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tv   Worldwide Exchange  CNBC  November 10, 2016 5:00am-6:01am EST

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good morning. stocks rally around the world and u.s. futures are pointing to a positive start at home. new this morning, an iea report says opec production has hit an all-time high. and mr. trump heads to washington. the president-elect and his wife will meet with the obamas at the white house today. it's thursday november 10, 2016. "worldwide exchange" begins right now. ♪ good morning. welcome to "worldwide exchange" on cnbc. i'm sara eisen. >> i'm wilfred frost. good morning to you from me as
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well. let's get straight to the market action and check in on futures this hour. this time yesterday they were yo-yoing all around the place. we were down at one point more than 3% in the premarket. we ended the day yesterday up more than 1%. we'll get to the reasons for that rebound and what we can expect moving forward next week as well in a moment. right now, as you can see, called higher to the tune of triple digits. the dow once again 142 points. the s&p expected to open up 16 points. the nasdaq by 45. the major u.s. averages rallying within 2% of the all-time intraday highs. yesterday it was broad, 7 out of 11 sectors positive. financials up 4%. utilities down 3%. >> quite a performance. more on the markets in just a moment. first some overnight news to tell you about. thousands of protesters swarming the streets of several major cities following the surprise election of donald trump. reports say that at least 30 people were arrested in new york
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for disorderly conduct. in los angeles more than 100 protesters shut down a major highway. in seattle a crowd estimated at several thousand people marched and chanted "not my president." we'll have much more on the day's top political headlines in a moment. again, a little deja vu here after brexit, we were part of that protest and marched with them in terms of coverage after the uk voted out and the people in london who wanted in, then marched down to parliament. >> i don't apologize for making the comparisons anymore, because we were right doing that throughout the run up. expect those to last. we still have court issues in the uk about unwinding this brexit vote. and that dissatisfaction and hurt. both of these elections were two polarizing outcomes, and people
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are still dissatisfied. let's check in on yields. big story in the treasury market, yields jumping past 2% on the ten-year. another wild ride yesterday with initial gut reaction to finding out that trump was gains momentum and it looked as if he would win was to buy the safe haven treasuries, get out of stocks, yields went down to the low 170s. then later in the morning we started to see some selling of treasuries. so much so that yields popped up to 2%. this is the inflation sort of growth trade that we'll get to in a moment of how the markets digested the trump victory. >> the particular extraordinary thing about the move in the treasury note, this happened at the point when expectations of a fed hike fell. they fell from from 70% to 50%. >> moving on fiscal and not monetary now. >> we're back above 2%, when will that happen? certainly not until a fed hike. the likelihood of that has
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fallen and yet the yield curve up. 60% to 65% of the bank's interest rate sensitivity comes from the short end of the curve. we saw short yields move up, but the fed funds rate is the big thing to their profitability. we saw a big move because of the yield curve steepening. >> it was a global phenomenon. european yields at this hour, all higher. we're seeing jump here's in some of those safe haven bund yields. in germany the ten-year yield there jumping. way off negative levels we saw earlier in the year. seeing it in london, spain, france. there's a feeling that maybe, jim o'new'neil saying yesterdayt perhaps this deflationa arary t that we've been in post-crisis is coming to an end. austerity is no longer in vogue, and if we can get some growth
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and then inflation yields are jumping on that. >> european equities which ended up yesterday 1.5% are rallying again today. gaining of about a percent today for most markets. italy is leading the charge, up 1.4%. that's because the banks in italy are soaring. let's look at some of the european banks. yesterday the likes of the italian banks fell sharply on the fear that this upcoming italian referendum on december 4th would follow the trump result and increased possibility of another anti-establishment vote. so italian banks suffered yesterday. all of the banks benefiting both late yesterday and today on that rising yield trade. across the board significant gains for the european banks. a quick look at asian trade. that's disproportionately large today because it closed during the troughs of the moves yesterday. >> 7% gain. >> and a 5% loss for the nikkei. it was the only index that fell,
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ended the day down sharply yesterday it didn't enjoy the laterally yesterday when futured turned overnight. a new report from the international energy agency, saying global oil supply rose by 800,000 barrels per day in oe . october. the iea is keeping the demand forecast unchanged and suggests the market risks running another surplus next year without an opec cut. minist ministers will meet on november 30th about that. wti which did close above $45 a barrel, gaining more than a half percent yesterday is down below that level. the dollar/euro turn aid round sharply yesterday.
