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tv   Power Lunch  CNBC  November 30, 2016 1:00pm-3:01pm EST

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to the market, but don't know how long the timeline will be. >> isn't it an indication they're not quote/unquote desperate to sell core assets. >> mistake to rely on the judgment of this company as an ind vacation indication of anything. >> thanks, everybody. "power lunch" starts now. >> welcome to "power lunch." i'm melissa lee. a huge market move topping your menu as the trump rally reaches historic heights. stocks in unchartered territory as the dow and s&p 500 soar to new records. a business man in the white house, sending financials, transports, steel stocks, all sharply higher since election day. we're all over this historic rally straight ahead. do not lose sight of oil. crude a big driver of the market run today. opec members seeing past their differences and agreeing to cut production. right now crude oil up nearly 9%, a big move in years.
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we're headed live to vienna, austria, where the meeting took place in moments. >> i'm tyler mathisen. welcome. donald trump's money team being introduced to the world here first on cnbc. trump tapping former goldman sachs banker steve mnuchin to be his treasury secretary. and aiming a familiar face to cnbc viewers, wilbur ross as his commerce secretary. trump calls him one of the best dealmakers and negotiators he's ever seen. well, we're going to track down their market moving comments straight ahead. "power lunch" starts right now. >> welcome to the show. i'm michelle caruso-cabrera. president-elect trump's new money team fueling today's record rally. steve mnuchin and wilbur ross talking everything from trade to the fed to regulation, right here on "squawk box." but it is what they said about taxes that has gotten everyone's attention. they want to cut the corporate tax rate to 15%. simplify the personal tax code
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and steven mnuchin says the wealthy will not be paying less in taxes. >> any reductions we have in upper income taxes will be off set 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 the middle class, but any tax cuts we have for the upper class will be offset by less deductions to pay for it. >> let's bring in one of the key early advisers of president-elect's trump tax plan. so many ts. joining us, larry kudlow. good to have you here. steve mnuchin says that even though the wealthy will get a cut in the rate that they pay, the deductions are going to be so eliminated that ultimately they're going to write the same size check. >> close. a fair statement. remember, you're lowering the rate, broadening the base, simplifying the code by limiting the deductions in many cases, getting rid of the deductions.
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people hate complexity. that's a really key part going all the way back to the beginning of the year when we were discussing this thing. mr. trump himself, president trump himself said i hate the code, a stack of papers that his accountant s do. >> many people say the math doesn't add up. >> wait until the legislation comes through. that's all i'll say. his point, his generic point is a very good point. and i just want to put a number in here, okay. including the deductions estimated, very hard to estimate this thing, you've got middle brackets, middle brackets in this, running tax cuts, right, 7, 8, 9, 10% for the middle brackets. the very top bracket could be a little higher. could be 11%, i don't know. it depends on how deep they go on cutting back on the deductions. but the reality is, more important, the marginal rates come down, that's your incentive effect. if i keep more of what i earn,
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i'm rewarded, i have an incentive, i'm going to go out and work more hours, i'm going to start a new business, i'm going to invest more. that's the key point. not this stuff about tax -- >> i'm going to offend 100% of our audience right now. nobody understands taxes and here's the problem. i know the gop controls capitol hill. but you still got very powerful players on the left. pelosi, warren, et cetera. will it be possible to sell them the idea that we're going to bring down this top rate for the rich, but don't worry, all the deductions will be eliminated. that is a very difficult sell because taxes are so complex and to your point, michelle, extremely individualized. everybody is different. is this a political sell? can we do it? >> yes. look, other things going on. the key, the heart, the centerpiece, the kudlowian argument for i don't know how many years you heard me say this, get business tax rates down. it is the single biggest obstacle. stop companies moving offshore,
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stop companies putting their cash offshore, get companies to invest. investment has been so bad, without investment you can't get new business, without that you can't get new jobs and wages. the business tax reform is going to be the key to selling this, in a bipartisan way. here me out. the plan right now, between the house and the senate republican leadership is not to use reconciliation 51 votes, they want to use regular order, because they believe, particularly the business component will get democratic support. dems are up -- 25 up for the senate in 2018. of those, seven or eight in trump states. they will listen to this because -- >> i know there are a bunch of moving parts here, a ton of them, we don't really know what ultimately will be in the statute law. but let's drill down more on the question of the deductions. what i understand is that the trump administration to be wants to limit individual deductions to 100,000.
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is that right? or -- >> 100 single or 200 married? >> i don't know. 100 per individual. all right. you tell me. you're the tax expert. >> i don't know what the updated updated updated numbers are. as i recall, god help me if i'm wrong, it is 100 individuals, 200 married filing jointly. that's pretty good. >> then does doing away with capping deductions at $200,000, doesn't mean you're taking away my mortgage deduction or my medical deduction or whatever it is, we're not going there because that would be a very difficult political sell, right? >> that could easily include mortgage deductions on a huge home. if you're talking about the very rich, you could have more than 100,000 -- >> certainly. >> the expanse is going to be capped, yes, indeed, absolutely. >> let's say it is 200,000 per couple is the limit. >> i think that's -- >> will that then allow for what mr. mnuchin says, in other words, there would then be no --
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even if you cut rates way down on the super wealthy, that there would be no -- he describes it, absolute tax reduction for those super wealthy people. >> and a dollar -- and dollar terms. not marginal rate terms. dollar terms. i'm going to -- >> the size of the check they write. >> steve mnuchin knows what he's doing. he worked with steve warren and i for many months writing this thing up, the final, final, final, he's one smart fellow. if he's saying that, i'm going to go with his numbers. remember, you're going to have some witch's brew when it gets to congress, et cetera. but just -- >> newt gingrich. >> to sell his point, to sell his point, okay, the tax the rich democrats, including their defeated candidate will never buy this. they're not. elizabeth warren is not going to buy this. okay. i'm sorry. she's going to lose. okay. she's going to lose. the country wants growth, jobs
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and wages and that's why tax reform is exactly the right prescription. if nothing else, if nothing else people want simplification. one post card, thank you very much. that's where they're driving. >> you bet they do. that was the heart of the reagan tax simplification. fewer deductions and lower rates. >> most top end people who may not get a dollar cut in their taxes have a huge incentive effect because they keep -- >> i want to bring in one of your democratic friends. barney and friend here, let's turn to another focus of the trump money team and that would be dodd frank, steve mnuchin telling cnbc's "squawk box" that dodd frank is way too complicated. it prevents banks from lending. and they plan to take a close look at the volcker rule to boot. let's go reaction from the man that the bill is in part named for, former house financial services chairman barney frank. good to see you.
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i'm sure you just heard the conversation here. let's start with dodd/frank and mr. mnuchin's comments about it. he says that it impedes lending and that that is the real target here to amend dodd/frank, not to scrap it, but to amend it so it is friendlier to lending. your reaction? >> well, first of all, let's say this is just one example of the bait and switch that we're seeing from mr. trump. he was going to stand up to wall street, he was going to take on the big guy, he was going to break up the big banks. but what he is in fact doing is appointing a couple of people who have been legitimately using the law within the existing framework and making it easier on the big banks. not an accident that bank stocks have gone way up. i read today in the new york times how happy traders are that mr. mnuchin is going to be appointed. i think trading is probably -- trading isn't lending.
