markets now wall street pointing to a higher open as investors try to kick the center rally into a higher gear crude realities. oil sitting near a two and a half year high after a pipeline blast in libya we're drawing down on energy's big move elon musk says a tesla pickup is coming "worldwide exchange" begins right now. ♪ good morning and a warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. i hope you had a lovely christmas. let's check in on the global

market picture this morning. as you can see we're pointing higher to the tune of about five points or so the dow is up 27 the nasdaq up 13 we were a little bit lower yesterday, but not too much. the nasdaq was the laggard the other two were just below the flatline although it was the fourth negative session out of five for the dow. albeit up 2% on the dow for the month as a whole which is the ninth straight month of gains for the dow. the s&p's also looking at nine straight months of gains after december if we hold the gains at the moment which is pretty extraordinary, consistent gains through the course of this year. let's have a look at oil prices coming up next as we said. jumped significantly yesterday still up there near that 60 mark for wti. all right. let's have a look at markets around the rest of the world hong kong was closed yesterday for the boxing day holiday most other markets open

yesterday. everything open today. shanghai down a percent or so, but elsewhere slight gains for hong kong and japan. european was mixed yesterday for the christmas holiday. in general we're looking at strong gains for the month germany slightly higher. as you can see, low volumes and flat let's have a look at the broader markets. treasuries have climbed in the week i've been off 10-year treasury note up 2.5% than it was -- takes so long to cross up into 2.4% now to 2.47% the passage of that tax bill supporting a rise higher in yields didn't really support a rise in the dollar last week similar slipped during the course of last week. this morning the euro and the pound both about a quarter of a percent higher the dollar is weaker this morning as well. let's have a look at gold. gold is probably in the mid-1200s. when it's coming, i haven't

checked it this morning. i can't tell you the price until it comes because i don't know what it is and there it is. $12 $1290. it's ticked up nicely in the course of the last week. and bitcoin for you which of course had a big pullback around christmas day. not doing too much slight moves depending where you look at. just below the $1,600 mark now let's discuss the markets further. boris slaushburg joins me. hope you had a lovely christmas. >> thank you happy holidays to you as well. >> why haven't we seen a bigger reaction to the dollar to the upside >> i think the single biggest thing with the dollar, it's very surprising as you've said, is the fact that we really haven't rallied at all and i think the reason why i because the market remains still very skeptical to me the single most interesting spread going into 2018, there's a difference between the fed block and the

fed fund futures rate. if you look at what the fed is projecting, they're looking at three interest rate -- and i think until you see a convergence between the view of the fed and the view of the markets, the dollar continues to be very weak that's the problem that's going on in the currency market right now. >> do you expect that to change early next year? what could trigger a dollar rally that otherwise some people might kp pt? >> well, i think there are two factors that could contribute. uptick in inflation, of course if you have an uptick in inflation, that's going to translate to higher yields and of course the second thing is growth. if we get growth above 3%, that certainly will help the dollar as well on a pure growth basis but many are an open question that's what you see with the markets.

huge hesitation. >> you don't think it's necessarily a fed rate hike aspect as much as others what exactly are you expecting from the fed next year >> i think what the market is basically saying is the fed isn't going to hike until and unless they get higher inflation and stronger growth. that's really what you're seeing the market is just not believing the fed projection that's why the dollar is not rallying but even at the current rates, what's really kind of surprising is how weak it remains the 10-year is almost at 2.5%. so to me that sort of suggests that the market is just not buying the continued gradual rate increase story the fed is trying to sell. >> what do you think about the euro going into next year? clearly there's a massive yield differential that would suggest the dollar should rally higher you've also got political questions as well. we all thought after the french election, the politics, the negative potential was going away but they're starting to creep back in a bit. >> they are because of spain and

