Skip to main content

tv   Squawk Box  CNBC  December 20, 2016 6:00am-9:01am EST

6:00 am
where business never sleeps, this is "squab box." good morning, welcome to "squawk box" right here on cnbc. we're going to start this morning with several developments overseas which investors will watch closely today. in berlin, germany, 12 people were killed and at least 48 have been injured by a truck that drove into a christmas market yesterday. speaking in the last hour, german chancellor angela merkel said, "we must assume it was a terrorist attack. it would be especially hard to bear if it were confirmed that the person who committed the act was a migrant in germany and she urged the german people not to give into fear." in other geopolitical news, a gunman shot and killed a russian ambassador to turkey at a photo exhibition at the turkish capital in ankara yesterday. the ambassador was speaking at an art exhibit when a man wearing a suit and tie fired several shots. a spokesman saying from the
6:01 am
kremlin that it would not impede efforts for a peace deal in syria. richard engel will join us from istanbul to talk about this and more. among the other big stories, china has returned a u.s. underwater drone. china's defense ministry said it returned the drone after friendly talks with the u.s. friendly in quotes. the pentagon acknowledged the return of the drone, but says the incident was inconsistent with international law. in corporate news, uber continues to lose money despite rising sales. the ride sharing company lost at least $800 million in the third quarter, not including items such as taxes and the sale of its china business. revenue rose to $1.7 billion, however. uber disclosed the numbers with the call with investors last week. heavy on promotions including cash incentives to recruit new drivers and investing in businesses such as self-driving cars and food delivery. we're learning more about president-elect trump's dinner with carlos slim.
6:02 am
they met saturday night at trump's mar-a-lago resort. slim's office described the dinner as very cordial with good cheer for mexico and the mexican people. that's the impression, joe. is that okay? the dollar is up sharply against the peso even as donald trump rose in the polls the mexican peso got weaker and weaker. they had to raise interest rates several times to stem it. at the top of the show i was saying we'd get his impressions of donald trump, i thought that was kind of funny because we certainly hope he had a good impression because we don't want him to have a bad impression -- >> now, with cheer. with cheer -- that's what i know. initially -- monte --
6:03 am
>> and senator governor, you're here today. good to see you. >> great to be here. >> you must have done other things, too. did you -- if we have a drone over there, are we spying? do you know or are we testing the water for co2 or temperature? because we said we're doing ocean -- >> i'm not sure we build these drones to do anything than spy. >> so i'm naive. i thought they were going to cure climate changes. that's not what they were doing -- >> on a noaa ship. >> what are you reading? >> no, i just wanted to tell you because we missed the real headline of carlos slim. if you remember during the campaign -- >> you're talking "new york times"? >> during the campaign, trump condemned the "new york times" and carlos slim as being part of a media conspiracy. >> did he ever officially say it or leak and not say it? i follow that story very closely. >> i believe that was the --
6:04 am
that's what he's saying. >> are you looking for a reference for that? >> i was looking for the exact language to figure it out. >> say it was good cheer and blah, blah, blah. >> the meeting was meaningful in part because in part there was a view that there was something between these two and that he had criticized, trump, therefore, had criticized carlos slim. so it's a bit of a -- >> large ownership stake in "new york times." >> but that's the back story. >> i know it's the back story. but for us -- >> to explain it's a business man and a business story. why wouldn't we explain that? >> to frame it that his impressions were okay with it. hopefully trump backed off some of that nasty stuff he said -- >> that's all i had. they wouldn't give me anything else. >> otherwise it doesn't make sense. >> it's 6:00 a.m. let's get a check -- >> don't him being mexican is also super important because -- >> sure. >> but so much more to the
6:05 am
story. >> i just hope, i am hoping that he, you know, 'cauhe doesn't ma mr. slim mad any more and he's the kind of president mexico wants. u.s. equity futures at this hour overnight in asia. the bank of japan kept interest rates steady. the boj also offered a more upbeat view of japan's economy and assessment. iths recovering moderately. the nikkei gained 0.5% and markets fell by 0.5%. european equities this morning mostly not mixed down 0.5% or so. the dollar, though, and, michelle wanted to look at that yesterday and this is the data. look at it, again. 103 as we head towards -- do you think it would be sitting when we hit parody. if all thes aligning.
6:06 am
take a look at crude. take a quick look at what's happening in oil. $52. more on the markets -- >> just update he kept waiting and waiting and waiting and at a campaign stop in greensboro, north carolina, he did accuse carlos slim of helping hillary clinton. let's get that out there. meeti try to help the other side. he's trying to balance things out. trying to be diplomatic. >> the holidays are coming up. >> i'm wearing my holiday tie. my holiday spirit. >> i love your holiday tie. i think it's so cute and charming. >> is this the color for hanukkah? >> it's close. >> i don't know if it's a hanukkah color. it's like the israeli flag color maybe. that blue. if that's what your -- >> our new ambassador. i'm very pro-israel. >> good. >> always have been. >> good. >> good. >> bringing jeff, chief investment strategist.
6:07 am
i hope they're okay with our new president, too. maybe we'll get their impressions. see, we're a little more nationalistic. there's been a move away from just getting along and appeasing everyone on these multiple appeasement tours from the prior president. the multiple appeasement tours. with the bowing and the bowing and the pillars in germany which has their own. >> it's christmastime. >> which has their own problems. >> christmastime and, once again, trucks going into the crowd. also joining us now david joy and jeff. a financial chief market strategist. all right, jeff, 20,000 on the horizon maybe. >> yeah. i think it happens before year end. i think larry finket at that cio round table the other day summed it up when he said this is the biggest honeymoon i've seen in my entire career but feels like you should stay long stocks into the inauguration where reality might show up. that foots with our models.
