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tv   Worldwide Exchange  CNBC  November 15, 2016 5:00am-6:01am EST

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>> zboorng. stocks jump, bond yields soar and dollar trades near 13 year highs. >> taking flight. warren buffett makes a big bet on u.s. airlines. the details behind the surprise move coming up. >> plus earning central a new read on housing, the economy and american consumer as home depot rolls out its quarterly results. it's tuesday, november 15th. "worldwide exchange" begins right now. a very good morning. welcome to "worldwide exchange" on cnbc.
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i'm wilfred frost alongside seema moody. yesterday we did see a decent futures board this time yesterday and decent open but we lost impetus during the course of the day essentially you can call it a bit of a step back pausing for breath from this post-trump election rally and today we're seeing a little bit of positivity but muted given the gains we saw last week, the dow higher by 32 points, s&p by five and nasdaq by 11 points. not huge gains yesterday we saw continuation of some of the sector performance, financials once again the best performer they've had their sixth positive session in a row. can that continue again today? tech suffering significantly, down over 2%. worst sector yesterday. big names like apple and amazon have been suffering since trump's election victory.
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>> take a look at european stocks. they did finish well off their lows yesterday. here in europe. as we can say u.s. treasuries now in focus with the ten year still above 2.1%. in europe mixed session right now with france holding on to a grain of .3 of 1%. >> eurozone gdp plus 0.3% plus 1.6% year-on-year. that's online. germany coming in softer. italy stronger. overall no big misses or hits but the german one getting attention. the uk is out performing today in a relative sense. that comes in light of a softer pound. the pound down about 0.8%. allowing the ftse 100 to rally.
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let's take a look at asia to see how markets are responding to the data we got out across the eurozone. the trump rally wearing off a bit, the japanese nikkei now at 17,668. basically hanging on to the flat line whereas in hong kong gains there of around half of a percent. china down fractionally on the day. stocks and bonds suffered about a 2.5 billion in outflows due to trump as policies. >> let's look at broad maerkts. oil prices are rallying. yesterday broadly ended the day flat. today up 2.5%. opec will deliver its production cut. of course that's one of the big events we're looking at towards the end of the month. 44.4 wti. dollar prices let's have a look. we did see the dollar rally again yesterday. not quite as strong. you got the dollar a little bit
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softer today against the euro, some gdp data helping the euro stronger, pause and reason for a correction given the recent run the dollar has had. dollar higher significantly so. u.s. dollar versus yen is broadly flat given a very strong run the yen, the dollar has had against the yen since the election result. gold prices very quickly for you yesterday fell .2 of 1%. today similar size. the outsize reaction markets generated a discussion as to whether this, these levels are justified given that at this point we had big picture ideas from the president-elect donald trump, a lack of detail. can markets move just on the prospect of fiscal spending and lower taxes. >> yesterday we did slightly pause for brit. we were broadly flat.
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interesting to see pharrell williams put -- financials but strong. we did see the short end play catch up. lagged previously. we saw more of a steepening. shorter end of the curve caught up with the rise in yield we seen in the longer end. at the moment you can see around 2.2% on the ten year. a bit higher. two year note has caught up and at highs across the curve now from december-january which shows the space of the move. >> i appreciate the live charts you're using. just in case. >> more for myself.
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more to keep myself. >> today's top corporate stories, warren buffett berkshire hathaway disclosing new investments in four big airlines. sec filings shows buffett's firm took stakes in united airlines, delta and continental. becky quick reports that berkshire has taken a stake in southwest airlines. the move is a shock reversal for buffett who has shunned the airline industry for decades following a volatile investment he made in u.s. airway back in 1989. >> it's interesting. as you said, massive reversal. everyone is trying to work out what his reasoning behind it. it's hard to take a step in the domestic u.s. airlines unless you have a bearish view on oil prices. now there might be other minor factors around it. there's a macro link factors. he must be saying this is a vote confidence for the u.s. economy and a vote of bearishness
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towards oil prices otherwise hard to take those positions across the board. we have those reasons. >> timing so interesting. two weeks away from that november 30th opec summit where oil prices could move and change as you point out. one of the exalternatival factors. >> reynolds america looking for a higher price from british american tobacco. projected $47 billion take over offer. saying the price was too low. british american already owns 42% of reynolds. the company is said to be open to improving its initial offer. >> grocery shopping center owner regency centers is buying equity one for about $4.6 billion. the tie up will let regency add areas like los angeles and new york to its portfolio. aig agreeing to sell its japan life insurance business. terms were not disclosed.
