tv Squawk on the Street CNBC November 16, 2016 9:00am-11:01am EST
anything advertised, then what are you going -- if everything's just advertising, how do you run an economy on advertisement? >> how do you explain the lowest productivity we've had in 25 years? seems to me that an awful lot of people spending an awful lot of time on social media ain't contributing to productivity in our country. >> sam zell, always great to see you. michelle, thank you. >> thank you. >> i'm going on vacation, everybody. >> you are? you are? that's like a vacation for me. >> be sure to join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. a week ago today we were talking election results and since then dow's up seven straight although futures settling back a bit. s&p remains half a percent from
an all-time high. europe is red. yields around 2.26 as wholesale inflation comes in a shade light. our road map begins with markets and the winners and losers under a trump win. plus. twitter gets more serious about stopping abuse on its platform. and facebook just out with some news on how it measures viewership. and two big retailers out with results, lowe's and target moving in opposite directions this morning. first up though futures pulling back a day after the dow posted another record high in its seventh straight day of gains. s&p coming off its highest close in two months and as we said within half a percent of its own record high. jim, you thought yesterday was actually the most bullish day we've seen. >> it was the first day we saw both -- we saw the whole market go up because interest rates did a little bit of a u-turn. now, the one thing i would say is we have this facebook news which is facebook was key to the rally. that was the one that led and we're talking about facebook value. we'll get to the measurement. i want to know more about that. but yesterday was a broader
rally than we've had. it wasn't money coming out of one area and going to another. it was like more money coming in. today there's some froth in these dry containerships that's a bit worrisome to me. i don't know if you've seen that. >> dry ships going around. >> now it's all of them. and i don't like to see that. yesterday had a level of being broad that told me there's new money coming in. i know stephanie posted a tweet this morning, you know her, from cnbc, saying there's been money coming in, money leaving bonds. i got to tell you that has to continue to happen to fuel this rally. you need more money coming in because we've really gone up very far, very fast. or else we have to give stuff up. but yesterday was broad. it was broad. >> yeah. we're hearing from a lot of people, gundlach saying trump doesn't have a magic wand and stocks are in for a bumpy ride. this morning it's bill gross saying he'll be a one-termer, saying his tenure will be damaging for the jobless and workers with low wages.
>> well, i mean, i think that what people are trying to get our arms around is when you had the democrats what they wanted was to spend more but raise taxes and put regulation. republicans, they wanted to lower taxes but spend less. i mean, you got a guy that's very hard to figure out. that boehner interview was amazing with scott wapner. what it seemed is you have a guy that wants to spend more and deregulate and not raise taxes. that's produced a rally that sam zell is talking about in the industrials. based on optimism. does it mean it just gets repealed. does it mean as they come down people come in and buy? >> right. as you know i've spent a lot of my time talking to guys who run hedge funds and most of them did not vote for mr. trump, but almost all of them seem somewhat enthusiastic about the prospect of a trump presidency. >> that's what i've been getting. i've been -- people like, i didn't go for him, but geez, i like what's happening. >> and they cite everything we've been talking about now for almost the last week from that
first day rally last wednesday. namely the idea of course of a lot of money coming back from overseas in terms of corporate tax reform and the benefits that's going to bring here, maybe in terms of growth too if some actually is used for capital spending. the ideas well of less regulation, particularly in the financial services industry. >> yes. >> move in the banks, guys, there are still people who think even with that little bit of a pullback yesterday that there's a lot further to go for some of these banks including the idea that you can see an m&a cycle again because you're not going to have that level of regulation any longer applied to them. and all the things they're testing on could conceivably come a bit less important. >> there are a lot of people who do not believe a zions and first republic bank buy to hold at morgan stanley, bernstein downgrade zions, fifth third, downgrade key, baird downgrades bank of america. a lot of the analysts are very
suspicious of it, but i agree with you. it's not like bank of america is well ahead of the market. >> no. >> goldman just finally went above book value. morgan stanley has been an incredible stock year. >> could you see these things trade meanfully above book is the question. could j.p. morgan go to 100? is it a possibility? of course it's a possibility, is it in any way a likelihood? >> if trump does cut taxes and boost spending, and you're on the fed, that's not one and done even though you have low inflation. i think you would say -- those things are now pricing mobile rate hikes. morgan stanley by the way, they've always been doing well. but no one seemed to care. suddenly like people say, you know, i care. gary cohen on yesterday, listen to him, raise the volume. >> it was interesting and listening to immelt as well, but there's the other side which is immigration and what kind of a mitigating factor will that have if you really start to deport a lot of people.
>> right. hawkish fed. >> and then trade. >> right. >> a lot of people come back to in terms of trade and particularly that relationship with china and what that will do if they really meaningfully go. >> ubs had list of companies most impacted by increased fiscal spending, key, fifth third, bank united along with the general dynamics -- >> you know, it's funny. i talk to key all the time. key is a remarkable bank. they did an acquisition. they did first niagra, which looks to be incredibly good prices. and i can tell you i think what's going to happen with a key -- i mean here it's 16. it's moved up a great deal. i think it pulls back. i think it pulls back a dollar. and then people go back in. because key's done nothing. take longer term. it's up from 13. i mean, that's a major move. but if you like -- these banks have done very little. a key bank, a fifth third -- i don't want to downgrade a key.
what upgrade when it gets back to 14 on the business she has and the growth she has? i don't know. i find myself to just be more suspicious of the downgrades in banks than -- like illinois tool works jumped 15 points and last quarter wasn't so great. i'm just saying we got to be careful of the ones where the quarters weren't that good. cummins had a good quarter, caterpillar at 93. >> cat's been one of the best performers in the dow, right? >> doug, he set that company up for the trump rally. >> some of the laggards like disney at least getting some love today. >> how about that upgrade? that was upon saying, listen, espn we were really worry about it, we should stop worrying about it. that was one of those pieces where, wow, 93 everyone worried, 98 we're all thrilled. >> i know. although i continue to be watching closely. i'm very curious to see what if
anything mr. iger chooses to do. >> do you mean in real life? >> in terms of -- >> like going somewhere? >> like buying something. >> oh. cleaning up twitter. >> or, or, or something -- maybe not twitter. maybe something else. you know, but that's all speculation. yeah. netflix would be interesting though, wouldn't it? >> that would be blockbuster. are you kidding me? throw it out like that after being with john malone and that ad -- i watched the ads. >> malone really praising reed hastings too talking about him being a great businessman. interesting. >> i think you just dropped a bomb. >> no. i'm just speculating. if i knew something, believe me, i'd be reporting it. >> if you didn't say there was some -- you don't throw things out. that's my job. >> that's true. you're right. i'm going to stay away from that. you start throwing things out and i'll bat them down. >> you mention taxes coming
down. big story last night was donald trump even after they told the press pool they were done for the night went out to the 21 club here in midtown manhattan and talked about cutting people's taxes. take a listen. >> we'll get your taxes down. >> we're going to get your taxes down, don't worry. that's courtesy of nbc's hallie jackson who booked a table at the restaurant when they found out that's where he was going. >> i sat next to him at polo a couple months ago. >> i know. he likes his burgers. they had great sliders and wings at the bar at the 21 club. really delicious. i'm sure he enjoyed them. >> very good wine. >> yeah. >> look, funny people say roll back regulation, epa. he can appoint a lot of people to these agencies and they don't necessarily have to do anything. i mean, i've been watching walgreens, rite aid, walgreens yesterday said they've got some
buyers for rite aid. >> they do. >> puts people in and that gets done. >> people looking who's running the antitrust and ftc and seeing very positive thoughts for less regulation. >> mnuchin. >> well, mnuchin in terms of mnuchin. not mooch, mnuchin. >> yeah. mnuchin. >> all right. >> considered for treasury -- >> -- itself not getting great reviews. not that this will sway any trump supporters, but page one of the times. >> running the risk to tweet the show. >> bring it on. veterans and discord put trump's transition team in a state of disarray. >> oh. i don't know. >> which he then responds to on twitter. multiple tweets this morning about how the times has gotten it wrong. >> boy, we should -- he probably watches the show. >> did he say failing "new york times" as he typically does, or did he leave that part out? >> not too long ago that's definitely how it goes, failing
"new york times." >> i think there is this spirit, sam zell talked about the spirit of optimism. there's two ways to cut this. my friends who are hard left say there's a spirit of optimism that the election's over, but they're more concerned obviously there's personal -- some of the more social civil rights issues these people are not bending on. i mean, it's like, wow, this is a new world. but when it comes to the optimism of the business people, the ceos i have on, it's like a cloud is lifted. they all say the same thing. cloud is lifted. >> we do need to wait and see what happens. tax reform in and of itself, i mean, the idea of bringing the money back is easier, but real tax reform and some of the ryan plan when it comes to making things here and trying to bring -- and that being part of it may not be the easiest lift. >> right. >> there's still a long way to go. >> right. a lot of discussion today about infrastructure and the private investment that will be necessary and just exactly how that gets done. >> if he floats, which i know