6:08 am
we think we grind higher into late january. >> how about you, david? >> i would agree with that. but at a very slow pace. the only thing i would change is i think the market continues higher into about the april period. once we get a better look at what the tax changes are likely to be. >> yeah. and do either of you -- i guess everything is compromised. where do you think corporate taxes end up, david joy? >> well, it looks as though we may be able to get it, you know, down to 20 or 15%. i think you're going to have to a repatriariation holiday at somewhere around 12% and that will be a huge boost to the economy and also huge boost to the market over time because that will fall to the bottom line as those tax rates are lowered. and it will help specific sectors. technology. a lot of money parked overseas. pharmaceuticals a lot of money parked overseas. i think we can get there. but, you know, i think there's going to be some offsets, as
6:09 am
well. particularly on the individual tax side because there is a push to keep this as close to revenue neutral as possible. so, i like where they're going, no simplification and not too much of an increase in the budget deficit. >> so, people still argue, jeff saut, about whether there is anything two dynamics going and if it's not revenue neutral we will hear we shouldn't do it. if you leave money in the private sector with risk takers and entrepreneurs and you do see, let's say, gdp growth goes up a little. people are very pessimistic because we were near the 2% that's all we can do. let's say it goes up a little bit, doesn't that generate more revenue from the growth that don't people pay more in taxes? isn't dynamic scoring just something you would assume if you believe anything about the private sector being more efficient than the governor sector? >> yeah. i absolutely agree with that and i would also point out that thompson put out a study for
6:10 am
every 1% reduction in corporate taxes that hypothetically adds $1.31 in earnings to the s&p 500. so, even if you get a 25% corporate tax rate, you're talking about adding another 13 or $14 to s&p's bottom number for next year to 131. that gives you $144 in earning. you want to hold p/e numbers constant at 17. you are talking about 24.50 late next year. >> the number you see right now is 17 for the multiple. you think that's accurate for where we are right now? and you just have the market go up much higher. what did you say on the s&p, could go to where and still be at 17? >> $24.50. if they get a 25% corporate tax rate. as we transition to an earnings driven secular bull market which will become more evident over the next 12 months. >> david, do you think that this
6:11 am
rebound in growth is going to offset any backup in interest rates? >> yes, i do. in fact, we think gdp growth next year is going to be somewhere in the vicinity of 2.8%, which would make it by far and away the best growth year. seeing a big switch around. we think consumer spending is going to be quite strong. we also see an opportunity for some capital spending on the business side. particularly in the energy space. but, also, maybe some other places, depending on policy that's transitioned into legislation. so, if we get that, i think that will clearly be enough to allow the markets to overlook what we do. expect what will be three quarter point rate hikes by the fed. at the same time, we're only looking for the ten-year to go to 275. we think a lot of that three rate hike expectation is already priced in. >> all right, gentlemen, thank you. david, jeff, we'll talk to you.
6:12 am
>> merry christmas. >> merry christmas. happy holiday. there are times i, you know, i've talked about "sing" coming up. it's a universal thing. i try to, you know, steve burke might be watching or something. because he's the boss and everything. did this carlos slim have anything to do with -- do you feel like he's your boss? because he owns some new york -- is that what that was about? that was not about favor with the guy who owns all the -- >> no. i will stay -- >> i know you would understand. >> that i would understand. >> no, i would not. >> it had nothing to do with him being your task master? >> no. >> there are two classes of stock, my friend. >> do you have any of that left? you didn't sell that? >> one has no control. the kind that slim has. i feel confident, as long as i'm in america. >> you're more american than ever, my friend.
6:13 am
and it's a greater america. you don't own that stuff any more, do you? you held on. >> i think i still have a couple. >> literally a couple shares. >> could you hold a shareholder meeting? >> i could go. >> in interest of disclosure, symphony, i love universal, nbc. >> the symphony is our behind the scenes project where we all work together to promote stuff. >> i'm not trying to boost disney, for example. >> i see. >> you shouldn't do that. >> i'd probably be -- i know you -- >> you don't have a christmas tie on. >> and it is a great tie. >> holiday tie. >> it's kay to call it a christmas tie. >> i love christmas and i do have a tree and we do hanukkah and all of it. >> why wouldn't you? >> we do eight nights of presents, actually, plus usually an extra day, however, this year, as you know, hanukkah is
6:14 am
on christmas eve. >> christmas eve. >> which i don't know how we're going to have to work that out. >> three kings day and then another -- >> that's my birthday. that's the most important. >> is it really? >> isn't it funny. did you know that. the day this whole electoral college. i think he gets ratified on january 6th. >> you could have an extra party. >> okay. we've heard from him a little already, but let's get some more from our guest host this morning. former u.s. senator judd gregg. co-chair of campaign to fix the debt. you guys were almost going at each other by the throat, i thought, before the commercial. >> we were very -- >> before we started the show. >> i expected at any moment a -- >> we were having a discussion about border adjustment taxes. >> we're from the same town. we have to be friend. >> from new hampshire.
6:15 am
>> we'll talk about that in the next segment. talked about dynaming scoring which is the crucial issue, maybe it won't be the crucial issue. >> it won't be the crucial issue. >> where do you see the fault lines, if you will, within -- if we have one single block party which has the republicans thinking about tax policy. >> i think the line is whether it's bipartisan or not bipartisan. as tip o'neill says, you don't jam the big ones. you don't jam the big ones because if you jam a major bill like this, people are going to resist it on the other side aggressively. you have to have some fingerprints like this on the other side of the aisle. you need to maintain and you can do that while dropping the rates and maintain progressivity to get a rational guy on board and has a bill. but if on the other hand the democrats decide they're not going to come to the table and participate and negotiate in this process and you'll know that fairly soon, i think.
6:16 am
they can jam reconciliation and then -- >> obama care was reconciliation. >> right. will they learn? >> hopefully they learn from that. i think most of the leadership. i talked to most of the leadership about this and they understand the bipartisan bill is something and, of cours course,raticourse -- >> you connect the dots. the democratic party in most dire straits in not a decade, but a century. >> obama care. >> make every single thing he tries to do we'll try to block and make him a one termer. all goes back to the way obama care was done with it. the purchase. he had to bribe his own party. >> it was brought to the floor of the senate on saturday and passed on christmas eve three days later and no substantive amendments were allowed. >> they lost kennedy. >> as a result, you ended up
6:17 am
with -- >> what happens on taxes? >> undermine the legitimacy of the bill. i don't think you can do big legislation. it affects a lot of americans unless they feel it is fair. fairness is defined by bipartisan. >> certain republicans boent go to 15. on the corporate rate you're looking at somewhere around 20, give or take a point or two. >> depends on where you get the offsets. to get the offsets to get to 20 you have to saverage idg salvag >> it raises a boat load of money. right? the biggest offset you get, if you want to get the tax rate lower for corporations, you switch the way you tax corporations and it raises a ton of revenue. >> obviously. yeah. i mean, if you eliminate the deductibility of interest the
6:18 am
whole paradigm of how we invest in corporations. and that's actually one of the arguments for seeing it back on interest deduction. but to do that, you're basically causing almost every company in this country today, especially with our low interest rates to totally adjust their corporate structure. >> we're going to talk a lot more about taxes for the rest of the show. let me ask you this final question before we go to break. how do you feel about how i imagine the next four years are going to be run in part over twitter. meaning, the president is going to be tweeting quite regularly. sometimes saying relatively incendiary things, depending on what side of the aisle or what country you live in. >> tell the chinese they should keep the drone. >> i think that was yesterday. but how do you think that's going to play out? well, badly, what -- >> absolutely new paradigm on how politics are pursued in this country. and everything is changing. parties are being made irvelvent
6:19 am
by social media. there is virtually no discipline any longer on the party side. you've got the fact that the main stream media has been basically leap frogged by this president. this is the president-elect through the use of twitter and other opportunities he has on social media. we haven't seen how it shakes out yet. how he uses it depends on how it shakes out. a new paradigm. people aren't going to feel necessarily that they're going to have to use main stream media any longer. they will go directly to people if people are following them on facebook. >> you didn't tell them where they can put it and stick it, which was sort of implied. >> good point. >> part of the conversation isn't just about how he says it or what medium he uses to say it, it's what he says. >> that's true. >> yeah. >> and what that ultimately means both internationally, broadly. >> but he can say it unfiltered over twitter and facebook as much as he were to say it in main stream media.