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fwd group is the arm. a busy one on the data front at 8:30 eastern we'll get retail sales, import prices, empire state manufacturing survey and at 10:00 business vince, two important speeches today at 8:00 eastern, boston fed president will give remarks and then answer questions at an event in portland, maine. at 1:30 eastern we'll hear from stanley fischer. few earnings reports to watch. home depot posting quarterly results. watch for dick's sporting goods and tjx the parent of tj maxx. the street is looking for home depotato post earnings on revenue of $23 billion. beyond those numbers here are the three things to watch. first big ticket item data from the association of home appliance manufacturers suggest appliance sales softened in the quarter, second weather, higher temperatures throughout the
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quarter stifled home improvement projects especially in august. however prep regulates for hurricane matthew as well as post-storm recovery helped same store sales. and listen for management's projection on outlook. they expect a stronger finish to the quarter but mixed macro signals and uncertain consumer following the presidential election could lead to slower growth ahead. shares from home depot are down 6% in the past three months. back to you. still to come, the dow on a six day winning streak. insight and analysis from our chief market strategist. that comes next. don't go anywhere. you're watching "worldwide exchange" on cnbc.
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. welcome back to "worldwide exchange". yesterday marked the deadline for big money managers to reveal their holdings in 13 f filings with the sec. soros one management dissolved its shares in the world's largest gold funds. the move was ahead of the presidential election. >> john paulson's firm held a stake in the spider gold trust exchange. paulson has been long known as a gold bull. by the end of the third quarter the value of the firm's position fell by nearly $4 million. >> david einhorn green light capital cut its position in the biggest holdings during the quarter. this included apple and general
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motors. einhorn's firm disclosing a stake in u.s. steel. the position was worth around $58 million. let's get back to the broader markets. joining us is our strategist, art hogan. thanks for joining us. we hit all time highs on the dow yesterday but the move was smaller than we've seen in recent days. it is right we pause for brett for these new highs. it's been a resounding rally. >> it's a rally that's been characterized by a couple of things not the least of which is repositions. you have a lot of people, portfolios positioned for a hillary clinton candidacy and i think that set people up in a position where they needed to exit some trades that were popular. short financials, short health care stocks, defensive plays. that's happening at break neck speed.
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it's natural for us to take a pause. last week's volumes were up 25% week over week. a lot of positioning has happened. now step back and say what does this mean. how much economic growth will we get out of a new administration and some of the policies. >> is that why financials are the best performer? >> yeah. both of those things in concert when you think about that and that's a group that hadn't recaptured it's 2007 highs. when you look at the s&p 500 and the ten industry sectors only one that hadn't gotten back to 2007 was financials. when we think about brave new world for financials both things happening for the same time in a group that's not moved enough will be explosive. >> does it make sense for investors to reallocate money into different sectors based on the prospect of trump policies which we don't know what they are and lack of detail?
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>> i can tell you this. that's a great question. at the very least you want to get out of those things you were assuming were going to continue to be negatively impacted. if you think that biotech will have an overhang because of reimbursement or financials will see more not less regulation you might want to unload that trade. doesn't mean you have to plow into industrials or into materials but we've seen a lot of that repositioning happening pretty quickly. to your point at some point in time we do need to sit back and say how much how far said and how much you can do in terms ever changes and we won't know that for quite a bit. >> does the dollar keep rallying. on the face of it, increasing the national debt through a fiscal stimulus should be softening. yields have gone up and makes it attractive. will it flip? will we see dollar weakness? >> for sure. we've never seen currency moves
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that we've seen. the pendulum has swung too far in the short run for the dollar and probably, you know, has gotten to a point where it's more stretched. my guess is that backs up before anything else does. >> the selloff in emerging markets is that justified or do you think at this point it's overdone. >> rising rates. commodities coming down. very dependent on selling u.s. stronger dollar. doesn't set up a very good menu for emerging markets. again that trade probably has more legs to it. as usual, think about that, over the next 12 to 18 months, would that continue to be a negative? yes. it's a very simple short emerging markets. >> we spoke about the repositioning going on including financials have been the biggest beneficiary. any other sectors haven't repositioned sufficiently enough for a trump presidency. >> financials obviously the first and foremost and health
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care. i think when we look at the industrials we've only started at the large cap. the industrial complex throughout the mid-cycle industrial companies will benefit and again this is a group that hasn't been on fire. so some things i get more concerned about on the negative swhied you lo-- side, that's gotten ahead. to the extent we're talking about some massive infrastructure spend over the course of the next two years, i think that we need to differentiate who actually gets that money. that's where you'll see most of the bargains and stocks that haven't lifted. >> outside of the reacshow in the technology space, amend market cap lost $35 billion since the election outcome. is that move overdone or do you think it's no secret that is i lie cone valley does not get along as well with a president-elect donald trump and his policies on trade and immigration. this as you were pointing out this is one part of the market
