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tv   Squawk on the Street  CNBC  November 30, 2016 9:00am-11:01am EST

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what was a historic morning this morning. speaking both to newly appointed treasury secretary and commerce secretary in wilbur ross and steve mnuchin. crude 48.79 and markets pretty much across the board up in the green. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer and david faber at the new york stock exchange. final day of november looks to be the second best month of the year. futures positive. tons of news including two big cabinet picks, steven mnuchin to treasury, wilbur ross to commerce, both on cnbc this morning. personal income fastest rise in six months and oil is soaring on these headlines of an opec cut. road map begins with treasury and commerce, stephen mnuchin
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and wilbur ross confirm they are the picks. we'll dive into comments on growth, trade, regulation and more. and more news from the trump transition making good on a high profile campaign promise, that's a deal to keep carrier, at least some of as many as 1,000 jobs in the state of indiana. >> and from those cabinet picks to movement on opec decision in vien vienna, markets moving on political news all around the world. first up, president-elect making two new picks for his cabinet. steven mnuchin as treasury secretary, mnuchin was national finance chair for the trump campaign. and billionaire investor wilbur ross has been tapped for commerce. earlier on squawk mnuchin spoke about boosting economic growth. >> i think we can absolutely get to sustained 3% to 4% gdp. and that is absolutely critical for the country. we're going to cut corporate taxes, which will bring huge amounts of jobs back to the united states. >> what do you think you're going to get to on that? >> we're going to get to 15%. and we're going to bring a lot of cash back into the u.s. >> all right. >> wow. >> so much to tackle here, jim. >> yeah. i got to tell you, i think the
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ultimate takeaway is -- excuse me, mnuchin and wilbur ross are business people. i mean, pure business people who have done great business in their life, made a lot of money. very much part of the firm ameant of wall street. you have people very sophisticated and understand business. i thought these interviews were breathtaking. said, look, we're going to do responsible tax cuts. everybody wants to see corporate taxes cut. i was blown away these two guys are basically saying, listen, we have a traditional republican agenda, bring money back. you know, try to help the middle class, maybe give some breaks for the rich but take them back in the terms of the way it's done, republican agenda. >> so you didn't hear any rollback on instead of 4%, 3 to 4, you didn't hear any rollback on no absolute top end tax cut,
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more about deductions and limitations. >> it just seemed to be much more responsible. i mean, going in i had felt that president-elect trump stood for big tax cuts and lots of spending. today i felt like he stands for bring that money back, repatriate nice tax cuts for the middle class and things will work out. won't grow as fast, but certainly be better. seems like you would get as a republican. >> obviously is predicated upon corporate tax reform, which is interesting. and i think is something that we've heard from from corporate america for years now. >> right. >> not just about bringing the money back from overseas at what mr. mnuchin said would be 15% at least under sort of the earliest stages here of whatever plan comes up with, but also the lower rates overall being an incentive to not leave, to even perhaps redomicile, who knows. but, you know, tax reform even
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with one party control of all three houses of government is messy, messy business. >> even repatriation tax reform, i don't think so. >> i'm saying connecting it all, i don't know if you can separate corporate from individual. and who knows where we end up. we end up with something i would assume will be lower taxes on corporate and overall tax rates for individuals, but where we end up, come on, it's way too early to have any idea. >> remember what gridlock meant. every time you heard jack lew, he said, look, without comprehensive tax reform, every time you heard republicans without comprehensive tax reform. this is different. no kpcomprehensive tax reform. >> so you think that's what happens, you get corporate and then individual is a different animal? >> yes. that's why i think this was so breathtaking. they're not going to be connected. it's just going to be we're going to repatriate that money instantly. >> corporate coming first. >> yes. that's the biggest. >> but is that what paul ryan wants? >> you know, the work that i've
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done say yes. >> i think that's got to be a key component of this conversation. >> that's the work that i've done says yes. >> the work you've done says he's -- would allow that to be two separate. >> yes. >> and now we're speculating, really. >> true. but the point is that one's very easy. they did it before. bush did it. >> i was reading the transcript, i read it a number of times and listened to him. >> yeah. >> you know, is it really -- are they going to lower the top rate for the highest earners? or, yes, but they're going to offset it with no more deductions? it was very much unclear. you've got people on twitter now including greg ip who we have on saying that's not possible to offset if you're going to lower the rate. >> does it in 140 characters. >> yeah. >> this is about you need 15,000 characters. we got to throw away twitter. this is ridiculous. when you start talking about -- going to do what reagan did.
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remember reagan simplified tax brackets? >> yeah. >> i thought that's what trump was going for. >> ip's response was to this bite right here where mnuchin talks about whether or not you can have upper income tax cuts that are offset by deductions, whether or not there is a net benefit. take a listen. >> it's not the case at all. any deduction we have in upper income class taxes is less deductions so there would be no absolute tax cut for the upper class. there will be a big tax cut for the middle class, but any tax cuts we have for the upper class will be offset by less deductions that pay for it. >> that's what i donate to charity this year then? what do i do? >> we'll still let you do charities, but there will be other deductions that are absolutely limited. >> how about mortgage debt? >> again, we'll cap mortgage interest, but we'll allow some deductibility. >> so that's not going 39 to 36 or 33. >> no. >> he's talking like he's got
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the plan written down. you know, that doesn't appear to me to be coming off the top of his head. they've clearly been thinking about it. we have, we are, 15%, mortgage deduction yes but still capped. it's capped now, of course, i think it's a million. and charities even capped also? >> well, that's always been impossible to get through. that's been impossible. >> and then what about on corporate tax? what about interest deduction? what are they going to do there, right? interest is deductible now. he could put the private equity business out of business if you get rid of that deduction. >> did you hear of anything you thought before the election today? i thought this was very different from what people voted in. >> frankly, i had no expectations. >> you were being told the economy was horrible. >> yeah. >> now we have jumping fastest in -- adp running 216. >> they have nothing to do with this. >> things are moving fast. i just think that it's a
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sequence. and the sequence is we're going to get that money back. and that is what i hear. okay. and then we'll tussle over these brackets. it's just every time you hear anything about deductions, that is pandora's box. and it's just -- no president can control deductions. you can't -- look, unless -- when reagan did, we all forget how hard it was to get what reagan did, and that was simplify. this is much harder. it's harder. i mean, look, everyone i think a lot of wealthy people thought they'd already looked at how much they were going to save. >> the running theme between -- the line between ross and mnuchin is making lending easier. >> yes. >> a big part of the elements in dodd/frank they want to address first. this is what mnuchin said about that. >> we've been in the business of regional banking and we understand what it is to make loans. and that's the engine of growth
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to small and medium size businesses. so as we look at dodd/frank, the number one problem with dodd/frank is it's way too complicated. and it cuts back lending. so we want to strip back parts of dodd/frank that prevent banks from lending. and that will be the number one priority on the regulatory side. >> wilbur's written entire white papers about this. >> right. >> as it relates to infrastructure at least. >> well, look, dodd/frank is not one for one, meaning if you got rid of it, you would not get a lot more lending. what dodd/frank has stood for is tighter enforcement, higher fico scores in order to be able to get loans. >> right. >> make it -- dodd/frank stands for make it tough to get loans. because we were too easy. so if you can make it easier, whether it means we're not going to have as many examiners -- maybe lend it. but it's a change in tone.
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the banks were scared. >> let's not forget bigger picture here, these are two gentlemen, ied logs -- of course our viewers know wilbur ross well, or at least should, he's been on our air so many times through the years. mr. mnuchin not so much. but that's what they are. i spoke to lloyd blankfein a month or month and a half ago talking how many years will it be before somebody in goldman sachs can serve in government again and he was saying of course these things go in cycles, but he didn't think the cycle was ending. that was something of a surprise. certainly so was the election of mr. trump. >> your point is right with the interview this morning. not idealogs -- >> i think it will be embraced by corporate america. >> not just deals but like deals with risk. coal mines out of horizon, indy
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mac, guys that make a bed and stay with it. >> steve mnuchin understands lending. i remember the indy mac call it's going to be fine, don't worry, and then it collapsed. he came in, took it over, flipped it and made money. but he knows how to lend. at goldman, i hate the term sophistication because it does have connotations of, well, listen, other people don't know what they're doing. >> no, don't forget treasury is a huge bureaucracy with 86,000 employees. >> you don't think he can handle it? >> i would expect that he will be able to. but his experience is not necessarily geared towards running large organizations. but it doesn't mean, you know, henry paulsen ran a large organization, bob reuben ran a large organization. >> what did jack lew run? >> nothing. >> there we go. game, set, match. >> i didn't say he was -- yeah. >> i think when obama came in, i don't know if he even knew this circle of people. i think he knew that goldman sachs meant trouble.