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there is more emphasis on trading. when you talk about making changes, with regard to the volcker rule, i do think we should make it explicit that banks under $10 billion in assets aren't covered by it. they aren't in fact but they spend more money trying to show that they are. but beyond that, i want to know when he says make it easier to lend, one of the things we have in the law is a restriction on loans being made for home mortgages, to people who are very unlikely to pay them back. the problem we have had recently, going back -- not recently, 40 years, securitization has meant that when you can make a loan and immediately sell it, you don't have the incentive to worry about the borrower. now there was a thought universal agreement that loan standards had deteriorated far too much and that we needed to impose tougher ones. is that one of the things he wants to change. i don't know. another is the question of derivatives. again, not lending, lending, if they can look -- show me things that restrict lending, i would
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be glad to say, well, gee, maybe we should change those. what i hear is complaints, for example, about the volcker rule, the volcker rule is about derivatives. it says, if you are a bank, you should be lending, not doing a lot of trading on your own account on derivatives. the problem with derivatives is was -- the new financial derivatives were unregulated. you had an aig trading in derivatives which told the bush administration in september of 2008 that they were $170 billion short of paying their obligations. and the bush administration said we better pay the debts because there will be a problem. i want to look at specifics, in terms of hurting lending, tell me what it is in the bill that does it, maybe there is something that does. but don't tell me that you're going to go back to derivatives without having the money behind it. >> having participated in the conversation, there were two separate conversations, first was dodd/frank and we're going to look at it and remove the parts that are -- we think
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inhibit lending and then there was a follow-up question, okay, now on to the volcker rule. so something different. larry, you wanted to -- >> i want to ask you, i don't think they want to lower loan standards. i think you make an important point there as you always have. i think one of the things i'm hearing, and i'm not the guy in the transition, i didn't work on the dodd/frank stuff. they're saying that the volcker rule is too complicated. that's point number one. point number two, therefore, barney, allow the banks to hold the companies to have a merchant bank, let them do it, but number three, this is my hypothesis, correct me if you think i'm wrong, you got to have much higher capital ratios and much lower leverage ratios if you allow a merchant bank inside the -- >> let's be very clear. the volcker rule does not involve trading. it doesn't even say you cannot have derivative trades as long
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as it doesn't involve lending. as long as you -- in the house we didn't have the volcker rule. i think it is a great improvement. what we did have were require s that when you're involved in the derivatives, you go on exchanges rather than one-off with no capital behind them. i'm glad apparent i had people are not trying to weaken that. but beyond that, here is what i find interesting. you're asking that we amend this law so that bank holding companies can have merchant banks, which engage not in lending, but in these kind of investment activities. this -- but isn't this the party that had in their platform glass/steagall re-enactment? how is the republican party -- >> i think it backs off. >> excuse me. it backed off. another bait and switch. backed off is -- let me finish, larry. back off is what we hear about a lot about repealing obamacare, building a wall, but in other words, the republican party platform and how about donald trump saying we had to break up the big banks? now you're telling me the
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opposite, we have to let the big banks get bigger by letting them get more fully into merchant banking. that's a legitimate thing to talk about on the merits. but let's be clear what a repudiation it is of the platform he ran on. >> you may be right. >> i may be right? have you not read the platform? >> let me get through this. let me say this, the idea, good idea or bad idea, whether you approve it or not, i don't know all the details myself, the idea is to raise capital standards and lower leverage ratios. that's the idea and it would be dri derivative trading. what steve mnuchin is saying and jeb hensarling, they're saying this stuff is just too hard to parse through, and anyway if we can have higher capital and lower leverage, we can cut back on many of the regulations and paper work that have inhibited lending. >> and lower compliance costs. >> first place, we're not just -- i don't see how this
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inhibits lending when you talk about the drierivative restrictions. we have been pushing for higher capital standards. here's this issue. higher capital standards, they are there in case there are failures. but i would like not to have to get to that. higher capital standards, get into serious trouble. i don't want overall capital standards. we think particular trades, highly leveraged trades, should go on exchanges so that you don't have the failures. yes, if aig had more capital, maybe they could have made up the $170 billion problem they had, but what we shouldn't have allowed that. capital does not solve the whole problem. once again, i would be glad to look at any specific people tell me is hurting lending. i do agree, banks under $10 billion are spending too much money trying to comply with the volcker rule when they don't --
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and i would exempt them altogether. i would also say the 50 billion, i think which gets you into the systemic area, i would be in favor of increasing that. but only if that was a stand alone. what i worry about is that people, the biggest banks, the people who are in fact representative by mr. mnuchin and wilbur ross will use the problems of the smaller banks as a battering ram to get rid of other parts of the bill. so tell me what specific things in that law now inhibit lending other than saying you can't lend money to people who can't pay their mortgages and i'm glad we agree on that. >> great to have you. >> thank you. >> congressman frank of the aforementioned dodd/frank bill. and larry, we'll see you later on in the show. >> merci. >> okay. -- for the first time since 2008, oil rallying sharply as a result. we're heading live to vienna for the very latest. that's next.
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the "power lunch," bob pisani on the floor. several key sectors at new highs, look at energy stocks here, remember, big agreement over at opec here, 13 -- those are not typos, new highs. we have been down 3% in the last few days. busting out here, the other one, banks at new highs here. regionals like zion, big money center banks like goldman sachs, also 52 week highs.
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this is the perfect storm for banks. let me enunciate why they're moving up. we have the facts of higher rates and the facts of a steeper yield curve, great for banks. then a lot of hopes, corporate tax cuts, better economic growth, maybe more lending, maybe we'll get it, but market is acting like that's going to be happening. overall here, the only other group at new highs, some infrastructure plays now, so illinois tool works, new corp., steel stocks. closing out a big, big month for november here, russell 2000, 11.5%, haven't seen that in five years. best performance. same with financials, haven't seen financials up 13% in the last five years. good month overall. a lot better if only tech in november helped a little bit, some of the big names, they're not helping right now. back to you guys. >> all right, bob, thank you very much. despite some long-standing deeply rooted secular and political differences, saudi arabia and iran were able to put economics first. and help opec agree to its first formal production cut in nearly
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nine years. the cartel agreeing in austria to cut daily production by 1.2 million barrels per day. saudi arabia cutting by nearly 500,000. iran will actually increase production. let's bring in steve sedgwick, at the meeting in vienna, with mike rothman of cornerstone analytics. right down to the wire, your guest yesterday, haleema croft, she nailed it, said they would put aside their differences and get a deal done and indeed they did. >> what is really interesting, i've been looking at the screen what is also in here as well is the fact that nonopec will contribute 600,000 barrels a day. i spent a lot of time in the last 24 hours speaking to the saudis during, before and after the meeting. i spoke to the saudi oil minister after if and let's hear what we had to say to me. >> we are extremely happy. we think it is a deal we have been seeking. brings stability back to the
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market, volatility, and it will give impetus for investment flows to come at a healthy level into the market. >> also, he was cautious during the meeting, put after meeting, he said he's really happy. how did this happen? how did all the differences that brian was talking about get put aside and they got a deal? >> at the end of the day, it is really about income and, you know, national production levels being secondary. the saudis wanted a conciliatory gesture from the countries including iran, trying to gain up to the last minute, getting iran to come off the position. but it is about income. and at the end of the day, iran's number they use in the communication is theoretical. >> what about the russians being on board, leaving 600,000 barrels worth of nonopec -- >> in terms of russia, the --
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the issue for them when they signed the deal back in february was in their own interest to see higher average oil price. their production surged, people who look at the data saw this kind of jump up 300,000 a day. that's likely to be the figure that they do reduce by. so if there is no reduction, it won't matter, but if there is any pullback, just going to exacerbate the effect of the opec cut. >> it is brian sullivan back in new jersey. i'm not going to take anything away from this historic deal, not going to take anything away from the 9% jump we're seeing in oil. it is a big deal. however, as you know and our audience knows, oil was higher three weeks ago. it was back above 50 back in july. is the u.s. increase in production, all those rig counts we talk about every week, mitigating the effects of this opec cut because it is not as if oil is at 75 a barrel. still just at 49. >> the u.s. numbers up recently have to do with seasonal
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tendencies. can go back and look at 15 years of data, you'll see normal fourth quarter rise. and that's fine, that's expected. the issue with the u.s., even before the price of oil tanked two years ago, had to do with whether u.s. production was going to be able to grow, really u.s. reduction would grow after 2017. the pullback in prices is the drop in activity means the best days for the u.s. are behind us. >> you and i have been -- between us, 45 years worth of meetings. i can't believe it. they cheat, they cheat all lot historically. they say it is different this time. is it? >> time will tell if it is different. the one thing that is very different, especially when i think about my first meeting, 30 years ago, is back then they were sitting on 15 million barrels a day spare capacity. the ability to cheat, the propensity to cheat was very high. at this point, everybody has got their foot all the way to the floor. the idea of cheating is
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unlikely. the cuts that are going to matter the most at the end of the day from the gulf countries. saudi arabia, kuwait, and the uae. libya is out. nigeria is out, venezuela is out. so you'll get at least 800 or 9 had been,0900,000 of real cuts. >> 30 years, this man beats me hands down. back to you. >> steve and mike, thank you, both, very much. coming up, steve mnuchin picked to be the next treasury secretary. could a big bet he made in the past come back to haunt him? closer look at his business background still ahead. first, big pappy's big new venture in private equity. that story is straight ahead.