he's watching the show so he can tweet, mr. trump f you do that $500 billion thing i've been suggesting the last ten years, $500 billion make america great, give it a name, infrastructure treasury, i think people will buy it. a 30-year $500 billion. why not? i mean rates are incredible. he knows more than anyone that the rates are low. why not do it? see if you can get -- i'm talking to my executive producer, in the poll tonight so i can push this $500 billion plan? >> he might be there. he likes to go there. he's all over town. >> let's just do it. >> he's a security nightmare. and a traffic nightmare. >> he is a security nightmare. we sat next to him it was like -- couldn't get near us. you know? paul was there. pretty good. canadian. jim mentions facebook news which broke a few moments ago. more miscalculated metrics at the company. the stock's down more than 2% premarket. company says that an internal
metrics audit found discrepancies or they're calling them bugs led to the undercounting or overcounting of four measurements including weekly and monthly reads of marketers posts, full video views and time spent with publishers instant articles. facebook announcing new tools to independently review measurements. second time now we've had a trouble. >> my travel trust owns it. obviously this is a concern because on the conference call they talked about rather robust engagement. i want to know how much over the conference call versus this what they feel differently because that would be the time they went on record. that said when you have a ceo from clorox and he's talking about putting a dramatic amount of money toward social, he's talking about facebook. and he's talking about alphabet. >> right. >> so i want to know more about whether sheryl sandberg if she were here she would say, look, when we went over this conference call we did not contradict, that would be very important. or the cfo who's very good. david, if they do that, then i would be more concerned. if this is just a discrepancies,
that's one thing. but if they want to take back the very bullish things they said ability engagement, that would be different. >> do you think this will dissuade any advertisers at all from advertising with facebook? >> the advertisers want to be in facebook, they don't want to be in print. they want to be in tv if the ratings are up. have you seen the ratings for premier soccer? that was huge. it's not just football. sports is down. although not according to disney according to deutsche bank. >> then you have twitter suspending a number of accounts associated with the so-called alt-right. >> that was not what i wanted -- >> the distribution of news and information on social is so complicated now. >> see, i wanted twitter to focus and go over this with anthony noto, an old friend, i wanted to get rid of the death threats and the libel, the political stuff, it's -- >> but some of that was part of
it. >> right. >> there were attacks as part of that. >> related to politics that's bad, but the death threats and follow-up on the death threats are equally as bad. i mean, there's people criticizing say, jim, you're a namby-pamby, you call the fbi. i like the fbi. let's see if you get a negative tweet and you follow-up and they say something about you and it's very bad. >> let's get to industrial production having gotten ppi earlier this morning. let's go to rick santelli. rick. >> yes, october read on industrial production comes in a little light both in form of expectations and sequential. 75.4 last time, 75.3 this time. if we look at that's utilization of course. industrial production up 0.2. also.1 light, same as last time revised up 0.2. the market doesn't seem to be responding much but we want to pay close attention on the influence of a softer equity,
something we haven't seen in quite a few sessions to see if we throttle back some of that rise in yields. carl, back to you. rick, thank you very much. rick santelli, when we come back latest on snapchat as it sets the stage for the major ipo. also ahead martin feldstein on the pros and cons of trump-economics. take another look at the premarket. dollar index did hit the highest since '03 before settling back a bit. >> that's amazing. >> more "squawk on the street" from post nine in a minute. how was your commute? good. yours? good. xerox real time analytics make transit systems run more smoothly... and morning chitchat... less interesting. xerox transportation services... ...soon to be conduent. thank you for calling. we'll be with you shortly. yeah right... xerox predictive analytics help companies provide a better and faster customer experience. hello mr. kent. can i rebook your flight? i'm here! xerox customer care services... ...soon to be conduent. wait i'm here! mr. kent?
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♪ time for a mad dash on this hump day. >> dekenzian it was the best of times, it was the worst of times. target, lowe's, they expect to be up more than 10% for the year which means they are very bullish for the holiday season. this is the first company to come out and literally say, listen, we had great back to school and we're very bullish. by the way one of the reasons why people were short it was because cvs said negative things about target. >> cvs, also this has not been a great year. you could have said the same thing about target itself. >> totally true. >> dealing with food deflation as they have been. >> you're absolutely right. now, they're going to get food right eventually. remember, walmart tomorrow, david, guidance for walmart is going to be very important because they're up more than 10% last year. everyone saying who is target
getting share from? well, if you look at lowe's, you might believe lowe's is very disappointing. >> it is. >> yeah. it's like i'm surprised they didn't put out a release saying lowe's we were disappointing. the difference now between home depot and lowe's is the widest i've seen in a long time. home depot i thought was a better quarter than the street felt. they were conservative for the fourth quarter. but target, david, this is starting to call into question what i'm concerned about is walmart if they really stay true to that guidance of what they have to cut, then you might not be as sanguine about walmart when they report as you would have been before you read target. >> right. >> it's got to come from somebody. home depot talks about share take which is probably meant from sears because they're talking about appliances. >> is there any share left to take from sears? >> they still have sales. less appliances share take was from lowe's. >> yeah. >> but people are really a twitter, not twitter, but a twitter and home depot doing so
much better than lowe's, target doing much better than everyone. i want to know about the dollar stores. >> okay. >> the dollar stores lost in this new era. >> i don't know either. >> what do you think of that wrap? >> i like that a lot. i wish i could answer your questions, but i can't. >> on the conference call i've been catching for target, the most upbeat since he came in. >> all right. leave it there. upbeat. >> queens guy. >> upbeat. is he? no kidding. there are so many of us. >> geez, i live in brooklyn, who do we have -- >> you're a philly guy, who do you have from there. >> ben franklin. he was big. he's on the hundred dollar. >> we got a big opening few minutes away. stay with us.
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europe walking through retail earnings, odds of a december hike, jim, are now 90-plus. >> yeah. you're going to start hearing about how many hikes. remember this time last year we started hearing about many hikes coming? i'm still waiting for someone to say that because if you decide to spend and you don't tax, okay, you cut taxes, and you're a fed governor, you probably feel like, wow, we're going to fall behind rather rapidly. >> yeah. >> they're not going to overrun the 30-year, though at times they've made major moves. remember greenspan raise the banking system raise short rates high make a lot of money. >> we ever going to hear from deficit hawks at all along the way? >> who are the deficit hawk sns where are they? >> i don't know. >> that's the sort of weird world we're in, right? where republicans aren't too concerned about $18 trillion, $19 trillion. >> boehner basically saying listen elected a democratic
president who likes to spend and also wants to cut taxes, which historically that's guns and butter. remember that class? anyone take that lbj class or am i so old lbj stands for something else now? >> i follow you. >> it was like if you both spend more and tax, think you can get away with it and bust the budget, well, it's inflationary. but i'm not hearing that. >> do you know what the budget was when lbj trying to negotiate for 1964 the overall federal budget? he was trying to keep it under $100 billion. >> a billion here, a billion there. >> the entire u.s. budget. >> really? >> yeah. >> wow. that was a great society. >> it was. and led us to have problems we're having now. >> hadn't started yet. $99 billion i think 1964. >> and i think about the collapse of the phillies. nine games up, ten games to go. meanwhile, interesting outperformance on the dow for
year-to-date which is ahead. only twice in 20 years has the dow outperformed when all other indices were also up. >> the dow is filled with actual real companies. i think if we add something interesting sam zell was saying, if we're going to actually make things instead of post pictures on facebook, it adds up. they can take facebook down all they want, but that was what i've been waiting for is how much these metrics, is it all the metrics, 4 out of 220, pointing it out. >> s&p at the bottom of your screen big board the finance xchange doing honors. over here towerjazz. you raise an interesting point, we asked immelt about it yesterday about whether the enthusiasm for making stuff in an infrastructure world starts drawing capital out of innovation, out of tech, out of start-ups, certainly that's what
equities are suggesting. >> well, i think this is all about having more money to go around. and i think that it's about printing money to get more growth. our country hasn't printed money in a long time because we couldn't have any agreement between democrats and the republicans. but i thought that jeff -- that was a great interview. but that's too negative an approach. i think that we are in a moment where it's possible that if you really do get a pullback in regulation, i'm talking about this tonight, i'm talking about the small cap rally that's been going on. that's a lot about like the regulations tend to benefit the big companies. >> yeah. >> but you're waste management and you push for regulation, it wipes out a lot of the smaller guys. i think there's a lot of people feel that won't happen under president trump. so i'm not so quick to be as circumspe circumspect. >> right. >> now, the rally's been remarkable. i know. it's been remarkable. so anyone who is like a very rational cool businessman like immelt has to be thinking about
this. but i've asked him about china, and that's something i would be more concerned about. remember boeing's two big orders were from china and iran. trump's not out there making phone calls to iran and china. >> right. >> how's the putin call? >> i mean, our manufacturing output has doubled in the last three decades. we're making more stuff now than we ever have. >> but we also -- >> and there are going to be a lot more robots making them than people. >> but when you build a plant, a car plant, like a bmw plant in the state of mexico, there's a lot of businesses that get started around that plant. and when you go across america and you see all these shuddered doors of retail, a lot of that is because the bigger plant left. >> right. >> that's for real, david. that's for real. and then you read about all the things that go wrong in a town once that big plant has left. >> sure. and we'll see if these tax cuts lead to more plants or lead to more div hikes and buybacks.