6:20 am
heavily filtered by an editorial content that would be put around it. >> certain place on the front page by some papers. >> which still happens, by the way. because then the tweet gets taken and sort of attempts are meant -- >> the readership is different. >> the tweet is read by more people than the paper is read by. >> i know that hurts. >> i will actually take issue with that because i think that the reason that the tweet works is because it's magnified and echoed by the media. not because people are seeing necessarily the tweet itself the first time as the original. >> i think you're right about that. >> that's true. >> senator, stick around. we have more to talk about. coming up, geopolitical hot spots. the assassination of russian ambassador to turkey and suspected terror attack in berlin. richard engel joins us next. "squawk box" will be right back. .
6:21 am
this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
6:22 am
6:23 am
archlt lot of geopolitical hot spots in focus this morning. angela merkel saying the incident at a christmas market that killed 12 people is believed to be a terrorist attack. meantime russia stepping up security measures after its ambassador to turkey was shot and killed yesterday at a public event. nbc chief foreign correspondent richard engel joins us from
6:24 am
istanbul with more on the assassination. richard? >> well, a team from russia has arrived. a team of investigators and they're trying to get to the bottom of exactly what happened. we know the basic facts. we know that an off-duty police officer was there with his gun dressed in his uniform as a security officer, a dark suit and white shirt. and he was standing behind the ambassador at the opening of an art exhibit. and as the ambassador started to speak, the gunman, a 22-year-old riot policeman opened fire on him, killed him and then said the attack was carried out to take revenge upon russia for its involvement in syria. but what we don't know is was he working with anyone else? was he working for a specific group? turkish authorities have detained some of thiz equaintances and also some of his family members today. and turkey is vowed to work very closely with the russian investigators. the relations between turkey and
6:25 am
russia, which had been terrible a year ago are starting to get better and both russia and turkey said that the purpose of this attack was to drive a wedge between them. the gunman himself saying the purpose of the attack was to punish russia for killing many people in syria. >> richard, it's joe jernen. you saw the nato conspiracy theory put forth. i'm sorry, is there any possibility that there is any veracity to that? what was the -- what purpose did that serve to even bring that up that it didn't just say possible, i think he said it's likely after highlighting some of the other possible reasons for this. is there any way that that that's possible and what's the point of trying to do that? >> well, i think i know what you're talking about that some state media here are blaming
6:26 am
this incident on the cia. that it was a conspiracy theory. conspiracy plot led by the united states. there has been quite a bit of this sentiment in turkey since the failed coup attempt. the failed coup attempt was, according to the turkish government carried out and every time you hear git mentioned and there has been a campaign to hunt down his supporters and the united states who has consistently refused to hand him over saying it it doesn't have the evidence to do so and a lot of support thofrz president here are furious about that. every time something goes wrong in this country and, unfortunately, that happens with increasingly frequency here. there are bombings and shootings. the supporters of the government will come out and say these were the gluhweinists. they used the nato base to try
6:27 am
to launch their coup. and that is part of the anger that is in the mix here. istanbul right now and all of turkey is really a cauldron of different conflicts and emotions. there's this anti-america senment, which sometimes the government fuels. there is an anti-russian sentiment clearly because of the anger against what's going on in syria. there is the anger of the refugees here. it's volatile. >> are you noticing, can you feel it on the streets? the currency is getting pummeled. it has for a long time and it got even worse yesterday. people have to be feeling inflation there. >> the currency is getting worse and even that is wrapped into this nationalist fever. the president came out and said people should dump their dollars and buy turkish. when you walk down the streets, some shops, if you bring a recent from the currency
6:28 am
exchange place that showed you really did exchange $100 or more, they'll give you a free sandwich. so, there is a national campaign here to try and bolster the turkish and sell dollars. but it doesn't seem to be working. and certainly people are feeling the pinch. >> yeah, sure. i mean, investors are fleeing like crazy since the events related. thanks for joining us from istanbul this morning, we really appreciate it. coming up possible tax changes under the new administration which could have a big effect on the business world. why retailers are worried. plus, former vermont governor howard dean tells us what it will take for democrats to sign off on the republican tax plan.
6:29 am
6:30 am
6:31 am
i think that she's a very nice girl. you never got the brakes looked at? oh yeah...no. at cognizant, we're helping today's leading manufacturers make things that think and do, automatically. imagine that. a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready. because we're helping leading companies lead with digital.
6:32 am
welcome back. take a look at u.s. equity futures at this hour. we'll show you what is going on ahead of the market open. looking that dow. looked like it opened about 40 points higher. trump rally continue in the premarket. s&p up 6.5 points. we should also tell you facebook is in more than hot water. the eu accusing the company of providing misleading information regarding its 2014 purchase of what's app. >> the audio and it would play it for the one analyst we have on. >> that is true. >> the issue, the issue involves the use of the consumer data by
6:33 am
facebook. the company has until january 31st to respond. facebook could be fined up to 1% of its worldwide revenue. >> that's a lot. >> which is not nothing. >> anthony. >> anthony. >> anthony diclemente. >> let me just say, he's a great analyst and been spot on on a lot of stuff. >> did you hear we're not really talking to him for that reason. >> what's up? >> there's no time for that. >> he was funny. >> go ahead p. all right, the gop is working on a tax plan. yes, lowers corporate taxes, however, more significant, it dramatically changes the way corporations would be taxed. no longer on their profits. it's scaring the retail sector, which is why retail reporter courtney reagan is here to try to explain this. >> i'm going to try to explain. >> you're going to do a great job. trump's tariff has gotten a lot
6:34 am
of attention. a tax proposal that is scaring the pants off of clothing and shoe retailers. the plan was proposed over the summer but became more of a possibility under a gop-controlled congress and white house. three parts to it. corporate tax of 3% certainly would be welcome. immediate depreciation expense and the third is the zinger for retail. the border adjustments for nonu.s. manufactured goods. 90% of clothing and shoes is manufactured overseas. here's an example of how it would be adopted as is. the gap buys a sweater for $80 from a manufacturer overseas. gap has an additional $15 and other expenses associated with that sweater. a shopper ultimately pays $100 for the sweater. so, taxes calculated like this. $100 revenue, minus $80 cost of the good, minus the $15 in additional expenses associated with the sale equals a $5 profit.