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their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t. hi, everybody. i'm sue herera. here's what's happening at this hour. a charlotte police officer who shot and killed a black man at an apartment complex will not face charges. the local district attorney says officer brentley vincent's actions in killing keith lamont scott were justified. scott's family says he was not armed. a fourth person has died from wildfires that have engulfed tennessee. the victim was found at a hotel. earlier in the week winds of up to 87 miles per hour fueled the flames near the resort town of gatlinburg. but thunderstorms dumped much needed rain overnight and that's
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helped to control those fires. the u.n. security council voted to tighten sanctions on north korea. it unanimously approved sanctions that target north korea's hard currency revenues by placing a cap on coal exports. cutting them by at least 62%. and retired boston red sox slugger david big papi ortiz is becoming a player in the private equity game. he and some former players including nolan ryan and barry larkin are launching dugout ventures, a private equity fund that will focus on companies making the next generation of baseball equipment. you are up to date. that's the news update this hour. and now to melissa lee with what's coming up next on "power lunch." yeah, we have a market flash coming up here on "power lunch." to seema mody for what is moving right now. >> it is the divergence in the commodity market that continues to be a big story this month with gold shares now set for the worst month since 2003, down about 9%. the gold etf, ticker gdx, down
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15% in november for -- set for the second straight monthly decline. however, copper continues its rise. up 18% in november, its best month since '09. the move in copper being attributed to more spending on infrastructure, that is expected in 2017, and this growing optimism around china's economic prospects improving. back to you. >> that would make sense with copper. thank you, seema. we told you earlier about these reports about whether or not goldman's coo gary cohn weighing his future at the firm at goldman sachs, seen at trump tower. reuters is quoting a trump transition official saying chief operating official gary cohn is under consideration for white house budget chief and/or other positions. another potential goldman connection to this team, potentially. if he left, he would be forced to -- >> sell goldman stock. >> at an all time high. >> at an all time high. >> and without paying taxes. >> tax free. >> i mean, this --
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>> might want to do it just for the money. >> think of the tax -- some could argue that, you know, with this administration, they could be engineering a massive new fresh leg higher for the financials, he could be missing out on the upside gain on that stock. but i think not paying the taxes lessens the pain of possibly missing out on that rally. >> that's part of the rule that applies to people who have to liquidate. >> he joined treasury. >> you don't have a conflict of interest. >> exactly. the benefit also is if he goes back to goldman sachs and gets awarded new stock, that would be at a higher cost basis. >> for future taxes. >> also reports that cohn could be under consideration for a soon to probably be open fed jobs. >> yes, that is another, yeah -- >> the federal reserve under trump is also going to probably evolve. we have not talked about that. good time to -- >> two governors, goldman's coo gary cohn discussed leaving the firm. you said there was something
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else -- they're talking to me. they looked forward to filling those two spots that are available on the fed. >> two governorships. >> the white house address is 1600 pennsylvania avenue, but the second white house address may be 200 west street. goldman sachs headquarter address. all right, take a look at this stock chart. wow. it is certainly been a november to remember. but what does that mean for december? dom chu, it is all about what have you done for us next? >> that's right, brian. history ends up repeating itself, this sector could be due for a nice pop during the holiday season. we'll tell you which one it is and which stocks will dazzle in december. that's all next when "power lunch" returns.
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welcome back. stocks in unchartered territory with the dow and the s&p 500 both hitting record highs. the dow is higher by 72 points. s&p 500 higher by 3.5. the rally, is it going to continue into september? dominic chu is looking at his crystal ball. >> the crystal ball, if i ever did have one, if one exists, we asked our data partners to look at their crystal ball to look at how historically stocks are performing the month of
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december. so since 1996, the past 20 years, the s&p 500 and dow, they're neck and neck averaging 1.2% gain average for the month, the s&p is a positive trade, slightly more of the time. the nasdaq is the big winner averaging over 1.5% for the month, but it is only positive half the time. the small cap russell 2000, it is one that stands out here, up 3% on average, a positive trade or has been 80% of the time over the last two decades. sectorwise, utilities up there, averaging 2.5% gain. they're positive 85% of the time. and tech is the big laggard, up a third of a percent in average gains less than half the time as well. since 2010, more recently, some individual stock standouts telecom equipment companies, they produce some really big gains. meanwhile, regional banks like key corp., it has been a positive trade each december since 2000, with an average 6% gain and, of course, as always, guys, the caveat is applied
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toward historical data, past performance, and we already have seen a big move higher in parts of the stock market, which you just mentioned, and that may have already drawn forward some of that positive seasonality for december. factor in potential fed rate hike and could be in for a december to remember or maybe even forget given what we have already seen, guys. back over to you. >> dom, thank you. dom chu. what should we expect from the markets in the year ahead? will the trump rally roll on? our next guest says yes, earnings revenue for stocks to -- expects to grow at 8% next year. let's bring in mike ryan. great to see you with -- thanks for joining our show. i have the notes that say you guys have retained your rating on stocks overall but moved to reduce your u.s. equity exposure. what exactly does that mean? are you overweight overall stocks or taking money off the table at this point? >> we're still overweight stocks. our overweights are in the u.s. and in the emerging markets. what we really did in terms of our u.s. positioning, we have
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seen a run in the small and midcap space, we want to take some profits here. what we want to be careful about is this is not a complete pullback, not overruling, and withdrawing our overweight, we're sying that given the market move, we want to take chips off the table, going into year end. >> why market time like that? it sounds like you're trying to market time. if you're bull initiate 2017, because of some of the proposals put forth so far, by president-elect trump, then why would you say trim a little bit here, but 2017 will be a banner year. >> we're saying, remember, on the margin, we're taking some risk off the table. we had this long held overweight u.s. equities and served us extraordinarily well. we think 2017 will be a constructive year. still some uncertainty on the horizon. we'll see a different policy prescription by the trump administration, what they're able to deliver on in terms of legislative solutions. so far what we have is policy priorities, we don't have legislative achievements. a couple of issues that we'll focus on, what they're able to
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achieve in tax reform, in terms of infrastructure spending program and how much relief we get. on the other side, we need to balance that with whether we see this impulse towards increase protectionism and also push back on immigration. >> did you see steve mnuchin this morning on cnbc? >> i did. >> so i see you like financials. what he said today, that bolsters what you already thought, was it disappointing, enough? is it why you like financials? >> our view on financials, we had this for a while, our view on financials is the following. one is, we do see rates continue to reset higher. our view is that the fed is on the process toward rate normalization, and if anything, we'll see the impulse towards somewhat stronger dwroeth and someone higher inflation could actually allow the fed to raise rates at the pace that they have been setting through the fed dots rather than based on market expectations. that's part of it. second, if we start to see the business conditions improve as we started to see already, what this will lead to is better lending activity that translates to a better environment. on top of that, if we get, even
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on the margins, that's a pretty favorable matchup for the financial services sector. >> what are you saying trim? you made it very clear you want to trim some areas because we have a lot of promises, we don't actually have legislative action, i would think financials fall squarely into that category. and yet we had mr. mnuchin come on cnbc this morning, really hitting home on a couple of things that could be very beneficial for financials, not only on the regulatory side, but also the possibility of issuing longer term u.s. debt which would steepen the yield curve. >> in terms of where we have taken position off, we have seek a run-up in small cap stocks. what the big surge has been since election day, you had double digit gains in small caps. so we have trimmed our positioning. in terms of holding our position, even though there is a question of how much we'll be able to deliver in terms of regulatory relief, we expect to see some progress in terms of the delayering of the regulations. we see a pathway towards higher rates. what we see is if we're right