>> well, i know that's always been the trade-off. and you're not hearing a lot of people saying all they're going to do is buy more stock. by the way, a lot of these companies that are moving, they bought a ton of stock back and it's like there's no supply now. home depot bought back a lot of stock, there was little supply there, but for the industrials that have been buying back stock forever, it's like there's no stock up here. >> right. >> they bought it all. and there's a -- of stock of tech, but not of the industrials. >> meaning what? if they bring the money back they're not going to use it to buy back stock? >> meaning that the -- >> not that the industrials mean that much. >> a lot of this rally is about supply and demand of stock. >> right. >> so if they do come back and buy. david, there's no supply at caterpillar at 93. in the '60s when goldman told you to sell it, there was supply all over the place. it looks like caterpillar bought it. boeing has been buying back stock consistently, right?
there's like no supply up here. it will come out eventually because they'll say, wait a second, i bought it at 120, now it's at 147. but there's not enough supply of the old line industrials and all the old line you want in tech. >> amazon down another 1% today. google also -- or alphabet down a bit. that has been blowing up a lot of hedge funds by the way over the last few days. >> what, fang? >> yeah, the performance numbers i'm hearing from a number of them are not good. >> did they raise fees when they do that? because the carried interest might go away so they need to make money. >> why not? absolutely. >> boy, if you're a hedge fund manager, i don't know, you probably have to sell. >> although the overall tax rate is going to come down so far it will eliminate -- >> the buyer, the other guy who outperforms will buy the house in florida out from under him. >> what's happening next year is all the deferred money, all the offshore money has to come back in '17. >> right. >> had ten years to bring it all
back. that's it. that's why a lot of these hedge fund guys were thinking about moving to puerto rico, a lot moved to florida if they could ahead of time so they're not paying the state and local taxes if they're new york city based. but they're going to get -- i mean, with potential lower tax rates that money's coming back at the right time for them. >> that's true. >> treated as ordinary income. >> went for calvary hospital fundraiser, thursday i'm free, do we do a hedge fund fundraiser? >> i think we do. they're now at $500 million -- >> see what that does to robin hood and the like. target 104 beats by 13 cents. comps better than expected, traffic better, e-commerce now up 26 year on year. >> e-commerce. a lot of people got, you know, a little negative because there were some issues, david, some quarters that were not what we thought. >> right. >> but this all came together this quarter. and the quarter seems very real and the comps seem very real.
but there's not that much going up yet. but yesterday i'm not saying it's going to happen today, but yesterday you see the reversal in financials when interest rates just started, you know, interest rates were down a lot and kind of came back? >> yep. >> and bank of america came back suddenly it was 20 and change and goldman down three, i'm watch fg you ask me what the key to the market is, it's not tech resources and it's not cliffs international, it's going to be again bank of america. let's add morgan stanley. morgan stanley is the one i kept thinking would get multiple expansion because they weren't in trouble with the government. >> although this baird downgrade of bac today, take profits, wait for more structural improvements, more definitive macro trends in their favor. >> the problem with that is you come back at $18? $18.65? do you think it's going to go back to $16 without dodd/frank? >> no. >> the head count reductions will no longer be at the branch level. they'll be at the compliance level. >> yeah.
a really good point. >> how many people were watching other people were watching other people who had to watch those people? i mean, that's what was going on. i mean, the layers of compliance, there were more compliance officers than loan officers at some of these places. because they cut back on lending but couldn't cut back on compliance because such an aggressive government. now, if you read jamie dimon -- jamie dimon of course bought that stock at $53. nice call. >> that looks pretty good. that's not a bad move. >> they've had -- they've talked ultimately about compliance and they do a huge amount of lending. the compliance person per lend got to a level that i'm sure can actually impact earnings per share if you can roll that back. >> yep. >> interesting. one of the great calls or reports of the morning is citi on tiffany literally asking whether the trump protests will impact sales at the fifth avenue flagship, which they estimate are almost a fifth of u.s.
sales. >> it's huge. >> robert frank brought this up the other day when he was doing a report from 57th and fifth. the reason of course is because the protests there that is where president-elect trump spends most of his time right now and the thought is may continue to even after he has a home in the white house. they're basically roping off tiffany's. >> it's just barriers for security. >> they going to send you to zale's? you going to jared? >> i don't know where you're going to go. >> maybe we should be sbbuying cigna and selling tiffany. >> that location is a stronger one. >> the cfo i thought would be good for them. i'm such a small minded person, i hadn't thought about the tiffany prosgltest. >> it's not something you can plan for. we got to think about moving because donald trump could get elected -- >> -- graduated from college from tiffany, i guess now i
would have to cross the barrica barricade. ever cross the picket line? i've been in two, i've never crossed a picket line. is it going to be a picket line? >> protests. >> what do they do? a big blow up of a diamond? >> it's not one of the giant rats. it's not that. >> this is extraordinary time we're in. >> yes. >> do people go to other tiffany's -- >> i mean, citi's point if you want something from tiffany, you're going to get it somehow. you don't need to go to fifth avenue. >> yeah, well, what do they think about cartier? >> that's on 52nd street though. that's out of the zone. you're okay. >> can i just say this is the height of absurdity, but i'll play with it. tiffany's had a very big rally. maybe you roll back tiffany like a dollar on this. i don't know. i mean, it's something. >> it's something. >> i'm speechless. >> listen, that's a huge store for tourists, biggest one in the world most likely. >> right. >> and it's important. you can't get in there -- >> i find that store isn't very
big. it's a very, very big store, but isn't that kind of nutty? >> yes. >> here right now i'm getting the conference target call encouraged by meaningful improvement in sales of apple products. but remember apple is in the rock and the hard place. the chinese now are talking he's got to build them over here because trump -- apple it's break-less. apple gets no breaks. did malone say he likes apple? >> he brought up the idea of apple buying disney. >> really? >> yeah. i played it for you. >> it was on our air. >> i know. >> spinning off espn and then buying apple. >> you followed this industry for 20 years. >> i followed it for even longer. i just like to keep it in that range. >> i love the ad campaigns. each time i find out more about the people who work at cnbc. >> you knew that about me already. >> i know. i'm just trying -- i'm trying to bring you up. trying to get you a little more happy. >> well, you know what makes me
happy is the idea of bill de blasio, the mayor of new york city meeting with donald trump this morning at trump tower. that i think is got to be pretty fun. >> like breakfast at tiffany's. >> i'm sure they're going to discuss traffic. >> yeah. i'm getting a note from one of our reporters on the nbc side. the nypd does anticipate a significant change in sort of long term security. wouldn't surprise you. >> start getting to know these numbers, one, two, three, four, five, six. you know what those are? that's the subway you can take from now on mr. black car. >> you know that that is the furthest thing from the truth. >> you're on the subway constantly. >> i can give you updates. updates on a number of lines on any given day. only way to get around. >> goldman and jpm dragging the dow down. let's get to bob pisani. >> this is the second day in a row it's happened. we talked a lot about how fast the banks have moved. let's look at the sectors. carl is right. you can see the under performance here. there's the bank kbe, techs just
turned positive but was negative. energy's come down here. oil's been bouncing all over between 42 and 45, industrials are weak and telecom and utilities out of favor the last week again a bit in favor today. look at big banks. we've talked about this for the last two days, zions bancorp. going up at some point people are going to say it's too much. we talked about downgrades yesterday, take a look at more, baird, bank of america, fifth third, capital one, bernstein fifth third, keycorp., zions, morgan stanley doing some downgrades, guggenheim doing downgrades. this is very natural when these stocks move double digits in six or seven days. yes, deregulation is nice. yes, corporate tax reform is nice. yes, higher rates is nice, but we don't know much about any of this where it's going to end. we just don't have much information. it's all moving on some vague ideas that at some point it's stopping and that's exactly