6:35 am
say gap pays a typical 35% corporate tax on $5. so, that's $1.75 tax bill. under the proposal, assuming that that 20% corporate tax is in play, but also no allowance to deduct the cost paid to oversea suppliers, gap pays 20% corporate tax rate on that $5 profit instead of 35. plus the 20% of the $80 cost of goods sold. which is no longer deductible and now means the tax goes from $1.75 to $17 for that sweater. more than three times the profit on the sweater. >> i want to add one thing to that. keep that up. keep that up. keep the wall graphic up, please. the proponents of this tax will argue, you did a great job. this is a perfect explanation that the $80 sweater isn't going to cost $80 because the dollar is going to get so much stronger that sweater is going to get a lot, lot cheaper to the purchaser. right? so that's how they're trying to argue to the retailers that this
6:36 am
won't necessarily hurt. >> exactly. >> but it's going to be a tough sell. >> it is a tough sell. i tried to speak to some economists about it and some think it's possible and others aren't so sure. you have to get about a 25% depreciation on the dollar to balance it out. a lot of forces at play here and it's complicated. but we try to lay it out as simply as possible. >> we'll talk more about what kind of tax plan we'll see from the gop and trump administration. joining us now former governor howard dean and democratic committee chair and nbc analyst and senator judd greg. senator, is this going to fly? this new corporate tax. >> no. >> why not? >> one of the most influential groups in washington are the folks who live and work on main street and talk to their congressmen with regularity at and you'll see you'll be taxed on your gross income versus your
6:37 am
income versus your deductions. what it exhaust you to produce that income, they're not going to believe that the dollar will basically adjust in a way that allows them to make money. they're going to see if there is a dollar adjustment that somebody else may get that benefit and not them. i think you'll find this is a real, real heavy lift to get this one off the ground. i think there are a lot of proposals for major tax reform on the corporate and individual sides, which have already been embedded such as the simpson/bowles bill which get the corporate rate down to 25% or even 23%. that don't require this sort of eradical adjustment in the way that one sector of the economy is treated. >> governor dean, i would think you would love this because it raises so much money. i mean, when you look at the budget lines and people examine with the border tax, it raises tons and tons of money. >> two issues here for me.
6:38 am
one it looks like dynamic scoring. a whole lot of stuff that is predicted and it's supposedly going to fix all the problems like dynamics and then, of course, when the revenues don't actually happen and the dollar doesn't actually go up. in this case, then the whole thing falls apart. the second is what effect would this have on the wto? this is especially a protectionist way of financing and taxing. so, you know, i would think that other nations would retaliate. i'm with -- and then i totally agree with judd. i think this is a nonstarter. i actually am one of the democrats who is in favor of lowering the corporate tax dramatically for competitive purcha purposes. >> to what? >> this is very close, howard, to a back tax. and wto compliant and it's not a dynamic issue. if you're walmart and you're buying 80% of your goods from overseas and you're making $100 billion and you have $100 billion in sales a year, i don't
6:39 am
know what walmart's sales are. you have 20% tax on $100 billion and you get hit with $16 billion of taxes. >> it is also based on reassuring the sector that they're not going to get into trouble because, don't worry, the dollar will get so strong that they'll actually make money. you can't run a business because some politician tells you the dollar will get much stronger and you'll make money. i'm against this. i do think that we can figure out a way to lower the corporate tax rate. i think it's a good idea. my own preference would be to take out all the loopholes and take out the oil depletion -- >> inversions in a big way, governor dean. it would change all the incentives. >> that's all why i'm exactly for it. >> destination-based taxes. the same thing we're talking about. help eliminate inversions almost completely. >> oh, yes. except at what price. it doesn't do well to eliminate diversions if you put retailers out of business.
6:40 am
>> no matter what happens in the tax reform bill, there will be a tax reform bill and i think it will have -- we will move to a territorial system. >> i'm in shock, governor. i don't know what happened since the election, but you want to lower corporate taxes and worry the corporations will get hurt if we lower them too much. what happened to you? the electors didn't do what you were hoping. you're not in a fetal position any more and you don't want to tax corporations and you want to help them? >> i don't want to -- >> you're in new hampshire now. that's what -- >> am i allowed to answer this one? i want to make sure that main street retailers don't get put out of business by some unproven and i want to keep corporations home. i have been for lowering the corporate tax rate for a very long time. we talked about that when i was on this show because that does stop inversions and i think we
6:41 am
have to be real. capital goes where capital goes. if you put up barriers to it, it will find the way around it. that's the problem with the corporate tax. i would like to pay for it by getting rid of a lot of the loopholes that the corporations enjoy and the special interest stuff. i agree that 18% to 22% somewhere is the right place for corporate tax. >> did you ever think that the democrats would be considering someone that makes you look like a centrist, governor, to run the dnc? >> well, that's a long way. that's going to be a very interesting -- this is, unfortunately, sort of a proxy fight going on between bernie sanders and barack obama. it's not good for the party. there are some, you know, good candidates in their race and i'm just going to wait and see how it all shapes out. >> the spirit of joe's question. how does it feel to be a centrist in your party? you used to be the left flank. >> that's actually not true. i have always been fiscally conservative. ask larry kudlow.
6:42 am
>> thanks for joining us this morning, governor. >> thank you. she's ah-haing him. apple ceo tim cook speaking out on last week's tech summit with donald trump. tell you what he said right after the break. as we head to the break, quick check on what's happening on european markets right now.
6:43 am
6:44 am
6:45 am
time now for the executive edge. imf chief christine lagarde kept her job during her time as france's finance minister. a guilty verdict but chose to withhold any punishment. lagarde said she will not contest the decision. >> i am not satisfied with it, but there is a point in time when one has to just stop, turn the page and move on and continue to work with those who have put their trust in me. >> the court took into account the global financial crisis that was happening at the time of the
6:46 am
payout in 2008 that's been so kroe controversial. now, three imf convictors in a row. which happened after he left the imf, but, still, it just lends this whole idea to the institutions -- >> this isn't nearly as good as the -- >> you mean nearly as bad. >> nearly as good. >> politically motivated. >> but it wasn't as salacious. >> put it in the same category as those others. . i think the court looked at it and looked the other way and gave her an excuse she was very busy at the time. >> undermines that it was a bad thing. is she staying? >> they reconfirmed her yesterday. >> but she definitely had -- >> i'm just going to suggest that if we held our own
6:47 am
political people and, frankly, bankers during the financial crisis and all sorts of people to that same standard, you would have guilty verdicts all across, all over the place. >> this is about $400 million. >> notice a fine or sentence whatsoever. >> it will just feed into a narrative that some people are above the rules, you know. >> absolutely. coming up, small business success stories weigh in on the trump administration. we'll check in with some companies. some of the companies we profiled throughout the year. we'll do that next.
