tv Squawk Alley CNBC December 1, 2016 11:00am-12:01pm EST
carrier plant in indianapolis. 11:00 a.m. on wall street and "squawk alley" is live. ♪ welcome to "squawk alley." jon fortt has the morning off. our top story today, of course all eyes on donald trump's latest cab knelt nominations as the president-elect prepares for his first public address since securing the presidency in november. our eamon javers is outside trump tow we are the latest. hey, eamon. >> good morning, carl. we're waiting for some floousmt
the trump motorcade excepting to leave this morning heading out to indiana to that carrier plant where he will announce a deal to keep about 1,000 jobs at that plant from moving to mexico. so we're awaiting that movement and we're also awaiting any new cabinet-level announcements. take a look at what we know so far of the trump cabinet. you see a lot of positions have been filled including steven mnuchin the likely treasury nominee. i spoke to him a few minutes ago and asked him if we can expect any other announcements today. he was playing very coy this morning, wouldn't say if we'd get more news this afternoon or not. waiting on the big two, state and defense. a lot of speckation about jim mattis for the department of defense and speculation about mitt romney as a possible secretary of state. no real announcements yet. a lot of speculation on those two jobs. and then of course we'll see donald trump going out on this thank-you tour throughout the country over the coming days. that's going to be fascinating
to watch because, carl, one of the things that previous presidents have really struggled with is maintaining the momentum from the campaign trail once they take the job at the white house. barack obama faced this difficulty back in 2008 and 2009. you remember those massive rallies that he had out on the campaign trail. then he gets to the white house, becomes much more of a technokratic president concerned with legislation and rolling out deals and specific agenda items. that can take some of the wind out of the sails of a president used to being op the campaign trail, getting media attention and feeding off that energy of the crowd. we know that donald trump likes to do that and we'll see him doing that over the coming days. question is whether he'll be able to keep that up as president of the united states next year. so that's going to be an interesting sort of style point change to watch for as we watch the president-elect become the president of the united states, carl. >> eamon, good stuff today. eamon javers in midtown. this is the first day of a new trade moog and the postelection rally for the dow rolls on.
broader markets mixed this morning but the dow is up 82 points now, officially with a 10% gain for the year. dow up 5% since election day and both the s&p and the nasdaq have seen gains of 3%. should investors expect more in a trump administration? here is the president-elect's pick for treasury secretary on squawk yesterday. >> our most important priority is sustained economic growth and i think we can get to 3%, 4% sustained gdp, critical for the country. our number one priority is tax reform. this will be the largest tax change since reagan. we've talked about this during the campaign, wilbur and i have worked very closely together on the campaign. we're going to cut corporate taxes, which will bring huge amounts of jobs back to the united states. >> joining us this morning the always outspoken grover norquist, the president of americans for tax reform. good to see you. good morning. >> good morning. >> sounds like you think this is drawing a direct line from
reagan and the policies that we saw in the early '80s. >> it is. what's very interesting is reagan took individual rates down, and because ours were much too high. and right now the american corporate tax rate, 35%, plus about 5% for the average state corporate income tax, we're at 40% when we tax our businesses. the europeans are about 25%. a number of countries are significantly lower than that. we've got to become competitive, and i think both the ip coming secretary of treasurymnuchin, a making it clear we have to take that corporate rate down. that will bring us i think to 4% growth. you add the lower corporate rate, which is a consensus issue among republicans in the house, the senate, and the incoming administration, and full expensing for business investment. these are two powerful drivers of new investment, job creation, and increasing productivity,
which allows wages to rise. >> goldman sachs has some predictions on what, for instance, repatriation would mean, and in their view a lot of it's going to go toward buybacks. does it matter to you where it goes? >> if we're giving perhaps as much as $2 trillion that is locked overseas because of our stupid tax laws -- we do this to ourselves. the chinese didn't do this to us. the russians department do it us. our government did this to us. we get rid of that and go to a territorial system as trump and the republicans in house and senate have put forward, we have $2 trillion that flows back in and i would say that the people who have that money, the companies that have it, can invest it best and they can do any number of things with it and there's nothing wrong with -- a buyback is investing in your own company. that's certainly an awfully good sign if companies are saying i think the economy is so good, i want more of my stock. >> grover, one of the things that you are most known for is the taxpayer protection pledge, which is basically mandatory for