what's happening right now. a lot's been said about lowe's disappointing numbers below expectations. their comps 2.7%, half of what home depot comps are. you see lowe's down here, home depot was down yesterday on some concerns about potential higher interest rates, maybe that's justified. maybe not. let me point out a couple things about why we're getting this under performance between lowe's and home depot. some good notes out this morning on this. number one is their less exposure to the pro market for lowe's here. pro is 30%, less market share gains and appliances. home depot has been comping up double digits in the category overall. finally, let's just note dryships halted at the nasdaq for more information. guys, back to you. thank you very much, bob pisani. you're looking at a live shot here of trump place, this is on the upper west side of manhattan. the buildings as you probably know by now are removing the
trump name from their displays today after hundreds of residents reportedly signed a dump the trump name petition. interestingly sam zell talked about this earlier this morning on "squawk on the street," said it was part of a long term agreement. it would be a little bit weird no matter who became president if their name was on a building. >> yeah, i guess so. i don't know. what do you say when you book the reservation? >> a lot of names on a lot of things. >> he is. the side of the road. >> that's god to be a works progress, that's an infrastructure play in itself getting his name down. that takes a lot of players. a lot of people being hired to take those names down. >> i'm sure those will be collector's items right there. >> that's a good point. e-bay. good call. >> i mean, untangling his business life from his public service life is going to be difficult. doj deutsche has been written about. where do we begin there? >> i mean, what happens if he pardons deutsche bank -- gives
deutsche bank -- tells the justice department, look, the justice department is going to be independent, always independent, but it would be merkel and trump goes there says, look, the previous administration was very tough on these mortgage issues and we're not going to be as tough. >> all sorts of different ways. you can stay in his hotels if you're trying to get something, trying to work on something at the white house. aren't you going to book a lot of rooms at the trump hotel in d.c.? >> smartest businessman in my lifetime, right? i mean, in terms of building names on buildings. >> though he doesn't own a lot of them, manages them. >> no, but do you think about some of these other -- brookfield for instance very big. and macy's mentioned brookfield, it's gigantic but it's not trump. >> here's sam zell by the way who owns these buildings and what he had to say this morning about the name change. >> been in the process of dealing with this for over a
year. our goal was we have no interest in having any political position on anything. once mr. trump made the decision that he was going to enter the political scene, we looked at it and said, you know, we just want to be neutral. we don't want to have an opinion. and this was part of an agreement we had with him. the agreement has expired. and we're basically renaming the buildings according to the street. >> what? >> fascinating collision between public and private life. >> look, various number of interests that he's involved in that we don't know about that we're going to find out about. i'm not saying there's anything secret, just has a lot of deals. >> we never saw his taxes either. >> no. that's a good point. very good point. we're not seeing signatures react to the tiffany's news. >> not yet. >> not jumping. maybe people don't go from
tiffany to jared. >> you know what we've not yet mentioned is snapchat. confidentially filing for an ipo. valuations now in the 20 to 25 range. everyone recalling the three they got offered by zuckerberg in 2013. >> if it's 2025, zuckerberg can write a check for 30.30, it's not going to come at that level. that's ridiculous. it's going to come in double that. >> this has been an anemic year for ipos, as you know. there have not been a lot behind us, any big names. if snapchat comes in the first quarter next year, will you see so many other names that we know so well follow at some point? haven't heard much from uber, but airbnb, what point does that consider doing it? >> yeah, cyber security. i think that snapchat that's a ridiculous number. i mean honestly. that is going to be half -- snapchat is very, very positive
numbers. now, there are some people who feel snapchat doesn't attract those advertisers as much. the younger demo, yes though. >> younger demo yes. 25 billion is low? >> you're saying -- >> i'm saying it will come in 40. >> $40 billion valuation? >> yes. yes, it will. you want to bet? bet a steak dinner or polo? >> i like the first one, i like the steak dinner. i'm going to take you up on that. why not? because i don't mind taking you out for a steak dinner. i'm going to take you up on that. >> it's got to be polo -- >> we'll settle this in march maybe if that's when it happens. >> 39.9 i win. >> 40 bill. snapchat is going to come at $40 billion. i'm telling you that. i used to help price these things. >> okay. you're on. >> we made a bet in may about the presidential election, so be careful. >> okay. >> yes.
>> what'd you get there? >> i forgot what bet that was. he's going to remind me. >> that was for big mac, fries and drink in town. is that right? >> let's get to the bond markets and check in with rick santelli. rick. >> i'll tell you, there's a lot of noise, a lot of decybils coming out. selling a lot of volatility. the run on the transition from a certainly non-pro-business administration to what is arguably a much more pro-business administration, maybe it's just that easy but with equities and preopening equities under a little pressure, getting sold off. let's look at the key, and i mean key, technical areas the big markets are hanging out at. look at a 24-hour chart of 10s. see what the high yield is? around 2.30. let's open to a one-week chart. i know that the bond market was closed, the cash market was closed friday, there's a blank space there, but that's not the
point. the point is see on monday top is basically 2.30. today 2.30. open the chart up year-to-date closed at 2.27. pretty much all you need to know. dollar index also significant technical information to pay attention to. look at a 24-hour chart of 10s, the dollar index. you see the high right around 100.50. now, if you look at an april chart 2003, the only thing that stands in our way to comping the dollar index all the way back to april of '03 is 100.33, the march 2015 high. we've already traded through it intraday. you want to see where we close. it's the closing levels that count. carl, back to you. >> rick, thank you very much. rick santelli. when we come back, a closer look at trump-economics. former white house economic advisor martin feldstein on what he's expecting from the next president. that live shot of trump place in new york city, the building's removing the trump name from their displays.
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this is what you call a different kind of transition. the name trump being taken off of trump place on the west side of manhattan on riverside drive as sam zell, the owner told us this morning just part of the deal when the license becomes president. >> looked like rump place, which is like rump parliament with, you know, in britain. you don't want that. remember the rump parliament? >> meanwhile, it's time for cramer and stop trading. >> go google it. >> okay. >> lulu, credit suisse joins many other companies saying the margin pressure in discounting is great. credit suisse takes lulu buy to hold. enough people take this thing buy to hold it's going to have a
big rally. i don't know. everyone is down on this except for matthew boss from j.p. morgan. he said that the number's going to be bad, maybe even down mid single digits is what i think. but at a certain point when down mid single digits it can take off. but remember the chart for target was about as hideous as you could get. congratulations to brian cornell for really putting the number out there. give a guy credit. do you like credit? >> and sustainable too on target, do you think? >> do i think target's sustainable? we'll see what walmart says tomorrow. if walmart says retail's not good, but i think target took some share and not just from sears. >> yeah. that e-commerce that's the fastest growth rate year on year since the fourth quarter of last year. >> a lot of things you put in place were investments. people didn't like the investments but now they're panning out. i remember the cvs short call really did get more hedge funds, boy, hedge funds, we're going to have to do something. maybe some sort of, i don't know, charity thing. >> jim, what's on mad tonight? >> okay.