6:48 am
mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.
6:49 am
6:50 am
the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain... but you can feel confident in our investment experience
6:51 am
around the world. call us or your advisor... t. rowe price. invest with confidence. ♪ over the past year kate rogers has profiled start-ups in 12 different cities across america.
6:52 am
she recently checked in with a few of them to find out how president-elect trump will impact everything from wages to regulations. hi, kate. >> hey, joe. over the past year we have visited the 12 cities that you see right here behind me. we've also profiled nearly 40 different companies. with 2017 just a week away and a new administration right behind it, we caught up with some of our biggest successes to hear their thoughts on what a trump presidency might mean for their business. the founder of detroit denim company we visited in march, he's committed to keeping his production right there in the city. >> one of the big questions that is -- will, you know, i guess, answer itself at some point is what does it mean to a small manufacturer in the u.s. and we heard a lot of discussion about that of how that was the focus and bringing back, you know, jobs to the u.s. but that remains to be scene. when i started this company i had very specific values of how i wanted it to run, how i wanted
6:53 am
to treat people. and, you know, how i wanted to hire and, you know, employ detroiters. so whatever happens is not going to change how we do our business. >> meanwhile, jeff winkler in san diego is looking forward to lower taxes and less regulation. >> i think the net positive impact moving forward would absolutely be lowering the corporate tax and also, you know, having a little less regulation nap would impact our business and allow us to hire teachers faster so that we could essentially provide more developers for san diego in a real way. >> businesses are planning to stay true of course to their own missions no matter what might come down the pike under a new administration. back over to you. >> thanks, kate. time now for some parting shots. parting shots? parting shots from our guest host. go ahead. >> take a shot.
6:54 am
>> if you got something -- i mean, if you really want to do that. no, do you have some closing comments? >> well, i think your tie is scottish, by the way. i think it comes from -- >> i agree. >> yes. it's got a holiday feel to it. >> holiday vibe. >> you would -- i mean, it explains why you would wear it. >> because you're not scottish. >> you wouldn't wear it because it looks good. >> i think it looks lovely. >> i think it looks good. >> made, by the way, by j crew. >> are they going to be able to -- >> i wear it once a year. you have to amortize these things. >> you'll see it every year for the next 20. >> was that off camera when you were talking about the appointments? >> i think the cabinet is very strong. i'm impressed by the people he's bringing into the government. they're all doers.
6:55 am
they've all been successful. and they're not yes people. a lot of them i know fairly well. jeff sessions will be a strong leader as attorney general. i mean, you've got good people who have enough life experience that gives them it. >> when we are going to watch these confirmations. and we're going to hear from the media about who's in trouble. we heard about the recount. i thought he was done in michigan, pennsylvania, wisconsin. >> you never had faith. >> no. then i thought this election that hollywood was going to sway these guys. unfortunately more change for hillary. >> sarcasm, sarcasm. >> who has the biggest actual
6:56 am
problem not the ms perception of it? >> by taking away the filibuster rule in my opinion making the senate more of a house organization. i don't think any of them have a problem. >> they only need 51 votes. rex tillerson, he's got an amazing career. he's been everywhere and it's nice to have somebody who's got common sense and some business judgment leading our foreign policy. >> you consider leading the big oil company a positive career. i don't know if many of us do. thank you. >> pleasure. >> always great to have you here. >> natural high school's finest graduate. >> thank you. >> you can come back any time. coming up, guest host martin franklin gives a read on the consumer as we head into the final shopping days before the holidays. don't move. this year at t-mobile, the holidays are on us!
6:57 am
switch your family of four to t-mobile, get unlimited everything, and we'll give you $800. that's right! $800 to spend anywhere you want. plus, all season long, get awesome deals on smartphones, tablets, and accessories. hurry in to t-mobile and get your holidays on us. when whirlpool builds an appliance, they put everything they know into it. but once it's sold, there usually isn't a way to keep improving that product. today, whirlpool can analyze iot sensor data from connected appliances on the ibm cloud. so they can continuously learn how customers are using their products. and how the machines respond. harnessing data to make great products better - that's what the ibm cloud is built for.
6:58 am
harnessing data to make gthis is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars.
6:59 am
7:00 am
stocks shrugging off multiple attacks overseas. but there are concerns on the geopolitical front. plus corporate earnings on today's agenda. the latest on what to watch in today's session. plus we talk m&a in 2017. is the window closing for median tech deals? it's the final countdown to christmas. ♪ it's the final countdown martin franklin joins us to talk sentiment. president-elect trump. and the state of retail. the second hour of "squawk box" begins right now.
7:01 am
lye from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and michelle border adjustment taxes caruso-cabrera. >> taxing imports. would that make you feel better? >> it's very arcane. >> but it's not going to be. it's going to be -- you are going to get so sick and tired of talking about border adjustment taxes. i guarantee you. >> introduce this gentleman. >> our guest host martin franklin a lot o discuss something about today. clint eastwood has something to do with mariposa right? >> do you like butterflies? you know that's spanish for
7:02 am
butterfly. >> i did not. >> what is -- >> i thought it was an island somewhere. it's a famous movie. >> first a check on the futures at this hour. now up 43. looks like yesterday. you know, i saw 20 or so on the way in, but you can't see the fair value. you never know. >> we've been hanging out too long together. because you just said they're up marginally. >> i was wrong. >> i always say marginally. >> ultimately is what i use. >> but tell me what i think about that. >> the 10-year ranked ultimately headed higher. we probably should have looked at currencies because that's where we're at 1.03 now on the euro. i think it would be fitting -- >> she's just a guest host, right? >> you can push me back. i'm not here tomorrow, you'll know why.
7:03 am
>> exactly. oil's at $52 or so. not a whole lot happening in wti either. there's the you're row. 1.03. haven't seen that very often. i think if we got to parity, that would be some type of -- >> epiphany or something? >> that's the best holiday. january 6th. >> your birthday. some non-market news, very serious. we continue to follow the developing stories coming from overseas. gunmen sh gunman shot and killed the russian ambassador to turkey. a gunman stood behind andrey karlov and shot him in his back. the shooter was an off duty police officer. in germany a truck plowed into a crowded christmas market
7:04 am
killing 12 people, injuring 48 others. authorities are calling it a deliberate attack. german media cited local security sources that there was evidence suggesting the suspect was from afghanistan and pakistan and entered germany as february as a refugee. berlin police are investigating leads that the truck had been stolen from a construction site in poland. meanwhile german authorities arrested a man overnight involved in that. we'll have much more on developing stories later on in the program and as details become available. >> it's frightening because every small town in germany has a christmas market. they're all soft targets. and you don't know. supposedly in this part of people spreading out from the middle east. would you go to a christmas -- i would be afraid at this point to go to a christmas market?