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ending up, the u.s. dollar up half a percent against the yen, 106 and up slightly against the likes of the euro and the pound. the gold prices rallied initially yesterday as it was a safe haven trade. but it's ended up trading flat for the day and is up a bit today by 1%. 1284. extraordinary turnaround that we saw over the course of the last 24 hours. it's predicated on the hope that there will be fiscal easing, tax cuts that could boost the econom economy. the question i want to ask, not whether his intention is to deliver it, but a lot of red tape to get through to deliver that. there's a lot of laws that need to be passed, congressional red tape -- >> but the feeling is the republicans have both houses now. so it's going to be a lot easier, and they're in
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agreement, even though there's been some in-fighting in the republican party, they're in agreement. donald trump's platform and house speaker paul ryan's platform -- >> it's not instant is my point. >> the infrastructure thing, who knows. there's also fed in the mix. san francisco fed president john william thinks the u.s. economy is strong enough for a gradual rate increase but that the fed will examine all the data before the next meeting. williams also says the central bank will be able to maintain independence under a trump administration. >> one of the lessons from, i know, a hundred years of central banking is that independent central banks tend to perform better, keep inflation low, and that's something that most successful countries have accepted. from mier speculative, that's the most important thing for the fed to continue to have the ability to make the monetary policy decisions that are best for the long run. >> first post-trump fed speaker
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there. williams said he won't speculate on whom trump will appoint to fill the two vacant seats on the federal reserve board. donald trump is not seeking janet yellen's resignation. an economic advisor to trump tells the "wall street journal" that the rumors are not true, but judy shelton suggests trump would not nominate yellen to a second term saying he wants someone's whose thinking is more in keeping with his own. >> her term is up in 2018. >> big focus will be on that next fed meeting. in terms of event risk. let's look at the last 24 hour market moves and what if means moving forward. michael fahr, a cnbc contributor joins us. good morning to you. quickly, let's just touch off on that extraordinary turnaround in markets yesterday. what do you put it down to? is it justified?
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>> it was our own little mini brexit moment where we looked at futures overnight down 700, almost 800, and then an up opening. shocking. as wall street moved their bets from a president clinton expectation to a president trump expectation. and it happened very quickly. it happened with a great deal of force. the big surprise for me was on the yield side. the ten-year treasury yield really going much higher. those treasuries falling in anticipation of a lot more debt and perhaps less good relationships with global holders of that debt around the world. >> that's an interesting theory. i was reading more about an inflationary jump as a result of a fiscal stimulus package he might introduce, but a boost in growth. >> it's interesting that we had
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this financial crisis, because we were overlevered, the consumer was overlevered. we have seen the u.s. balance sheet on the debt side expand, $19 trillion, $20 trillion in u.s. debt at this level. this new president saying i'm going to expand that debt with these new programs. now the markets are greetding that fairly well on the equity side and yields are moving higher. still amazingly low rates at just over 2%. >> michael, the other reaction to the financial crisis was the thought that there was a need for much more and tougher regulation. is that another thing that donald trump could unwind significantly? particularly on the side of banks. >> i'm shocked with the amount of optimism that the markets -- with which the market is greeting president trump as opposed to candidate trump.