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growth, we're -- a new trump administration could add a half a percent of gdp. if this leads to a deeper impulse, the fed will continue to reset at a pace they have defined as about at least 50 basis points for next year, but maybe even higher. that's pretty favorable for finances. >> mike, thank you very much. mike ryan, ubs, appreciate it. carrier keeping a thousand jobs in the united states after striking a deal with donald trump. which companies could be taking a seat at the negotiating table next. plus, the single biggest threat to u.s. jobs that donald trump really hasn't talked much about. that story straight ahead. s my . this is where i trade and manage my portfolio. since i added futures,
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if you're not paying attention to shares of fannie mae and freddie mac, you need to be. fannie and freddie are both up more than 40% right now. back over 4 bucks for first time since the financial crisis. the reason, the aforementioned steve mnuchin saying that the government needs to end control over fannie and freddie. remember, guys, they took control of fannie and freddie after the financial crisis. the current president, president obama, said the government needs to continue to control them, but the incoming treasury secretary saying, hey, these should not be under government control, the market likes the fact that these may be returned to private ownership, those are whopping stock moves. already, now that carrier reached a deal with president-elect trump to keep jobs here in the united states, which companies could be next? phil lebeau is live in chicago with more. >> we reached out to a number of companies that have either publicly said or indicated they're moving plants or jobs down to mexico, plants that are -- jobs here in the u.s. here is what we heard back from
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some of the companies. nobody has been contacted by the trump administration, rexnord bearings, it is likely moving production to mexico. cardin, this is a privately held large auto parts supplier in philadelphia. 1300 jobs being shipped to mexico. it will still keep the plant in philadelphia, but it will be smaller and high tech workforce there. it has not been contacted by the trump administration. lmi aerospace. this is an aircraft parts supplier in wichita, kansas, it is shifting some of its production to mexico as it phases out that plant in wichita. it has not been contacted by the trump team. mantwalk food services, closing a plant. i talked with a treasury for the company, he said this is about removing excess capacity globally, some is in mexico. it has not been contacted by the
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trump team. and then you have the auto industry. keep in mind that mexico exports 2 million vehicles or they did in 2015 to the united states and canada. that's the bulk of where the exports go to. nine of the last 11 new auto plants built in north america were built in mexico. we talked about this for some time. ford has said it is not changing its plans to move production of small vehicles to a plant in mexico. so, that's just a brief mention of some of the companies that have some plans to move production to mexico and so far none have been contacted by the trump administration. back to you. >> very interesting list. phil, thank you. to sue herera with breaking news. >> we told you earlier that manhattan u.s. attorney bharara was meeting with trump. they just finished their meeting
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and the u.s. attorney came down to the microphones and here is what he had to say. >> president-elect asked presumably because he's a new yorker and is aware of the great work that our office has done. we had a good meeting. i said i would consider staying on. i agreed to stay on. i have already spoken to senator sessions who is, as you know, the nominee to be the attorney general. he also asked that i stay on. so i expect that i'll be continuing the work of the -- that's all i have. thank you. >> so he made it official, he's staying. usually when you get a new administration in, especially one of a different party, they usually try and appoint their own attorneys and this is an interesting situation because, one, as mr. bharara just
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mentioned, he had a lot of success. it is interesting he's going to be staying on. back to you guys. >> very aggressive in prosecuting insider trading cases and has won more than he has lost. sue, thank you very much. we're going to take a quick break and come back and talk jobs in the trump administration. this game and the returns i get out are measured in reps, huddles,bright lights, competition and games played. at td ameritrade we believe the best investments are the ones that matter most to you. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan.
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president-elect donald trump puts much of the blame for job theft on china and mexico. but one investor says there is a bigger culprit in an op-ed for fortune magazine titled now donald trump can bring jobs back to america. dan arbis writes, jobs aren't being replaced by cheaper ones somewhere else, they're being eaten by microchips and smart software, executing ever more sophisticated tasks without human intervention. dan, thanks for joining us. this has been something that brian has talked about several times on air. and we all have. as you look at the future of employment, just sum of your argument here that it isn't china or mexico or trade
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policies that are the major threat to employment. it is automation. it is artificial intelligence. >> first of all, ty, good to see you again. i think the first time we talked live was about 22 years ago. let me cut to the chase as quickly as i can on this. donald trump has won an enormous man date from the public. he needs to make the voters feel great again. he needs to address the anxieties that have been identified, specifically voters in securities about employment and their physical safety. okay. voter insecurity about the economic prospects is why do i open the tv and hear the president of the united states say unemployment is 4.9%, look what i did to recover the economy since the financial crisis, put my family doesn't have jobs. and the enemy is not open trade.
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when we talk about make america first, we're not going to make america first by erecting trade barriers and inhibiting the free flow of commerce between countries. and the enemies in this battle to create employment opportunities are no longer the countries where physical labor has migrated like mexico and china because they're being disrupted by the same force which is the penetration of robotics and sophisticated software that are displacing entire categories of workers. >> you conclude your article in fortune by saying donald trump has the chance to be the greatest dealmaker on the most important stage with the highest stakes in generations. what is the deal he needs to make to address the issue that you isolated? >> okay, there are a bunch of deals. it needs to start with the correct diagnosis of the cause that we have seen of people's anxieties. which is forget about china and
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mexico, that's 20 years ago, decades ago, focus on the problem, get the analysis right so you get the right prescription in a policy agenda. so the deals to make are convene, convene the best economic minds in the country who have taken the position, and i've been part of the conversation, the background for at least a decade now, the position that has been taken by the economic establishment is don't worry about it, in every previous technological transition in the economy, from farm to factory from factory to services, new jobs have been created. people maintained productive engagement in their lives that have paid the bills. no one i know has been able to identify exactly what kinds of jobs are going to come for even well educated stem students who are experts in computer coding because of the very nature of this transition is displacing
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the need for human intervention. >> this time it is different. in the past, dan, i think to your point, we were talking about simple automation, the robot arm moves over here, lifts something and puts it over there. now we're talking about thinking. you can buy something on amazon, goes to a warehouse, a robot removes it, puts it on a driverless truck, takes it to another warehouse, where a robot moves it and puts it on another truck and it is dropped at your door. how does donald trump or anybody fix that? >> it actually goes further than that. it is not just repetitive tasks, labor that is being displaced. it is increasingly sophisticated things like grading college exams or verifying new microchips to make sure they don't have any bugs, which requires you to run hundreds of different scenarios on the hardware. >> how do you fix it? >> we convene a panel of experts and think hard about what types
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of jobs can be created and if we conclude that there is going to be an absolute decline in employment opportunities, we need to think carefully about how are we going to get money in people's pockets to drive the consumer economy, how are we going to make productive use of people's time when in aggregate you need far fewer employees and that's going to bring us smack into the economic issue of the generation, which is hold on a second, who is getting wealthy from this phenomenon? shareholders of companies who are enjoying the efficiencies and margin improvement and the innovators who are -- >> getting rich. >> getting rich. that's a very small number of people. so what are we going to do and the temptation is to go robin hood. take from the rich, give to the poor. that's not a good thing. if you're not going to do that, we got to think of other ways to get people money in their pockets, universal basic income
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is one idea. minimum level of income funded by the government, add -- >> we got to run, dan. >> let me finish. add that to the list of demands on the government which are social security, national security, infrastructure investment, you have a big fiscal challenge coming. >> we'll take a quick break and be right back.