the independence vote in catalonia. i think the single biggest exteistential risk, if those pa by with more conventional parties and the sort of non-independence parties winning, then i think you'll see the euro really rally. the fundamentals when the eurozone have not been better for a decade and despite the fact the yields in the eurozone are low, the market is sort of valuing on a relative growth basis. seeing the ecb is going to cut qe sooner rather than later. as long as the political climate remains stable, euro seems to be a strong bit at this point but italy will be the test case next year as to how well the euro performs. >> and those due in march. about that growth pickup in europe, you think that's sustainable for how many more years? >> it's hard to say but they have momentum now. i think you're seeing a lot of pent up demand in the eurozone and overall, europe is really

doing much better than i think most people expected that's why you're seeing this unbridled strength in the euro despite the fact that european yields are so much lower than u.s. yields. >> if you had to pick a top currency trade next year, what would it be? >> it's very, very hard. i think i'm as hesitant as the market is because of the unknown situation going forward. but i would say still to this point to me the pound we mairem the most vulnerable moving forward. because of what everybody thinks is going to be positive. to me the most vulnerable in 2018 remains the pound >> all right great stuff. thanks for joining me this morning. boris schlossberg. it's a light day on the wall street agenda. november pending home sales and december consumer confidence both out at 10:00 a.m. eastern time in corporate news, elon musk says a tesla pickup truck is in the works.

amanda doughty joins me with all that >> welcome back. tesla takes on ford. in one of their most lucrative segments musk tweeted, quote, i promise we will make a pickup truck right after model y. have had the core design/engineering elements in my mind for almost five years. am dying to build it in a follow-up tweet, he added the truck will be similar in size to the ford f-150 although slightly larger to account for a really game changing, i think, feature i'd like to add, he said in the model y he referenced has yet to be revealed all this comes as they try to ramp up production of the model 3 sedan. shares of tesla up nearly 50% year to date back over to you >> landon, thank you for that. other stocks to watch today, shell expects the tax law to have a favorable impact on its

operations the company says it will disclose the details of the impact in its fourth quarter results but says it will have incurred a charge of $2 billion on the basis of its third quarter numbers. it's about a percent or so today. bmw also expecting tax reform to have favorable effect on its operations. they say the measures could add up to $1.3 billion sits flat in german trade today. chubb expects $250 million in the fourth quarter as a result of the u.s. tax law. the insurer's estimate reflects the lower corporate tax rate and repatriation of foreign earnings on its deferred tax position no change in the share price in the pre-market we're edging closer to the end of the year. throughout the show we're looking into the future to find out what's in store for 2018 let's kick things off with your social media playbook.

>> under pressure from regulators, social media will step up in 2018. expect facebook to spend big on sports and tv shows. facebook's failed bid for cricket indicates demand for sports rights. it will double down on programs for its watch tab to compete for tv viewers and ad dollars. while snap to avoid getting crushed by instagram will continue to embrace its relationships with media giants including investor and cnbc parent nbc universal >> expect even bigger changes to battle bad wraps even if it means eating into the bottom line. twitter for trolling and bots. facebook for enabling russian manipulation of the election and youtube for extremist content. these companies will prioritize transparency and crack down on anything misleading or false to hold onto their users and avoid regulation >> social ads will get smart

new ads will use augmented reality for visual search and the ability to buy anything you see on an app. imagine speaking with a messenger customer service bot, buy clothing on instagram without leaving an influencer's post, or snapping in friends' stories. >> that was cnbc's julia boorstin reporting still ahead here on "worldwide exchange," a roundup of the global markets and today's top stories. plus this morning's top stocks to watch e ares of the uk office firm iwg arsoaring. we'll tell you why after the break. do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade.

