think of it as a cycle. i think there's some regulatory relief, you will see branches growing, opening new branches in new cities, adding loan portfolios, seeking out clients they don't have. hoping to see a little of that too. but that will wait for regulatory relief.

>> why are you saying this might be a little more than just weather, that this might be more sustainable when you say the economy might be turning? >> i'm saying we don't react to small change in the economy to how we grow and expand our business. but it looks to us if you look across the broad spectrum, capital expenditures, consumer confidence, household building, household formation, wage income, wages going up, unemployment going down, auto sales going up, retail sales going up, it looks like it's getting stronger, not weaker. that's what it looks like to me. that's my own personal belief. >> maybe just if we give you a bit of insight into the philosophy about how we do our investment and expense budgeting when we talk to our businesses, you know, regardless to jamie's point about necessarily whether, you know, the external factors are, you know, moving. the question is -- >> all right. that was the j.p. morgan conference call. jamie dimon saying some pretty optimistic things, observations about the economy but saying it's not really going to filter into very dramatic new hiring plans for the bank until they

really see whatever regulatory changes or better growth it comes along it seems to me. as we head to quick break, let's see what the markets are up to. we lost a little altitude, dow up 22. it was up about within 50 points of 20,000 earlier. j.p. morgan actually one of those stocks that has come in a little bit. and coming up, tuesday at 10:00 a.m. eastern time treasury secretary jack lew, won't want to miss that. much more ahead on "squawk on the street." stay with us. wa7. s litye er y

there has seshly been a lot of discussion this week about the border adjustment tax proposal, but are investors missing the big picture here when it comes to the proposal and its impact on the economy? our steve liesman has been looking at why the border tax matters, why it's crucial for the economy and the republican agenda, steve. >> yeah, sar rarks the border adjustment tax is really complicated. but the main thing you may need to know is this, it raises a lot of revenue. the plan endorsed by republicans would slap a 20% tax on imports and not tax exports at all. but it raises nearly a trillion

dollars, maybe more, over ten years. and that's critical because it's seen as a major revenue source to help pay for a lot of other ideas that are out there like individual and corporate tax cuts along with perhaps infrastructure spending. without the money those ideas could potentially be watered down. >> if you give up the trillion dollars of revenue from this border adjustment provision, maybe the corporate rate can't come down to 20 or 25 or 15, whatever the final number will be. maybe you have to phase in expensing. you have to give up something. it's going to be a horse trade on capitol hill. >> it could be the reason why the market was ahead of itself, ken griffin from citadel said earlier this week he thinks deregulation will be trump's major pro growth program because infrastructure and tax cuts could be limited by deficit concerns. and this could be, could be sinking in. the russell 2000 is up more than twice the s&p since the election, but that's changed since january 1. one reason could be small cap stocks pay higher tax rates. and now that may be showing a little bit less optimism about

cuts. the s&p they have an average effective tax rate of 26%, the russell 2000, small caps, 32%. so they have more at stake, guys, in the corporate tax debate. maybe watch that differential for knowing whether or not the market is optimistic about tax cuts on the way. sara. >> as far as an industry breakdown, steve, what are you finding? who could be most effective? we hear a lot about the apparel industry, sneaker industry, autos, who else? >> now you want to get complicated again, sara. i was trying to get away from that, but you're absolutely right. there are major effects in refineries because of what happens to those refineries that import oil, what about those who use domestic oil, what would be the effect on domestic production? now, larry lindsey and other economists out there say there's really no price increase here because the dollar will adjust. a bunch of other economists who i know you talk to as well, sara, they'll say you know what the dollar adjustment won't be total. i will say that my gauge on this so far is this may be too

complicated for primetime. that it is something that is -- dan mitchell said it today. he goes why would you propose something that is so divided by the way the republican party? and i have to also say i've talked to a lot of smart people who think this is good economics and ought to be done. but it is so controversial and maybe its achilles heel could be it's so complicated. >> we'll see what happens, steve, thank you. >> absolutely. >> inauguration morning one week from today. we're moving from the promise phase here to the action phase for the trump administration. and investors are watching every move and every tweet. for more on the financial market and the economic impact, we're joined right now onset by citi group's chief global economist and alan ruskin, deutsche bank head of foreign exchange strategy. great pairing. welcome to you both. >> pleasure to be here. >> so there are two schools of thought right now on the markets and the economy. there are the optimists that say corporate tax reform and deregulation and fiscal stimulus, all good for the economy. that's going to boost the