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where we're seeing earnings growth. >> it's amazing that trade has picked up. it's a difficult narrative to spell out. you laid that out nicely but what does that mean? do you think we'll get immigration policy that will negatively impact they companies and get trade policy that will negatively impact all of us? if that's the case it's not just technology companies it will be bad necessarily for the entire economy. we're seeing it first in some of the bank stocks. but what we've got through the first -- what we've been four, five days into this president-elect cycle. we focused on the positives except for those four or five stocks in technology. we haven't really considered how trade policy, immigration policy can negative impact. that's the scary part. we've seen the good trump. we haven't seen the bad trump yet. >> thank you for joining us. pleasure to see you. nasdaq announcing its long time ceo will retire at the end
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of the year. current coo will take over the top job. green pld will become chairman of nasdaq's board. they both will join "squawk box" this morning live 7:30. still to come the trump transition. the latest on the president-elect's white house plans. but first as we head to break here's today's national forecast from weather channel kelly cass. good morning. we are tracking some rain across the northeast moving into the drought stricken areas of the new england area too so that's a good thing. we need the rain in boston, much of massachusetts, still dealing with severe to extreme drought. few rain drops may cause delays at new york airports. otherwise good travel conditions across the south. albeit we need the rain in the southern appalachians where wildfires continue to be a big story. the smoke has been aufrl reducing air quality in so many areas from asheville, north carolina even down atlanta where
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we've been smelling smoke for days. few showers in miami. temperatures in the mid-70s. big system coming in to the west. you may hear thunder in seattle and portland with snow coming to the higher elevations. that's a look at your national forecast. we'll be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.
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where investors can investigate and invest in vests... or not in vests. sign up at and get up to six hundred dollars. welcome back to "worldwide exchange". let's get you up to speed on market action. politics still playing a big role in driving market action. the dow hitting an all time high
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yesterday, traders attributing that once again to trump's presidency and the prospect of fiscal spending and cutback in taxes and that ultimately being able to boost economic growth. again dow calling for a higher open of 30 points, nasdaq up 12 which ended lower because of the selloff we've been seeing, extended selloff in the tech sector with those big tech names like apple and s&p higher. let's take a look at currencies. it's been the appreciation in the u.s. dollar that has been hurting the emerging markets and currencies of those countries but today we're seeing a bit of a breea breather. u.s. dollar is down against the yen and euro. deutsche bank is now calling for a parity between euro, the euro and u.s. dollar trade. that's something to keep an eye on. if we switch focus 0 commodities a big move in gold and iron ore. oil yesterday it was trading lower. today a bit of a rebound here, perhaps hat has to do with the
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move in the currency market. the u.s. dollar, wti crude at $44.44. ice brent up nearly 2% at $45.38. wolf, back to you. >> president obama arriving in greece earlier this morning. this is his last presidential trip abroad. he'll visit greece as well as germany in a bid to reassure his european allies the u.s. will maintain its kmint to nato. in washington president-elect trump is working on his transition. tracie potts joins us with the latest. >> reporter: the latest is that he's appointed someone as chief strategist who is a lightning rod for controversy during the campaign and will now have the you president's ear. criticism is pouring in on president-elect donald trump's choice of steve bannon as chief strategist. >> the fact that republicans have been silenced on bannon's appointment is a disturbing
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sign. >> reporter: his breitbart news is a favorite of white supremacists. >> i look forward to having a discussion with whoever they appoints. >> reporter: president obama declined to weigh in on bannon but giving the president-elect some advice on how to heal a divided nation. >> how he signals his interest in their issues or concerns, i think those are the kinds of things that consider tone. >> reporter: including reports that mr. trump's campaign finance chair success considered as treasury secretary. >> a lot of hard work. >> reporter: conservative radio host laura ingraham as press secretary and gull and former u.n. ambassador john bolton as secretary of state. >> i won't be attorney general. >> up won't be. >> i won't have to decide that one. if i can escape. >> reporter: insiders say the trump transition is ahead of schedule. and the nbc is now learning the
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transition is asking whether the three oldest trump children who are very close advisors to their father might be able to get security clearance before the inauguration. after the inauguration trump can grant clearance to anyone he wants. before the new ration they have to get the okay. that's unusual. >> let's go back to the appointments yesterday that garnered so much attention over the last 48 hours or so. clearly those two, chief of staff and chief of strategist didn't require any senate approval. might we see retaliation from the senate with those appointments in the cabinet that do require senate approval. they will try to block those? >> reporter: we haven't seen that level of backlash yet from the republican party and that's what you just heard from the democrat and rp saying we're not hearing republicans who are in charge of the senate speak out. certainly you may hear that from democrats in the senate but from the republican party not a lot of push back on this.