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i think trump's saying, i don't know, let's get a couple good business people in, they worked at goldman, that's fine. >> everybody thought tim geithner worked at goldman, but he didn't. >> he didn't. >> remember during his congressional testimony? >> elizabeth warren gave a statement last night. >> oh, yeah? >> called mnuchin the forrest gump of the -- >> forrest gump? are you kidding me? oh, please. >> he did run mortgage backed securities at goldman. >> it is goldman sachs. >> well, i mean, look -- we should get lloyd blankfein onto lecture senators. look, it's a different era. is she right that he was involved with mortgages? yes. absolutely. indy mac was a mortgage company. he was involved with mortgages at goldman. it's hard to find people who were not involved with mortgages if they were in finance. if you were in finance and not involved with mortgages rk what
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were you doing, profit finance in emerging markets. >> yep. >> it's what you did. it's what you sold. so if you choose to get people from the furmament. >> another piece of news we were able -- >> is this a segue? >> yes. the indiana -- >> all over it. >> carrier plant as i was able to tweet last night at around 7:00 or so -- what? >> i know. >> i was able to get it out there. it's the only way. >> i know. i know. >> i was having a beer. what can i tell you? i wasn't near a tv. >> i was working on it. i didn't want to tweet it. >> oh, you're saying you could have matched me on that? is that what you're saying? really? >> i was so close. >> okay. bring it on. >> i was within minutes. >> bring it on. >> i will bring it on. >> you bring it on. >> you really negotiated -- trump or pence? >> pence. >> okay. how many jobs? >> it's a little over 1,000 may be that they're keeping in
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indiana. we're kidding here. seven or i think closer to 800 in one of the plants and maybe as much as 300. so we're saying close to 1,000. may end being a bit more than 1,000 jobs. roughly half of what was going to exit the state. >> right. >> again as we reported last night, this was a big campaign issue for mr. trump. he is going to go to indiana tomorrow with vice president-elect who is by the way still the governor of indiana. and i had said former yesterday. that was incorrect. >> right. >> still the governor. they will make the presentation along with of course greg hayes from united technologies of this ability to have saved some jobs in indiana. there are some incentives coming from the state, however sources tell me they're not that significant. >> minor. >> they're not that large. and obviously mr. trump can claim victory here. there are some people say, listen, getting some incentive from the state and keeping jobs, 1,000 jobs, but, hey, it's more
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than were going to be kept. >> look, there's how much business with the government here? >> that was the key. >> $6 billion -- >> as we said previously in reporting that i had done, that we had done, right, they've got a huge government business. >> $6 billion with the government, department of defense. >> you do not want to start off on the wrong foot with the trump administration. this was simply not a big enough number in terms of savings from sending those jobs to mexico that equated to getting off on the wrong foot. >> talk about keeping the furnace business. >> right. >> keeping the furnace business here. and you're talking about the possibility of a larger thing, which is $7 billion overseas that can come in. that's a much more of an atheerl larger issue. president-elect trump say i'll let you take your $7 billion back if you do this, is it face saving? no, it's more than that. this is different from the lincoln deal where there was no deal to take lincoln --
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>> oh, ford, yeah. >> this is real. >> no, this is something that was active and again was negotiated. listen, it happened to be very happenstance but favorable that vice president-elect pence is still the governor of indiana where all this is taking place. >> right. and i think that united technologies probably spelled out the idea that, hey, listen, you're going to put a tariff on our stuff? all our competitors are down there already. i mean, this was just, you know, why should we be the loser because we happen to have it right at this moment? so i think there had to be some give and take. this again is, i think, part and parcel with what where we really are. which is there was a deal. there was a -- the art of a deal. there was a deal. >> not every deal is going to have this particular set of outcomes. >> right. trump makes the call, pence does the details. trump makes the call. he made the call. he made the phone call. >> yeah, some say it's not the president's place to be hammering on corporations. by the way, what are the obligations for corporations? why should they be patriotic?
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their obligations to their shareholders, customers, sometimes employees, not their country. >> it's a new regime, my friend. a new regime. guy picks up the phone, you're not taking all those jobs to mexico. you have $6 billion with the department of defense. nice to meet you. >> i like free markets. >> oh, did i elect you? who elected you? >> nobody. >> right. exactly. >> when we come back, a lot more we haven't gotten to oil prices are surging. look at that 8% move on crude as opec ministers meet on production. we'll get the latest on that. dallas fed president robert kaplan with the fed meeting two weeks away. netflix now tweeting you can download content. we'll see what that means for that company and apple when "squawk on the street" comes right back. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks.
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take a look at the markets. dow looks to open at a record high at the open as we close out november. this will be the fourth year in a row that november's been positive for the dow, the s&p and the nasdaq. we'll get cramer's mad dash and the opening bell after a break. . so corporate put you up in a roadside motel. but with directv from at&t, you can download then binge watch your dvr'd shows from anywhere.
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♪ all right. we got that seven minutes before we get started with trading here. oil is going to be the big story. on any other day we would have led with it for sure given the move up as a result of what's come out of the opec meeting. >> what we are hearing is probably the most bullish outcome you could have. which is that we went from -- initially we thought there may be a freeze. then there will be cuts. and now we have bigger cuts than anyone expected. so the whole complex of oil stocks and oil will have a massive short covering. because, david, the word is that the saudis who were pumping 11 million barrels a day, are cutting to 10.06. that's remarkable.
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>> right. >> that is a very big decline. that in itself is worth a couple of bucks. now, we don't really know, iran's a little opaque -- opec, opaque. >> right. >> but no one was prepared for this level of cut. can they enforce it? >> so everybody else stays where they are and the saudis come down? >> that's what it does seem to be. >> right. >> but the fact is the saudis are capable of doing that without -- >> are we the marginal producer these days? don't we potentially come in start fracking more? >> that's why you're going to see a continental resources, which is the one i pick of being emblematic of all -- you'll see domestics move up more than internationals. this is big. >> look at that move. >> this will take that out. >> eog also get -- >> oh, boy, eog goes to 100. >> harold hamm still talked about as something in the administration. >> national oil minister -- oh,
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no, they have in other countries. what this means, david, is that the united states is free to start pumping more without destroying the price. so i think you get 50. okay. at $50 the permian very, very good. at $50 eog, permian and continental resources is in scoop, which is in oklahoma area where you'll make a fortune at $50. so that one makes sense to be up a lot. >> all right. we're going to talk a lot more about oil given its importance overall to the market and some of these names jim just talked about when we get that opening bell just a couple minutes from now.
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serious problems including tooth loss. gum crisis averted. you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in about 90 seconds. a lot going on. mnuchin and ross to treasury and commerce, of course. adp comes in hot, 216 above the 170 estimate. personal income and spending pretty good. savings rate goes to 6, jim. and now you're working your way through these opec cuts chrks
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are a little confusing given some outliers like indonesia. >> yes, but i think what the saudis did was say, okay, listen, if we cut back a million barrels, oil will then go up say 10%. and we'll net out higher that the saudis kind of did the alleghe algebra. doesn't sound like iraq or iran are going to do anything. indonesia really important. what matters here is no one thought they'd do a deal. over and over again we said they'd fail. everyone on monday we heard they'd failed. we heard putin wasn't going to do a cut. apparently he's done a cut. so what will happen is the complex moves up to 50. and the u.s. is the winner. our companies. we get a higher price. you'll see the rig count go up. it's kind of like if you're short one of our u.s. oil companies, wow, you've got the wrong side of the trade. >> oil has not been above $50 since october 27. this will be the best day for
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crude since february. remember the lows of february. >> holy cow, in the low 20s. >> had a 12% gain. and that was the low for the s&p for the year. >> well, we thought there was going to be $300 billion in bonds that were going to go bust. that didn't happen. we thought there were cuts dividends, that didn't happen. smaller ones did. whoever bought like pioneer when pioneer did those deals and bought oil low, txd, sheffield's a winner, eod, huge winner, huge. you got that one right. >> do we think that they can keep it together though? the history of opec says all good intentions and then not long after somebody's pumping more than they should be. >> the saudis can agree to themselves to do this. >> yes. >> the other guys -- >> what if they see iran doing more? i mean, there's no love loss between those two countries. >> iran can only pump -- i mean,
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they have to put new technology in. >> right. >> it will be interesting to see under president-elect trump whether they'll be allowed to have that new technology. >> by the way, opening bell right there. algonquin and jack henry and associates payment provider for processing services for the financial services industry. i assume, net investment, right, in oil. i mean, you're going to want to watch the schlumberger and baker -- >> and halliburton. the only thing you have to remember is you have a president-elect who favors pipelines. exporting a lot of natural gas. natural gas very important really all u.s. market right now. what we're seeing is kind of the best of all possible worlds this morning for the u.s. oil companies. exactly what they want. natural gas a little too warm, price not great there. but still competitive against coal. the complex is strong. >> complex deserves to be strong. >> everything at the top of the
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list today is oil, rigs top gainer, 10% move on rig, chesapeake, apache and adarko. >> that's funny, you need 70 for offshore. transocean is all offshore. for the domestics, work for halliburton. they're great at 50 because they've lowered the price of technology so much. but no one thought this deal would happen. it's kind of amazing. whether it can stick or not all i can tell you is that the oil futures guys got this totally wrong. they were on the wrong side. that's why you see this move. >> financials another sector that is having a very strong open. >> yes. open. >> right. we'll see how it does through the day. but right now many of the big banks are up as much as 2%. is that based on mnuchin? is that oil related too somehow in terms of, i don't know, inflation, higher rates? >> oil-related, yes.