7:05 am
when they said this is the time you need to -- so it's -- i think it's -- i watched george will last night say that terrorism, isis is way down. he had like eight other things that were much more important. and it was just like, really? he had -- i don't know. there are some. obviously iran, north korea is scary. but these guys are -- could be in threat if they get a dirty bomb. if they get a loose nuke. >> or they're going after incident individuals that were not targeted. >> i don't think you put it way down the list like that after yesterday again. >> in the meantime, maybe this is down the list relative to some of the larger issues but we have corporate headlines this morning. facebook could face a eu fine. regulators providing facebook of providing misleading information about the purchase of whats app.
7:06 am
launching an investigation of about 1 million fiat chrysler pickup trucks. following complaints the vehicles roll away after being parked. in other auto news, general motors shutting down several factories next month as it scales back production. also planning to lay off nearly 1300 workers at a detroit plant in march. this is -- this is coming as auto sales have started to slow after seven years of growth. stocks closed higher monday and low volume trading. since the election. it gained nearly 1.1%. also worth noting, the nasdaq hitting an all time high yesterday and was on pace for the fifth straight positive year in a row. joining us now. great to have you here. >> thanks for having us. >> i want to start with you
7:07 am
because you actually ran businesses. what do you think about what's happened in the u.s. market since the election? there's this message coming from the markets, the return of animal spirits, that things are going to get better for the economy. do you agree with that? >> yeah. i mean, everything that you see is pointing to a pro-growth administration. and you're seeing the markets react to it. the markets always are ahead of, you know, actualities of what happens in the economy. and you're seeing that momentum. it's not just a honeymoon about trump. it's all the people he's putting in his administration. guys like wilbur ross, my old boss. you know, it's good. it's optimistic. at the end of the day, optimism feeds on itself. you're having that cumulative effect. >> some of these things work. we've had eight years of people saying those things don't work. >> there's a momentum that's been released from the administration. >> we're going to get to see whether it works again or not. and maybe we can convert some of
7:08 am
the naysayers. >> you know how it plays out. end of the day a lot of these bold decisions will end up getting cutbacks so they can get passed. >> but anything, something. >> but they'll be things that will be pro-growth. >> better than what we had before? >> for certain. >> what have you done with your money in the past month and a half? >> so i've been -- i'm not a short-term investor. so i've been buying into businesses that i think have long-term potential. i bought a company called royal oak switch a charcoal company. there are really only two large manufacturers of charcoal in the united states. one which is clorox. one is royal oak. it's one of those businesses every time you're doing tailgating, every time the season comes around, people use charcoal. >> so you have no money in equities. >> i don't play the stock market. >> at all? >> except the companies i'm involved in. >> i think to what martin was saying, one of the criticisms we've seen of this rally in the
7:09 am
last several weeks is it's all on so-called animal spirits. trump's not even in office. it's almost laughable to use that criticism. because if you're investing in the stock market and you're waiting for them to ring bells and concrete legislation to get passed, you're in the wrong business. >> because you'll be way too late. >> you'll be way too late. and we probably won't get everything the optimists are looking for. but again, it's going to be in that direction. and we're going to see some relief of regulation. we're going to see some tax relief, and we're going to see better -- some stimulus in the economy. so those things, we may not get it all but we're going to get some of it at least. >> should people buy more here? >> i think as long as -- i think the market going forward to next year, we have two things to focus on. valuations which are excessive but valuations are never a catalyst for a market selloff. you need another catalyst to
7:10 am
drive the market lower. and interest rates, looking at interest rates, we've seen an uptick in interest rates which in the long run higher interest rates are bad for equity -- when interest rates have been rising because we're still in bunker mentality rates. just this shift we've seen in the last 50 days since the election where we've seen bonds shell off sharply. we've only seen that five times in the last 30 years. >> josh, you're the economist on set but we won't hold it against you. >> please. >> are we going to get more growth as a result of these policies? >> we don't know what we're going to get. so i agree some of the things talked about have the potential to be pro growth. but the devil's always in the details. we don't know what we're going to get on the fiscal side. we don't know what we're going to get in terms of corporate tax reform. i think some of the things as i said could be positive.
7:11 am
but there's also some things that i do worry about. >> like? >> protectionism, for example. how hard are they going to push on those things. because those could cut the other way. those could damage the potential over time. >> you're so before the election. >> we'll see. maybe they won't happen. i don't know. >> you were worried before the election, too, weren't you? >> about protectionism, sure. not just in the u.s. this sort of populist, you know antiglobalization wave is in other parts of the world too. maybe it's rhetoric. maybe it won't come to fruition. i hope not. but that is certainly something to be concerned about. the other thing is on that front if we do get pro growth stimlative stuff, domestic demand picks up and pushes the dollar higher, that may make it difficult to get the other goal to the trade deficit. and that could further fan
7:12 am
protectionist flames. i'm not saying those things are going to happen but they're risks. >> if you wait until everything gets passed, it's the rally. have you already started to raise them? only because i mean this platform is far more pro growth and pro business, right? >> nudging it in that direction. not starting until the latter part of next year. it's going to take time for these things to happen. i'm just saying there are risks on the other side too. the market is looking at everything glass half full or glass all full. i'm just saying -- you know. >> thanks so much. martin's going to be with us for the rest of the show. we'll have you back on some other time. >> malpaso. not mariposa. clint. that is a beautiful little creek which is south of carmel. and malpaso is now --
7:13 am
>> malpas coming in. >> not now. he's ill. people at home that have been waiting around for that and not changing their plans, now can do whatever they had to do. when we return, we're going to talk to the state -- about the state of the consumer and sentiment around the country post election with guest host martin franklin. great capitalist. you know, you -- glad you're here. >> actually did something. that's nice. >> as we head to break -- maybe you need to get into government. line your pockets even more. we'll get a look at yesterday's top dow 30 gainers. we'll be right back. has declard a winter weather emergency... announcer: soon, insurance companies won't pay for damages, that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims, into one focused on prevention
7:14 am
with predictive analytics... helping them proactively protect the things that matter most. get ready. because we're helping leading companies lead with digital.
7:15 am
tadirectv now. stream all your entertainment! anywhere! anytime! can we lose the 'all'. there's no cbs and we don't have a ton of sports.