any republicans seeking office since reagan. donald trump is not your traditional republican. have you had a conversation with him about whether he will conform with the pledge and what it means for the pledge going forward? >> sure. we have a majority of the members of the house of representatives who've signed and kept the pledge and in the senate almost all the republicans also have signed and kept the pledge. donald trump in this campaign said he would never raise taxes, no net tax increase and the strong interview with time. he's not publicly signed the pledge, although his campaign told me during the campaign that he had signed it and they'd get it over. if so, we'd love to have it and make it public, but he's on record as saying he would never raise taxes, he wants to cut taxes. so he's right there where ronald reagan was on these issues. that's helpful. >> have you reached out to the president-elect's team since the election to see whether they could proffer that document for you? >> i haven't, actually. i've been focused on giving what
advice i can, but i think they're in such the right place, look, take the corporate rate down to 15%, go to full expensing, a territorial tax system. you've solved much of the problems that our economy faces, and then of course the president is committed to reducing tax rates to all americans on the individual side. that's a good sign too. >> grover, it's still your universe, this carrier story today. we're still waiting for more details about it. obviously it's a feel-good story, it's a win politically. there are still going to be critics who call it croney capitalism gop style. what's the problem with that? >> well, the good news is that what trump's plan on deregulation and tax reduction, corporate rate is to do for all american companies what this special deal for carrier is. i'm less excited about a one-off deal. i'm much more excited about saying to every company in america, those that exist and those about to come into existence, your rate's not going to be 35%.
it's going to be 15%. you're going to have full business expensing. that's a real fill up to help move things forward. i think he can do 20 or 30 rallies where he goes around and says -- there are more than 100 significant energy investments that have been stopped or slowed down by the bureaucrats under obama. we can cut that red tape, but if trump went out and stood and said right here, if the government would get out of the way, we can have x number of jobs and build a pipeline or build a liquefied natural gas facility and you could put 20,000 people at every one of those, put tremendous pressure on the bureaucrats in washington to speed up this permitting process that has been disastrously slowed, a lot of damage has been done to our infrastructure because the present administration has not allowed the permits to move forward and they've played political games with significant pipelines with thousands of jobs at stake. and trump could go out and at each one of these areas put
together 20,000, 30,000 people, demanding that we get this going, and that doesn't cost a dollar of taxpayer dollars. these are businesses looking to invest in real infrastructure, particularly in the energy zone. >> i probably don't need to read bernie sanders' op-ed to you this morning but he does say that he's signalled to every corporation in america that they can threat on the offshore jobs in exchange for business friendly tax benefits and incentives. true? >> well, what -- no. what's happened is because we've been damaging the economy, because our tax policy has hurt all businesses, it's killed jobs in america. and it doesn't kill jobs overseas when we do something stupid. they keep growing. it kills jobs in america. what trump has said is we're not going to be having a tax policy that kills jobs. bernie sanders, i don't know what he expects but we're not going to continue stupid. we've been -- for eight years, maybe 16 years we've known that one of our major problems was a corporate rate way out of whack
with what europe and other countries are doing. and that could never get fixed because obama always demanded at least a trillion and a half dollars in net higher taxes before he'd consider a little cut in the corporate rate. he held that hostage for eight years. that ends now. >> you can say that again. grover, good to talk to you. talk to you soon i hope. >> good to be with you. >> president of americans for tax reform. >> let's get a check in on the markets. the dow the best performing average leld by goldman sachs, which is good for about 40 points. currently the dow sitting up 73 points. the s&p and the nasdaq are in negative territory, albeit only slightly. but we'll keep an eye on that. we are coming off a november to remember for the markets. the dow, s&p, nasdaq and the russell 2000 all hitting record highs. financials the top performers, seeing the best month for the sector in five years. of course largely on rising yields but also farther down the
line the prospect of deregulation. gold down nearly 8%. that was the worst month for gold since 2013. treasuries soaring in november and just this morning the 30-year yield hitting its highest level in a year. the ten-year yield piercing through an important psychological level as well as flows come out of the bond market. also watching individual names this morning. fit bit reportedly nearing a deal to buy smart watch maker pebble for an undisclosed price. fit bit is um cles klose to 2%. keeping an eye on caterpillar for you. cat is halted for news pending. it had been up close to 2%. when we get more information on what that news is we will bring that to you. >> we'll look through that. when we come back, why aaron levie has been anything but quiet when it comes to the election of donald trump. then president-elect trump making his first public appearance since getting elected. live to indianapolis with all the latest on that.