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i'm hampton pearson live at the federal reserve with the latest federal reserve beige book headlines. economic activity continued to expand across most regions at a moderate pace. demand for manufacturing products was mixed with a strong dollar cited as head winds in a few districts. majority of districts reported higher retail sales, especially for apparel and furniture. a slight upward pressure on overall prices. single family housing construction starts were higher in majority of districts, activity in nonresidential real estate expanded in many districts. new motor vehicle sales declined
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in most districts. a tightening of the labor market conditions was reported in seven of the 12 fed districts. farmers generally satisfied with this year's harvest, but low commodity prices continue to weigh on farm income. the energy sector is improving slowly across many districts, but there was an oversupply of oil and gasoline in the atlanta district. turning now it banking and finance, credit investment demand varied widely, new york, philadelphia, st. louis, strong commercial credit and loan demand. in atlanta, some small businesses had trouble getting credit. back now to wages and prices. wye wage growth remains modest as it has in the last four beige book reports. >> thank you very much. for reaction now, let's bring in steve liesman, also with us is cnbc contributor larry kudlow and bob brown, chief investment officer with northern trust global investments. steve? your response? >> i think -- 3.2% in the third
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quarter and the question is is the economy accelerating or is this a snapback from some of the earlier weakness? i read this beige book, i don't see the evidence of an accelerating economy. i see a economy muddling along. i guess i would call this a 2-ish beige book, i don't see 3%, i don't hear the economy firing on all cylinders. my take has been that the 3% number is much more of a snapback from the earlier weakness we had earlier this year and we're probably along the lines, i use our cnbc rapid update, 2.4% feels right for the fourth quarter. no need for the fed to jump out and get going, get its socks and shoes on and get to raising rates right away. >> the economic challenge facing the new administration, unlike 2009, when things were not going well in the economy, the new president comes in with last gdp
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print of 3%, whether borrowing from the past and bringing it forward, beside the point, stocks are at all time highs. house prices never higher than they are today. not necessarily in inflation adjusted terms, unemployment by any measure is close to -- you can quibble, close to -- below 5%. pretty good. how do you make it better? >> got to look underneath the hood for a lost the stuff. for example, this bizarre bulge in soybean exports which added a percentage -- >> i haven't been paying attention to that. >> i know, but -- >> all over it. >> beans. >> you're ahead of the curve. >> educate me. >> steve liesman is a great -- >> it may have been 1% of growth. >> look what i've done. i said one sentence and everyone is jumping around. this is good. it wasn't as good as you think.
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second point, business investment. equipment spending is still down. third point, today's pc report, not -- below expectations. i don't know. i think housing is doing better. i absolutely believe in that. i think overall you're still looking at about a 2% something economy, maybe a little less, maybe a little more. the whole key to this is to spur business investment, new business startups, those are your job creators and those are your wage creators. so i think these numbers are painting a picture that is actually not as good as it really is when you look under the hood. >> can i -- >> not as good as when you look under the hood or better than when you look under the hood? >> worse when you look under the hood. to me, business is everything. you can say consumer spending is 7%. that's misleading. you look underneath that hood, business to business spending. it is supply chain spending, that is not doing well, but one
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hope, you had a positive, profits number, in the gdp report. >> bob brown, i want to get your opinion on soybeans. no, i want to get your thoughts basically on what you just heard larry, steve and from the beige book. how good are we right now economically? >> well, the beige book tells us what we already know. backward looking data. we think what is important is the regime shift that is taking place since the trump election. that is a transformational event for the markets. we think it will be similar first year of abenomics. we are currently in an okay economic environment, but the potential for a major shift in direction and trajectory here is quite high. we're -- the pro growth narrative we have seen since the trump election, we think only accelerates and continues, and so we immediately -- we were already overweight risk asset,
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and -- >> the progrowth agenda, the author is sitting to my right. he's been the guy who from the very start, and one can argue, larry, one can argue that the reason mr. trump won was that he was all about growth. >> i think that's a key reason. >> and there was a deficit of any rejoineder on the other side. >> lots of people contributed to the economic tax cut. >> i know. let me flatter you. >> bob is -- just on the investment side, bob is right. there is something in the air called growth and it is called hope and it is called optimism. we almost have seen a sea change. take a look at the consumer confidence numbers that came out a couple of days ago. this is extraordinary. the bulge in consumer confidence, particularly -- this is extraordinary, 20, 30 and 40
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point increases in the rust belt states immediately following the election following the survey. i've never seen anything like it. so i just want to echo bob's point. the only thing, bob, let's not get ahead of ourselves. i've been through the legislative presidential grinder and we don't always get what we want. >> steve mnuchin said this morning they were targeting 4% growth. at least 3% and 4%. do you believe them, one? two, is that what this market is pricing in or is it getting ahead of itself? >> i don't think it is pricing in those types of levels. if we see 3%, that would represent a big change from the pre-election consensus of more of the same 1.5 to 2% gdp growth. overemphasis on quantitative easing. now what matter is the politics, fiscal stimulation, and supply
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driven economic growth. it will be a reaganesque contribution to economic growth. >> he gets it -- >> is that larry? >> he got today's nobel prize, bring him back, give him a medal, i'll give you the $100,000 with it in gold. >> lots of corona. >> i think one or two quarters next year, 3% growth is meaningless. i think what you want to be really careful about is you stay away from tyler's question had a really interesting premise in it, which is that the economy is doing okay now, it does not need short-term stimulus. what it needs is a change to some of the critical dna when it comes to investment, when it comes to some of the regulation in the economy. >> like corporate tax reform. that's long-term. >> the sugar high, i can give you two quarters of 3% growth next quarter like that. >> you're disagreeing that bob brown was saying we don't even have to get that far. >> everybody keep our eye on the prize here.