i've got chegg, which almost doubled, dan rosenweig, and wix, which is how you make your website. if you want a website you want to make it look professional, you hire wix. you want an amateur website, be my guest. i got to go take some names down cramer building. bar san miguel, just going to make it ar san miguel. no? >> no. >> what's the inn called? >> the debarry. >> i think i can call it that. great champagne salesman. >> name it after yourself. >> i can use trump now. right? just because he doesn't use it doesn't mean i can't use it. >> he'll sue you in about a new york minute. >> all right. the cramer inn. he's taking it down, i'm putting it up. >> i would stay there, jim. >> thank you very much. 17 rooms. when we come back, what to expect from trump-economics. we'll talk with martin feldstein who chaired reagan's presidential advisor council on
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good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla along with kayla tausche and david faber at post nine of the new york stock exchange. sara eisen is off today. banks leading the dow this morning. dow about 70 points down and we see giveback to the massive financial rally we've seen over the past few days. by the way, wholesale inflation and industrial production came in just a little bit light this morning. unchanged on both. >> i believe we have some data crossing the tape at this hour. diana olick in washington has that. diana. >> actually, we're in miami, but home builder sentiment unchanged at 63 in november on the national association of home builders. wells fargo home index. now, this is up from a year ago in november at 62, but the home builders are quick to note that the results of this survey mostly came in the week before election day. and that was before mortgage rates shot up a half a
percentage point after the election. so you could expect a change in december. but again, unchanged at 63. we did see mortgage applications last week plummet 9% on those higher ratds. on the survey from the builders though, buyer traffic increased one point to 47. current sales unchanged at 69. sales expectations over the next six months down two points to 69. 50 is the line between positive and negative sentiment, so only buyer traffic still stuck in negative territory. regionally speaking the strongest home builder sentiment was out west. the negative area was in the northeast. now, if your wondering why we're in miami, it's because we're going to talk to miami's condo king about his brand new condo and hotel tower. he is, as they say, the condo king of miami. we'll talk about real estate under a trump administration. we'll talk about the luxury high end and miami in general. that's all coming up later today on "power lunch." back to you guys. it's a hot place to be, diana. we'll see you later on. it has been one week since
donald trump won the presidential race. and the stock market performance has been a bit divergent. take a look at the dow which has outperformed other indices for the year. s&p up 6.3%, dow about two percentage points more than that. s&p financials leading the gainers pack over the past week, a lot of that is the expectations of higher rates and rollback of some regulation. joins us to discuss is jonathan golob and ed canard, a romney senior advisor, although also author of "new york times" best seller "the upside of inequality." jonathan, i'll start with you. is the conversation in the markets still hinging on forthcoming stimulus? or is the conversation turning back toward data and what the fed does? >> no, this is a trump-on rally. the market needs to entirely readjust how it's thinking about this. there is huge upside from here in the banks, in the industrials, downside in staples. i think if people are questioning whether this huge rotation that we've seen is
over, i think we're in the second or third inning on this. >> and how much do you price in stimulus? j.p. morgan says it could be worth 150 points on the s&p. goldman says maybe 300. how do you figure that? >> i think this late in the expansion it's hard to believe that stimulus is going to have a big effect. it will have some effect. so i would think things like corporate tax reform would be more impactful on the market than just trying to pump stimulus this late in the economy. just cutting taxes without cutting spending when the economy starts to tighten up not as interesting. >> but by definition, jonathan, i mean lower taxes mean higher profits. >> yeah. first of all, it's also so late tale -- long tale to get into the system, but regulation immediately hits your profitability. and if we get a move down in corporate tax rates anywhere between the 15 and 25, that immediately is going to reflect in higher stock prices. and i think it's going to create a wealth effect for consumers who see the stock portfolios go up.
>> i sure would expect that too. you'd expect the market to anticipate that far in advance and recognize the impact it will have both on employment and on consumer spending ultimately. >> every time we hear that we're, quote, this late in the cycle, someone wonders whether or not we're starting a new cycle. is that true? or likely? >> this has been an unbelievable -- we've averaged a 2% economic growth during this cycle. so if you adjusted for the pace, this is like we're year four in a cycle, not like entering year seven, so we have a lot more room. if we juice the system, are you going to speed that process up? absolutely. but i don't think we're in a question we're too late in the cycle. >> the problem is the cycle has been long and the problem has been slow, so we have gotten ultimately in a very painful way to a fairly late point in the expansion. employment is tight, so there's not a lot of room to really grow employment. when you look at the people who aren't employed who aren't participating, they're not highly productive work who are
are really going to excel the growth rate. >> some make the point that infrastructure would have been more effective if the labor market weren't so tight, right? >> sure. >> sure, but i think one thing we've seen is with productivity so weak during this recovery, if people start to believe lower taxes give people greaterin centive to work, that less regulation frees up businesses, they may actually project a better more optimistic trend even beyond this cycle km i think really could help stock prices. >> let me while we're talking steve mnuchin's made some comments at trump tower about all of the things we're discussing right now. take a listen to this. >> i think i mentioned yesterday talked about taxes. i think the other big thing focus is regulatory changes, working at a creation of new infrastructure, bank, there's a lot of things to do. i would say economic priorities are clearly taxes, regulatory. right now we're just in the planning stage as you can see. we want to be in a position.
we're in the first 100 days we can execute the economic -- >> very big focus regulatory changes and the creation of an infrastructure bank to fund infrastructure. when he says first hundred days, that seems entirely doable, does it not, ed? >> i think some of these things are quite complex. i don't think we'll see it in the first 100 days. we might see the anticipation of it in the first 100 days which would reflect in the stock market, but we won't see it i don't think in the growth rate that quickly at all. >> how do you parse, ed, what's good for the markets, what's good for companies and what's good for consumers? because if the fed raises rates, you'll secret card aprs and other interest fluctuating devices go up, mortgage rates have spiked in the last week. i mean, is there a point where consumers say hold on a second my life is getting a little bit more expensive than it was before? >> well, i do think there's a difference in that corporate profits which are good for investors, not so great for consumers, is one of the things that drives the market. but i think at this point given
where corporate profits are already, i think the two are aligned and people would say my wages are going up, i'm going to spend more money and we'll see that reflected. i think one of the issues though you see the tech sector dropping and there's concerns i think about immigration of high skill workers, which may be our single best opportunity for growth. that's really an area where the economy is constrained. if we were to continue to constrain that instead of unconstraining it, that's an area where we could see growth and i think we see a little bit of a conflict there in the market. >> jonathan, any sectors where you would be more discerning? >> i agree tech is an area i might be rotating away from but for different reasons. i think that with banks and industrials, such a huge beneficiary that there's simply a rotation in terms of sentiment, the fundamentals in tech and especially new tech are great, but i think they're just going to be less in favor. i think we're going to see consumer behavior is going to shift. wages are on the rise right now, and if you juice this economy, we're going to get a raise for retirees who've not been able to
make ends meet on low yields, if you raise rates, they're going to be much more comfortable spending money. so we could actually see the savings rate fall and people spending more money if they have lower taxes and if they see the wage level and yields go up. >> every sword has two edges as we know. >> absolutely. >> jonathan, ed, thanks to both of you. meanwhile, lowe's and target both reporting earnings today. courtney reagan's been digging through those numbers and joins us with more. >> hi, carl. mixed results from two very different retailers. target handily beating the street with its profit and better than expected sales. comparable sales on traffic though still slightly negative. but both improving at least from last quarter. target's digital sales grew 26%. that's the best growth rate since last year's holiday quarter. back to school season was a key contributor to the quarter. apparel sales have been pretty strong for target for some time. now, last quarter target lowered its full year earnings guidance, but with this quarter's beat it's now increasing that range above the street's consensus.
in august you might remember that target said apple sales were down 20%. now the retailer says apple product sales have improved thanks to recent product launches. target's expecting strong demand this holiday season saying preorder volume for new products like iphone 7 and the new watch are three times higher than they were last year. target's pharmacy transition to cvs was a pretty big disruption last quarter, but the retailer says that's improved. grocery sales slightly negative. target's shares are surging, you can see here up almost 8%. but shares of lowe's are tumbling. it missed earnings forecast, cut its full year guidance. now, the home improvement retailer says slower than anticipated traffic in august and september put pressure on profitability before it began to improve in october. comparable sales grew but less than expected. and it was driven by a slight increase in transaction and a 2.2% increase in average ticket. so like home depot lowe's did see strength in big ticket purchases driven by outdoor equipment and appliances.