later, forget wall street. why main street's new enemy may be silicon valley. henry blodget and jeff richards weigh in. world ugly and messy. they are the natural born enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.
green burg bought half a million shares of his stock earlier this week. it was upgraded by buckingham. the shares have taken a beating since the highs back in august of last year. it was a $54 stock. they're still 15% lower year to date so far. the average analyst target prices are just about in line with what share prices are right now. we'll see if adjustments are made in the coming weeks. back at hours, cloud storage company boxer reporting third-quarter earnings after the bell yesterday. the company's customer base grows and showing a rise in revenues. with growing competition and donald trump's win as the president-elect, how will the landscape change for companies in silicon valley? to talk about all of that, we are joined by aaron levie, the ceo of box. great to see you. >> good to see you. >> let's start with earnings because ibm in particular was responsible for eight of your six figure deals. i'd ask if you sent them a fruit basket for that, but more seriously, how risky is it for you to rely so heavily on a
single vendor or single partner? >> we have many partners that help expand our distribution and facilitate the growth of box in the new markets. ibm is one of those. we did eight deals in our sort of large-deal segment of which we did 38 deals over $100,000, so eight were through the ibm partnership. i know that we have 69,000 customers globally now at this point. we brought on thousands of more customers in the quarter. so we're pretty diversified in terms of how we get to new customers but ibm has absolutely been helpful in reaching new markets and regulated industries, governments and especially a lot of our international segments that we're growing in. but it was a phenomenal quarter. we did $102.8 million in top-line revenue, our first $100 million quarter and grew 31ers% year over year. we're happy about the quarterly results. >> you also raised guidance going forward. tell us about your line of sight
into enterprise and consumer spending and the demand that you are seeing for new products like governance, zones, relay, which the marketplace is just really getting to know now. >> our whole strategy from day one has been we're building out the absolute best way that enterprises can securely manage, store, and clan rate arnold all their corporate information in a much more modern way. we've been building on a cloud platform for the past 11 years that allows companies like general electric, eli lily, p&g to be able to store and collaborate on their data. we've seen tremendous success from some of our newer products last year. we've sold box governance, better data governance and protection of your information over 500 times. that's really kind of taken you have and been a big part of our multiproduct strategy. but overall, what we're benefitting from is not only a very differentiated product and a very mature product relative to the competition, but now a
much more improved macro environment for our space, which is that every enterprise on the planet has to upgrade its i.t. infrastructure and begin to modernize the way they do business. no matter what industry you're in, you need motd earn tools and technologies to be able to run your organization, and we happen to have the right solution for many of those organizations across the world. >> most of the metrics that box focuses on in its discussions with investors, aaron, are nongap metrics with which the s.e.c. has tried to limit companies' use of nongap metrics. what's your view on that and have you had any discussions with regular lay tors about transitioning to more generally accepted accounting metrics? >> yeah, so we provide obviously all of our results in both nongap and gap terms. we guide to some of the nongap metrics as well as some of the gap results just to provide sort of teased-out numbers, but either way we're pretty comfortable with whichever the trend is on wall street. we just like to make sure our business is well understand in
either environment. >> let's stick with politics, aaron, because you have been extremely critical of the president-elect before, during, and now after the election. you said the day after the election so many disastrous ideas have been surfaced throughout. we must now do everything we can to ensure america is for everyone. i mean, the tonal of that suggests that you are placing the onus of the responsibility on washington, but silicon valley established itself as far to the left of the republican party during the election. what can tech, the value do to bridge that gap? >> yeah, i mean, i think what -- certainly what that was in reference to, that specific message was lot of the rhetoric through the campaign was very divisive on the part of the president-elect. that was extremely uncomfortable for many of us in silicon valley, where our organizations are built on inclusiveness and diversity, and that was a very
troubling campaign cycle, especially on that dimension. however, now, you know, moving forward, we know that we must work constructively with d.c. and with the new administration on making sure that we have an economy and that we have a tech sector and innovation push that works for everybody. but i think in silicon valley, what we're recognizing is we need to ensure that as we see more and more technological disruption, that technology works and enables new growth for every sector all around the world. so we do think that it's going to be important that we create many new jobs driven by technology and we know that silicon valley has to do a much bigger role in bridging that divide between silicon valley and d.c. as well as throughout the rest of the country. >> aaron, it's carl. you wrote a memo on the 9th to your employees, your boxer, and since then there have been other companies that for one reason or another waded into the political debate. today it's kellogg removing