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the prize is not two or three quarters of real gdp growth. the prize is -- 3% change in the potential growth of the economy. structural change. >> i got to stop it i'll say this, you give me corporate tax reform along the lines mr. trump proposed, i'll give you a 4% to 5% growth rate for the next half dozen years. okay. it is not just fiscal stimulus. it is called changing incentives, which is what drives the economy. >> okay. let's take this off camera. >> we'll see -- we'll start to see 3% growth in the wake of the type of changes you're calling for. we agree that corporate tax reform is on the table, it is going to happen. it may not be 10% or 15%, but even 25% with less regulation, those are powerful catalysts for getting the economy going. >> we just talked about the changing nature of the future of
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work with dan arbis. >> two nobel prizes. >> kudlow prize, thank you very much. oil near the highs of the day up 10%. the s&p 500 just turning red here. we're down by just about one point at session loews. bob pisani on the floor of the new york stock exchange. reflation trade happening. weakness in technology. >> and the important thing right now is is it worth paying the prices for stocks? the market is expensive now. we're near the highest levels we have been in a long time. is it worth it? should people pay up for these kinds of prices? what happened is the market has levitated itself into believing that we're going to get a significant expansion in earnings in 2017. now, if we do get the economy improving, if we get the tax
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cuts, get the fiscal stimulus, if we get reregulations reduced, that certainly will have an impact on the bottom line. on the revenue side, not just cost cutting, on the revenue that will justify an expansion of multiple, we can be trading at 18, 19 times forward earnings. the problem is, there is no evidence that happened yet, no change at all in 2017 earnings. nobody is changing their numbers. i know the market believes that somehow this is going to help things out, but so far we're not seeing it. i think the market is a little expensive now. >> from stocks to what is going on with interest rates, rick santelli is tracking the action. steve mnuchin saying he thinks interest rates are going to stay relatively low for the next couple of years. >> that is a relative term. don't think we'll see 5% or 6%, but a three handle is possible.
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we're up two on the day, no response to any of the beige book. up 8 on 10s. 8 on 30s and the dollar index is up two-thirds of a cent. you can talk fundamentals all you want. there is plenty of investors who want to take the place of selling investors. treasuries, stable range, doesn't look like it will give ground and if you factor in atlanta fed gdp down from 3.6 to 2.4, that puts all four quarters at 1.95 for the annual gdp. back to you. >> all right. we'll watch for that number. thank you. donald trump making two new important nominations to his cabinet, wilbur ross and steven mnuchin to be his top money men. but is there something in the business history that may work against him? we discuss coming up. as we head out, look at some stocks hitting new highs on the record-breaking trump rally. fedex trading at all time high
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welcome back to "power lunch." i'm seema mody. a historic month, bank stocks on track for best month ever. the spider bank etf, kbe, up 18% in november.
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vastly outperforming the broader s&p 500 index. and 61 out of the 64 components are up 10% or greater this month. bank stocks surging after president-elect donald trump indicated he will focus on deregulating the financial sector during his term in office. the prospects of a fed rate hike providing a lift. the best performing bank stocks, larger name this month, bank of america, up 26%. >> thank you very much. donald trump with two more key announcements to his team, by now you probably heard the money man wilbur ross for commerce secretary. and steve mnuchin as treasury secretary. cnbc viewers probably very familiar with mr. ross, he's been on cnbc a lot, but mr. mnuchin a little more of a mystery, i suppose. very well known in his own right. eamon javers is at trump tower in new york city with more on mr. mnuchin's business background. >> very rainy trump tower here in manhattan. we also saw preet bharara stop
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by and talk to reporters. he said he has been asked to stay on as the u.s. attorney here. that's an interesting pick by the trump team. he's known as the sheriff of wall street, but also got his start going on capitol hill as the chief council to senator chuck schume, a democrat. he's known to be on the democratic side of the aisle, an interesting pick here by the trump team. mnuchin, we're learning about today, a goldman sachs figure, some background on steve mnuchin. he was a trump finance chair during the campaign, helped raise money to coordinate fund-raising events and that sort of thing. spent 17 years at goldman sachs and helped finance avatar and x-men and ran a credit fund under george soros, involved with the one west bank group as well. and hank paulson had some good things to say about mr. mnuchin. here is what hank paulson said.
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i think steve mnuchin would be an excellent choice for treasury secretary. he is very talented. he knows,0 s how to bring peopl together and get things done and has a working relationship with the president-elect. we saw gary cohn here today. that's an interesting conversation to have, he's somebody who is known as a democrat, but donated a lot of money politically to republicans. there is some speculation he might be under consideration as budget chief under a trump white house. we'll watch and wait for that one as well. clearly goldman sachs having a moment here today at trump tower. >> and had many. thanks so much. will steve mnuchin's actions during the financial crisis cause problems during his confirmation process? let's bring in elon muhi, covering the story for the washington post this is related to the investment in indymac,
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the troubled bank, back during the financial crisis. correct? explain. >> steve mnuchin led a consortium of investors that purchased indymac from the fdic in 2009, about $1.6 billion for the portfolio of loans that previously were held by indymac. and then he was chairman of the bank for several years until the bank was later sold to cit there are two issues that could come up during his confirmation and democrats are already beginning to raise, which is, one, the bank is still receiving government bailout money, under the terms of the agreement with the fdic, the fdic would cover a certain percentage of losses on the loans that mr. mnuchin and his investors purchase. >> beyond a certain level. >> they're covering about 95% of the loan losses on that portfolio of loans. that's going to be continuing through 2019. you have a situation where someone who is donald trump's pick for treasury secretary, you
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know, potentially being involved with a bank that is receiving government bailout money. he still sits on the board of cit, large stake in the company. that's one area that is sure to draw some fire from the from advocacy groups as well. >> so he was asked about a couple of these things this morning when he was on cnbc. let's just play his response so people can see it. >> one of the most part aspects of my career was buying indymac during the financial crisis. we bought it from the government in a highly competitive six month auction. and we saved a lot of jobs. and we created a lot of opportunities for corporate loans. now, one aspect of that is we bought the worst mortgage portfolio in the history of
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time. about 30% delinquent loans. all the loans we unfortunately had to foreclose on, we didn't originate those, those were indymac loans. and the deal, when we merged with cit was the first bank deal to be approved post dodd/frank. we went through a one-year comment period with the fed, the same community groups protested against the deal. the regulators looked at the deal. and thought it made sense. >> so that's a little bit of a headline of the testimony we might see at some point, right? >> yeah, that's exactly right. there is two ways to look at this, right? as steve mnuchin, is someone who profiteered off the housing crisis, and made off with millions and millions of dollars while others lost their homes, or, you know, is he someone who as one of -- someone close told me, rode in on a white horse and saved a bank that would have failed otherwise. two conflicting narratives, two sides of the same coin, but you're going to see be part of the debate as he heads to confirmation.
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>> there is some talk that steve mnuchin wants to remove fannie mae and freddie mac from government control. those stocks are up more than 40% each just today. how do you think that is going to fly on capitol hill? >> treasury is still overseeing some of these home modification, home refinance programs that were started under the crisis. so there are some -- i don't want to call them conflicts of interest because if he sells the stock, cit doesn't have one, there are some overlapping interests that has -- and because he's not been a political official previously, we can only look at his business background to understand the perspective he might bring to the job. >> thanks so much. we appreciate it. >> no problem. >> so she was talking about the criticism that already exists. elizabeth warren is -- >> did you read that? here it comes, baby. >> steve mnuchin is the forest gump of the financial crisis.
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he participates in all of the worst practices on wall street. it goes on and on and on. >> forest gump was well loved by everybody and incredibly successful. >> i could watch that film every single time. >> one two of movies that makes me cry. >> she was complimenting him. >> no. t coming up, amazon's big bet on the cloud. it has been a wild month, transports in high gear. united continental up almost 25%. avis up. we're back in two. out your medi, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis.
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the overall markets have been in rally mode, shares of amazon.com have been left behind. they're down 8% this month. and while you probably think of amazon as a retail site, biggest source of profit, not revenue, profit, is its amazon web services division. deirdre is live in las vegas where she spoke exclusively with the amazon web services ceo. amazon's cloud business accounts for 10% of revenue, as you said, its entire operating profit. so in that exclusive, i sat down with andy and he said this is just the beginning and it is a long-term bet.