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at least not yet. >> timeline for the big appointments. when do we expect them? >> reporter: secretary of state is one we mentioned. we could see that possibly by the end of the week. >> thank you very much. on a programming note don't miss an exclusive interview with john boehner at 12:30 p.m. eastern on "halftime report". >> absolutely. coming up on "worldwide exchange" this morning's top stories including another early morning rally in stocks. plus we'll talk politic, the fed and economy with michael gapen. stay tuned you're watching "worldwide exchange" on cnbc. breitbar
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good morning. global market rally, the dow on a six day winning streak closing at record highs an futures point to more green arrows ahead today. >> taking flight. warren buffett makes a big bet on u.s. airlines. plus only in vegas, taco bell making a unique debut on the strip. it's tuesday, november 15th, 2016. you're watching "worldwide exchange" on cnbc. ♪ very good morning to "worldwide exchange" on cnbc. i'm wilfred frost alongside seema moody. good morning. >> great to have you with us. let's check in on global market
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action. we're pointing higher but not too much. about 30 points for the dow, s&p by five points, the nasdaq by 11. we continued higher yesterday. the dow hitting another all time high albeit the gains were smaller in size than we've seen last week with some of the post-trump davis ralys rally. financials thread way. sixth positive session in a row and tech continued to suffer. that was the weaker sector down over 2%. let's have a look at european trade. it was slightly higher yesterday. mixed today. we have had european gdp numbers out. germany itself was a little disappointing. why it's up only ten basis points. the survey showed some signs of positive sentiment with the forward looking gauge as opposed to the backward looking one. overall european gdp at 0.3%
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quarter on quarter was in line with expectations. ftse 100 up almost 1%. uk inflation softer at 0.9%. it had hit 1% last month. the pound has suffered today a little bit and that's why the ftse 100 is higher. we're looking at asian trade being a bit more muted particularly the nikkei which has been particularly strong following that trump induced yen weakness. the yen today is just pausing for breath and the nikkei as well. >> let's look at broader markets because there's an interesting move in the commodities space if we take a look at oil. some disappointing u.s. shale production figures sending oil prices higher. this coming ahead of that opec meeting on november 30th. renewed talk of a cutback in production. wti crude up 2.7% at $44.49. if we take a look at treasuries that has been where the action has been, this reallocation out
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of bonds in to equities. u.s. ten year treasury yield which over the past week has jumped more than 40 basis points to a ten month high retreating a bit here. still holding on to 2.21% that's the yield on the ten year treasury. the u.s. dollar the appreciation we've seen over the past couple of days on the prospect of trump's potential policies that he'll put forth when he becomes president in january, retreating a bit. the u.s. dollar weaker against the japanese yen and euro still holding on to 107. stronger against the uk pound. as for gold that's been an interesting trade as well. it was down last week, but one today,'s trade we're seeing gold slightly higher perhaps having to do with a weakness in the dollar. >> be interesting to see if equities can continue to hold on the their own gains. we saw bonds pause for dret, 2.3% was the high we saw in the ten year. so not a big reversal but if we
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don't don't see those yields soar will it hurt equities performance, less money coming out of one asset class. >> a lot fof cuss will be on the fed speakers today. first economic data we'll be getting after the election. how investors retook that. as you point out move in yields is interesting. >> quite of few speakers yesterday. if we do see a looser fiscal policy it includes the environment with more ease to tighten monetary policy because one offsets the other. that helps get the expectation of a hike up to 90%. we're pricing that in. we're getting ready. shorter end of the curve. pick up yesterday to offset some of the pull back we've seen. let's get to today's agenda on wall street. busy one. 8:30 a.m. eastern time retail sales, import prices and export. at 10:00 business vince. two important speeches 8:00 a.m. this morning we get boston fed
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president eric rosengren and at 1:30 we'll hear from stanley fischer. a few earnings to watch. home depot post quarterly results before top. watch for results from dick's sporting goods and tjx, parent of tj maxx. late yesterday we heard from richmond fed president who said a possible fiscal stimulus could cause the fed to hike interest rates faster. san francisco fed president john williams said he was hopeful the u.s. government would continue on its currents course of open and free trade given the years of subpar u.s. growth. >> today's top corporate news warren buffett, berkshire hathaway disclosing new investments in four big airlines. sec filings shows buffett's firm has taken stakes in american airlines. united airlines continental holdings and delta airlines. becky quick reports exclusively