their ads from breitbart, breitbart responds with a boycott kellogg hashtag. how are companies supposed to think about political discourse at this point? >> well, you know, i think there are a number of issues especially in this campaign, chfls unique in many ways, that affect our ability to build a strong culture and a strong community in our organization. and first and foremost, we can't build a successful company if we done have amazing employees that get motivated every day to work together and build, you know, awesome technology and are able to innovate, and that was really the message that we wanted to come out with for our organization, which was these are the values we stand for. we stand for inclusive nls and diversity and that many of thes me annals and much of the rhetoric of the campaign season don't reflect the kind of thoorgs we're building. and so, you know, we're going to have to move forward and be able to work again productively with a new administration. but we are going to stand up for our values and ensure that all of our employees are protected no matter what happens over the next four years.
but, again, we are in the period where it is time to start to move forward and make sure that we do have, you know, a set of policies and a way of thinking about the technology sector as well as the rest of the economy that allows us to be in a very, very strong position over the next four, ten, and many years after that. >> aaron, good to see you. appreciate your time this morning. >> good to see you. >> aaron levie from box. finally getting a resumption of trade in caterpillar. dom chu. >> we have shares have just resumed in the past few moments. shares were up $97.30. that was the trade before the halt. we're trading now at about $95.73, this because the news halt was for release of conference presentation slides caterpillar is presenting at a credit suisse conference as we speak. as part of the presentation, the presentation says that the consensus analyst expectation for sales revenues at $38 billion is a reasonable midpoint expectation, however, they say
that consensus embasarnings per share of $3.25 may be a lit tool optimistic considering expected headwinds. they also go on in the presentation to say there are some concerns they have about the current environment that oil prices remain volatile and not high enough to drive substantial investment. also current weakness in north american construction equipment, a concern as well. economic growth in europe and the impact of brexit on growth in business investment. however, they go on to list a number of other headwinds, carl, but also say we are encouraged for the potential of a u.s. infrastructure bill tax reform, regulation, commodity prices and the opec announcement. back to you. >> encouraged although maybe a little impact in '17 according to dow jones. dom, thanks for that. when we come back, we'll go thrive that now famous carrier furnace plant in indianapolis where president-elect trump will make his first public appearance since the election. then we are awaiting a statement from house speaker paul rye an at 11:30. we'll take those comments live.
president-elect donald trump making his way to indianapolis this hour where he's expected to make his first public address since the election. philip lebeau is there live this morning. good morning, phil. >> reporter: good morning, carl. there are people lining up here at the carrier plant waiting to go in so they can hear from donald trump a little later on this afternoon. details are starting to come out regarding how this deal was put together between united technologies, the parent of carrier, and the trump administration. let's clarify some of these. first of all, there were two plants scheduled to close in indiana, run by united technologies. one of those two, the one behind me, will remain open. the other one in huntington, indiana, which is not far from here, about 700 employs there, that plabt is still closing. about 1,000 workers, a little over 1,000 workers all together will keep their jobs here and there are some detail that have just been report, "the wall street journal" reporting that
united technologies has agreed to invest $16 million in its facility here in indiana, tax breaks in the state of indiana may total as much as $7 million. so when you put this all together, there are some financial incentives for united technologies here, but make no mistake here, vice president elect mike pence, who's still the governor of indiana, he brokered this deal, but this deal comes together just a few months after he failed to keep carrier to stay here when he was just the governor before he was on donald trump's team. what's changed? well, the united states government has a lot of leverage. $6.7 billion in contracts with united technologies through the defense department, and most believe, look, it's pretty clear that united technologies wants to stay on the good side of the trump administration. here are some of the workers here at the carrier plant talking about what this means to have their jobs staying. >> it was shocking. i mean, it just seemed surreal, you know, the phone's going off
and people telling me that our jobs were being saved, and -- it was just crazy, just surreal. >> they started clapping and started talking and being happy that they would be able to maintain their jobs, their homes, and take care of their family once again. >> reporter: again, we will hear from president-elect donald trump a little bit later on today. no doubt, carl, it will be a raucous crowd filled with workers who are happy to know that their jobs, at least some of them, are staying in indiana. back to you. >> thanks so much, phil lebeau. i'll take it from there. still to come on "squawk alley," forget wall street. why main street's new enemy might be silicon valley. henry blodget and jeff richards weigh in. and house speaker paul ryan is expected to make his weekly comments at the bottom of the hour. we'll take you there live. where, in all of this,
keeping the power lines clear,my job to protect public safety, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it. public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers. we want to keep our community safe. this is our community, this is where we live. we need to make sure that we have a beautiful place for our children to live. together, we're building a better california.