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welcome back to "worldwide exchange." if you're just waking up, let's get you up to speed on the market action. futures pointing higher today. slight declines yesterday. nasdaq was down a third of a percent. a slight bounceback expected s&p up by five dow 36 and the nasdaq by 13 points. quick look at currencies dollar slipping 0.2%, just a little bit more than that against the euro and the pound this morning it's down about 0.5% against the aussie dollar. boeing announcing an order for four dreamliner jets from morocco's national airline it's $1.1 billion at this price. the order which was previously listed as unidentified includes two planes purchased last year and two purchased this month boeing up fractionally in the premarket.

china's geely auto has bought an 8% stake in truck maker volvo. makie ining it the company's lat shareholder. shares of uk office manager iwg are up more than 30% today the company has confirmed it's received an asset takeover from brookfield and onex. in october iwg caught its full year profit citing weaker disruptions from natural disasters in the u.s up about 32% this is the sort of uk version if there was a direct comparison of it. it's been around for much longer sort of lower end type of offering than we had still ahead, president trump

talking he ining taxes from hisa home but first here's the weather forecast >> good morning, wilf. as we look at travel weather, one of the travel spots where we saw unfortunately record slow in pennsylvania, the great lakes. look for travel to be hindered by all that snow the lake-effect machine continues today. some rain across the gulf coast and the south, but more snow for areas along the great lakes. that could cause travel slowdowns. temperatures are brutally cold so if your business travel is taking you anywhere you see purple here, i would say bundle up and then some because the windchill factor would take these numbers and drop them 20 degrees below the numbers you see here even places like st. louis your high is 17 degrees. you're also looking at the cold air plunging all the way to dallas and oklahoma city in the 20s. that's your business travelers forecast more "worldwide exchange" when we come back

(news anchor) downtown traffic is still bad. expect massive delays. (news anchor 2) all lanes on highway 50 remain closed at this hour. (news anchor 3) the stats are in and this city leads with some of the worst traffic, with the average driver sitting in gridlock the equivalent of three days a year. for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts, over the course of the week, to about 10 pounds of carbon dioxide. growth is good, but when it starts impacting our quality of air and quality of life, that's a problem. so forward-thinking cities like sacramento are investing in streets that are smarter and greener. the solution was right under our feet. asphalt. or to be more precise, intelligent asphalt. by embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to study and analyze the flow of traffic.

then, we will take all of that data and we use it to optimize the timing of lights, so that traffic flows easier and travel times are shorter. and sacramento is just the beginning. with advances in cameras, sensors, and network speeds, we have the ability to make cities smarter, and happier. what excites me about this technology is that we're using some of the most cutting-edge machine-learning, and ai, to help solve the most fundamental challenges that cities face around the world. who knew asphalt could help save the environment? (lani) and the possibilities are endless.

welcome back to "worldwide exchange." let's have a look in on markets again. futures pointing higher after slight declines yesterday. the dow was down for the fourth negative session out of five, but yesterday's declines were fractional the s&p also fractionally lower. the nasdaq was the laggard yesterday. we're up nicely for all three markets, but not too significantly. dow up 40. s&p is up five points. treasuries for you, yields have

ticked up nicely over the last week or so closer to 2.5% on the 10-year now. it took so long to get above 2.4% and since then higher to 2.47% on the 10-year currencies for you this year, we've seen doppler slippage down a quarter percent. it was down more than that against the aussie dollar. down 0.5% -- excuse me up 0.5% to the u.s. dollar reacting perhaps to allister cook's century this morning. it's been a fairly good year for the transportation sector. the dow transport index is up 18% so far in 2017, but what to do over the next 12 months here's morgan brennan's playbook for that sector for 2018 >> in 2018, a growing economy will propel freight volumes to new records. spurring more mergers and more infrastructure spending as transports try to keep up.

first a tech-tonic shift electric vehicles, automation, drones, even bloc chain for trucks all in the works but new federal regulations will have the biggest impact. coming into the new year, commercial trucks must be electronically tracked and railroads will have to install new safety tech. many won't be ready. second, e-commerce escalation. there will be more planes to move more packages more mergers focused on logistics in the last mile of delivery and more big stuff. literally as companies like xpo logistics deliver other large items that can clog fedex and u.p. u.p.s. third, labor shortages it's already happening but warehouses, railroads, and shipping docks will see it