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because criticized loans will be taken -- won't be criticized. >> right. >> those loans are good. >> that's true too. that hasn't been a huge concern for the industry, bad loans in the oil sector, but a bit of a drag. >> no. listen, i think you listen to mnuchin, i think more business going to get done, earnings per share go up. deutsche bank, goldman goes hold to buy. why? new business not being reflected enough in the stock. remember the other day we saw so many downgrades of these? last two days we had big downgrades. >> yeah. >> they presumed there wouldn't be a lot of growth. but if you have gdp growth and you have dodd/frank kind of repealed in terms of the strictures on lending, then suddenly we have loan growth. all wv been trying to get is net interest margin growth. imagine loan growth on top of net interest margin growth and companies trading at 8, 9, 10 times earnings. cheaper than they were a week ago. >> you've been -- >> you know i love that group. >> you've been really happy. you were on that group for a
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little bit. [ bell ringing ] >> your treasury secretary is a guy that worked for 17 years at goldman, and a partner, who then turned around indy mac, who can call everybody in the world, everybody kind of knows him. his dad the greatest trader of our lifetime. >> goldman is set to take out the 2015 highs. this is going to take it back to 2007 where the high was in the 2.50 range. that's a breakout here for goldman. >> goldman was trading below book value right before the election. >> yeah. >> the book had been scrubbed clean. it was trading below its cash. closed its doors. that was crazy. is this crazy? i don't know. you're going to get a price-to-earnings multiple. >> the moves we're looking at for the banks as this year ends are pretty darn significant. morgan stanley up over 30%. now goldman up over 20%. bank of america 23%. a lot of that having taken place
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only in the last month. >> i know. you look at wells -- >> not even. >> well, wells obviously had a lot of problems, but wells is it even up for the year? >> it is. no, it's still down. little over 3%. >> even if you think wells the business is cut back, wells is down 3%. that's wrong. that's wrong. that's going to go higher. my trust owns that. i don't really care for it. just been stuck in it. but i've got to tell you that goldman sachs is going to do more business than we thought they were going to do and that really does matter. >> yeah, breaking out to a post crisis high is an historic moment for g.s. >> it's underperformed, everything under citi. remember citi's nowhere near where it used to be. bank of america just got back to where it was. these are amazing, amazing catchup in performance. and the piling in of this is still -- there's got to be more money coming in the market. it's not like everything else is down. the health care's down. but oil's 8%, 9% of the s&p.
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this is 19% of the s&p. but it's not coming out of health care. it's new money. new money in. >> the unh is second best dow stock of the year behind only caterpillar. >> caterpillar regarded as oil and gas play because that's what you need. >> meanwhile, the airlines and utilities, jim, are going to suffer because of this. southwest, alaska all down. >> well, they should. but historically what's happened is that any time oil goes up, we thought it was because of demand. we know actually today it's right in our faces because supply cutting. so, yes, i would buy southwest air just because i think it's going to have a good quarter. better than we think. but, yeah, that group is going to be under pressure. we haven't even talked splunk or gopro. >> gopro? oh, yeah. >> sounds like abandoning the plan to become a media company as they long said.
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>> no longer an ecosystem. >> stock is actually up. >> the old media company plan. >> get out of stuff that's not working. >> yeah. >> but one of the things we've seen here is they come out with a release. what do they say? solid holiday demand. solid. >> solid. >> solid. solid as a rock. >> better than not solid. better than not solid. yeah. >> shaky. >> yeah, wouldn't want to hear that. >> no, shaky would be bad. >> i don't think you'd lead a press release with that. tepid. >> interesting. we'll hear what eddie lampert, roommate in college of steve mnuchin when sears talks, see if it's selling. >> what do you think? man who will not even go to a kmart? >> less than solid. suboptimal. >> suboptimal. >> netflix up i think 2% on this news that you can now depending on the content download something to watch it where you do not have an internet signal later on. >> so i can fly united continental and see what i want?
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>> exactly. orange is the new black, narco crown examples they give. all original content. >> crown i need subtitles. narcos i was happy with subtitles. i've got to tell you, the new honeywell plane configurations allow you to have actual netflix. this is good for the ones that don't have -- >> what do you mean you can use your own netflix account on the screen? >> yeah. this is what you're talking about here. >> nice. >> go-go doesn't do it. you're talking about go-go is the technology that doesn't allow you to stream live. >> right. >> and this doesn't help you. remember i was going back on the super bowl was on? >> yes, i do. that was a mistake on your part. >> the pilot periodically give you scores. this doesn't help you there. netflix you can't download the game beforehand and watch it. still live programming. >> it is. >> all right. so record high for the dow. record high for the s&p.
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goldman as we said leading the charge. bob's on the floor. bob. >> good morning, carl. and what we are seeing today is a microcosm essentially of what's happened all throughout the month because the leadership is exactly what's been the leadership throughout the month. take a look at the markets right now and key sectors that are moving. banks a leadership group, energy has now moved up, wasn't a big one, but materials and industrials the other big group. that's basically what's been moving the markets overall. interest rate stocks, sensitive rate stocks, consumer staples lagging that's what's happened throughout the month of november. new highs not dramatically expanding even though the s&p is at a new high, but most of them are all financials. so the whole new high list, 50 or 60 on the s&p, are all financials as you see here, keycorp., morgan stanley, market savvy guys on your financial team, what's not to like about financials? a long list of why they're moving on the upside today. energy down about 3% in the last two days on what looks now like
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we might have a deal. all up rather notably double digits. these are dramatic outperformers and had been underperformers in the last few days. housing a little on the weak side. i think this is due to some discussions about perhaps, perhaps maybe they'll make some mortgage interest deduction. this is an old chestnut debating for 25 years. i doubt very much you'll see anything dramatic at the top, but there you see some of the stocks on the downside a bit today. major indices in november, you got to go back five years to see the russell 2000 up 11% in any month at all. the s&p more modest gains, but that's simply because financials and industrial gains were offset by declines in consumer staples and utilities and some of the big tech stocks that were on the downside. financials got to go back five years to see financials up 12% in any given month. 8.5% really good on the industrials. it would have been even better month if we didn't have some problems with some of the tech names throughout the month. so your facebooks and qualcomms and ciscos, google, alphabet was down, apple notable decliner there.
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we would have had much better numbers on the s&p 500 if we had some of these stocks anywhere near positive territory. as for where we're at right now the state of the markets pretty simple to highlight what's going on. consumption numbers out of gdp yesterday widely discussed on the floor, better wages, better job growth overall more people out spending more. earnings, we've seen an end to the earnings recession. got some good numbers again from the commerce department on that. we've seen the earnings recession end in the third quarter here. volatility has dropped down to the midsummer lows here. that surprised a lot of people, but that's where we are. and right now you could certainly argue that stocks are overbought. but we are poised for a multiple expansion. what does that mean? look at the s&p 500, the multiple on the s&p, it's down about 15. at the end of october, forward earnings, 2017 estimates 16.3, today it's 16.7 and heading towards 17. in other words, we are already seeing a multiple expansion.
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what does that mean? well, when you get earnings improving and when you get a belief that the economy is going to be improving and you actually get some numbers that start to back that up, not just we hope things are going to get better down the road. that is a perfect scenario for a multiple expansion. so the bottom line is stocks could go higher here 16, 17 is not out of the ordinary when you start getting an improving economy and better earnings overall. right now the dow up 92 points. new record. carl, back to you. >> bob, thank you very much. obviously oil is going to be the story of the morning. our jackie deangelis at the nymex today. jackie. >> good morning to you, carl. everyone i'm speaking to is saying christmas has come early, not just for crude futures but also for the energy stocks as well. you guys hit the point here. we do have some sort of a deal on the table. we don't know the details just yet. what seems to be leaking out is it's a steeper cut than previously announced. this is very important because it shows that the saudis came to play ball. they are going to shoulder most of this.