good morning, everyone. i'm sue herera. carnival cruise lines will plead guilty to seven charges of deliberate pollution and ensuing cover-up and pay a $40 million fine according to the justice department. it stems from the illegal dumping of oil and contaminated waste from the princess cruise ship. vladimir putin giving his annual state of the nation address in moscow speaking about the economic situation in russia. the russian economy contracted
3.7% in 2015 with the recession continuing this year. pressured by low oil prices and western sanctions. iraq's elite counterterrorism troops pressing on with the assault on mosul. isis' last major stronghold in the country. they continue their push to take an iraqi village northeast of that city. and britain's prince harry and singer rihanna helping to kick off a concert celebrating the 50th anniversary of barbados' independence. the barbados native rihanna was welcomed to the stage before the prince addressed the crowd of some 20,000 people. that's your news update this hour. back downtown to "squawk alley." guys, back to you. >> sue, thank you very much. we are count do you think to the close in the uk and across europe, which happened a few moments ago. seema is at hq. >> stocks mostly lower on the first trade daigh of december in europe. this despite data showing eurozone manufacturing pmi rising in november to, get this, a 34-month high.
the broader market, though, posted a gain from november, marking its first advance in after two straight monthly declines that we saw in europe. we're only three days away from that much -- the highly anticipated italian referendum where the no vote once again is leading, raising uncertainty around prime minister matteo renzi's political fate. keep in mind, also in focus on sunday is the austrian presidential election. also set for this weekend. two candidates, norbert hoffer, and alexander van der bellin is leading the green party. polls show the candidates are neck in neck. if hoffer wins the presidential election in austria, jpmorgan says it will highly influence the opinion of other elections in the euro area coming up over the course of the next 12 months and also raise the likelihood of this anti-establishment momentum gaining ground across europe. so two political events on the horizon. if we take a look at what's driving stocks today, it's those oil names that continue to be a
bright spot one day after opec's decision to cut production. since that deal was announced, the stocks 600 oil and gas index um more than 5%. the big gainers include tullow oil, eni, bp and royal dutch shell. we'll see if gains continue after the opec deal. >> definitely looking at session highland park bridges this morning on crude. seema, thank you very much. we are awaiting comments from house speaker paul ryan this morning expected to take questions on everything from the president-elect's cabinet picks to the deal with carrier. there's the left of your screen. on the right is the tarmac at laguardia, donald trump's plane preparing to take off for indianapolis. while we wait, it is the new era for the relationship between the business and the white house from the president-elect's cabinet picks to his deal with carrier to singling out particular companies which of course have included silicon valley. joining us here at post 9, business insider ceo henry
blodget and jgb capital's managing partner, jeff richards. thanks for being here. >> great to be here. >> is the market ahead of itself pricing in this embarrassment of riches coming businesses' way? >> it's been nice to see. a lot of us were predicting exact hi the opposite. always great to see the market go up. i think the carrier deal will raise questions. certainly as ceo of hundreds of manufacturing jobs, are we going to get a deal? are we waiting? we could put our jobs anywhere in the world. is everybody going to be to get sweetheart deals? you want it to be consistent and this looks like a one-company negotiation with a special deal, just raises questions for everybody else. >> nodding your head, jeff. >> i agree. where does it end? if i'm another employer in indiana am i asking for benefits as well? i think the focus on jobs is a positive. that's what people wanted, asked for. you're seeing trump respond to that out of the gate and that's a positive message and the market has reacted to it. >> there's a question of whether you have to northern plains you are moving jobs somewhere else
in order to get credit for keeping jobs where they are. they were jobs slated years down the line to move outside the country and the president spoke directly to bill ford, the chairman of ford, to keep some jobs in louisville. and vice president elect mike pence brokered this deal himself. how much of this is going to remain a personal vendetta for this team and how much of it is on the companies to say we were going to do this, what can you give us? >> all great questions. the devil has always been in the details. you can't just declare that iphones have to be made in the united states without crippling apple in the world stage, all of our companies compete internationally, labor markets are very different, companies should be able to take advantage of that. at the same time, it's perfectly reasonable to create an environment and create incentives for companies to stay. you just want to be consistent. >> not threatening to move your newsroom to germany? >> no. overall, the problem is actually not manufacturing. it is the fact that manufacturing jobs pay very well because over the years unions came in, wages went up, we now