more companies may not be able to find all the seasonal help they need. >> that was cnbc's morgan brennan reporting. in political news, president trump is talking tax reform just days before the law takes effect edward lawrence is live in washington with more hey, edward. >> good morning, wilfred the promoter in chief is back. the president expected to tout those tax cuts that american workers may see in their paychecks next year. >> on behalf of the american people -- >> president trump says he's now on a working vacation in florida as he travels back and forth to his international golf course during the day we've not seen much of him since christmas, but he's kept his presence on twitter promoting the tax cuts saying this will be a great year for companies and jobs >> share prices in corporations are going to go up pundits said that will be good for everyone because everyone owns some stock. more than half of people don't own any stock. >> some worry it will

disproportionately help the rich and we're underinvesting in me spshlly kids >> a dollar invested in a low income kid's education will pay you back seven or eight fold later in life. >> still accountants say we should be prepared for the tax changes but time is running out. >> it'sry li ridiculous. usually in the month of december we're going on vacation, taking it easy. >> the new tax law only allows for a deduction up to $10,000 on property taxes prepaying right now means you can still deduct a larger amount on this year's taxes you may want to make an extra donation of money or items before january if you want to write it off your taxes. also, if possible, defer income like bonuses until january that way you can take advantage of the percentages in the lower tax brackets

the bottom line is you may want to consult a tax professional right now. >> and the president himself is where at the moment and when is he expected to be back in d.c. flatout looking at the agenda for 2018 >> he's a mar-a-lago right now expected back the first week in january. president again saying this is a working vacation for him however, he is spending a lot of time playing golf. still the president starting to work on infrastructure and that's going to be the big push coming the first of the year he says or he believes that democrats will come on board easily for that plan >> edward, thank you very much for that edward lawrence for us in washington sticking with politics, president trump is coming up, of course, on his first full calendar year in office. what's in store for thetrump white house in 2018? here's eamon javers with your political playbook >> first, we could see a much different group of white house aides advising the president in

2018 gary cohn who publicly split with the president earlier this year also closely watched will be the president's top liaison to capitol hill, mark short and keep an eye on jared kushner and daughter ivanka trump. with investigations swirling and progress slow, some believe the power couple may want to return to new york. second, the special counsel's investigation will continue to haunt the trump administration in 2018. already robert mueller has obtained guilty pleas and cooperation from mike flynn an no one outside the special counsel's office knows exactly where he's going next. how will it all end? three possibilities. more indictments, an impeachment referr referral, or a full exoneration of the president and his team. and third, the white house will try to capture legislative momentum after the tax debate. president trump says one focus will be on welfare reform. he argued some unemployed people

make more money than those struggling with two jobs that suggesting he'd like to reduce benefits. but an official told me the plan will involve people getting back in the workforce and increasing job training suggesting an increase in certain benefits either way, the white house will try to get legislation through congress early before midterm election year politics makes progress impossible. >> eamon javers there reporting. it's been a roller coaster ride no doubt still ahead here on "worldwide exchange," round up of this morning's top headlines. and a check in on the global markets. plus we're keeping a close eye on crude it's giving up a little bit today. but we'll get an expert's keta when we come back from where it heads next plenty of questions. fortunately, there's a place to get the answers, for them and for you.

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crude realities. wti sitting near a high after a pipe line blast in libya more straight ahead. bitcoin takes a breather stabilizing after days of wild swings snowmageddon, call it what you want one pennsylvania town buried under a record 5 1/2 feet of snow and more is coming an update on that. it's wednesday, december 27th, 2017 "worldwide exchange" continues ♪

good morning and a warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. a belated happy christmas to you as well. let's check in on the market picture this morning we were down across the board yesterday on these the nasdaq was down about a third of 1%. the nasdaq's up about 3. it's been another good month looking at 2% of gains for what would be its ninth consecutive month of gains in a row. extraordinarily consistent positive markets we've seen throughout the course of most of this year. let's have a look next at the treasury yield curve as you can see. yields have been ticking up nicely over the course of the last couple of weeks or so as tax reform progressed and passed the t10-year. asian equities for you were mainly open yesterday apart from

hong kong was closed for boxes day. now they're all open of course the big focus over the last couple of trading sessions in asia has been the tech suppliers. slipping on fears throughout the christmas period haven't been quite as good as expected. over the course of the last couple of days let's have a look at european trade for you. it's not too active. low volumes, low market moves. germany slightly lower the ftse 100 looking great for the month of december. up about 3.5%. broader markets for you. dollar board slipped a little bit yesterday. fractionally today as you can see. we've got the dollar just a little bit lower against the euro and the pound about a quarter of 1%. and it moved about 0.5% lower against the aussie dollar this morning. not much against the yen as you can see. gold prices closing up about