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and also trying to restore some faith within opec. the market was heavily discounting that there could be an agreement here. and in fact there was. the big questions that remain of course are some of the players going to cheat? you've got iraqis and iranians who really didn't want to come together on this. they may choose to ignore it altogether. but at the same time the fact we could reach a consensus is really key. even more important than this however is the demand side of the picture. you've got president-elect trump supporting the energy companies, perhaps taking that demand picture up. and if that's the case with a supply cut here, then we may really be onto something. now, an 8% move today is very steep. remember, some of this is short covering too because people were not positioned to hear about this news today. but it hasn't pushed the price over $50, and that's very critical right now. we haven't seen that since october. the concern right now of course, the price goes up, the shale producers pump and then the price goes down again. so we're going to have to wait and see. back to you, carl. >> thank you very much, jackie deangelis. we are going to get chicago pmi
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in a few moments. rick santelli watching for that. rick. >> well, i'll tell you what, today's big story is the long end. now we could all talk about the fed of course it's important. but the fed really they're in the caboose hanging on for dear life because the long end is where all the action's at. the market is really starting to get more aggressive than it was. let's look at a one-week chart of 2s. yeah, yields are up, you see the right side. but look at the left side. there's yields higher. that's not what you'll see when you look at the long end. look at 10s still hovering around highest yield closes since mid-july of 2015. but you could look and see, now, we have two intraday spikes, the 25th and today, above 2.40, but it's the close that matters most. we came back down a bit. yesterday we held. what is today going to be the tenth day in a row suddenly between 2.30 and 2.36 and it looked dicey for awhile. 30s just exploded today. traded up close to 3.08. they backed off a little bit. look at a one-week of 30s, up,
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up and away. bund yields, you know, relative value trade is when europe pulled us down, when negative rates was the scourge of the world. as rates moved up in the u.s., we saw real lag. and it's still lagging, but there is some impact now. you see bund yields moving up. now, if you look at a month-to-date of 10s minus bunds, it's still well over 200, but pay attention here. this is going to be big for draghi. one week of the dollar index it's kind of a laggard on this move even though it's been moving aggressively and other weekly segments especially two weeks ago, a four-year chart of the euro versus dollar tells you everything you need to know. dollar index isn't going to go a lot higher until we start to crack under 1.05. and of course we have our november read on chicago purchasing managers survey at 57.6. this follows 50, 5-0.6, and it is, guess what, the best number of the year, shocking, isn't it? and if we look at the last time
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we would comp this, this would be the best level since january of 2015. of course i know oil is playing a significant impact to many in the markets today. i don't know, don't count me in as believing what's going on in opec. but i don't matter. you know who matters? the shorts. and the shorts are nervous and they always believe. you say boo to them ten times in three seconds, they'll jump every time. carl, back to you. >> all right, rick santelli. rick, thank you very much. dow's up 100, record high. s&p's up almost 9, record high. the number to watch for nasdaq if you're looking for a hat trick, 5403. we are not there quite yet. we're back in a minute.
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that's something the treasurer would do. >> so of all the things that seem like priorities with regards to china, expansion to ranks, tariffs on exports here and now this, i wonder which comes first. >> the market is overlooking things that it typically wouldn't. there is an air of good feeling here whether you think it's right or wrong is united technology's stock is higher. united technologies not being able to take that plant to monterey. stock is up. i think there's a sense that china will get to that. we'll get to that. wilbur ross was very strong on trade. i do think that trump believes he can probably call china and say, come on, guys, we're not going to go for this anymore. >> well, mr. ross did say during the interview and i thought it was interesting, tariffs are the last step, not the first step. >> that was bullish, because everyone was afraid that when trump said -- >> you don't start with tariffs, you end with them. >> when trump said we're going to put a tariff on anything you
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make, carrier. >> yeah, no longer 35% coming from mexico, tariff. >> yeah, you worry about other companies saying, yeah, we'll stay but what do you got in return? >> well, i think they'll stay. i don't think they want that phone call. i think the trump phone call is something you don't want. >> i mean, in the case of utx there's significant revenues that derive from government business, but that is not the case for vast majority of many companies. >> if proctor wanted to move a lot of production -- i mean, everyone's moving production. and then you can move -- almost anything you can move they're trying to move. but the highest tech jobs you need americans. that's why the aerospace jobs, didn't hear about them going away. >> no, but what happens when we're going to replace workers with robots but keeping it all in the united states, do you get a call then? >> that's alabama, right? >> yeah, move from this state to that one and replace half our workers with robots. >> that's why it's the era of good feeling because it really doesn't change that much.
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>> no. i mean, the longer road here still leads to fewer jobs. >> well, that's technology. i mean, they're not -- you're not hearing trump say, listen, we're going to go in and destroy disk drive factories. >> do you stop the advancement of a.i.? >> no. >> or machine learning? >> no. >> or autonomous driving? it will eventually result in the loss of jobs. >> no. how many people has sprks esplunk put out of business when they make these big contracts? a lot. splunk being cloud, machine learning, artificial intelligence that say, machines are cheaper than we are. trump can't change that. put a tax on machines? >> nor has he really addressed those. >> nobody can. that's kind of like i hope people don't feel like a president can change progress because you can't. you can't do it. >> we're going to get stop trading with jim in a moment as we watch some of these new record highs. we'll be right back.
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time for cramer and stop trading. >> you know, there could be retail jobs, but they're going to be destroyed by artificial intelligence too because people rather shop on amazon, which brings me to american eagle, a very light number.
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very bad forecast. and that's going to hang over retail all day today because they're basically saying the holiday season's not going to be that good. now, that's very out of sync from what we hear from a lot of other companies. i think we could hear different tonight when we hear from pvh on "mad money." >> why would anybody take a signal from american eagle as the whole retail industry? >> i know. i was by there last week there was nobody in it. there were fewer people in abercrombie only, the only store that had fewer people in it. i took some pictures but decided not to post it because seemed like a mercy killing. didn't want to euthanize a retailer. but hear pvh that's more macy's, more kohl's. then we hear mpc, wouldn't that be interesting? a stock that's not up, why? they make their money off the spread. when west texas goes up, they don't make as much money. this is -- i slept in a half hour today and it was the worst half hour i ever had. >> not a good day for that. >> and i missed the top of wilfred frost and bannering sara and wilf. i did get the articles that they
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like, that they read. whatever. this is hard. >> it is hard. >> and people were trading -- right now buying halliburton. i totally goat you, but you're coming on the backs of short sellers who are panicking. there's so much panic right now. >> yes. jim, we will see you tonight. >> remember said ain't going to happen? greg hayes. i bet you before trump that carrier plant that wasn't staying in america. that was going to mexico. >> yeah. >> it ain't going to happen. >> a lot of surprises. >> now it's going to happen. >> during brexit goldman was 138. it's now there at 138. >> holy cow. >> when we come back, more on the president-elect's new cabinet picks, new record highs for stocks. we're back in a moment. what's the value of capital? what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods?