need to get all of our other jobs -- we have actually a relatively low unemployment rate. we've got to get pay for the low-wage service jobs to rise. then we're fine. it's not specially focused on manufacturing. >> a thousand jobs, the journal this morning said since 2000 indiana has lost 150,000. >> 5 million across the company -- country, rather. >> some people say you have to start somewhere, others say that there's no way you'll recoup those. >> somewhere we'll have to have a balance between corporate profits. carrier is owned by united technologies, a $90 billion company in the middle of a $16 billion buyback. versus saving 1,000 jobs. where is the balance between investing some of that capital back into the company, keeping the jobs in america, not just threatening to move them overseas? >> this is what is going to get the economy moving again. the problem is the consumers don't have any money to spend and the reason is because there's been so much wage pressure. we have to pay people more than
they can spend and the economy can grow. >> just talked to grover norquist 30 minutes ago and said what if all this money comes back and goes straight to buybacks? his answer was, if the company feels that's an efficient use of capital, more power to them. >> i think that would be a shame, right? if we ended up with a scenario where hundreds of billions of dollars came back to the u.s. and all got invested in buybacks, that would be a shame. it wouldn't benefit the general population. how do we create tax policy to put that back in job creation? >> the companies would say there's not enough demand for things we would make if we were to plug that money back in our business, create more goods, turn around and sell. how would you argue against that? >> a great question. i don't have the answer to that. i would say corporate innovation, if you look at the amount of money spent on r&d by companies like united technologies, a lot is going into current product lines vest fund nug product lines. silicon valley and venture cap cal, we fund crazy ideas. most large companies don't do
that. that's one idea. take billions and put it into crazy ideas. do it in other parts of the country. >> as wages rise, demand will increase. it's there. and there's so much change. people go back toll, oh, technology, it's destroying jobs. 200 years ago we were all farmers. the industrial revolution came along, destroyed a lot of farming jobs but we worked through that, wages went up. now we're dealing with incredible new technologies that have put a lot of pressure on, but we can work through it. it's all about whether we pay people well. >> speaking of tech, are they being unfairly targeted from a policy stand point are the share price losses about finance nug trades and energy and industrials? people are wondering why is amazon down as much as it is, right? thoughts? >> i don't think you'll see a negative impact on amazon from some of the new policy changes with under president trump. i think there's a lot of fear and certainty and doubt. he's been a little anti-tech with some of his rhetoric around apple, amazon, and others, but as we get into his administration, he'll have
bigger issues to deal with, things like china, foreign trade with other countries. >> we've had guest who is say donald trump will be a vengeful president and silicon valley need to offer an olive branch. do you agree with that? >> i think silicon valley will offer an olive branch. they have lot of things they would like to accomplish with the new administration around immigration, all the issues we talked about with tax, and repatriation and capital. there will be a lot of joupt outreach. i think right now silicon valley is reeling. they were largely in favor of hillary clinton and doesn't know where to go right now. if you look at the cabinet picks for trump so far, haven't seen a lot of people from the tech industry. mostly from banks and financing. hopefully that changes. >> this is one of our most world-leading industries and you had trump as a candidate take shots at individual companies, he's going to crack down on apple, going to go after amazon, because of jeff bezos owning the "washington post," there's definitely risk to that. hopefully it doesn't happen. hopefully it's just rhetoric. there's concern around that, concern around privacy. but ultimately, as an american,
you've got to be incredibly proud of these companies. we should be encouraging it and we certainly should be encouraging silicon valley to not live in a bubble but recognize the social impact it's having, but these companies we should just cheer about them. >> yeah. we're going to see if those two sides can come together after this election's been put to bed. guys, thanks. that was good. jeff and henry, good to see you both. when we come back, why it's not investors putting the pressure on the likes of facebook. justin bieber with choice words about instagram if you missed that. first, rick santelli, what are you watching? >> i'm watching inside one of the options pits and thinking what is the yield kufshg going to look like a month from now, a week from now, a year from now, five years from now? right now tens minus twos separated by 131 basis points. where will it be in the future? that's what we'll talk about after the break. crazy stressed o figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren?