markets and the economy and there are those saying you've got to be cautious it could get messy and we don't really know how congress is going to respond. where do you fit in? >> well, as usual i'm firmly in the middle. i think corporate tax reforms indeed -- personal tax reform would be a good thing, infrastructure spending would be a good thing, but the country doesn't need a fiscal stimulus. it's the one country that doesn't need is going to get one. couple years from now this would be overheating and will be a mess, but markets never see ahead more than two years. regulation i think will happen and i think it could be done quickly unlike tax reforms which takes at least a year. so i think the markets are probably slightly over. they adjusted yesterday following the press conference when it became clear there was a lot more noise around what is going to be imposed and implemented. but slightly uppish still in terms of reality. >> so i ask you whether you're cautious or optimistic and you say you're cautiously

optimistic. >> optimistically cautious. >> alan, what stage are we at in your view of the trump trade? >> probably sort of the deal making stage. we had this trading of the promise as it were and paradigm shift where people really had to get their heads around what was potentially going to be a sizable fiscal stimulus. i agree entirely with willem, it's not called for right now. reform is called for certainly, but i think net stimulus is not necessarily called for right now. but we're in that deal making stage. it's going to be noisy in terms of let's see what we get. i agree with steve in fact that, you know, all the talk on the border adjustment tax is so much complexity here that it's going to be hard for the general public to understand, but the markets will respond enormously to it. that's the big story really. if we get a border adjustment tax, the dollar i think is really going to fly. >> you think the dollar will fly if you get a border adjustment tax? that could be one of the unintended consequences in terms of how global markets react to this, correct, willem? >> well, you've seen value added

tax, proposition a very good benchmark also the notion that it's going to give a big tax revenues because the value of imports, value of exports, that's true today. the u.s. is a net debtor country so the present value of imports in the future is less than present value of exports. but again markets like politicians are firmly short sided. >> isn't the strong dollar going to be a huge problem for president-elect trump, alan, no matter what? he's trying to save american manufacturing which has been in a recession over the last few years because of the strong dollar. >> yeah, i think it's somewhat different looking at a chicken and egg here. the trade balance is improving partly because you're driving up import prices and giving implicit subsidy for exports. some improvement on the trade side somewhat drives the dollar. different from the story we had earlier that the threat of a strong dollar was actually going to drive the trade deficit into a larger deficit. >> i see you shaking your head. >> it's not a problem. a strong dollar would be a response to, you know,

advantages tax advantages to exports and tax penalties to importers. so it's six and two threes, the reality is that in the benchmark view of economics this is completely irrelevant. >> we did have some of your g10 colleagues say we are entering a period of dollar weakness, you don't think that's the case? >> that's just way ahead of the game, right? we haven't had trump as president yet. honeymoon is, sort of i guess a question in terms of the politics, right? but the economics we haven't really started. in fact, if you think in terms of economics and fiscal stimulus, you're probably really talking about the entd of 2017 and the first half of 2018 before you get the real kicker there. so i think the strong dollar story really gets quite a kick towards the end of this year and into next year. >> yeah. and the fed outlook as well. we've got to leave it there. we hope you'll be back together preferably. >> pleasure. >> good to see you both. when we come back, what it's like to negotiate and do

business with the president-elect. we'll talk with the ceo of equinox harvey spevak knows him pretty well. january is the best start to any month since july with that record high today, but the dow's up only nine. back in a minute.

is a big comeback ahead for active managers? that's what one strategist says. he makes his case on tradingnation.cnbc.com. more "squawk on the street" coming up. ut wou

t he rnrn erir e? wou welcome back to "squawk on the street." rick santelli here live on the board of the cme group. i would like to welcome my special person in guest, rebecca corbin. when earnings season is here, you're right here. this one is unique. >> it is. >> since the election everything has gone sort of wild. stocks, dollar, rates, is it sustainable based on the respondents and your respondents are another subset of all these

investors, aren't they? >> that's right. we surveyed 100 investors globally this quarter, i'll tell you usually our survey results are contrarian to what the markets are doing. not this time, rick. the level of positivity that's coming out in almost every single channel check is very surprising to me. and heading into earnings season 85% are expected in line to better end results and 60% are expecting sequential improvement. so better than third quarter heading into the fourth quarter. >> now, this is fascinating because anybody who's optimistic about the layout of government, which are probably part of your respondents, must know that trump hasn't even been sworn in yet. so any seeds they're looking to grow into better earnings were already there. so are they just generally optimistic even above and beyond the trump rally? >> yeah. you know, we saw a real reset last december 2015 expectations were reset heading into company guidance. and companies have actually been doing better with the economy and the reset expectations.