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and start gathering the information you need to help you keep rolling with confidence. go long™. ♪ ♪ good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at the new york stock exchange. record highs today for the dow and s&p as we close out the month of november. mnuchin and ross to treasury and commerce. and then oil the best day since february here on these reports of an opec cut as we wait to
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hear whether or not that's going to stick. meanwhile awaiting remarks from house speaker paul ryan. as soon as that happens we'll bring you any news from it as it comes. it is a busy morning. more economic data crossing the tape right now on housing. let's get to diana olick with the numbers. diana. >> reporter: pending home sales in october up 0.1% month-to-month, up 1.8% year over year. that is exactly in line with expectations. now, the pending home sales index from the national association of realtors is based on signed contracts in october. that is people out shopping for homes in october pre-election and before that unexpected rate spike that came just after the election. the realtors saying that really tight supply is holding back sales. and they are noting that people who got in before the rate spike are likely going to be more competitive than those who are in after the rate spike. saying that if we don't get more supply on the market come 2017 when rates are expected to go even higher, that will hurt sales more than expected. now, regionally pending home
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sales were up in the northeast 0.4%. and up in the midwest 1.6%. they were weakest in the south where home builders are most active but where supply is still tight down 1.3% month-to-month. and, again in the west, up just barely 0.7%. so right along expectations on pending home sales, but a big worry sign ahead for the higher mortgage rates which are already hitting mortgage applications, which we saw this week. back to you guys. >> diana, thank you very much. as we said earlier, the president-elect picking more cabinet members this morning including for treasury secretary steven mnuchin and for secretary of commerce wilbur ross. both confirming that right here on cnbc. our john harwood joins us this morning with more on that. hey, john. >> reporter: hey, carl. we also got todd rickets, the co-owner of the chicago cubs who of course just won the world series and he won a job as deputy secretary of commerce to wilbur ross. but steve mnuchin made news in three ways that were in addition to confirming his appointment on
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cnbc this morning. and those three ways all moderated donald trump's economic message. let me run through them. first of all, he talked about repairing dodd/frank, the portions of it that he said discouraged lending. not scrapping the entire law as donald trump talked about during the campaign. secondly, he articulated a goal for u.s. economic growth of 3% to 4%. he thought that was realistic, rather than the 4% that donald trump sketched out in an economic speech this fall. so that is a change from the goal setting that donald trump had engaged in. and finally, he indicated, steve mnuchin did, that there would be no net tax cut for top end earners. take a listen. >> any reductions we have in upper income taxes will be offset by less deductions. so that there will be no tax, absolute tax cut for the upper class. there will be a big tax cut for
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the middle class, but any tax cuts we have for the upper class will be offset by less deductions to pay for it. >> reporter: now, it's important to note that is not what donald trump actually proposed during the campaign. his campaign was scored by liberal and conservative tax analysts as providing the largest benefits at the top of the spectrum. and i talked to analysts on both ends of the spectrum this morning after steve mnuchin's comments. and they said they're either going to have to see more deductions specified or a higher than that 33% top rate in donald trump's plan in order to achieve what steve mnuchin said. he referred to caps on mortgage deductions, but didn't specify beyond that. we're going to have to wait and see, guys. >> that is certainly a big question on those tax cuts for the wealthy. john, thank you. john harwood outside of trump tower on watch for who's coming in all day long. mnuchin as john mentioned speaking first over"squawk box" this morning, also talked at length about rolling back those post crisis financial reforms,
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known as dodd/frank. listen. >> we've been in the business of regional banking and we understand what it is to make loans. and that's the engine of growth to small and medium size businesses. so as we look at dodd/frank, the number one problem with dodd/frank is it's way too complicated. and it cuts back lending. so we want to strip back parts of dodd/frank that prevent banks from lending. and that will be the number one priority on the regulatory side. >> for more on what this trump administration means for markets and deregulation, we're joined now in a cnbc exclusive by the president of the cowen group and ceo of cowen & company, jeff solomon. jeff, good to see you again. >> good to see you guys. how are you? >> first on these appointments this morning, are you excited to have two people from your world in key economic positions in this country? >> well, i think i'm excited about the possibility of having people who actually know how to get things done from a business standpoint and having them be in positions where they can influence positive economic growth for the first time in a
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while. >> what about that comment on banks? mnuchin said that rolling back parts of dodd/frank is going to be the number one priority on the regulatory side. clearly an early christmas gift for the banks. >> well, i think for the regional banks. that's not clear to me that necessarily applies to the money center banks or big banks. i think that's an important distinction. something we're certainly seeing at cowen. we think regional banking, the rebirth from regional banking is actually quite strong and to induce banks to making loans to small and medium size businesses is a growth area. we've seen significant growth in alternative lending, it's something we've been doing at cowen for the last four years. i think any time you can get more liquidity into the marketplace for growing businesses helps economic growth. so i'm not sure what mnuchin said has actually impact at all on the major regulations like the volcker rule for large money center banks. but it's absolutely very positive for regional banks. >> he did talk a little about the volcker rule and getting to the complication of that potentially, but we've already seen this big move up in banks.
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we're tallying the november returns. the spdr bank index up almost 17% for the month. would you suggest more room to run or regionals outperform now? >> it's hard for me to call the immediate move in stock prices. what i do think is better economic activity generally means better for banks, as they get more involved. i do think we're going to have a regime that's a little bit more conducive to -- economic growth and utilize the banks to what they do best which is foster that growth. i think we've had a pretty significant hangover what's happened in the last decade and now it's time to get back to actuallyin centivizing banks to do what we want them to do to fund growth. i think mnuchin and ross are at the center of that. >> but you still have people, and this is no surprise to you, who claim that as we work our way back toward loosening restrictions on lepding, freeing up regs on at least regionals that there's some sort of financial crisis amnesia. is that not a fair fear at this moment? >> well, you know, the next
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crisis will be from something else. i think looking backwards and making regulation that just, you know, protects you against -- >> the last crisis. >> is challenging. and i think -- so there will always be challenges in financial markets. they're not without risk. i just think that the people that we're talking about having it understand risk -- actually understand turnarounds, very important. both of these gentlemen are extremely talented at turnarounds. >> at high risk turnarounds. >> not necessarily. you can make the argument buying indy mack was not a high risk at all. there was a lot of downside and a lot of upside to that trade. we are about to enter a very interesting phase in the markets. definitely going to see fed raising rates, we have a lot of debt overhang, we've got to figure out a way out of the zero interest rate policy that we're in. so to me these are two individuals who have a lot of solve viness at how to manage that and i'm happy to see them in the spots they're in. >> do you see the u.s. as a
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turnaround story with stocks at rortd highs, pce at two-year highs, gdp cycle highs. >> i don't know that the u.s. markets are at a turnaround, but i think they're at an inflection point. i am concerned about rising interest rates. that's going to happen. i think what we've seen is asset inflation as a result of low interest rates where, you know, where else are you going to go? there is no other alternative. we've talked about this before. so, you know, i don't necessarily look at it stock market as a proxy for what's best for america though it helps. i think we're going to go through a time here where we're going to have to reengineer our way out of the debt overhang and i'm happy to have two people in place know how to do that. >> you're talking more about normalization almost in a sense. what about the capital markets and your expectations for next year both in debt and in equity and certainly ipos where your firm used to play and where we've had hardly any here at the nyse or anywhere else? >> so i'm looking at our first quarter backlog and things that are happening, people are cueing up to raise money, both in equity markets and in the debt markets. the view is there's going to be
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significant growth opportunity. this is a pro-growth administration, at least it seems like it is. and people want to be geared up to deal with how that growth is going to happen. again, i think fundamental economic growth actually hasn't been there for a while, now we're starting to see fiscal poi si and infrastructure spend. we're gearing up for that and i would say we're likely to see significant new issuance -- >> where are the deficit hawks? you hear everybody talking about spending and tax cuts and everything else, is that going to come to the fore and maybe put a break on this? >> i think it would have under a clinton administration, i think it probably gets back burnered. i do. i think there's a belief that you can grow your way out of the challenges that we have. the only way out actually is to grow your way out of it. so if we're going to focus first on deficit reduction, that's anti-growth. so that may come later on in the term as we grow our way out of it from a fundamental standpoint. >> a lot of optimism on growth and the markets, there are losers though to some of these policies. where would you be telling your
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clients to stay away from? the rate sensitive stocks? >> it's still too early to call that. i think we're a little bit concerned about let's see how things go with the re-do of obamacare. i think there's going to be some huge winners here. we've already seen biotech stocks would be huge winners as a result of obamacare, but remains to be seen there's going to be elements of the health care spectrum or ecosystem that are going to be damaged by the changes as people really thought this was going to be law for a long time and probably not geared up for that. so i think what's interesting about this is there's definitely going to be winners and losers. i think this is great for active managers by the way. you know i'm always on here talking about the importance of active management. i think there's going to be winners and losers within sectors, so just going out and tactically allocating is probably not going to be as successful as it was you know, in what i would call a single direction market. so, you know, going to be very interesting time. >> all right. jeff, thank you for joining us to talk about some of them.
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jeff solomon, the ceo of cowen. did want to direct our viewers attention to shares of valeant, which are down after dow jones reported a few moments ago that the company's efforts to sell its salix division, remember it bought this company not that long ago, the focus there of course is on things like ibs, have broken down. and i can also confirm at least according to one source familiar with the situation that dow jones reporting at least as accurate saying they were last-minute disagreements the je company they were talking with focused on price and hence sale valeant is now planning to focus on building that business as opposed to selling it. the stock if you recall had acted quite positively to the prospects of a potential sale and the over $10 billion that might be coming into the company in part because of course it
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would give an opportunity to pay down some debt. that's been a key consideration for investors with $30 billion plus in debt valeant has. but at this point it appears those talks have broken down largely as a result of disagreements on price. and salix will remain with valeant. the stock down almost 7%, sara. all right. when we come back on the show, what the trump era and the new cabinet picks mean for business. we're going to talk to the ceo of athena health, jonathan bush, on obamacare and trump's new hhs pick and exclusively with the ceo of telecom giant. and in the 11:00 hour, don't miss an exclusive with dallas fed president robert kaplan, get his take on president-elect donald trump's economic vision. plus where the fed goes from here. and as we head to break, take a listen to what treasury secretary designate steven mnuchin said this morning on cnbc about rates. >> i think that interest rates are going to stay relatively low for the next couple of years. and we're in a period of time of
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low interest rates, and i think we'll stay there. and interest rates have come up a little bit, which i think makes sense. and i think we're going to be looking at the treasury all different types of opportunities. we'll look at potentially extending the maturity of the debt. because eventually we are going to have higher interest rates and that's something that this country is going to need to deal with. generosity is its own form of power.