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candidate trump was talking anti-trade, anti-immigration, and now markets are looking for the rosiest donald trump that they can imagine. somehow we'll have less regulation, we'll have lower corporate taxes, we'll repatriate dollars from overseas, and all of these will drive prices higher and everything will be great from now on. it seems to be a bit of an overrosy reaction at this point. i would caution investors, markets are still near all-time highs, and could make all-time highs today if the futures pan out. >> i think you have to go beneath the averages and the top line there. there are interesting stories, healthcare, a strong performer. the biotech stocks jumped the most they have since 2008 on this idea that a trump presidency and a republican congress would be good. financials along with that. there were some losers, like the big technology companies, amazon and apple. you have to rip up the play book
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and start thinking about what this new regime would look like. whether you're worried about some of the overarching uncertainties or not. >> you're absolutely right. again, of course the pressure that secretary clinton had been bringing on so many of the healthcare stocks, particularly the biotechs, pricing of pharma and on energy, clearly -- the banking system, of course, all of those were depressed. a lot of the hedge funds. we have to remember the hedge funds, they had been making short bets, waiting for secretary clinton to be elected. a lot of those positions were short and a lot of short covering yet as people were making sure they weren't exposed as these stocks did move higher again. this is a big reshift calculation. markets are just pricing mechanisms. they can price in anything given time. they hate to be surprised. >> so you're not buying? >> sure i am. >> you are. >> well, yeah.
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i'm always looking for a bargain. i'm always looking to buy. not buying broadly or probably buying anything today. if i can find things that meet my discipline, i will. this is high, if the rule is to buy low and sell high, in general things are not high and caution is certainly warranted. >> michael farr, thank you for joining us. when we come back, turning campaign promises into policy. from trade to jobs, we'll talk about what a trump white house will mean for the world.
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welcome back. this morning we're going beyond the political headlines to break don't pillars of a trump economy. one key question for global investors and foreign powers is trade. joining us from washington, the founder of the reality check blog. he has written extensively on the issue of trade, the trade deficit. has been a must-follow during this entire election. good morning. >> thank you very much. great to be here. >> you have an interesting position. it goes against the consensus and the sort of group think that all trade deals including nafta and tpp are good for business and good for the global economy. you've been more on the trump side. explain your position and why you think trump's policies might be good for america on trade.
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>> my two main concerns about trade policy and the way it's conducted since nafta came into effect at the start of 1994, one, that the growth of the u.s. trade deficit in real terms during this current very feeble economic recovery has sliced about 20% off of cumulative u.s. growth during that expansion. that's about $420 billion worth of lost growth adjusted for inflation. that's a lot of jobs also. my second concern has to do with the return of the very same kinds of global economic imbalances that set the stage during the previous decade for that horrendous financial crisis that we all suffered through. i was very deeply concerned that had hillary clinton won, she
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would have, despite various campaign gestures and statements to the contrary, placed u.s. trade policy right on the same course or right back on the same course of seeking the kinds of -- the kinds of trade agreements that inevitably fuel those enormous imbalances. >> alan, i don't want to oversimplify the trade debate. even in its best case, is it not a zero sum game? if you put up tariffs and barriers, what you'll be doing is shifting the benefit from the consumers who want cheap products, a variety of products and cheap products like iphones being manufactured in china and shifting the benefit to the workers who will get jobs back but in a free particulmarket wo shouldn't have those jobs? >> one problem with that statement is that we don't live in a real free market world. we live in a world where countries large and small, rich
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and poor interfere with trade flows all the time and with a special eye towards attracting the highest value production and employment into their borders. and i don't see why the united states can't and shouldn't do exactly the same thing. the second problem that i have with that statement reflects the fact that however beneficial low consumer prices are, gainful employment with what we might call family level wages are even more important. if you're not earning enough income to finance your consumption responsibly, you're led to greater reliance on debt. we should have learned during the previous decade, during the run-up to that financial crisis that successful reliance on debt-fueled consumption leads to very serious trouble that we should all want to avoid that
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again. >> alan, either way, has trump got a bit of a job on his hand to explain to the voters in michigan, for example, that voted for him on the hope of getting a job back, if jobs do come back to the united states, they'll be different jobs than the ones they lost 20, 30 years ago. they'll have to retain people, it's to manufacture an iphone now as opposed to working in a hard-core manufacturing plant. >> i got to tell you, i don't see why the united states can't bring back enormous amounts of manufacturing production. from places like mexico, like china, where it has gone to a very great extent -- again, since the early '90s when u.s. trade policy went off into what i would call its off-shoring friendly phase. the reason is that industries like automotive are high value capital and technology intensive
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industries and the united states and its workers should be fully competitive there. >> we have to go, we'd like to have you back, your take is a unique one and something they're worried about. >> understood. >> and alan, i think what you're spelling out could mean -- i think, something that could be growth friendly for the u.s. alan tonelson there. still to come, trump and his wife will meet with the obamas at the white house today. that story tops today's political news. stay tuned for that and much more market analysis on "worldwide exchange."