$1290 the price when we checked earlier. up 0.2%. bitcoin for you. wild swings of course over the christmas day period this morning slightly lower but has recovered some of its recent ground yesterday and the day before just above $15,000 the price this morning oil prices, big focus of course for us today and yesterday gaining 2.5% yesterday after libyan explosion and we're going to dig into that today. but just pulling back today as you can see. let's discuss oil and the broader energy sector. let's dive into the short-term before we look ahead to 2018 the move yesterday and the sort of move up over the last week or so, what's the course of that? >> we had a series of oil

outages over the past six months or so now. we've lost some output in northern iraq and kurdistan there. the pipe line sprung a leak. also too we have a major outage still going on but it is being resolved now in the north sea. about 400,000 barrels a day. and yesterday's libyan explosion, not a big one, but a reminder of how tenuous the supply is from both libya and nigeria to the market. things have tightened up we had a big overhang in the market for some time but now these have reduced the cushion. yesterday in low volume and the $60 being there by reminding me of the old days when we had a trading pit and the guys would goose it >> and in terms of that short-term move, would it be more bullish how long would these particular supply delays, disruptions expected to maintain >> yeah, that's the rub, wilf.

and not only that, there's not so much support in opec anymore. and russia for that matter for this deal. this oil limiting deal so the year for oil will turn. there is a lot of supply ready to come back to this market. this north sea will be fixed for the new year both of the keystone pipe line is back in operation we're seeing the barrels in cushing get refilled and the demand is a bit of a question mark here going forward. and u.s. production, i think, is going to be the big story as well for 2018. we could easily get to 10 million barrels per day much earlier in 2018. we've seen the u.s. producers race in and lock in and hedge their production as prices have ran up since june. again, i really believe it's going to be january in terms of the supply picture overwhelming

things >> when you factor in that u.s. supply and you're relatively uninspiring coverage of whether the opec deal holds, are you pretty bearish from this sort of $60 level for 2018 >> i'm bearish from here but we're not in the -- we're not going back to the dark days any time soon where prices got down to $26 a barrel there are certainly upside risks as we're seeing. the infrastructure gets strained we don't have the cushion we did. so we're going to have these pops in the market the other big upside risk is a geopolitical one for me this year that is going to be what happens between saudi arabia and iran? we have seen them battling each other on a proxy basis on and on the edges of the region in yemen, syria, does that become more direct hostilities next year because certainly the rhetoric out of saudi arabia in particular has been quite fiery towards iran and there's a real chance, i think, 20%, 30% that those hostilities become direct rather than indirect.

>> that's a key region for geopolitical fears what about russia as well? is the election a non-event for the markets or could it have an impact >> well, it seems the outcome to me is a fore gone conclusion with president putin consolidating power. the question is whether or not putin is going to try to give his russian oil companies what they want. and they want to grow. they have bristled about the opec deal that putin struck or the energy minister struck with the opec ministers from the beginning. and they've really been pushing back hard. and with wti printing $60, the clamoring to get out is only going to be on the rise. again, that's going to be the problem for this market. they're going to become victims of their own success and potentially get to another syndrome where the production outstrips quite a bit global demand >> and if we talk about -- >> you should see strebt at the end of 2018.