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you can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues. don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. welcome back. late yesterday we broke the news that the carrier corporation owned by united technologies and the trump administration had
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reached an agreement under which carrier would keep roughly 1,000 jobs in the state of indiana. people may remember it was a key theme on the campaign trail for then-candidate trump. those jobs had been headed to mexico to monterey, mexico. and some still will be under the deal that has been negotiated roughly 1,000, perhaps may end up being a bit more of the jobs will remain that were scheduled to leave indiana. whose governor remains, by the way, vice president-elect mike pence who was key to negotiating this deal. there do appear to be some incentives involved but i'm told by people familiar with the transaction that they are said to be small. but of course overall a victory at least for president-elect trump in terms of carrying through with a promise to try to keep some of those jobs, if not all of them in indiana. here's what the treasury secretary nominee, steve mnuchin, had to say about this effort earlier on "squawk box."
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>> carrier deal, i think it's terrific. the president-elect and vice president picked up the phone and called the ceo of united technologies and told them we wanted to keep jobs here. i can't remember the last time a president did that. and, you know, this is going to be a terrific opportunity, both myself, wilbur ross who's in commerce working with the president, making sure we do the right thing for the american workers. >> from united technologies' point of view given the many contracts they have to provide equipment for defense related purposes, you might imagine they did not want to begin life with the trump administration in a bad place. and so giving up the potential savings from moving some of those jobs to mexico is thought to be the prudent thing to do in order to maintain good relations with the u.s. government. carl. >> all right, david, we're going to take a listen to speaker ryan at the weekly address. >> -- as fast as we possibly can in 2017. that is our plan.
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christina. >> [ inaudible question ] could you talk a little bit about why there might be a benefit to open it longer? >> for the house it doesn't -- we don't have calendar issues. in the senate we're beginning to appreciate how much work they have to do to confirm and stand up the new trump government. they've got to confirm cabinet officials, sub cabinet officials, there might be a supreme court nomination that's going to be occurring. so given the fact that the senate is going to have a very, very crowded calendar with all of the confirmations they have to do, we're respecting that fact. and that's why you're probably discussing the timing of this. >> last question. >> follow up on the cr, there've been some discussion about where things will land in flint. i'm wondering if the discussion now -- >> we're going to address flint. we're hoping to get done. word discussion is done. that's one of the things we committed to addressing, we'll address it one way or another. >> if that doesn't happen this
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year. >> we'll address it one way or the other. thank you. >> speaker ryan obviously addressing all the plans republicans have not the least of which of course is the repeal and replacement of obamacare. of course tom price heading up health and human services, joining us at post nine to discuss that athena chairman jonathan bush. great to have you onset. >> it's very exciting in the action. >> a lot going on. >> a lot of flat screens, that's why people come i assume, to see the flat screens. that's amazing. >> that's one reason. >> watching announcement by the speaker sort of brings home how much is going to get undone. >> yes. >> in government and as a fallout in business. >> yeah. yeah. i mean, i heard, you know, you guys had a lot of talk on dodd/frank. everybody knows who follows that the sort of pent up energy that gets balled up in complying. we went public in 2007, was it? there were twice as many public companies, twice as many choices. the biodiversity of the pond of the markets is dropping, which
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is not good for economic growth, carl, right? and all of a sudden they're going to rip that off and let the potato bugs go out and start new trees? that's exciting. and the same thing in health care. enormous, i calculated it sitting here waiting for my big moment in the sun with you, 100 software developer years a year for the last six years athena health spent on complying with five major federal quality performance whatever you want to call them programs. high-tech one, high-tech two, high-tech three maps, don't ask me what these things mean, and macra, we've done a good job of complying but huge consumption of energy that did not go into, using trumpisms, draining the swamp. 40% of a doctor's day is still on this long tail of little administrative tasks that don't really move the clinical nut forward. >> so is that all wasted effort? >> oh, absolutely. i mean, there's a keynes
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argument to be made even if you dig up phony measures, at least they have measures and computer to put in et cetera. i've been on the show a million times saying i wish they wouldn't do it. it's good for cloud based companies like athena health to smoke the old years of epic and all these pre-internet companies that got to live as a result, now hopefully those guys will go about their dutiful duty as old world companies and die so we can have their market share, which would be very grateful. >> sort of interesting to hear you so excited. >> i'm manic. i'm so excited. >> well, because your stock has -- >> well, if you're not me and you don't see what we're going to do -- if you're working on the underlying assumption that the only way anything happens in health care, which is a largely trog la diddic partly non-sector the government marches you ahead with a bayonet and carrot and -- we got to be the highest multiple stock. >> hasn't obamacare been so good
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for your business? >> everyone says that to me and i feel obviously not so patronized by you but the question, those programs commoditize us. they made us look the same as freaking pre-internet dinosaurs written in software languages that children don't even know about today. mumps, do you know what mumps is? no, no one knows. it's what all these companies have written their software in. it's wacky. obviously we got lifted along with everyone else. and we did a frantic sales and you look at our sales and marketing costs during this -- you know, we were frantic to get the goodies while they were out there. >> sure. >> but now that that goes away it becomes more better product wins, worst product dies. that's what i like. >> does it matter to you if they wait until they have a replacement before they replace? or can they kill it -- >> this isn't a big baton march where you land on the beach with a whole new program. there's a million little nuggets of surface area that you can change, right? you can change the fundamental minimum definition of what
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coverage means. which suddenly creates products that cost half as much money, which is what 2 million trump voters had before obamacare, right? there were all those very limited insurance products people were kicked out of. make them legal, right? you could roll back the aco program and the macro program. all that what you do to accomplish that is nothing. you stop pushing it forward. so i imagine this is more just a receding and a relabeling than to try to create a giant new battalion of bureaucrats to land on the beach. >> over what time period do you think? i would assume there will be bumps along the way. >> yes. >> and you're going to have congress involved. >> sure. well, i think this is an administration that is led by a guy who has a really good feel for pr and releases and announcements. so i think they'll take the jewels that have the most delicious announcement value and go first. and then they'll trickle down through, you know, so draining the swamp, killing mips macro
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means if it's 100 years a year for us, think about all the hospitals that do it themselves, all the doctors everywhere. i imagine something around draining the swamp first, eventually this is going to get awkward, right? because one of the big reasons that health care's so expensive is there are thousands and thousands of hospitals that are not full. all over the country. that are being subsidized. 38% of hospital beds every night are fully funded and staffed and empty. so if they are allowed to die, they're going to die in a lot of blue states and there's going to be a lot of people working in those hospitals that stop working there, that's an awkward conversation. i don't know how many united technology, you know, back of the hallway conversations you can have to make up for that. >> right. not to mention the compliance lawyers and banks and software developers. >> the professional class. run, go to canada like you said you would. everybody who's a lawyer and a banker and a -- i feel so bad for them. they're going to be gunned down at every corner. >> how about the bush family?
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how is it dealing with the election? >> well, licking -- all the fundamental sort of core values that allow you to be loved in the bush family turned out to be no factor in this election. and so that was a real repudiation of something that i think as a child i still feel the absolute -- the role of the president that is head of state to me is more important than the role that is head of government. most countries have them separate. we have them together. and we basically said i don't care about the head of state thing. i don't care if he's a philandering yoyo. i want a guy that's a tough parliamentarian and rip stuff apart, yep, i get it. i sympathize. i wish we could have had a better head of state to do the same ripping apart the mess, but there it is. >> this is where we are. >> yeah. >> onward we go. jonathan, as someone writes in, you never disappoint. so thank you for coming in.
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>> oh, god bless you, little tweet, hash tag person. >> good to see you. >> thank you. >> jonathan bush. >> you have a lot of fans. when we return, our exclusive with the ceo of altice ceo, his take on president-elect trump, cable and a whole lot more. stocks at this hour in rally mode. record intraday highs for the final trading day of the month of november it has been a strong month for stocks. the s&p is flat and nasdaq is lower. crude oil is surging. much more ahead on "squawk on the street." this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at and get up to six hundred dollars.