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morgan stanley welcome back. let's get you up to speed on the market action. following a big rally yesterday, we're seeing strength in u.s. equity futures. dow futures up 165, pointing to a record high if we open around these levels. s&p 500 futures are up almost 20 points. nasdaq futures in celebration mode to the tune of 53 points. this comes after a nearly 250-point rally for the dow yesterday. more than 1% across the board. and two stand out performers as far as industry groups on the move this morning. biotech and financials. there's the biotech index, also strong in the premarket after that strong jump yesterday. the financials, best performing sector on the back of jumping treasury yields. this idea that inflation and
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growth is coming to the u.s. with a republican controlled washington. ideas about spending on infrastructure and defense and cutting taxes. >> that's a big part of it, but specifically for financials, the hope of what -- not even so much what donald trump will do in terms of pulling back regulation, but the fear on what was priced in on what a clinton presidency would have meant for increasing regulations. would she have unleashed the likes of elizabeth warren more, appoint warren into a position. >> good point. >> that has led to a relief rally. >> it's the two. you have the steeper yield curve and less fear of regulation. president-elect donald trump is set to visit president obama at the white house this morning. the two will discuss transition plans. yesterday president obama said he and the president-elect have dig can't differences but promised full cooperation to ensure a smooth transition of power. coming up, today's top
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story, a global stock market rally. we'll get more insight into the markets and the election. alan ruskin will join us. you're watching "worldwide exchange." seeing is believing, and that's why
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to drive the day ahead including earnings from retailers and dow component disney. it's thursday, november 10, 2016, you're watching "worldwide exchange" on cnbc. ♪ good morning. welcome back to "worldwide exchange." i'm sara eisen. >> i'm wilfred frost. >> let's check in on the global markets. the trump rally an unlikely one i would say continues. futures up strong. dow futures up 156. s&p 500 futures are up 18 1/2. and nasdaq futures are up 50. that means we're watching for levels and potentially record highs in today's stock market if we open around thee levels. early action in europe extening that turnaround in trade. the german dax is up 1.1%. 1.25% for france. the ftse 100 up a percent.
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italy up 1.75%. overnight in asia, big comeback for the japanese nikkei market. that's the one that closed 5% lower last night when futures were still down several hundred points. a big bounce back there, up almost 7%. strong in hong kong as well. 1.9. shanghai up 1.3%. a lot of catch up to what happened yesterday in the session. >> a look at broader markets. oil prices took part in the rally. up a half percent. soft on the u.s. side this morning. wti below flat at 45.2. the ten-year note, the biggest talking point yesterday during the troughs of the risk aversion yesterday. we hit 1.7%, there was bond buying but we finished the day above 2%. extraordinary seeing that level of yields rising across the world.
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t the broader index higher yesterday. and the dollar rally with the yen up, and stronger against the euro and pound. >> joining us is alan ruskin from deutsche bank. good morning. >> good morning. >> we were talking about what it was like last night as results came in. you were on the trading desk. >> i was indeed. it feels like i have been here before. last evening was one of those where you thought you were marching in the direction of consensus, then within a short space of time it felt like we were reading back and going in the opposite direction in terms of sentiment and markets. >> what caused the turnaround and in your world the dollar to rally? there were so many warnings from forecast others that if trump wins, that's a huge dollar risk. >> i've been on the constructive
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side, and i think a lot of what happens fits with the story i was telling. i think the story beforehand, in terms of the uncertainty that related to trump, two things. comments related to trade and maybe some of the post election xhech comments. the tone seems to be tempered. positioning was a big deal as well. uncertainty, markets hate uncertainty in a sense. certainty, whatever the result was going to be, would add to clarity in terms of the risk story. >> either way have markets priced in the rosiest possible trump presidency quickly? is there now risk for downside if he doesn't deliver the sort of tempered trump rhetoric we got in that acceptance speech if he goes back on build the walls, tear up trade agreements. is there risk for down side again? >> yes. the market is billing up an idea of a tempered trump.