it's the game. heading into this year more than 60% are expecting company guides to be better. and i think we're going to see some strong company performances as well as much more optimistic guides than we saw last year for sure. >> kicking the tire of what may come down the political road and how it affects the economy is the new pastime in the usa. is there anything in your survey that will give us clues as to how much time will investors give the new administration to deliver versus the notion that they're already optimistic and looking for better earnings? >> yeah, well, i think you know when we advise our executive management teams on communicating future looking information, we always tell them to be conservative because what happens is expectations get out of whack. trump has come out with a lot of very strong statements, and now it is absolutely going to be about a timeframe as to when that gets done. i think if it doesn't get done soon in the first half of the

year, i think the markets might trade sideways all else staying the same. >> rebecca corbin, thank you, and thank all your respondents for their insights. we're going to go back to "squawk on the street." >> all right, rick, thank you. and we will take it. and send it out to jon fortt with a look at what's coming up next on "squawk alley." good morning, jon. >> good morning, sara. we're going to take another look at donald trump's relationship with tech. the president-elect started off on kind of a more combative ground, but there have been some shifts lately. also warren buffett on some better ground perhaps with ibm. we'll check in on that trade. and finally, apple consumer reports now saying the macbook pros are good to go. we'll take a look into what the problem was, what got fixed and what it means for apple going forward coming up on "squawk alley."

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president-elect donald trump saying this week that he tends to turn over his business operation to a trust run by his two oldest sons.

our next guest workinged with trumpover the years and his recent expansion is set to benefit from a soon to open trump hotel. joining us here on the floor of the new york stock exchange is harvey. >> it was also the year we celebrated 25 years. >> congratulations. so your company, big ownership, related companies, which is a competitor and also in new york city real estate market. what can you tell us about the president-elect. >> we have never done business with donald. truth be told, many years ago we tried to do a deal with him in the gm bulding. he he would call me a couple times a year and discuss whether we would take what now is the apple space on 5th avenue. but we have never actually done a real estate deal with trump and we will be neighbors in vancouver. >> so was there a specific issue that prevented you from doing a

deal? >> it was not the right location for us and he's a great salesman and he was trying to get us to pay a lot of rent and it doesn't make sense for us. >> business optimism has surged. levels we haven't seen in years. do you share that enthusiasm? >> i do, but for our business, we're about getting people to be healthy. whether it was hillary or donald, it doesn't affect our business. maybe if the population is stressed people work out more. our business has never been stronger. it's about the trends around healthy living, eating a certain way, urbanization. >> spending more money on working out. is that why retailers are hurting? >> i think the trends are around experience, community, health ri living and you're seeing that on the fitness side in many ways. that's really good for our business. >> people working out in the same way might be the question. we have spoken to the ceo of

planet fitness. they have a little bit of a different model. it's a more casual gym going. . you guys are a different experience with the soul cycle interaction. >> we have three big brands we focus on. soul cycle and blink, which is similar to plan the fitness except we just started franchising those with 50 locations. ask they are doing very well. they cater to people differently. they cater different demographics and capture the emotion and desires of people differently. equinox is more luxury and upscale. that consumer is different than the blink consumer. >> you mentioned soul cycle. what's the update with the ipo filing 2015. it's been on hold for awhile. >> obviously, we're still in a quiet period. we're focused right now on growing business. >> still going to go public? >> we're focused on growing the business. >> that's a no comment. >> what about non-gym working out. . we see people talking about what virtual reality can do for at home. >> i think all of that is good

because it it brings more people -- the funnel gets wider and people being active. today people are looking at fit ness as a daily routine. all of that might be complimentary, but different than retail, we're a bricks and morter business. you can't get the full service. >> we just have 30 seconds left. what's the biggest project for 2017 for you? >> i would say continued growth. we had a huge growth year financially and opening ten new locations. equinox is open over the next four or five years. the big initiative is our hotels. >> which we expect in 2018. >> first location in march of 2019. >> thank you. good to e see you. the ceo of equinox. a quick market check. dow up 16 points. the nasdaq the winner so far. >> the market hs a hard time breaking out of this rain. another day with a calm, tight

trade. >> banks are doing well on the back of what is the first group of bank earnings. jpm and goldman sachs leading the dow. >> we are still watching. . financial is still leaning. >> out to you, carl. have a good, long weekend. >> we'll see you next week. it is 8:00 a.m. campus number two, 11:00 a.m. on wall street and "squawk alley" is live. ♪