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welcome back. altice usa rolling out plans for a whole scale fiber network enable up to 10gig broadband speeds. joining me now is the chairman and ceo of altice usa, dexter, great to have you here. a very big news day. let's start with the announcement itself. that's the reason you're here. you're going to be bringing more
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speed to homes than they've ever seen i guess over the next five years? >> absolutely. >> why are you doing this? >> well, today we're continuing to see huge demand from our customers for greater speeds, continued application development, connected home development. we know that the data world is exploding. it will continue to. we're seeing doubling of the average speeds that we're delivering to our clients over the past year on sudden link. we're seeing similar trends over at optimum over the last three months. and so for us to go and invest in some type of technology to just go to 1 gig to us seems like a waste of time. we want to go and deliver 10 gigs over the period and future proof our network. >> right. so our viewers can remember, cable vision owned by you, sudden link as well with 3.1 million customers, optimum, another 1.57 at sudden link.
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you're saying you expect to reinvest sufficient savings without a material change in your overall capital budget. >> that's right. >> how is that possible that this is not going to cost you more than you're already allocating? >> well, there are things we've been doing each one of the businesses focused on upgrades, on improvements in the network, all of that capital now is getting reinvested in fiber project. all of our reviews of the capital projects that are out there today that we think are less useful for the future proofing of our network we're no longer going to be investing in and investing those savings directly into the fiber rollout. and there are just pure efficiencies we've been able to pull out of our capital budgets doing a little bit better with our suppliers, little bit better with the technology choices, little bit better with products delivered. and we're reinvesting all that money back into this fiber rollout. >> you really believe you're going to be able to keep it neutral in terms of expenditure? >> absolutely. >> bringing in all of that bandwidth to a home can enable
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them to do all sorts of things, i would imagine, including get the latest ott products or two or three if they want, which leads me to directv now annou e announced this week with great fanfare all those channels for a relatively low number. we're going to keep having this conversation. >> yes, we had it five months ago. >> and we'll have it again five months from now. where are we in terms of people adopting over the top as opposed to taking the bundle? especially now when there are these kinds of products available. >> well, it's a very good question. we are seeing today an increase in our take up from triple play over at optimum, not a decrease. so people are taking the bundle. we think also with the delivery of home hub center which we're launching in 2017 we'll start seeing even a better user experience with our video customers both of course sudden link and optimum customers. so we welcome what our competitors are doing. we think however we have a unique product, a unique pricing model and unique future in terms of enhancing user productivity,
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user interface and really a great experience. >> some of these distributors now are going to own a lot of content. comcast of course does, at&t soon will with time warner. does altice need to own content? >> i don't think that's our focus. we spoke about five months ago, really focus on operations. we continue to focus on operations. we have a big integration that continues to go forward. we've got several years of real focus on operations. i think we're not looking at any real integration or other strategies out there today. we like cable, we like where we are and we'll see what happens going forward. >> all right. some of the things we're going to see of course a trump administration taking power, the fcc will have impact on your business, not to mention potential tax reform. you're a highly indebted company, altice, interest payments are deductible. there's some talk that might not be the case. are you concerned at all what you might see from a trump administration? >> i think it's a little too early to tell, david. you know, we come from abroad. we're here now. we've been focused on
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integrating the businesses. there's a big election that just went through. a lot has been said. i don't think we're in any position to take a view as to what's going to happen going forward. we think that by and large that the administration's going to do what they think is right. >> net neutrality in the fcc a concern? a help? >> supposedly a help, potentially. i don't know, right? i think, again, we don't even know what the new makeup of the fcc is going to look like. very difficult to understand what the agenda is going forward. we'll have that discussion five months from now. >> all right. finally, dexter, are we going to be talking about an ipo of your u.s. properties? there's some talk about that you'll take sudden link and cable vision and make them a separate entity with its own equity. >> i think we will continue to focus on looking at optimizing our capital structure, right? to the extent we want to continue to do things in the u.s. and expand, it may make sense to have a currency. so that's something that we're exploring. we don't have a set timetable. we don't have a defined plan, but absolutely something that could optimize our capital structure going forward and give us more flexibility.
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>> dexter, we always appreciate the updates and looking forward to getting all that speed. >> i need to plug one thing. it's faber to the home. >> i like that. thank you very much. stay over to you, sara, i know you'll like the ten gig ifs you get it at home. absolutely, david, thanks. let's go to sue herera for a cnbc news update this hour. >> hi, sara. here's what's happening at this hour, everybody. russian president vladimir putin saying he and president-elect trump agree that the less than satisfying relationship between the u.s. and russia needs to be rectified. he added that russia is ready to do its part. fidel castro's ashes began a four-day journey across cuba from havana to their final resting place in the eastern city of santiago. his remains were taken out of the defense ministry, placed in a small casket and covered by the cuban flag to begin the 500-mile procession. three people are dead, three more critically injured after severe weather rolled through
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parts of northeastern alabama. a tornado slammed into a day care center in dekalb county. 25 homes destroyed along with six poultry operations. and pope francis paying tribute to those killed in monday's plane crash in colombia urging faithful to pray for them. he was speaking before a general audience at the vatican. that's the cnbc news update this hour. let's send it over to jackie deangelis with the eia inventory report. good morning, jackie. >> that's right, good morning, sue. the department of energy telling us we had a drawdown in crude oil inventories of almost a million barrels last week. certainly supportive of the move we've seen today, but this move unprecedented really on that opec news that we do have a deal. details of that still murky at this time. what's really important here though when it comes to the inventory report, when it comes to potential supply cuts is what we're going to see in the future. will we start to see demand pick up? will we see drawdowns continue? or are we going to see a price
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spike that ends up allowing u.s. producers produce more and bring us back to a place where we have a supply glut on our hands? that's what the market is really concerned about. certainly we have seen pops like this before sort of euphoric response to the kind of news that we're getting out of vienna today. but those rallies tend to fade as well. so something to keep an eye on here. and also remember some short covering responsible for this move today. not necessarily new net longs getting in here. last point to make, session highs so far $49.12. really key to get over $50 to really show that there's some momentum to the upside on this. back to you, carl. jackie, thanks so much for that. jackie deangelis on a big day, as jackie mentioned. opec making that deal according to reports agreeing to cut production. we're going to head to that meeting in vienna in a few moments. and we'll talk with mohamed el-erian, get his take on president-elect trump's cabinet picks for treasury and commerce. at 11:00 a.m. eastern dallas fed president robert kaplan will join us for an exclusive.
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you do not want to miss that. dow's up 75, just off the highs. back in a minute.
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president-elect trump announcing two major cabinet picks this morning for secretary treasury steven mnuchin and treasury secretary wilbur ross. steve liesman is looking at that and more. >> wall street heard maybe what a lot of it wanted to hear from president-elect's new economic team. steve mnuchin, wilbur ross, both appear to walk back some of trump's most extreme rhetoric from the campaign. mnuchin talked about aiming growth 3% and 4%. not the 4%, 5%, 6% mentioned on the campaign trail. he said the new administration would try to eliminate parts of dodd/frank that reduced lending rather than wholesale scrapping of the new bank regulatory reform bill. and ross said tariffs were a last resort and said trump's trade policy would aim to remove tariff and nontariff barriers to
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u.s. exports, even praised some of mexico's trade agreements. the two even praised fed chair janet yellen. >> i think she dealt with a very difficult situation and did a reasonably good job. i do. >> she may serve out her term, will she be renominated? >> that's a question for her and the president. not a question for us. >> but i will say we have two governor spots to fill and that will be high on the priority list. >> so we'll be looking for who those designates are. the details of economic proposals are yet to come. the key will be the actual policies proposed and those that can pass into law. but for the moment president-elect trump's designees on the economy sound closer to the center than candidate trump, carl. >> all right, steve, thank you very much for that. steve liesman. a lot to watch this morning. probably the two biggest economic picks we have, sara. >> absolutely. and it's going to be interesting to see what those two fed positions come out to be. i mean, when you look at, guys, market moving, you wonder what
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really could have moved the market when it comes to a treasury pick or commerce pick, as far as trump's cabinet these two guys are not as far right as say the hhs secretary, jeff sessions of course for a.g., and they're familiar and from the business world. >> yeah. and that does calm people's nerves certainly in the business community as you say. they're not ied logs, they do have long careers in business. some had thought it would be some time until we saw an alum of goldman sachs again in a senior position in any administration. >> especially with those campaign ads that were bashing goldman sachs specifically. >> yes. >> i mean, wasn't lloyd blankfein in an ad? >> i believe he was. that's right. given the speeches of hillary clinton or the appearances she made at goldman. >> meanwhile a promo for cap lain co -- kaplan coming up, paul ryan has a statement saying i'm excited to work with this strong team, these men together bring decades of experience across a wide spectrum of industries. by the way, steve, sean spicer
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saying apparently we should not expect any further cabinet appointments or nominees this week, although there are four apparently final candidates for state. steve's gone. >> i think we lost him. >> sara. >> yeah, after that dinner, i think it's everyone is waiting for that pick. all right. we've got a deal according to reports. opec leaders agreeing to cut production in a push to end the global glut. oil is on the move having its best day since back in february. stephen sedgwick is in vienna with more. steve, what are you hearing at this hour? >> reporter: sara, they're still in there. that's the point, six hours of deliberations and still in there. so i would be careful some of the details here. headlines we've got a deal of 1.2 million barrels or 4.5% to cut to 32.5 million barrels a day. that is at the bottom end of the range where we thought we had a deal back in september in algiers. incidentally oil price got up to $53 on the back of that.