lowe's online sales did improve 20%, but home depot is still the sector leader here. so the company has some work to do as a ceo mentioned in the earnings call and in the release. kayla. >> thanks so much, courtney. we showed you the shot last hour. you are looking at trump place on the upper west side here in manhattan, although the building's formerly known as trump place because they're removing the trump name from their displays after hundreds of residents reportedly signed a dump the trump name petition. equity residential says it will now use the formal street address of the riverside boulevard buildings. when we come back, we'll speak with the ceo of dhl express, we'll get his take on the president-elect and how a strong dollar could give holiday shipping a boost. plus, the election causing some anxiety over a possible trade war. we're going to discuss what's at stake for transports if some of these existing trade deals are in fact torn up. later on, top economic advisor under president reagan martin feldstein will join us.
with the busy holiday shopping and shipping season now upon us, dhl express looking to make some inroads in the u.s. against giants like fed ex, u.p.s. and the postal service. joining us first on cnbc is dhl global ceo ken allen. ken, good morning. >> good morning to you. great to be in new york city. >> you've done work on expected
volume here for the holiday season, 12%. you want to walk us through some of these numbers? >> yeah. i think just to be clear that we're in the international express business, we're not in the domestic businesses. so the big peaks that a lot of the domestic players see we don't see quite so much because the materials coming in from international. but this time of year versus prior year we're still growing 8%, 9%. and in terms of the increase in volume versus a normal week, we'll see increases up to 15, 20, 25 over the next few weeks. >> how does the strong dollar impact all of this? >> well, because we're a network and because we're international, we see a lot of inbound coming into the united states because of the strong dollar so american consumers are buying from around the world. but trade in general has a
balancing effect. so we see a lot of revenue now coming out of europe into the united states, out of asia even to the united states. and so our growth levels are holding very well. >> last week since the election results obviously a lot of new narratives have been written about the future of infrastructure in this country and job growth and corporate spending and productivity. are your plans changing? >> no, our plans aren't changing at all. first of all, i think everybody believes that global trade is the right thing to do. and global trade's going to continue. i know some of the trade agreements could be constructed better, so there's nothing wrong with looking at those. and i think for sure globalization is here to stay. and, you know, when you look at globalization, just think about something like tourism. even though a global trade is leveling out at the moment, tourists still going on in ever
increasing numbers. and tourism is global trade. people are spending money in different countries and on different products. and also when you look at how the world is at the moment you can't grow tea in switzerland, you can't have an industrial economy without importing oil and coal and other raw materials. so, you know, i honestly think global trade is going to bounce back. and on top of that we've got this great opportunity with the e-commerce trade. so we're seeing a massive increase in our shipments due to e-commerce from around the world. and i think the great thing is today any entrepreneur anywhere in the world can put his goods online and can be shipped to any country in the world. and that is going to drive trade. and i don't think that any government would want to stop that from happening. >> ken, you mentioned a lot of activity coming into the u.s. from europe and from asia. what's the force driving that?
>> i think american consumer i'm pulling material in because of the strength of the united states dollar. but i also think, you know, europe's an interesting case because when we had that euro crisis four or five years ago, you know, economies like the united kingdom, france, italy, spain, they had to look aggressively for export markets. and so now we're seeing big growth figures, we're in double digit growth. in fact at the moment europe is our second fastest growing market at 10%. a lot of the material going into the united states but also going into asia. because don't forget in asia there's a massively emerging middle class who are looking for european and american luxury goods, fashion, retail. so the whole dynamism of the world's changing. if you look at our results over the last 22 quarters, we've grown consistently at over 7%
volume every quarter. but every quarter every so often the number one growth changes. couple years ago it was coming out of china and asia, then it was middle east and africa. then it was europe and actually at the moment americas, the whole american region is our fastest growing at just over 10%. but i'm certain next year or the year after that trade will rebalance again. >> one last point op europe. i mean, your optimism on trade sort of flies in the face of brexit, the death of tpp, the potential of nafta being rewritten, do you just put all those things in a box? >> yeah. i think we do put all those things in a box. i think if you look at a lot of the trade agreements like tpp, like ttip, they've been going on for five, six years anyway. so it hasn't stimulated any trade. i think what we need to do is
what jack ma is advocatelid voi need an electronic world organization for the smaller company, especially in smaller countries, right? we need to build an infrastructure where everybody in the world can trade with each other. because i think, you know, if you look at trade today, 20 countries and 60,000 companies account for something like 80% of trade. we need to get the smaller economies and the small er and medium members enterprise business growing and doing something innovative. i think when you look at that that could be 2 billion people around the world, consumers, each sent one shipment, that's 2 billion shipments a year. i think we need to facilitate trade. i think the whole debate needs to go about how do we give small and medium size business the impetus and training and capability to export all around the world. >> that's clearly a challenge and a whole bunch of the businesses in the u.s. counting
on it. ken, we appreciate your time. thank you so much. ken allen from dhl. >> thank you. thank you. enjoyed it. thank you. the presidential election bringing the possibility of trade wars into focus as we were just discussing. and it's a big threat for transports. morgan brennan is with us from one of the busiest rail yards in the nation with that story. morgan. >> reporter: hey, kayla, that's right. so as you mentioned this is really the biggest question for the transportation sector. and that's will president-elect donald trump actually upend nafta and other major trade agreements and take a tougher stance on china? now, for the railroads about one-third of total u.s. traffic is trade-related. that's according to the association of american railroads. you've got autos, chemicals and grain which is actually benefitted in part from record soybean exports. some of the biggest groups there. but the other business that is closely tied to trade is intermodal. all those shipping containers like the ones behind me that switch between ship, train, truck and then are packed to a lot of consumer goods including
e-commerce packages. freight railroads have been betting big on that business in recent years and among the massive decline we've seen in coal it's what this rail yard, the bedford park facility, csx's bedford park facility is focused on and an area that could be effected in changing import dlsh export activity landscape. saying there's a lot of question marks and other perspective policy changes like tax reform, infrastructure spending and possible deregulation could offset any potential risk. >> i think one of the most important things is that the economy keeps growing and growing at a faster pace. so there's a balance there to be seen. we obviously serve also a lot of the imports that come into this country. but ultimately if the core of industrial america does better, we do better as well. >> reporter: now, to be sure analysts say csx could be potentially relatively less effective to trade winds than some of rail peers.
most notably kansas city southern all have big and growing cross border north american businesses, most notably between u.s. and mexico which has been something of a bright spot in an otherwise tough freight environment. kansas city southern in particular drives about half of its revenues from mexico. it's the reason you've seen that stock underperform the broader rally we've seen in the transport sector over the past week. but guys, as i just mentioned, a lot of question marks around trade and around these policies from the new administration coming in. we don't know a lot of the details. in the meantime when you see things like flat industrial production last month after months of declines, that's actually something that the industry's very focused on because we're potentially seeing a stabilization there. and all that industrial activity is very tied to the railroads. back to you. >> morgan talking some trade. that's going to be a huge story in '17. morgan, thanks so much. speaking of trade, our phil lebeau is live at the l.a. auto show this morning with a special guest. good morning to you, phil. >> good morning, carl. i'm joined by the ceo of porsche
north america, unveiling a new panamera. as we step aside and our photographer goes in a little bit, tell us about why this vehicle is so important for you. >> first of all, the sedan you see here is practically a sports car that has got four doors. it's the plug-in hybrid 4.4 sektds zero to 60, top speed of 171 miles per hour. and it's still very efficient in terms of consumption. and that car has got a lot of boost. >> and deliveries start in january. you've already what got 6,000 preorders worldwide? >> yes, we have. close to 6,000. and over 1,000 here in the united states, which is unusual. >> how much of that is hybrid demand versus i like the panamera, just not quite ready for a hybrid? >> there's no hybrid demand in there yet. >> none? >> we're just starting to sell the hybrid. so we started in july last year with a pre-sell of the 4s and the turbo and the hybrid is coming in now. >> so when you look at the market right now, the sedan
market in particular, your sales overall as a brand were up here in the u.s. but that's because you have a red hot right now. but sedan sales have been down. what's happened with the sedan markets? >> well, i think the sedan market is sort of overrolled by the suvs in this country. if you look at sales figures in this year, more suvs sold now than cars. and sedan also has to suffer a bit of that. but we try to detach ourself from that development. and at the moment it seems to work. >> speaking of detaching yourselves, as this diesel emission scandal has played out for volkswagen over the last year, year and a half, what we've noticed is porsche along with the other vw brands to a certain extent separate from vw have been able to dodge the bullet, if you will. do you hear much pushback from your customers regarding that scandal? >> of course we get some reflection. and of course we are in constant contact with our customers. we also have diesel customers we
look after, we're working with authorities to get the technical fix and we'll let them know and share the information about it. and we're with them. of course we have customers that say i would like to have a dies diesel, but that's why we bring them to the plug-in hybrid technology. and once they are in the car and drive it, they really like it. >> when you look at diesel demand overall for a market, has that ship sailed here in the u.s.? in other words, we've probably seen the most demand that's ever going to be out there? >> you know, what can you say at the moment? there are lots of issues with the diesel technology at the moment that have to be resolved. and once the fix for our situation has been approved by the authorities, then we'll see what happens with this market. >> i've got to ask you about the baby macan, it's so red hot. so many people ask me when are you going to bring that out. what can you tell me about that? >> of course i can't tell you about the future of our products. we're not unveiling that. but i can tell you the future for porsche is in the battery electric field.