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no one is taking trump's original plans. they're thinking, okay, with a republican congress we can right size the fiscal policy side. it's difficult to assess what is the right size for starters. but also there's a bit of a danger here that markets get ahead of themselves. the bond market gets so far ahead that it tightens financial conditions and reels back the stock market. may not be the worst thing in the worl, but thered, but there possibility that it slows things down. >> what do you do with emerging markets? >> you have to look at specific countries. mexico is a special case. china as well, there's a lot of sensitivity if trump does say sh, china, you're a trade manipulator. >> there is a precedent for that. this has happened before, i
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think under clinton, the treasury declares them a manipulator, and then there's all sorts of conditions they have to meet. is that a big problem for global markets? >> i think it's lower hanging fruit for the trump administration. the headline doesn't look good, but the immediate repercussions are quite limited. >> what about europe and the euro? is this a wake-up sign for the upcoming italian referendum and various national elections in germany, france and holland? is there a fear in europe that the similar thing could happen like with brexit and like with trump? >> yes, you're seeing some of that, more tempered response in europe is partly related to that. the idea that, yes, the trump victory does have implications to the italian ref reerendum an
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that could have huge implicatioimplication s. what you're seeing here is that the u.s. actually -- the stars have aligned in terms of politics. all the political uncertainty has almost gone out of the air. the republican party is in the ascendancy in terms of having control over both houses in congress and the presidency. it's a different story to the uk. >> give us the bottom line picture now that we have the clarity you guys were look for. and while we've seen brexit parallels it's going to be a different outcome in the u.s. >> i think you have to run with this. year-end euro/dollar call looks to be 1.05. that looks bang on. 95 cents, which looked aggressive for the end of 2017,
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i think that's firmed up and deserves to be firmed up. >> dollar/yen? >> i think we'll have to take a look at that again. i think this mix right now between risk on and higher bond yields is not a cocktail for a stronger yen. >> sterling? dear old sterling? >> sterling, i think, is caught between it's own politics. the dollar story which we thought was always going to be probably the dominant story before brexit, was going to drive cable down, sterling sharply down, now you have a dollar story as well to drive it. >> and finally is the mexican peso finished getting crushed? >> let's see how that one plays out. in terms of what does happen to nafta, what happens to the wall, you know, i suspect the more pragmatic side of politics will play itself out over time. >> alan, great stuff. thanks for joining us.
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alan ruskin. a pair of economic reports highlights the agenda today. weekly jobless claims at 8:30 eastern. followed by the federal budget at 2:00 p.m. koels, macy's and ralph lurns report this morning. landon dowde eddowded eded eded. >> wall street is looking for disney to post their numbers. espn subscriber numbers, disney's cash cow is threatened by cord cutters and diminishing interest in cable subscriptions. investors are watching these numbers closely as monday night football ratings are down about 2 20% this season. and whether the mouse house will have to make moves created by the scale of the at&t/time
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warner deal. listen to comments bob iger might have on companies they could purchase to stay competitive. the third thing to watch, disney has been winning at the box office with remakes like "the jungle book" and "cinderella" and upcoming releases like the "star wars" film should offset any weakness. shares of disney are down 3% over the past three months. >> disney shares down 19% over the last 12 months. coming up, today's must reads with a special guest. james freeman there the "wall street journal's" editorial page. we'll do a live in-person must read of the morning. stay tuned.