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that berkshire has taken a stake in southwest airlines. the move is a shocking reversal for buffett who has shunned the airline industry for decades following a volatile investment he made in u.s. airways back in 1989. >> cigarette maker reynolds is looking for higher price from british american tobacco after reynolds rejected a 47 billion take over offer saying the price was too low. british american owns 42% of reynolds american. back to the broader markets and the economy joining us now michael gappin chief u.s. economist at barclays. very good morning to you. thank you for joining us. let's talk about the market rally. 2.3% was the high we hit on the ten year note yesterday. back to 2.2%. is that a reversal of the trends we've seen since trump's election victory and what does that suggest to you about u.s. equities? >> it does suggest we finished the initial move. taking ten year treasuries back
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to where we were around the fourth quarter of last year. we've been at these yield levels before as you mentioned in the lead. up about 40, 45 basis points or so in the last week. i would say the initial move is probably there. the data now has to start to come in and we need a little bit more clarity on what the actual policies will be from a trump administration. so this is consistent with the expectation you'll get a lot much fiscal policy, some improvement in short term growth and probably a little bit more inflation down the line. markets are reor yerntsing themselves to that outcome. >> you say we now need to see the data first and clearer policy second. do you put this rally more down data based expectations than trump policy expectations? >> i don't think at this point. obviously i think the expectation that policy will change dramatically. we're weighing how much of that is anti-trade and contractionary
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and tax cuts and spending. that's what markets are reacting on. in terms of the data, the data is obviously more about a rate hike in december, financial market volatility in the near term. we're not getting a lot of that, a hike in december looks very likely. market responds much more about what's anticipated policy stance which should come in perhaps early '17 if not the second half of '17. >> seems like investors picking and choosing what they want to hear from the president-elect forks cuss on fiscal spending and lower faxes, but overlooking the protectionist trade policies that donald trump could potentially bring to washington and also that 45% tariff on chinese goods. there's research that shows that could lead to a 4.8 million decline in american jobs. >> right. so the way to look -- there's an anti-trade component to his policy plans.
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this is about sizing the two. the underlying theme is to reorient the economy away from trade towards more domestic production and activity. that type of reallocation is typically messy. it's about the relative size of these. we assume you get some anti-trade policies. we've done that through form of higher tariffs on mexico and china goods not to the 45% as you mentioned. but china's exports to the united states go generally right into the consumption basket. it's like a tax on the consumer, higher tariffs are a tax also on business. you need offset that somewhere else to keep growth elevated. you do that through a large personal and corporate tax cut. it's about sizing and timing those two components. obviously there's a lot of uncertainty around that and i think markets are making the assumption that the fiscal package will dominate any anti-trade policies that come
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out. >> the market now resigned to the fact that any fiscal package will see the national debt and the deficit rise again or are people expecting that this is going to be efficiently delivered and balanced by the trump administration? i ask because i'm looking for where the market can see some surprises as we get into early next year and see some disappointments? >> our assumption is the deficit will go wider and borrowing will increase. where that ends up in terms of debt to gdp ratio will be dependent on where nominal gdp growth goes. but our assumption is that it can't really be offset in terms of being deficit neutral so we would expect the deficit to go from its current 3% of gdp towards 5%, the size of the revenue package we are assuming is about 2% of gdp in terms of revenues at the federal level for comparison purposes the bush tax cuts would be 1.5%. 2% would still be far less than
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independent estimates of the trump plan which would put it at 4% to 5%. we think that's a bridge too far but 2% to gdp would be a quite large program and i don't see how you make that deficit neutral. >> michael thanks very much for joining us this morning. on to top trending stories today there's a new taco bell on the vegas strip and not your typical drive through. the 24 hour restaurant has a dj, a vip lounge and customizable freeze wall with drinks on top. >> i like the sound of that. that sounds like a good set up. >> i'm not sure i would go to vegas and taco bell is my first choice. >> when you first turn 21 you don't have a lot of money. if on your facebook timeline was flooded with pictures of the moon yesterday don't be alarmed.