good people are keep ing their jobs in indiana instead of going to mexico. christina? [ inaudible question ] there are hundreds of executive actions that are out there we'll be sifting through. i'm not going to kind of get into every one on their merits. that's something that the transition team is working on right now as to what executive actions that obama -- the obama administration did and how they're going to deal with it. so i just don't have an answer for you because this is something the transition team at the executive branch is going to be working on. i know what they want to do is make sure that we have smooth transitions. what we're focused on with respect to immigration, securing the border. making sure that the border is secure, making sure that the resources match the authorization that currently exists to actually secure the border and that's the legislation we're focused on. yeah. >> you hinted in an interview
that you're interested in seeing some kind of changes to ped care. and in talking with -- >> hinted? i've proposed these budgets for years. >> you said it for a long time, that it's something you're interested in. are you still interested in it? what would the time line be? are you concerned that some republican colleagues in the senate seem to be trying to temp ter house from -- >> yeah. look, i think what's happening is you're getting the latest wave of democratic talking points to try to play mediscare politics, which is what they typically do every other tuesday. i have not discussed medicare with president-elect trump. mind you that obamacare itself does a lot of damage in our opinion to medicare. obamacare itself puts this new board of 15 bureaucrats, the ipab, in charge of cutting medicare in ways that will lead to denying care for seniors. medicare itself is on a path to going bankrupt in 2028, i believe, off the top of my head, so the trust fund gets exhausted
next decade, so we are going to have to do things to preserve and shore up this program. the reforms that we've been talking about here and the house republicans for many years are reforms that do not affect the benefits for anyone in or near retirement. but for those of us who are in the younger generations, the x generation on down, it won't be there for us if we stay op the current path. so we have to do things to fix this program so we can guarantee that it's there intact for currency nears but also something there for us when we retire. the kinds of reforms we've been advocating here are nothing different than what the federal employees have. you get to choose among plans that are comprehensive and guaranteed to meet your benefits. or if you want to stick with the current traditional program, you can do that as well. that is good reforms. that's what cbo tells us is a good way of actually improving cost, lowering prices, and expanding choices. medicare advantage is a program that medicare works pretty darn well right now that seniors
like. so obviously you've hit on an issue i care a great deal about because i care a great deal about this program. i want to make sure it's there for current seniors. as far as what our plans are with respect to reforming and preserving, that's just something that we haven't discussed yet with the administration and we'll do it as the year goes on. yeah. >> about the cr, there is various concerns now that it might need to go later or could get jammed up because of the senate and so on. could you just step back for a minute and give us an explanation as to why, when earlier leadership such as mcconnell had said, let's finish the budget this year, let's get it done, why was there this push to have a cr and why does the administration, the incoming administration, favor that approach? >> yeah. okay. so getting jammed up and senate in the same sentence is something i think we're going to hear a lot this year. they move slower than the house,
their system is different than ours, and they have to stand up to a trump government. the senate will have to do all these confirmation votes and hearings on cabinet and subcabinet officers, probably going to have a supreme court pick coming sooner or later that they'll have to confirm. >> we'll monitor speaker ryan's address to the press, but obviously interesting answers to questions regarding obamacare and the carrier decision. meanwhile, the dow sup 81 once again led by the likes of chevron and goldman sachs. we'll be right back. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet?