it's remarkable to me given the cold weather we're experiencing right now and the steady rise in exports of liquefied natural gas in the u.s. with that we're not at a higher price. inventory next winter could be quite tight and we could be back to higher prices as a result natural gas in a lot of ways very kind of simple market in terms of supply and demand and the storage numbers for that and the production numbers for that, very transparent when you do the math on what we're looking at as we get into next winter given the rise in exports we're going to see over the course of 2018, it's going to be an interesting scenario for that commodity finally >> and then to round things off again on wti, what's your forecast this time next year for the price and the sort of rough range we'll see over the course of the year? >> i think given -- we'll have some flirtations with above 60 but i think we'll also see prices break for a time in the spring before it firms up again. again, i think we're probably in an extended range for now

between about $40 to $60 but with some downward pressure at times it's going to be interesting to see how sloppy things get. if there's any economic slowdown in china or in the economy globally at all, the downward pressure will reassert itself. >> thanks for joining me this morning. in corporate news, elon musk says a tesla pickup truck is in the works and landon dowdy joins me with more on that >> hey there elon musk teasing details on twitter about a pickup truck that would challenge automakers in one of their most lucrative segments quite vague wi, per usual. musk tweeted, i promise that we will make a pickup truck right after model y. and dieing to build it in a follow-up, he added the truck will be similar in size to the ford f-150 although slightly larger to account for a, quote, really game changing i think feature i'd like to add.

the model y has yet to be revealed and all this comes as tesla rushes to ramp up production of the model 3 sedan. shares of tesla up nearly 50% year to date flat in early morning trading. back over to you guys. >> guys? it's just me you can say guy or wilf. either works landon, thank you very much. as the calendar gets set to flip to a new year, what will be the -- diana olick has your real estate playbook. >> 2017 saw a big slowdown in the housing market not in prices, but in home sales. because there was just nothing to buy 2018 will not be much better sales slow more. as the supply situation worsens. yes, home builders willcontinu to increase production, but slowly move up in the market not the entry level where

millennial demand is highest nap would squeeze would be buyers back on. prices push higher all that demand without much supply will keep the heat on home prices. and affordability will become a bigger issue especially now that the republican tax plan wipes out deductions in high cost areas. mortgage reform. the biggest move could be in the mortgage market. and the elephants in it namely fannie mae and freddie mac talk is finally heating up in congress to reform the system and private investors seem not only ready but eager to get back in the mortgage game as for mortgage rates, most predict they will move higher. most predicted that for the past two years and were wrong >> that was dye iana olick reporting. coming up, putting the stock in stocking stuffers kanye west's pricey presents for

wife kim kardashian. we'll tell you exactly what it waand how much he spent. don't go away. you're watching "worldwide exchange." happy anniversary dinnedarlin' can this much love be cleaned by a little bit of dawn ultra? oh yeah one bottle has the grease cleaning power

of three bottles of this other liquid. a drop of dawn and grease is gone.

welcome back to "worldwide exchange." time now for our top trending stories and landon joins me with what those are today >> i just wanted to join you guys >> yes >> all right here's what's trending stunning pictures of erie, pennsylvania, where a winter storm brought a record-breaking

five feet of snow this week. the storm started late on sunday continuing until 8:00 p.m. last night. and more is apparently on the way. experts are saying the tally could reach a whopping 70 inches by tonight >> wow and so this is about five foot of snow. >> yeah. this is about five feet. i'm all for a white christmas, but this is a whole different level. >> probably rather annoying if you're there >> when authorities are telling people to stay off the city streets. >> i can see why >> you have to dig out, ski out or something okay this is a good one kanye west literally put the stock in stocking stuffer this holiday. the rapper gifting his wife kim kardashian hundreds of thousands of dollars in stock as part of her christmas gift kardashian-west posting to instagram story snaps of her presents including netflix, apple, adidas, and disney stocks closeup shots showed she got 920 shares of disney would you ever buy your wife