so our emission e-car that's been shown. >> yeah, saw it the other day. >> two years ago. that car will be by the end of this decade available. and that's our future -- big milestone in our future. >> klaus, thank you. sales are up in part because the suv crossover market it is red hot and the macan and cayenne, you have it going right now. thank you very much. guys, back to you. >> good stuff, phil. and a quick programming note, coming up on "squawk alley" this morning at 11:00 a.m. eastern phil will sit down with the audi of america president. look forward to that. when we return to "squawk on the street," more on the markets and the potential impact of a trump presidency on the economy, special the deficit. that's on the other side of this break. 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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and how the machines respond. harnessing data to make great products better - that's what the ibm cloud is built for. snapchat parent snap confidentially filing for an ipo according to sources familiar with that situation. the five-year-old messaging ap and now fledgling hardware company is expected to go public as soon as the end of the first quarter or potentially the beginning of the second quarter. the company would be expected to be valued as high as or beginning at $20 billion to $25 billion. it would be the largest ipo
since alibaba went public in 2014. david, the last time the company raised money from investors it was valued at $18 billion. so that's usually the low water mark for where these companies get valued. so $20 billion would be expected to be basically the lowest possible valuation or most conservative valuation for investors to still turn a profit from the last run. interestingly they filed with the s.e.c. before the election, before any expected volatility in the markets. but now we know mary jo white will be stepping down from the s.e.c. so now there are questions about how quickly you could actually get the filing through the s.e.c. process given any turnover there. >> right. i'm curious to see expectations given you follow the stuff where they sort of set that range. as you point out it's up from the last round, but not up a lot. is it modest expectations on their part? will it get revised up? do we have any sense of that? >> well, all of these companies want to start from a level where they feel that the expectations will only go up from there.
they don't really want to price their stock at a level where people say that's pretty rich for me to wrap my head around. but it's only five years old. revenue expected this year to come in between $300 and $350 million. next year expected at about $1 billion. so obviously there's a lot of growth to be captured. >> that's what people care about, right? they care about user growth which has been increasing dramatically and obviously top line growth. that's sort of what it will be judged on. not ability to generate bottom line profits at this point. >> right. when we see an s-1 filed publicly perhaps the beginning of next year, we'll get more details. when we come back, the reality of trumponomics. we're going to talk with martin feldstein, get his take on which of the president-elect's economic plans are feasible, likely, effective. as we go to break take a look at stocks at this hour. dow's been in a tight range down by 60 points led by goldman and j.p. morgan. ways wins.
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good morning everybody. i'm sue herera. here is your cnbc news update at this hour. president obama doing a bit of sightseeing as he wraps up his two-day trip to greece. he toured the acropolisacropoli walked along the fifth century b.c. parthenon temple. the entire site was closed for the president's visit. afghan officials say at least four security force members were killed when their vehicle was attacked by a suicide bomber in kabul. 11 others were injured in the attack which took place near the afghan defense ministry compound. back here at home two freight trains collided earlier this morning in central florida. one train carrying fertilizer, the other coal. more than 20 cars jumped the track. two people suffered minor injuries. and in anticipation of the launch of the amazon original series "the grand tour," amazon is offering a one-year membership to amazon prime for $79. that's a 20% saving.
the deal is only for one day, november 18th. which coincidentally is when the first episode of "the grand tour" will premiere. fancy that. that's the news update this hour. now let's get over to jackie deangelis with the eia inventory report. good morning, jackie. >> good morning to you, sue. while the department of energy just releasing moments ago the figures, we got a 5.3 million barrel build in crude oil, that's higher than the api last night and estimates were all over the board. but it was the highest that i saw. also build in gasoline stocks of around 750,000 barrels. so certainly a bearish report. we were trading around 45.35 before this report came out. we hit a new session low 45.03. remember, we had a 6% price increase yesterday. this definitely taking the wind out of that oil rally that we saw. the other thing traders are focusing on is some headlines coming out regarding opec, that the ministers may meet informally at an energy conference in doha on friday.
remember, there's still a lot of strife within the cartel and there is some doubt on the street that this deal they promised us will get done on november 30th. so it seems like all the factors are aligning here to send these prices a little bit lower. back to you at post nine. thank you very much, jackie. as president-elect donald trump considers cabinet level picks, his reported top choice for treasury secretary signaling today what to expect in terms of economic policy from a trump presidency. take a listen. >> i think i mentioned yesterday talked about taxes, i think the other thing very big focus is regulatory changes, working at a creation of new infrastructure, bank, there's a lot of things to do. i'd say economic priorities are clearly taxes, regulatory, trade, infrastructure. right now we're just all in the planning stage as you can see. we want to be in a position where in the first 100 days we can execute the economic plan. >> our next guest says trump faces a tough challenge making
sure his economic policies stay fiscally responsible while remaining consistent with his campaign goals. joining us at post nine is former chair of the council of economic advisors martin feldstein. good to have you back. >> good to be with you. >> you go through it all, you go through taxes, trade, jobs, the debt. what should be at the top of people's list in terms of what they're paying attention to? >> well, i think people are hearing a story about very big deficits. i don't think that's necessary. i think that trump can deal with his major goals without creating large deficits. and i think congress, paul ryan, will push him in that direction. so i think things can -- we can get the stronger growth, we can get more employment without having to have large deficits. >> committee for fiscally responsible budget had numbers that were not encouraging. do you think those are wrong? >> well, i think what they tend to do is to look at things that he said in the campaign, that
trump said in the campaign, how big a tax cut and so on. and then put it through a machine and out comes a number, but i don't think that's where congress is. congress isn't going to take those. it's going to say the goal is to stimulate investment, create higher productivity, create jobs. and that doesn't require large deficits if they do it right. >> do you see parallels to reagan? and even though it took the market a couple of years, does it set up a big bull run perhaps in assets? >> well, things are very different in the sense that when the reagan administration began we were still in a deep hole in terms of the business cycle. the stock market was not high, it was very low when i came into the reagan administration. so now you've got a market that has been boosted by these exceptionally low interest rates for years and years.