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>> i don't think there will be one successful company in this space, but i don't think there will be 30. this is a space where scale really matters and breadth of functionality matters. i think the opportunity is large and it is one of the reasons why we often say that we think the u.s. has the potential to be -- >> amazon has a commanding share of the cloud market, but analysts say that others like google and microsoft could challenge amazon's dominance, especially as the focus moves from infrastructure and price cuts to applications. what can the companies actually offer in the cloud. government spending is also a key area that players are competing in. but given president-elect trump's very public twitter spat with jeff bezos earlier this year, i asked if he was worried that that could hurt amazon's prospects of winning government cloud business. >> i don't think it is going to be an issue. i think amazon has been around now for about 21 years at this
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point. we had several presidents that have been at the helm during that time. our strategy doesn't change depending who is the president. we will continue to listen to what customers want and deliver the right long-term customer experiences. we expect the same to be true here. >> now, you can check out more of that interview on cnbc.com. we talked about some of the products offered at the event here. as well as prospects in china and plenty more. so catch up on that. back over to you. >> thank you very much. a huge jump in oil prices today as opec may actually make a deal to cut output. looks that way. we'll get the closing price and some advice on how to make money off this news when "power lunch" returns.
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i'm sue herera. here is your cnbc news update at this hour. nancy pelosi has been re-elected to an eighth term as house democratic lead, beating representative tim ryan of ohio, a seven-term lawmaker who two weeks ago launched an upstart bid to lead the house democrats. here is ryan's reaction. >> i think quite frankly we got
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the message out we wanted to get out, that's as democrats we need to talk about economics, the issue that unites us, many of you heard me say this a million times in the last two weeks and i believe it in my heart, if we win as democrats, we need an economic message that resonates in every corner of this country. netflix users can now download several shows and movies to watch off line. the company says the feature is available for phones and tablets on android and ios by updating the netflix app. the national highway traffic safety administration is proposing a rule that would require automakers to place labels on sun visors of all new vehicles. why, you ask? because they want instructions there on how to file safety complaints. that's the news update this hour. back it you, melissa. >> thank you very much, sue. 90 minutes until the closing bell. stocks now are mixed. dow maintaining its gain of 36 points, but the nasdaq and s&p
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500 in negative territory. the s&p 500 at 2203 now. a big move in oil today. let's get to jackie deangelis for the closing trades. >> good afternoon, melissa. it was remarkable what we saw in today's session, near 10% pop in oil prices. session high, $49.90. ever so close to the $50 mark. this all came after we got the announcement that there was going to be an opec deal earlier this morning. those gains strengthened throughout the day as more details came out. opec telling us they'll take production down to 32.5 million barrels a day, a steeper cut than expected. and previously announced. moren this a million barrels. we had told you if the market gets that, it is going to be very excited about it. but, of course, there are some questions now. are we going to see some of the members that agreed to this cheat because they don't really want to participate? will the saudis have to shoulder this alone? will this drive the price up, get the u.s. shale producers to pump, and really push the prices down in effect? a lot of variables here, brian.
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back over to you. >> jackie, thank you very much. that move in oil that jackie was just talking about having a huge impact on the oil stocks. you hear us reference, folks, let's go to our screens. this is what we're talking about. this is the screen from my laptop here to show you the big moves in energy. you can see, the line that i want you to focus on is this one right here. that's the single day change. those are the changes in percent today. i got them broken out by big cap, whatever. marathon oil, it is up 21% today. the week to date gain is much less, they had a rocky first start to the week. still, 21% in marathon today. hess, 14%. conocophillips, up 10%. the biggest money, however, this is pretty big money, the biggest money is made in some of the midcap names that had been heavily shorted. not saying this rally won't last, but gains like this don't come every day. some of the more heavily shorted names are seeing the biggest move up as everybody is
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scrambling to cover. let's take a look here. this is the booken stocks i follow. look at whiting petroleum, it is up 29.5% today. today. unbelievable. oasis, up 27%. wpx energy, up 20% as well. i'm going to scroll through, don't mind the names. keep the trend. green, green, green, green, green. a lot of green on the screen here, almost every single oil stock, minor or major, is higher today. many by double digits. how do you make money in this energy market now? that's a big question. marathon's ceo on "mad money" tonight by the way, rob thumble with tortoise capital and joins us now. i was trying to show the viewers the magnitudes of the gain. this will no doubt interest some retail stock invests near the oil stock market. should it? because these gains are not sustainable of this magnitude. do you agree with that?
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>> we agree and then some, brian. the table is really set now for the energy sector. one big uncertainty is removed off the table. that's what is opec going to do with oil prices? there say cut in production. we know oil prices will be stable. now investor can focus on what is important. less technicals, more fundamentals. production growth is set in places like the permian basin, you have eog resources that will grow their production 15% to 20% per year between now and the end of the decade. you take that production growth, you had a little bit of price appreciation on there, and really accelerated cash flow growth. >> okay, okay. i hear everything you're saying, i know it is one of your favorite stocks. i got to push back. everybody is all happy about 49 and change in oil. let's not forget, a, oil has been above 50 a couple of times already this year and these stocks are suffering. and, b, the fact we're not at 50 with an opec cut of this size says to a lot of people that there is too much oil still in
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the world. why is 49 good on the way up, seemingly, and terrible on the way down? it is the same price point. >> well, it is more of stability going forward. i think that's really what's key here. we know that at this point, you know, i think last time i was on with you was on the 30s, and oil is probably going to $50 by the end of the year. we're at $49.90 and we're probably going higher from here if opec adheres to the latest production cuts. >> so are you happy enough with the current balance sheets, the way the companies have cut capital spending by 20, 30, 40%, they call it the new world, the new paradigm, whatever phrase you want, are you happy with the eogs of the world, their balance sheets are good enough that you want to own these stocks even if oil stays between 45 and 5 bubs for the next couple of years. >> absolutely. so companies in the permian basin in particular, that's where you see the combination of
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double digit production growth between now and the end of the decade and that coupled with the increase in price has been beneficial as well. other stocks that benefit as well. energy infrastructure stocks, great place to be. interest rates are just talking about it, they'll stay low. got really healthy dividend yields and a lot of energy infrastructure stocks as well. >> your name is eog and williams. rob thumble, a pleasure, we'll see you soon. thank you. >> from surging oil to the surging dollar, which is up today after hitting a 13-year high last week, joining us is mark astly. i want to talk about the dollar, of course. but first, steve mnuchin, president-elect donald trump picked to be his next treasury secretary was on "squawk box" this morning on cnbc. he said that they would be willing to label china a currency manipulator if they -- if they examine the skaexaminat and they think that's what should be done.