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now to our must read stories, the ones catching our attention in the papers. we have a special guest, a real-live columnist here with us on set here. james freeman "wall street journal" editorial assistant page editor. my pick in the "new york times," ten step program for adjusting to president-elect trump. gail collins writes if you're worried about social issues until fairly recently trump was a liberal manhattanite. in case you want to write a check, a large one to planned
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parenthood. this is the classic liberal snark reaction in the papers to president-elect donald trump. i have to say going through some of the op-ed pages, i couldn't find an optimistic celebration one. even the "usa today" view was very cautious. >> i think gail ought to be more optimistic. it's true, you don't know what you're getting with him. this is good and bad. i don't think he's ideological. he could be persuaded in one direction or the other. >> there was also some positive tones from secretary clinton and president obama. perhaps that's a tone that should have come through more on the editorial pages. >> gracious remarks. i thought a great speech from donald trump when he accepted. i think that's why you saw the trump rally in the markets yesterday. he wasn't talking about trade wars or the wall. i think we've gotten a lot of positive messages the last day or so. >> my pick is in the financial times. titled social media alone
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understood the donald trump story. the decline of newspapers puts them level with fast flows of fantasy and leaks. i'm diving into a particular line where it quotes aaron banks, ohe said facts don't wor. and says in contrast with the heavily rational romaine camp, talking about brexit, leave was about emotion. this goes on to say how the emotional side is captured by social media the factual side was captured by the hard core press. that's perhaps why the tone of the press was so surprised at the result. >> i would disagree with that. i would agree this was a rough election for the establishment of all kinds, politicians, media, obviously much of the media didn't anticipate that. i don't think the trump phenomenon is driven by emotion. it's the fact of a slow economy.
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it's the fact that you look at the stats all year, people say the country is on the wrong track, slow growth, we're not seeing the job creation. so i think those are the facts that were referred to. >> we are seeing job creation. you write about it as much as we talk about it we're seeing 3% growth. it's not anything great, it's not the most exciting growth story and definitely not all inclusive, but there's been progress and obama's approval ratings are high. relatively. >> i look at labor force participation, were it still at 1970s levels, worse than it was four years ago, eight years ago. when you look at that kind of referendum, and people tend to ask the reagan question, are you better off than you were four years ago? it's hard to say yes. >> so you think that there was this huge thing grossly underestimated by democrats and the media as well how much
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economic pain there is out there? >> yeah. if you go by county, basically places that were particularly struggling economically were very protrump all year. you saw that in the republican primaries. i think that was born out on tuesday night. >> going back to the social media point, did donald trump harness that better than hillary clinton? on the flip point everyone saying she had a better ground game but that was outweighed by -- >> by his twitter game. >> the experts took a beating this year. not just the pollsters, but we read so much about the analytics, the technology of the clinton campaign. it wasn't really a match for his ability to use relatively more low-tech twitter to get his message out. how amazing. a political rookie spending about half what his opponent did was able to harness so much free media to get his message out. >> how about the fact that no major paper in this country endorsed him?
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maybe except the "new york post." that doesn't tell a robust story in terms of the future and influence of newspapers. >> right. yeah. i'm all for the future and influence of newspapers. but i think all kinds of media are not reflective of the country at large. so it's something to keep in mind. >> maybe it's a changing role. maybe it's just changing how you guys think about that role. what's your next column going to be? >> well, i think we're focused on what happens now. it's all about the economy that the president is inheriting and what the agenda will be. i think for people like us who like more limited government and especially economic growth, i think there's a lot of upside here. we talk about trade and immigration where he has differences with republicans, but the things they agree on, where you could see progress in the new congress, tax reform,
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limiting regulation, 35%, 39% corporate income tax in the u.s. when you count state levees is the highest in the industrialized world, talking about bringing the federal rate from 35% to 15%. this is a game changer for the united states. if that happens, you're talking about really becoming a magnet for worldwide investment. i think that's why -- that's what a lot of people started to focus on when you saw trading yesterday. there's been a lot of fear about him, but there's a lot of upside economically for business profits. >> james, thank you very much for joining us. pleasure to have you with us. >> good to be here. >> we'll look for that optimistic take. it was missing from the pages today of the big papers. still to come, the u.s. yield curve moving to the widest in six months. we'll discuss with paul donovan from ubs next.