7:16 am
anywhere, any... let's lose the 'anywhere, anytime' too. you can't download on-the-go, there's no dvr, yada yada yada. stream some stuff! somewhere! sometimes! you totally nailed that buddy. simple. don't let directv now limit your entertainment. only xfinity gives you more to stream to any screen. welcome back to "squawk box." let's check in with our guest host on how consumers are fairing this holiday season and donald trump's effect on sentiment. martin frank lin is the former chairman of the consumer products company he sold earlier this year for a cool $16 billion with a "b" to newell brands. good morning. >> good morning. >> we've talked about animal spirits. do you think those animal spirits are cascading waterfa waterfalling down into retail sales for the holiday season? >> i think it's going to be a pretty good year.
7:17 am
i think it's going to be in patches like so many other things. i think consumer behavior is shifting. so you see people like -- retailers like niemann marcus having a hard time. that doesn't necessarily mean that the consumer is doing poor. there's going to be a lot more online buying. i think sort of for the mass market. i think it's going to be very healthy. i think people are feeling pretty good. you know, low unemployment, it's continued momentum. that sort of juggernaut of the u.s. economy. continuing to go on. >> we've also been told in part the trump presidency has been described as a success -- or he won in part because of huge swaths of the country that are terribly unhappy about the economy and people are doing terribly. do you see those people? >> no. i see it a little bit differently. i'm not sure that's the reason he won. i think there is definitely an anger about the movement of the
7:18 am
american base. i think he tapped that vein. they don't have the jobs they perceived they should be having. as you know, the biggest driver of employment has been in the service economy which doesn't pay as well as the manufacturing economy. and so you've had that effect. you definitely tapped that vein. i don't think there's any doubt about it. but overall america is okay. and i think it shows up in consumer habits. i still think it's pretty good. >> that's a nuance, but it's an important nuance. you don't actually think huge parts of the rust belt people are doing poorly or terribly. they're just not doing as well as they think they should be doing. >> exactly. you had brexit. it's a brexit vote, in a way, in america. america's vote for trump was a reactionary vote.
7:19 am
>> we did see wages stagnate in those areas. to your point of service economy. >> people that own assets do well because of zerp and everyone that owns the assets did fine. and the fed had to be there because the economy could never get above stall speed. every time they did, then it was another quarter it seemed like it was falling. with the fed unable to get out of that box. but i blame it on not havingny of the pro-growth initiatives that we're going to have now. because we were in a redistribution mode for eight years. and a grow government mode, not a private sector mode. >> you've got the momentum. you've got large corporations and i see it from the inside looking at what they -- how they're going to adjust wages for the following year. now looking at bigger increases. >> it will happen organically
7:20 am
though. >> and why is it happening? >> momentum. a tighter labor market. you want to keep your people. you have situations today if you don't pay people, they actually could find jobs somewhere else. >> but those conversations, are they happening on the back of an expectation of lower taxes? >> no. >> so they're happening -- >> those things are going to be -- if you want to increase the growth of gdp, those are the stimuluses you're going to need to make. lower corporate taxes. >> but the argument you just made we're going to see higher wages in the new year and boards talking about increasing wages, how much of that is a trump effect or how much of that is an effective just where we are in the economy? >> would it be happening anyways? >> it was going to happen anyways. >> okay. just want to be clear. >> but again, people dissatisfied with a juggernaut moving up 2% when they want a juggernaut going at 4%. >> right. >> so i think that's part of,
7:21 am
you know, the whole equation. but it is -- it's been a thin recovery in the sense that if you had assets, you really benefitted. and if you didn't have assets, you're left behind. that's the political side of it. >> they want to change the way corporations are taxed. not on profits but on cash flows to match what happens overseas. but you're familiar with what happens overseas. >> good luck with that one. >> is it better to do? >> cash flow is fundable -- >> how would you do it? what's your version of a territorial tax system? >> that's different. this is different from territorial. >> it's part of that conversation ultimately. >> i have never seen a corporation that actually pays the corporate tax rate. >> no. >> the corporate tax rate that is on book taxes is totally different from what every corporation pays in cash taxes. >> just to put context to this, the average effective tax rate for the s&p 500 is 23%.
7:22 am
it is not 35% which is the rate card. >> it's almost like the individual, you know, taxing citizens. if you need to simplify the tax code, you need to get rid of a lot of deductions. i think they're going to -- at the end of the day that's the direction they have to go in order to keep it not necessarily revenue neutral, but manageable. and acceptable. but i think the idea of taxing cash flow is very hard. too easy to manipulate. >> why go from 23 to 20 then? that's an argument to go to 15. >> right. >> it's a pay for. >> go to 15. >> go to 15 but what about the debt? >> reported corporate profits on book basis are going to go up sky high. >> don't worry your pretty head about that. >> i find it fascinating.
7:23 am
for so long you were someone who was conservative about debt. >> i was? oh you just mean the generic conservative. i've talked about that a lot? >> yes. >> really? oh, i didn't -- >>
7:24 am
7:25 am
7:26 am
let's look at some stocks to watch. we have been hearing for weeks about talks between industrial gas makers lind and prexair. they have agreed on a merger of equals. they signed a nonbinding term sheet which would see linde get for each share. and praxair holders would still get one. square was rated buy. the company is part of a global market and has been consistently gaining share. still to come here on "squawk box," the m&a for technology companies in 2017. plus colony capital ceo and head of the inauguration committee tom barrack is going to stop by. take a look at u.s. equity futures at this hour.
7:27 am
♪ we're drowning in information. where, in all of this, is the stuff that matters?
7:28 am
the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.
7:29 am
among the stories front and center, shares of food maker general mills are under pressure
7:30 am
in premarket trading. company reporting profits of 85 cents per share. revenue also fell short with the company hurt by weaker sales of brands like yoplait yogurt and progressive soups. also reporting this morning, blackberry. earned 2 cents per share compared to expectations of 1 cent per share. lost revenue was compared to loss of 1 cent. revenue was shy of analyst estimates but blackberry did raise its full year forecast. and two earnings reports of significance after today's closing bell. quarterly numbers from fedex as well as dow component nike. german police are continuing their investigation at a crash site in central berlin where a truck plowed into a christmas market yesterday killing 12 people, injuring 48 in what germany's interior minister said looked like a terrorist attack.