so i don't see that it has that kind of running room going up. >> your point about the deficit in particular, if they do it right you just said, well, what does that actually mean doing it right? >> well, one of the things it means is if we cut, as we should or as they should, personal tax rates, which have gone from 28% when reagan left office to 40% now at the top, if they do it right, they will match those rate cuts with changes in so-called tax expenditures. some of the deductions and credits that people get chrks are really a form of government spending. so if they can offset the top rate cuts with those kind of changes, it doesn't have to be a big deficit. >> so it can be more revenue neutral. but you're talking about things, i don't know you're talking about the mortgage interest deduction? where are you going when you talk about that because that gets to be dangerous territory? >> yes, right. and the house republicans came out with a specific plan in
which they say we get rid of all deductions except the mortgage deduction and the charitable deductions. so, you know, everybody will say, oh, gee, taking away my local property tax deduction or my credit for buying an electric car, yeah. but wouldn't you rather have lower issues has been a wide range, not just for their ideology or their background but in trying to predict exactly what policies will come out of it and whether they could run into issues with confirmation because there's no central party ideology that you can connect through all of these people. >> well, but i think the key thing is not the names that are being floated for commerce secretary or treasury secretary. i think the policies are going to come out of the congress, out of the president and his close advisors working with paul ryan
and with brady on what can happen. >> we've been talking about profit repatriation for a long time. >> right. >> and everyone always warns if it happens there's no guarantee it gets put into direct investment. it goes into buybacks and dividend hikes and it doesn't solve any sort of inequality. >> that's why i said in "the wall street journal" piece you're referring to, not only we should have that money coming back, when it comes back it gets taxed, taxed at a low rate like 10%, that produces a lot of revenue. and you can use that revenue to stimulate investment incentives so that companies don't just pay it out in the form of stock buybacks or more dividends. >> you also seem to be arguing for higher defense spending pointing out that as a percentage of gdp it's fallen. >> yes. >> but some would say, well, that is not going to create more deficits if we start increasing from where are we $600 billion right now? >> yeah.
we are now at 3.7% of gdp. that's as low as it's been in the post war period. and we're scheduled to go down to even less than 3%. we can't play the role that the u.s. has to play in the global economy and in peacekeeping with that kind of spending. so we have to spend more. we don't jump there overnight. we build it up over a number of years so some of the economic growth and the extra revenue can go into that kind of spending. >> one last question. b of a has a survey what do you consider the biggest tail risk. there's a bunch of options, debt ceiling impasse, tapering of qe by the ecb. but the number one thing is stagflation crash in the bond market. do you worry about that. >> i don't worry about it in quite those terms, but i would say long-term interest rates
rite #ri rising. if they don't deal with fiscal deficits -- if they go after his goals irresponsibly, the bond vigilantes will come back. they will push up those rates. and that would not be good for anything. >> it's good to have you back. thank you for coming in, martin. >> good to be with you. >> good to see you. and there are more miscalculated metrics at facebook. the company saying an internal metrics audit found that discrepancies or what it called bugs, led to the understocounti or overcounting of measurements including the weekly reach of marketers posts, video use and time spent with publishers instant articles. facebook announcing new tools to independently review measurements but just one of many issues, david, that facebook is dealing with right now as advertisers who are spending money and a lot of money on this platform want to know exactly what they're getting. >> they do. although it's hard to imagine any of them are really going to stop dealing with facebook or even increasing their spending. >> well, facebook --
>> given what i hear at least anecdotally from so many of them. >> well, facebook and google have the lion's share of the digital ad capture. >> yeah. incredible market share. >> they want to know how to price it and what actually it should cost them if they're going to spend it. >> and a lot more on video of course as we learned from the last time we heard from the company after earnings. as we head to break, take a look at shares of goldman sachs. it's dragging about 40 points off the dow. it's giving back some of its recent gains as that rally in financials fades over the last couple of days. and president-elect trump won coal country by promising to end the so-called war against coal. we're going to head to ohio. stay with us. mary buys a little lamb.
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you'll definitely want to pay attention to the price of oil this morning. down 1.5% a few moments ago, but now up after the russian energy minister says he sees big chances for an opec production cut deal. on that let's get to dominic chu. >> carl, markets mostly lower so far, financials though sticking to the downside trade. the sector is standing out as the worst performing of the 11 major ones on the s&p 500 by a sizable margin. laggards include zions bank, also capital one, hartford financial and goldman sachs as well. if these losses continue, financials will snap that seven-day winning streak, but certainly a hot sector, kayla, over the past week. back to you. >> thanks so much, dom chu. let's get to the cme group, rick santelli and "the santelli exchange." good morning, rick. >> thank you, kayla. and jim our guest of the week. >> good morning.
>> all right. you wrote something that i read this morning and i think i'd like you to share it and tell me exactly what you mean. we're moving from shared misery to shared optimism and that was sort of your boilerplate for your piece explaining how the markets reacted post election. dig down into that statement for us, jim. >> yeah, so the narrative among most consensus economist is we were in a period of secular stagnation, sub 2% growth, sub 2% inflation, wages only going to go up modestly. suddenly almost overnight that changes. we're now suddenly talking about boosts in aggregate demand and business investment. a lot of this coming from potential physical stimulus, whether on the tax front or infrastructure front as well. and that's a huge change. i can't underscore that enough that, you know, when the consensus community of economic forecasters had sub 2% growth to now some are going to start to talk about 3%-plus double the trend rate of growth for example going forward over the next 12 to 18 months, you know, that's a
significant boost. and the markets have to readjust in terms of price. >> you know, for the last seven years, jim, many of my friends on this trading floor have told me that their belief is, is by the fed being reluctant to move rates higher, even though the crisis had passed many, many years ago, that that sent a message of lack of confidence in the economy. and even though they were doing extraordinary measures, then it wasn't going to pan out. i don't know how you feel about that statement, but let's morph that. do you think they should raise in december to keep confidence high as to the shared optimism dynamic you just described? >> yeah, of course. i mean, look, i think a december rate hike, probably two hikes in 2017, maybe even three. now, the thing is, is that the building blocks for any interest rate forecast is going to be one year ahead projection for growth, your one year ahead projection for short-term interest rates on the fed policy and your one year ahead projections for the inflation rate. so, all of those are going up.
there are plus signs next to them and then the fourth component. with higher inflation expectations comes higher term premium. clearly, yes what we're doing is recalculating at this point what the new equilibrium level for interest rates should be. now, when the fed kept rates really low, that reduced confidence, flattened yield curves, hurt financials' earnings. now we need to see a boost in the financials' earnings so they can create credit and direct credit to the economy. because simply, unprofitable banks don't really lend to the real economy, and that's what we need. so i think we're getting a policy response, both you know, both on, even somewhat on the fiscal side, but also on the monetary side, to try to actually boost financials in terms of returns, and hopefully, that leads to lending and capex and productivity then tends to follow. >> you know, jim, we're out of time. that is well said and it's funny you used the word, i think we are in recalculate mode in the economy! just like when we're in our
cars -- recalculate, recalculate. markets have been untethered for six years. i don't know what's real and what isn't, but the markets are finding out and sending a strong message. thank you, jim caron. kayla, back to you! >> thank you, rick santelli. jon fortt has a look at what's coming up on "squawk yaey." >> why don't you join us? yeah, we'll dig in on the facebook ipo filing, secret though it may be, and its implications for the sector. also, social media continues to reel post presidential election with president-elect trump changing the rules. where do they go from here? and finally, the future of privacy and security under president-elect trump's administration that we're looking forward to at the beginning of next year. will the rules change? what does the industry want? all that and more coming up on "squawk alley." [burke] at farmers, we've seen almost everything,
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speed always wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. president-elect donald trump won over coal country with a vow to end the so-called war on coal. contessa brewer is in powhatton point, ohio, and joins us now with that story. contessa? >> reporter: yeah, kayla, so this area is a round-the-clock facility where the coal never
stops, brought in from the surrounding hillsides by train and by truck, delivered on to barges headed either across the ohio river or to ports around the world. it is really a bright spot in an industry that has lost 30,000 jobs nationally in the last five years. trump campaigned hard here. he promised to end the so-called war on coal, and people in this area took him at his word. they voted overwhelmingly for trump. now the same small business owners say there's eagerness post election about trump boosting coal, and in turn, they hope boosting their own bottom lines. >> i could see a little bit of hopefulness, you know? >> reporter: what do you think they're hopeful for? >> well, that jobs won't be taken away, you know, that there will be dinner on the table. >> reporter: robert murray of murray energy corps is hopeful, downright expectant. >> mr. trump has a mandate to carry out what he said.
it's going to be difficult to do it all. but he's got to do it and he's got to do it in a short time frame. >> reporter: he expects immediate impact on the environmental regulatory climate, kayla. >> all right. thanks so much, contessa brewer, in ohio. a week after the election. that does it for us on "squawk on the street." much more ahead on "squawk alley." "attention: are you eligible for medicare?" the medicare enrollment deadline is just a few weeks away. now is the time to find the coverage that's right for you ... at the right price. the way to do that is to explore your options. you can spend hours doing that yourself ... or you can call healthmarkets ... and let us do the legwork for you - with no cost or obligation.
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