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social media erupted with stunning photos of the emergence of the supermoon the largest and brightest moon. the moon won't come this close to the earth again until 2034. i caught it just before i fell asleep last night. it was beautiful. really astounding, to be honest. never seen the moon this close to earth. it felt fake. >> you say that for it to be zbhoen >> it gets dark earlier these days. >> i'm in bed at 4:00 p.m. so i missed it. amazon is ditching its blue and gold wrapping paper. they will be shipping millions of gifts in velvet gift bags. it comes in five sizes and three colors. prices range from 3.99 and 5.99. why the change? amazon director of worldwide sustainability says the e
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commerce giants wants to minimize packaging suggesting wrapping paper has no value. there we go. >> something to think about. >> hate wrapping. coming up on the show our must reads plus a programming note. don't miss cnbc's exclusive interview with jeffrey immelt at 11:00 a.m. eastern. we'll be right back. guests connected at work, and at play. or the it platform that powers millions of ecards every day for one of the largest greeting card companies. businesses count on communication, and communication counts on centurylink.
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. now to today's must read stories. let's start with "wall street journal's" editorial board writing a piece titled europe's trump panic. on sentence says please folks get a grip. the conclusion is europeans like to lecture americans about their political choice and even as americans always seem to be coming to europe's rescue before panicking about mr. trump perhaps europe's leaders should meet him and i do agree with the general theme in this particularly it's echoing sentiment from the foreign secretary of the uk over the weekend where he said to eu leaders we must stop this. i agree with that main point. but in terms of questioning what the result was itself. in terms of the policy implications there are reasons for certain countries to be concerned in terms of his position clearly towards backing up eu integration and that headline about some comments about nato worries the baltic
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states. overall analysis of this article is right on. but there are finer points ever policy which are worrying a lot of leaders. >> i'm encouraged how u.s.-european relations are impacted by a trump presidency. those foreign minister meetings is something we watch very closely. "financial times," i picked an article there. a piece titled donald trump, vladimir putin and the art of a deal with rush. he writes, a rival school of thought argues what mr. putin wants above all is respect and this school believes if washington treats russia as an equal and makes it clear america has no intention of encouraging russia's liberal opposition than new deal with russia is possible. i just thought this was interesting, a fresh view. so far reaction has been so negative to the prospect of stronger relations with russia. having russia restored relations would potentially be good. a unified approach in the middle east and in syria. also seen this rise of strong
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men across the world from i would say from modi to putin, trump in some ways as well. maybe this is someone we want on our side as opposed to opposition. >> potentially. there were no answers from the obama administration in terms of how to deal with it in any other way. there's a lot of, again, a lot of concern about what the consequence would be. >> geopolitical tensions. >> start to allow amnnexation o eastern ukraine. tough one to manage. not a successful answer in the past administration. >> approaching the top of the hour. steve is getting ready for box. joe kernen is full of ideas and tell us what is coming up. >> we had nigel on yesterday. >> i know. >> i don't know for sure whether he -- could he be a cabinet member here? i was talking actually to michelle caruso-cabrera about
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that. i would like to draft him to come over here and help with running. probably not. they still need his assistance as you said over in the uk. >> he's not going get it. the uk government came out again to make it clear he's not -- >> we may have something for him over here because he's sewing right minded about so many things. let me ask you, i know you're embracing culture. have you seen "meet the millers" or "we're the millers" the jennifer aniston movie. >> no. >> you're locked on to masterpiece theater. >> don't go to theater much either. >> jennifer aniston and funny. today we have bill miller the legendary investor and his son bill miller iv and it will be interesting especially given the cross currents that we're seeing in all these different markets that have reverseed a little bit today. one thing that hasn't reversed is the positive sentiment towards at least the broader
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averages. i don't know what's happening with the nasdaq. kind of interesting. we'll talk currencies, we'll talk back up in bond yields and three or four consecutive records we've had in the dow. bill miller over the years, had one of the best records of anyone on wall street. and we're going to give this new guy a little bit of a job interview see if he's up to the task for taking over for a legend. i mean he has good genes obviously. i've seen you in jeans, you look pretty good in those jeans. >> different spelling. >> what's your inseam like 40? >> not 40. that would be extreme. that would be put me about 8 foot. i'm 6'5". >> is it 38? what is it. i want to know. >> i'm 36, i think. i can't believe we're talking about it. joe we'll leave it there. "squawk box" starts in ten minutes time. >> coming up on "worldwide
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exchange," richard clarida. you're watching "worldwide exchange" on cnbc. ♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this?