this gift? >> no. and clearly from cnbc, we should be celebrating someone buying stocks for a christmas present, i don't really like this because surely in the essence of what's yours is mine, the money which essentially is stock is. it's not that thoughtful of a present. it's not like here's a necklace you can wear >> you mean you wouldn't want to wear a necklace? what yours is mine >> no. part of this is handing over cash in a slightly different way. >> you don't want cash from christmas? >> not from your husband or wife what you have is shared. it's got to be a more thoughtful present. maybe they talk stocks and that's why it's thoughtful >> he bought fang. he's got some -- >> he's got game disney if the deal goes through, yeah adidas, he's got a sponsorship with them don't they >> adidas? >> adidas, whatever. it's a nice story but a bit egregious showing everyone how much he bought but anyway >> you can tweet about it because the library of congress is changing its way. the federal institution says it's no longer adding every

public tweet to its ar kooarchis it cites the larger volume of tweets being generated these days to double its character limit. this one makes sense they were getting a billion tweets a day back in 2013. can you only imagine what they are now? >> i agree i think it's a sensible change landon, thank you very much. >> thanks. still ahead on "worldwide exchange," just three more trading days this year we're breaking down how to get the most from your money plus looking forward to 2018 the deep dive into financials. great reporter brings you that data for 2018. to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory.

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the market.redict but through good times and bad... ...at t. rowe price... ...we've helped our investors stay confident for over 75 years. call us or your advisor. t. rowe price. invest with confidence. welcome back to "worldwide exchange." 9 of the 11 sectors in the s&p 500 are in positive territory this year. financials up more than 20%. but what's in store for that sector we're going to have the playbook for financials coming up from yours truly.

some big tail winds for banks in 2018 and a few risks to watch out for too. first, deregulation. investors are excited about deregulation actually arriving now that key positions are filled including jerome powell as fed chair, randy quells the key things to watch for are changes to capital returns, changes to volcker helping trading rules and overall reductions in regulatory expenses second, rates. expect interest rate hikes to continue to help much of the recent focus has been on the flattening of the shape of the yield curve which isn't ideal for banks long-term. but there remains an immediate positive earnings impact for every fed funds rate hike we see. in terms of risks, keep an eye on deposit beaters ie, the rate at which banks kmeet and pay depositors as rate gos up and also credit quality.

while still low by historical standards, it's shown signs of rising recently. especially in the subprime consumer space final thought? bank reform. on hopes for tax reform given that they pay a high disproportionate rate of tax but expect the benefits to flow through to eps in 2018 there's your financials playbook for 2018 let's get up to speed on the market global action small moves other than china which is down a full percent hong kong and japan up fractionally european trade is mixed this morning. slightly heeer now germany had been lower ftse up a little bit france is up the ftse is up about 3.5% for december while germany and france either side of the flat line u.s. futures this morning following slight declined yesterday pointing up higher extended the gains over the last hour

yesterday as we already mentioned, apple was the big decline. which dragged both the nasdaq and the dow down somewhat. let's discuss markets more broadly. joining me, steve shavron. good morning to you. >> morning, wilfred. >> let's talk first of all about the short-term in what we can expect the rest of the year. we've had a great run in december does that hold throughout the year end >> probably. the adults are home and they've left -- exactly. we're what's left. and we're going to march to the marching orders between now and year end >> when we consider the gains we've seen whether it's outright numbers, the fact it's looking like nine months in a row of gains for the dow, does that concern you about 2018 or is the momentum so strong we can enjoy it for another year? >> look, earnings. we've talked about this so many times here on the program. earnings set to grow at least

14% based on con census expectations markets are going to move higher there are going to be blips along the way and heightened volatility, but earnings continue to grow >> what sectors are you most on in the u.s.? >> there was great reporting on. but we would tend to agree financials have the ability to lead the way you do have some rate hikes which should benefit that interest margin, return of capital we think is going to be a big story as the fed relieves some pressure there and allows companies to boost their dividends. there's a whole new class of dividend investors that come back for the first time since the crisis at 15, 16 times earnings, they look very attractive relative to the staples and utilities sectors. we would add industrials and many materials to that. >> is tech overrun >> no. even though tech is trading at an all-time high, the multiple isn't. look it's changing the way business is done. it will continue to run. but maybe not lead the way it