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>> that would inspire animosity. last year we had a big move in the -- that was a risk off event. and such the beginnings of some sort of trade war with china would very likely to be a risk off event. there are a number of steps to go through before that happens. three criteria to label a country a currency manipulator. bilateral trade, percent of intervention and the trade service. and the question is whether you carry that through. >> we're showing the chart of the dollar which has been on a huge run since the election. how much more can you get out of here? how would you trade this at this point? >> i think strategically we think this is a profound change in policy. can go a long way against both the market currencies and emerging. why is that the case? we're coming into a policy framework in the united states which is positive for the currency, simply tight monetary policy or tighter and easy fiscal. if you remember 35 or so years ago, the dollar had its biggest
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bull market in history, founded on exactly that. we think this could be a strong move in the dollar, higher from here. >> so listen to what you told us the day before brexit about the pound and then i want to see where you think it goes next. >> if the pound is at 149.50 and the uk votes to leave, where does the pound go? >> it goes way below last week's level, to 130 initially and may go further still. >> it hung out at 130 for a long time until the election. now talking about the 120s. where do you think it goes, dollar versus the pound? >> now around 125. we had a big decline already. if you look in the next three to six to 12 month period, it goes below 120. the dollar is king here. against both europe and the yen. pound will still suffer. >> mark, i'm curious, how are you positioned going into the italian referendum, specifically in the euro? >> in the euro, we're concerned about political risk, about this
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weekend, as you rightly say, renzi is likely to lose, could he lose his job? yes. further risk premium built into the euro. we think there could be further pressure. the next year we have the french presidential elections and marie le pen if she gets in, that would further undermine the euro. the political risks are high here. we think that also lends itself to a dollar rally. >> a dollar, looking at 106 now on the screen. >> i think we're sitting here this time next year below -- >> europe is getting cheaper. >> let's go to europe. >> to london. >> thank you for joining us. appreciate it. >> you're very welcome. the s&p 500 hitting a new all time high today. we can copy and paste that into every tease in the last 30 days. new all time high. industrials helping to push the index higher. now the second best performer year to date. here is the thing, you know what has happened. you want to know what's going to
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happen. can you still make money? that's trading nation coming up. plus, a guy steals more than a million and a half dollars of gold off the back of an armored car. not the start of a joke. it is a true story. and the full story when "power lunch" returns. ♪ ♪ is it a force of nature? or a sales event? the season of audi sales event is here. audi will cover your first month's lease payment on select models during the season of audi sales event. (bing)
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check this out. a man steals a million and a half dollars worth of gold off the back of an armored truck in new york city. you can seat man, he's lingering around the truck, and when both of the guards leave, not a good idea, he swoops in and grabs a bucket. that bucket was full of gold flakes. they weighed about 86 pounds. and the man is seen on the other cameras putting it down and then re-adjusting how he's carrying it. gold flakes are heavy. this happened in september and the individual has not been caught. police believe the man and the gold are now somewhere in florida. there he goes. if you know that man, get in touch with the nypd. >> if you know that armored car company, cease using them, leaving the back of the truck open with nobody nearby. >> he had to know what was in
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there. you don't just go pick up a bucket. >> a leprechaun armored car agency. filled with a pot of gold. >> a pot of gold. >> time for trading nation, don't you know? traders trade better together. and let's look at the big rally in industrials. they are hitting a record high today, like so many other groups. craig johnson, zach carebel. fill in the blank is hitting a record high today or this month. what is your take on industrials, big, slow growth? is this overdone at all? >> it is another example of markets trying to price in end points anticipating x trillion dollars of infrastructure spending. let's throw that out there. that's why you have names like nastak up, deere up, and some industrial metals. they're trying to figure out if all this spending materializes, where does that go, how does it go? it is an indiscriminate let's buy all the names. and it may be that these names
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in fact do quite well from the next 18 to 24 months of potential spending in whatever form. i don't know that there is another, you know, 35% there, doesn't mean that they're going to pull back, but they definitely are anticipating a lot. >> krcraig johnson, all of us he 401(k)s or 529s, we like stocks going up. i see the big caterpillar, not knocking any company, up 15, 20, 25%, i'm thinking the market can get ahead of itself. what is your technical take on where we are? >> well, brian, let's look at the xli chart i brought in as five-year chart, i go back and look at this chart, i can see two double bottoms that got put in on this chart over the last year or two. also point out that you had a little short-term pullback. that short-term pullback really was confirmation of the price channel that was made over the last couple of years, we pulled back, retested it, moved higher.
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everybody talks about this kind of 9% move in november being extreme. it is not in the top ten moves, advances on a monthly basis, go back and look at this etf throughout history. so from our perspective on the chart basis, you had another 5%, 6% upside from here with this particular etf. >> okay. >> go ahead. last word quickly. >> i would just say, look this is driven by an expectation of a macro event. whatever the technicals are, just be careful of this was a momentum trade based on an anticipation of something that hasn't yet happened. i like a lot of the names but be careful. >> craig more optimistic on the chart side. zach says be careful. thank you, both. for more trading nation, head to our website, trading nation.cnbc.com. we're back after this. now the latest from trading nation.cnbc.com and a word from our sponsor. >> i'm often asked what percentage of a portfolio should be traded? well, regardless of how small or
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s. welcome back. financials flying since the election. steven mnuchin is here to talk about bank business. >> we've been in the banking business and we know what makes growth. 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 prevents banks from lending, and that will be the number one priority on the regulatory side. >> so is it too late to buy? jason, great to have you with us. you pare off what mr. mnuchin and what mr. trump has said, and i would suspect you're the most
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realistic on this space for many, many years. >> i'm a lot more popular, but it's a lot more fun when the stocks are going up rather than going down. prospects for higher fed funds rate, and even if you don't get that, up 25 basis points, prospects of lending on the back of infrastructure spend. taxes will aid the banks, particularly from those who get earnings from the u.s. we face every year more and more regulatory burdens. the prospect for that is to get better, at the very least, not getting worse. >> you unleashed buckets of optimism, and a year ago or even less there might not be a single bucket on the list there. in terms of rallying we've seen since election day, how much of that is the sudden and dramatic
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rise in the yield curve and the prospect of possible deregulation of the industry? i'm just trying to understand, you know, how much have we moved on this notion that something could happen, but legislatively, nothing has? >> i think thaet a fair poichblt we've been talking for years that this group needs higher interest rates to get the top line going, and for the last seven years we've had a tax rate hike in six years. now futures are saying 100% chance they hike this year and the curve has obviously steepened dramatically. i think that's the number one factor. not betting on it, a lot of it has already occurred and to the extent some of these policies play through skpand inflation cs back, the fed will have to act further. one of the reasons we kept them at bay these last few years, you turn on the television or read the newspaper and there is a new
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headline with capital requirements. just a prospect of that ceasing gets everyone excited. >> everything is coming up roses, it looks like. which ones are worth a buy even now with this run? >> certainly the more assets have moved into the banks, but i think in general we're constructive on the group not knowing what it's going to do the next two weeks, but certainly i would look in the next year or so when these policies come through that are beneficial. they are trading at much lower valuations at the bigger banks, citigroup, goldman sachs stand out among the money centers. u.s. bancorp, mst. >> thank you, jason, from barclay's. up next, "check please."
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time for our final thoughts, observations or whatnot. mine, guys, is on oil. i understand oil is up big, it's a production cut from opec, but let's be careful here. opec is cutting production to 32.5 million barrels per day. in november of 2014, they produced 30 million barrels a day. >> so they're cutting back to more than they used to make. >> they're making more with the cut than they did two years ago. just be careful, guys. >> although, to be fair to opec,
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not that we have to be fair to a cartel, but many are anticipating that oil will be an onslaught next year. >> be fair to cartels. >> i stopped in little havana on the way to the real havana overover the weekend. they're celebrating there and there is an ice cream parlor that has started a fidel castro flavored ice cream. it's called burn in hell fidel. it has hot peppers. it starts out okay at first and then burns on the way down. >> who is going to enjoy that? >> i think they are. >> i think for a lot of us, the year 2016, a lot of us in journalism, will go down as a year where we were schooled that
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what we thought we knew was true wasn't necessarily true. we've been surprised at every single turn. >> brexit, the cubs -- >> brexit, the cubs, trump, the market will suffer with trump. 5.6% growth if corporate taxes are cut. that sounds outlandish. it may well be true. "closing bell" starts right now. and welcome to the "closing bell." i'm sara eisen. >> i'm bill griffeth. the final trading day of november. the dow is the only one in the green right now but it's had a stellar month. for the first time in history, the dow gained a thousand points in one month. >> it was the best for the dow since back in

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