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>> welcome back to "worldwide exchange". joining us now is rich clarida, local strategic adviser at pimco. let's get into some of the minutia of the bond moves we've seen. short end of the curve, stloer react to this trump victory. why is that and now that we're seeing expectations around 90% for a rate hike in december of all the bond moves happened already? >> i'm not sure about that but it's a good point. we had big selloff in treasuries. yields are back to where they were a year ago. really the 2016 yields that were abnormally low. also true that most of the selloff has been what we think
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of as a term premium. the fed repricing has been pretty modest. we expect the fed to go in december, perhaps two more hikes next year. most of this move is restoring a premium in the market and not pricing an aggressive fed. >> you're sounding like this move is totally justified. it's been i would say a very sharp correction. you think this is a justified move. >> the fact that it occurred in a week was obviously very noteworthy and if we get a lot of weeks like this it would be of concern. treasury investors have not been compensated for the past several years for taking on interest rate risk. also the markets have been too relaxed we think about inflation over the next couple of years and right now the repricing indicates markets are expecting about a 2% inflation rate and that also makes sense. >> the outcome of this election,
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rich has brought a discussion about monetary policy and geopolitical risk. are they overlooking the potential geopolitical risk that trump brings. >> geopolitical risk is with us and a very complex time. you're correct seeing markets -- the pendulum tends to swing both ways over geopolitical risk. that's a factor. another factor is that we'll be getting a fed chairman by early 2018. now we're focused on the transition of fiscal policy but next year focus on who the next fed chairman will be. >> is that a simple transition to perhaps a slightly more hawkish fed chair and that's it, very simple change or is this a more meaningful change, we'll see more political interference, someone that donald trump can speak to day-to-day and really start to lose the independence of the fed? >> well, i think that is not a major risk. i think transitions between fed
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chairmen always generate market volatility and likely that whoever president trump appoints will have a somewhat more hawkish approach to multiple than we've seen out of the yellen fed. i think the yellen fed on balance has made the right call but the folks that a president trump might appoint would have a different view about the pace of liftoff. that's the most relevant factor. >> when do you expect the first rate rise here in the u.s.. >> the fed meets next, in the second week of december. and the markets are pricing in at 90%. that looks about right. i think we'll get a fed hike at the december meeting. >> rich, great stuff. thank you very much for joining us this morning. pleasure as always. rich clarida with pimco. we leave you this morning with futures pointing higher. >> mexican peso rallying higher. >> dollar pausing for breath.
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that's it for "worldwide exchange". this morning "squawk box" is next.
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>> monopolies make money, right, andrew? when warren buffett does it you're vindicated. new read on housing, the economy and american consumer home depot set to report. we'll bring you numbers and reaction from wall street and rumors swirling about potential cabinet positions in the trump administration. we'll talk to a billionaire who reportedly is on the short list
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to head the defendant treasury. it's tuesday, november 15th, 2016. "squawk box" begins right now. a. >> announcer: live from new york where business never sleeps this is "squawk box". good morning welcome to "squawk box" right here on cnbc this morning. i'm sore with joe kernen and melissa lee. take a look at u.s. equity futures this morning. keeps going up, up, up. dow looks like it will open up 22 points higher. nasdaq up seven points and s&p 500 look to open up four points higher. overnight in asia, a bit of a mixed picture. hang seng did go hire. nikkei down. finally let's take a quick look at european equities. you're looking again, all sort of marginal mixed picture and then finally


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