let's get out to the cme group with rick santelli. good morning, rick. >> reporter: the yield curve is a bit complex to many but we can really boil it down. you have inflation is a major variable, not only for the long end obviously because if you invest in the long instrument and over time there's inflation it will affect your income stream so over time the price gets cheap er. it's a fixed income instrument, hence your return goes up to make up for the inflation on your purchasing power, the money you get that you're losing. on the short end it's about the interpretation of where inflation is, where it will be with regard to fed policy. you now, if we talk about a steeper curve, talking about long rates outpacing short rates, doesn't mean they can't all go up or down, it's about relative movement based on one or the other. flattening the opposite. the short rates tend to be more
stubborn to the upside. now the old trusty ribbon. this is a steep curve this is a flat curve. most people -- most investors are looking at markets now and thinking, hey, maybe it's going to steepen again. let's go to the charts briefly, okay? if you look at a ten-year chart of 2s, about ten years ago they were around 5%. a ten-year chart of 10s, they were around 5%. so let's look at the spread. 10s minus 2 currently 130, 131 basis points. we were hovering in and out of zero but it's a lot flatter than it was. here's the point. most are looking for a steep curve. but here's the wild card. depending on what the fed does, how stubborn or aggressive it is, the difference between expected inflation and actual inflation, the wild card, and it's the pain that hurts the most people, would be that curve does what it did in '06 and gets flatter so you really want to be
on your toes not only as to what the fed does but how expectations turn into reality regarding inflation. kayla, back to you. >> all right, thanks so much, rick. when we come back, why retail investors may be getting back in the game with markets at record highs. meanwhile, president-elect trump making his way to laguardia airport. there is his plane on the tarmac from just a few moments ago en route to indiana to visit that carrier plant. we'll be right back. ♪
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the role of retail investors cannot be understated as markets trade at record levels. what does the oldest student run investor club have to say about it? good morning, morgan. >> reporter: good morning, carl. they have a lot to say about this. home to the oldest student-run investment club in the country. this is one that manages $560,000 worth of investments and another $25,000 in cash. we're talking real money here. this fund is part of the school's endowment and it is managed by the next generation of up-and-coming investors. for that very reason we sat down with these students to get their take on markets in light of the recent trump rally.
>> our first thought was we were interested in diversifying into financials. people i've grown up sort of being mentored by have suggested if you want to diversify, you're not the sure where to, it's interesting to buy a banker stock because they're so interconnected with everything. >> this year's group of students, for a lot of us, first time voting, so it was neat we got to research candidates and policies for our own voting choice and also as it relates to investments and this club. >> the market was taken by surprise when it rebounded so quickly. we saw futures were almost down 900 points the morning of the announcement that donald trump would be president-elect, and then they quickly rebounded. markets are treating it fairly well, the bull market is continuing and i think investors are at least in the short term confident about the future. >> reporter: so this morning we watched the club, which meets once a week with anywhere from 60 to 125 students, engage in a, quote, stock battle about big
cap tech which we have seen sell off since the election between netflix and amazon the club decide d to invest in amazon, $10,000 worth of shares. another notable investment prior to the election the club also bought into a small class e it tf and given the runup we've seen in the russell 2000 that's been another really good investment. year to date they're up about 5.7%. really impressive for a bunch of 18 to 22-year-olds. guys? >> no kidding. some guys on the sell side wish they had that record. it does bring us to what jim was saying this morning, kayla, and that is fresh money needs to come in. it can't be all about selling amazon to finance an apache, as we look at the tarmac at laguardia. we have a day where cat says cautious on 2017 eps stocks not down. what is down is facebook and google and netflix and amazon again. >> had either priced in the optimism or pessimism about its
guidance or they are even more optimistic than the company it self is about how policy could affect the bottom line because the stock is actually up on that news. >> we'll keep our eye on trump as he makes his way to indianapolis and it to cincinnati tonight. that does it for "squawk alley." over to headquarters and "the half." guy, thanks so much. welcome to "the halftime report." i'm scott wapner. the trump rally and a new month for the markets. after some big-time gains since the election what, if anything, still looks cheap enough to buy? with us for the hour today joe terranova, jon najarian and kevin o'leary. kevin, i go to you, look at the notes and you say the trump rally will not continue. why not? >> everything is fully valued. this is about optimism. it's an animal spirit. there's no earnings changes whatsoever. i would argue the stocks including facebook are starting to show cracks because i