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welcome back to "worldwide exchange." looking at the ten-year treasury note, above 2%. having touched 1.7% yesterday during that yo-yoing of markets we saw as people decided whether trump was risk off or risk on event. joining us is paul donovan. thank you very much for joining us. do you agree with the market's conclusion by the close yesterday that a trump presidency is a risk-on event? >> up to a point. i think it's very clear that president-elect trump has got an agenda around infrastructure spending and around tax cuts, which is likely to get through a republican congress. to that extent you get immediate fiscal still plus that favors certain sectors in the economy, around construction, maybe issues around healthcare and maybe finance. at the same time this is also an
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inflationary program. let's be clear, u.s. inflation was running in line with averages along those measures, and now you're adding a relatively full time of employment. this will add to inflation. that's being reflected in the bond markets. >> so bond yields rise and surprising to see the dollar strengthen as well? should the dollar be weakening in this light? >> the thing is what we have from the president-elect yesterday was a rather conciliatory sort of victory speech. carefully scripted, where we didn't hear anything about trade protectionism, hear anything about american isolationism. and i think markets desperate for guidance seized on that with both hands. the thing is, as we move forward, if we start to see more questions about do we get punitive tariffs against china,
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against mexico, do we see more restrictions on trade, do we get the renegotiation of nafta that mr. trump has proposed, that is likely to start doing some damage to the dollar. as the inflation numbers start to come through, on the back of the fiscal package, we don't have details yet, but as they start to come through, that, too, is likely to do damage to the dollar. it's a mix of concern about the capital flows that the united states needs to prop up its currency, combined with the rising inflation environment in the united states will affect that over the long-term. >> there are geopolitical risks, rising uncertainties with russia, what's happening in the middle east, rising threats of terrorism, how do investors grapple with those risks? >> very badly is the honest answer. investors have never been good at pricing in geo mripolitical
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in an ordinary sense. this is a significant pivot if we can borrow a phrase from the current administration, inasmuch as if you look at mr. trump's track record as an individual, he has been strongly opposed to america playing an international role. he has been an isolationist in foreign policy for 30 years. and has gone on record saying this. what that means, do we see a rise of regional powers, now that it seems likely that the transpacific trade deal is dead, does china step in and create its own regional trade deal? therefore cement its position as a regional leading power in what happens with europe and russia in an environment where president-elect's tru trump's relationships with europe are
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different than the current administration, the markets have not grappled with this. >> when we look at specific political risk, how significant is the italian referendum on the 4th of december? >> i don't think that italian referendum itself is particularly significant. there's a 50/50 chance now that we see the government losing the vote and resigning. but really does yet another change in the italian government come as a shock to financial markets? probably not. one can question what the government may achieve. but the italian government is something which changes frequently. i don't think that's the risk. i think markets look ahead to france, to germany and the netherlands next year rather than italy this year. >> paul, final word on -- we'll pin you down. there's been some winners and losers in the markets across assets and within sectors. from the president-elect trump and republican controlled
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congress. what is the biggest winner and the biggest loser? >> i think the biggest winner is an inflation protection story. that's something which is very, very clear at this stage. where we look for losers, that's difficult because we're uncertain of how much of candidate trump's policies translate into president trump's policies. global trade could be a significant loser in this environment with wide raging implications. >> mexico appears to be at the forefront of that. paul, thank you. >> thank you very much. >> i have to say, the overarching thing over the last 24 hours, very -- large similarities in terms of what drove this result coming into brexit, but the market reaction over the last 24 hours very
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different. >> market areaction and ultimat outcome. we should be careful in terms of comparing it too much in terms of what it does for the world and this country. "squawk box" is next.
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. good morning. global markets alert. the rally is rolling on. stocks rising around the world, u.s. futures pointing to a record open at home. boy. who would have thunk, right? new this morning, an iea report says opec production has hit an all-time high. details straight ahead. plus mr. trump, president-elect trump heads to washington and with his wife. they'll meet with the obamas at the white house today. that should be interesting. it's thursday november 10, 2016, "squawk box" begins right now.
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♪ live from new york where business never sleeps, this is "squawk box." >> who would have thunk? we thunk. but we'll discuss. good morning. welcome to "squawk box" on cnbc. i'm michelle caruso-cabrera along with joe kernen and kayla. the dow on track for a record high at the ep. u.s. equity futures suggests the dow would open higher by 145 points, that after averages close to the all-time highs this would be the best week for the dow all year. >> everything is happening in a much quicker period. things are -- the contraction. so we went through the seven stages -- >> of grief? >> we went through it overnight. >> in those four hours. >> the 1,000 point drop. the only thing that crashed

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