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still a way to go to recapture all of that ground to the upside. perhaps we haven't yet is there are concerns about those details. couple of them are that saudi will be taking a hit of half a million barrels a day and that iran will be freezing at 3.977 million barrels a day. so freezing just below those pre-sanction levels. but what are the big barriers to getting over this deal? i spoke to the saudi oil minister earlier. listen in. i'm told we haven't got the sound, so let's just tell you -- >> country will have to agree -- >> reporter: and need everybody across the board to -- i'm sorry, i think we've got the sound or have we got the sound? all right. apparently we haven't got the sound. anyway, he said to me we need transparency across the board. we also need to see everybody participate. it has to be unanimous, coordinated action across the board. the interesting thing, and we've heard that in the last couple of minutes there's going to be a non-opec, opec meeting in doha
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on december 9th. that actually not opec will be contributing potentially 600,000 barrels a day to these cuts as well. that remains to be seen whether opec and russia will join in as well. back to you, sara. >> we know you were chasing those ministers down all morning long. saw you earlier on cnbc in europe. stephen sedgwick, thank you. we'll await to see if they emerge from those closed doors. when we come back, alilianz ceo mmd el-erian not to mention donald trump's picks for cabinets, two key economic posts picks announced today. r businesy when growth presents itself? american express open cards can help you take on a new job, or fill a big order
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10:49 am more "squawk on the street" coming up. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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welcome back to "squawk on the street." it is no surprise the s&p 500 energy sector is leading the way. and by a wide margin. this on the heels of reports saying opec has struck a deal. the sector is sector is now on its best day since late september. energy is the first sector now to crack that 20% year-to-date gain. it's up 40% from its lows. the big components driving the sector higher -- chevron, exxon, among others, up more than 2% on the day. sara? >> yeah that was goldman sachs having a big impact here on the dow, which is why it's outperforming. seema, thank you. now back to the news of the morning -- donald trump picking steve mnunchin and wilbur ross for treasury and commerce secretaries. listen to mnunchin on interest rates earlier this morning on "squawk box." >> i think that interest rates are going to stay relatively low for the next couple years. and we're in a period of time of low interest rates and i think we'll stay there.
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and interest rates have come up a little bit, which i think makes sense. and i think we'll be looking at the treasury all different types of opportunities. we'll look at potentially extending the maturity of the debt, because eventually we are going to have higher interest rates, and that's something that this country is going to need to deal with. >> and on that note, let's go out to rick santelli in chicago with a special guest. hi, rick. >> hi! a special guest and a mets fan all in one! my buddy, mohamed el erian, in person. mohamed, comment on that sound bite. >> he's right, interest rates will be lower than they have been in the past, but they will be going up as the market prices in the prospect for higher growth and high inflation. >> now, if he really thought interest rates would go to 6%, i doubt he would have said that on his first major interview, but i do agree, his last statement that rates are going to be higher. let's face it, we made our 1.35 double bottom in july, up 100 basis points since then. there's been a lot of talk, of course, about these picks,
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mnunchin, wilbur ross treasury secretary. these are big deals. but let's look at it in a broader context, as people who read the trump books. there's a three-story house here. first story is the foundation. these are the things that you and i think that these two gentlemen are probably going to deal with first. he's going to have -- the trump administration's going to have a lot of goodwill in their first 100 days. let's go over what he likely will tackle first. >> so, he's going to do tax reform, both corporate and household. he will look again to regulate with a view to deregulate. he will tinker with obamacare. he will have a major infrastructure program, and he will also look to reform the energy. on these issues he can get the republicans that now have majorities in both houses to agree, and he can validate what the market is pricing in so far. >> you know, many take him literally, including the media. so if you bring up obamacare, oh, he's not really changing, he's keeping 26, pre-existing conditions, or when we talk about regs, he's not rolling it
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all back. when we talk about taxes, oh, we're only going to get corporates. listen, low-hanging fruit. he needs to build confidence, no matter which of the issues he does, he's slowly going to work up. now, when we get to the next level, you and i weren't sure about labor market reform. what do you think there? >> this gets more complicated. this stuff has the potential of both promoting growth or taking away from growth. so this design here and implementation here is much stricter. so i agree with you, he will look to build the foundation, move on this, and then start moving on this stuff that's higher up. labor market's particularly tricky, because on the one hand, you want to retool the labor market to make it more agile. on the other hand, you've got to be careful because that's some very difficult -- >> there's going to be moguls. no matter how strategic he threads the needle, there will be moguls there, bumps. >> exactly. and further up is the really hard stuff. that has an impact over the long term, but it's very politically complicated, as is the design element. >> now, we both agree that if this is the growth formula, what
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we really need to do is not look at all the literal issues of the campaign versus the ultimate action, whatever it may be, but the issue is, is that if he brings a positive feeling, which is already priced into the market, in terms of those who backed him, they're going to give him latitude to work his way up, are they not? >> and you have to move very quickly on detailed design and then talk about implementation with the politicians. remember, good policy gets made at the intersection of the economy, markets and politics, and that is where they're going to have to function. >> now, what do you say to people when steve mnunchin is picked -- oh, we picked one of them, okay? we picked a banker. we picked a wall street type or a goldman type. we came away from a two-term administration that had no love affair with the business community. does it really matter? he's a savvy man. wilbur ross has experience. shouldn't we look at the individuals from that perspective? your thoughts. >> yes. i think we judge people by their action, and you judge people by
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their expertise. both of these gentlemen, whom i don't know personally, but both of them bring to the table an understanding of markets, an understanding of how the private sector functions. if they can complement that with people who understand the intricacy of policies, that can be a very effective team. >> okay. now, in the minute we have left, let's talk markets. you know, i am not surprised at all to see the long end leading the way. this really puts a lot of other economies in the box. what do you think about the renzi referendum, italy and mario draghi and the meeting next week? >> i think the renzi referendum will be another example of how antiestablishment movements are gaining traction. >> tea party, brexit, trump. they take the reins away, and that's what's happening globally. >> that is absolutely. why? because we've run very sophisticated capitalistic economies at low growth and artificial markets, and the result of that is people get angry. so, we have the politics of anger delivering the antiestablishment moves, and i think we're going to see that again. >> quickly, with the fed meeting ultimately coming up, is there any doubt in your mind that
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they're going to raise 25 basis points? >> i think it's a virtual certainty. but what i'm looking at is what do they say about the path of interest rates thereafter? what do they tell markets that are still repricing to where the blue dots are? >> you're the best. even though you're a '69 mets fan. my only response to that is the fed can't tell the markets anything anymore, the markets are going to tell the fed. mohamed, it's been a pleasure. sara, back to you. >> that was a treat. mohamed at the santelli white board. thank you. coming up, our exclusive interview with dallas fed president robert kaplan and his take on trump's cabinet picks, his policy plans and the impact on the fed and rates. the dow and s&p are notching record highs. the nasdaq underperforming. it's negative as big-cap tech underperforms. we'll be right back.
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stocks are in rally mode on this wednesday. the dow is up more than 60 points. goldman sachs is good for a little more than 40 of those points alone. energy and financials are the big gainers in today's session. s&p 500 is up about three points. and check out the nasdaq. even as you're seeing record highs for the dow and the s&p, the tech-heavy nasdaq underperforms, down 0.4%.
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microsoft, facebook, a lot of these big technology names which have underperformed since the election and for the month are getting hit today. there's the story of the day, wti oil prices up almost 7%, biggest move higher since february, above $48 a barrel, brent just below $50 a barrel on word of a deal in vienna for opec. we await formal confirmation of that. we await the jobs report on friday, and we're looking at the best month, carl, since back in march for s&p and dow. send it to you for "squawk alley." >> sara, thank you. good morning. it is 4:00 a.m. at netflix headquarters in los gatos, california. it is 11:00 on wall street, and "squawk alley" is live. ♪ ♪


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