has over the course of the last year >> in terms of global allocation with inequities, are you overweight the u.s. or under weight >> we're overweight the u.s., but we like international markets even more. prior to where we are in the recovery they think their banks are finally healed for the first time in a long time. and so we think we continue to see them outperform the u.s. >> when we talk about the rest of the world, so europe, you're overweight for the next year >> we like europe. it's both the periphery and the core really. >> what type of sectors in europe if we're talking about a cyclical recovery, is it earlier stage? is it some of the sectors that have performed in the u.s. >> if you think about european financials, it's u.s. financials on a bit of steroids they have been so beaten up over the last several years, there have been questions about the quality. we think they're finally well capitalized. we're also seeing some of that interest assistance there in a

lack of regulatory pressure. again, financials globally are our biggest theme. >> in terms of europe more generally. if we do see more significant removal of stimulus from the ecb, does that really put pressure on markets again? or is there a structural recovery there >> we think that's a really interesting buying opportunity because every time you've had removal of stimulus in the u.s., you had trouble digesting that at first once we got our footing under us b it set the stage for the next leg up we would be aggressive buyers of any trouble around removal of stimulus in europe but we think it's going to be slow and gentle through the course of the year >> emerging markets? >> more neutral. we think the dollar has an ability to strengthen a bit. we've soon china reiterate their desire to delever next year. so more neutral at this point. >> finally in terms of markets we haven't touched on yet, japan positive or negative next year

>> japan is an economy that's been difficult to call for next year you are seeing a bit of inflation so we like it. we prefer europe internationally. >> great stuff. >> happy new year. >> you as well approaching the top of the hour, the team is getting ready for "squawk. andrew joins me. belated happy holidays to you. >> we're admiring your hair cut. it's high and tight and it's new, isn't it? >> i don't think it's that new interesting you mention it it was shorter than the package we just played which was recorded pre-christmas so there we go >> we enjoy it nonetheless we've got a lot of news. we're going to talk about saudi arabia, what's going on there. we're going to talk about amazon, all of that. but the real news is we have two very special guests who are going to be hosting the show today with me today. kayla tausche is here and mr. wonderful kevin o'leary. we have a lot of fun stuff coming up here in "squawk" in just minute. >> so it's mr. and mrs.

wonderful? >> mr. and mrs. wonderful. though i think they're both married but to separate people >> right, right. exactly. i was just giving kayla equal billing. either way, andrew, fantastic stuff. we look forward to "squawk box" coming up in just a few minutes' time let's have a look in on what markets are doing before we leave you here on "worldwide exchange." positive for futures dow up 54 points the s&p up six points. coming off the slight declines yesterday. but fractional they were the nasdaq was down more down a third of 1% apple declined about 2.5% yesterday on fears of lackluster sales for the iphone x in terms of the other key market from energy yesterday. let's have a look at that. oil prices did jump about 2.5% yesterday in part due to an explosion in libya impacting supply today just pulling back a little bit 0.6%

that is it for "worldwide exchange" this morning the team of "squawk box" will bring it all up to speed for you after this short break ve gatay f hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online.

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good morning riding the rally on its winning streak since 1959. can you believe that crude oil prices we have not seen for more than two years we'll talk about it straight ahead. plus "squawk" in the tank. kevin o'leary is going to take us to the name of the next business idea. "squawk box" begins right now. ♪ welcome back live from new york where business never sleeps, this is "squawk box.

>> good wednesday morning and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm kayla tausche along with andrew ross sorkin joe and becky are off today. sitting in with us kevin o'leary. it's great to have you what a treat >> thank you great to be here >> take a look sat u.s. equity futures this hour. yet another subdued session early in the morning after thin trading overnight both in asia and europe were they to open now, s&p would be up by six, dow up by 51, nasdaq up by 15. after the dow and s&p yesterday fell for the fourth time in five sessions no santa claus rally to be found. crude oil has been the big story this week. there was a pipe line blast in libya causing supply concerns. that drove the price through $60 a barrel for wti for the first time in more than two and a half years. those prices falling slightly this morning