7:31 am
joining us now is kurt volcker, former u.s. ambassador to nato. but first cnbc's geoff cutmore joins us from berlin with the latest developments. good morning, jeoff. >> reporter: there have been some developments within the last few minutes. we understand some german media are quoting police sources here saying they don't believe the man they have in custody is the actual perpetrator of this attack from last night. we do understand there is a 23-year-old pakistani man who is in custody and has been questioned by the police here over this attack. but just within the last few minutes, there is a suggestion in the media that perhaps police do not have their man in which case that would suggest the perpetrator is still at large. i can also tell you a little bit more about what the interior
7:32 am
ministry has been saying here. 18 of the 48 people who have been hospitalized are considered to have serious injuries that would suggest they could be life changing. there is also a report that one individual has bullet wounds or would indicate that they were shot. we don't know too much about that at this stage. and at this point, the police are not revealing any identities of either those who were killed or those who are in hospital at this stage. they have suggested through the interior ministry that at this point it is quite difficult to confirm the identities of some of the casualties of this horrendous attack. chancellor merkel is expected here somewhat later in the day. we have no confirmation on the timing of this. but she has already come out and said she feels this was a terrorist attack. that would have some bearing on
7:33 am
chancellor merkel's own political position running into elections next year with some members of the opposition here suggesting it is the asylum policies that may have led to this type of terrorism. so that's a quick update on the latest we have here for you. michelle, let me send it back to you from berlin. >> thank you very much. geoff cutmore there for us. let's bring in former u.s. ambassador to nato who is director of the mccain institute for international leadership. geoff set it up there. we don't know this is islamic terrorism at this moment, but certainly this ask going to raise the pressure on angela merkel looking back on her decision to allow so many refugees into the country isn't it? >> absolutely. it's reminiscent of the attacks in niese if it turns out to have been something else maybe that will mitigate the effects but
7:34 am
the assumption is that it was some form of jihadist following out al qaeda's orders to kill infidels wherever you can. mimicking that niese attac-- ni attack. that is put in place, people will blame those policies because it let in a lot of people. that political effect is going to be felt. >> they're certainly worried that process is used as cover for people who don't deserve refugee status. it's important because she's running for office. and if she doesn't win, there are implications for europe at large. there's implications for the euro as well. every time we see these attacks, it feels like we get closer and closer to the possibility of eu disintegration. >> it's certainly a lack of leadership in europe and an inability to come in with
7:35 am
daunting challenges. and you have external challenges such as the conflict in syria or russia's encroachments in the east. europe has not been an effective player in dealing with thoses. >> let's talk about russia. the assassination of russia's ambassador in ankara turkey yesterday, what is russia's likely response? we've seen turkey and russia have vowed to work closely, solve the situation in syria. tell us what you think is really going on. >> well, certainly it's a tragedy that any diplomat is assassinated like this. it's not something you want to see and it's terrible for him and his family. but at the same time you have to be clear about vladimir putin. he's a cold-blooded authoritarian leader. he will use this to put pressure on turkey in order to get turkey more onto his side how to handle
7:36 am
the syria conflict which is to go after some of the armed opposition groups and keep assad in power. turkey's been doing the opposite. at the same time they'll use it to fan nationalist fervor at home and that's something that vladimir putin uses to strengthen his power hold. >> thanks for joining us. >> my pleasure. thank you. coming up, the -- meantime, check out the futures right now. we have some green arrows with the dow looking to open about 53 points higher. back in a moment.
7:37 am
7:38 am
this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do,
7:39 am
then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. weighing in on the trump presidency in a blog post last night dalio said trump is a deal maker who negotiates hard and doesn't mind getting banged around. he said it will be greater than the sum of his policy changes because it could ignite animal spirits and attract productive capital. he said to better understand donald trump you should refresh
7:40 am
your memory on ayn rand. this administration hates weak, unproductive, socialist people and admires strong can-do profit makers. it sounds so bad. >> note, though, that i remember having a conversation with ray dalio on the stage at the delivering alpha conference -- >> that was before the election. >> i know. and we asked him and tim geithner what was a realistic growth rate in america and they both looked at each other and i think said something in the order of 2%. >> and? what's your point? >> and here we are. >> so it sounds like you might have recalibrated. >> perhaps. >> you know who said animal spirits? >> first? ayn rand? >> no. >> oh, no. >> according to wikipedia. >> joining us is tom barrack.
7:41 am
i know you probably had everything on hold. until yesterday. things are going to go as planned. a lot of hollywood types were appealing for the electors, it's their country they said. >> emotions are still running high. >> oh, you're nice. you're being conciliatory now. >> we need to be conciliatory. right? he's now the president of everybody. not just the constituency that was sponsoring him. and listening to ray who is brilliant by they have way, reminds me of teddy roosevelt. the credit belongs to the man in the arena whose face is marred and bloody and dusty and wounded. so you have a guy who entered the middle of the arena. you may like it, may not like
7:42 am
it. but it's time the get over it and give him a chance. all the rest is conjecture. so this idea of inauguration, right, that we talked about before this, the only democratic peaceful transition of partisan power in the world is a moment to display to the world look what's happening in the world. it's a nightmare. right? >> look at yesterday, for example. >> it's incredible. so you talk about, you know, radical islamic terrorism. the only way to stop radical islamic terrorism is to get good islamic backing behind stopping islamic terrorism. but we have to start as a nation together. part of the healing and bridging process versus everything that's happening economically is how do you bring these back and let the president-elect listen to those voices. global warming. everybody looks at the epa appointment and says we're doomed. we're not doomed.
7:43 am
you're going to have a dialogue to figure out what that is. but reduce the regulatory hurdle behind what the productivity of a green energy may be. so everybody's just jumping to conclusions. he's better than his building. give him a chance. this inauguration is not about laying adulation to a dictator. it's about we the people. it's very different. and president obama was a great guy. he did the best job that he could. 535 other people had a massive input to what he had. so celebrating him on the way out is a great thing. he wasn't a celebrity. he needs that celebrity support. he's certainly a celebrity now. and president-elect trump is a celebrity. he doesn't need the celebrity support. he want this celebrity backing. >> question about the celebrity backing. i know you've been involved in the inauguration planning.
7:44 am
some of your friends in hollywood apparently are unwilling or at least the reports were saying they were unwilling to perform at the inai inaugurati inaugurati inauguration. >> what? did you know that? >> yes. same with the rnc. >> they are willing to pay anything. that was the quote. another -- >> the trump people are willing to pay anything. >> it says i couldn't do it not even for a billion dollars. whatst the real experience been like for you? >> it's part of the trend of disinformation. so this president-elect started and said, look, i don't want a gigantic production that looks like it's homage to me. of course the entertainment is tensed off it. there wasn't a process of the pick of the inauguration committee going out to anybody and asking. the program for what it is is
7:45 am
about america. it's not based on the great celebritiship. it's available to president obama, to president trump. there are thousands. and there are also thousands who are hesitant. >> so what's all this going to look like? saying create a media sensation. >> mark burnett is one of his oldest friends and greatest partners. the idea is for us to be in the helicopter. not the president-elect. i'm teasing. no, it never happened. again, that came out of a dialogue saying what would it look like? president-elect says, look, i want to get to work. make this simple, make it quick. i'm concerned about what bible i'm sworn in on, who swears me
7:46 am
in. and that day. >> which bible would he like? >> you're going to see. you have to tune in. >> the other thing i was going to ask about was his security. there was a report he's kept on his private security in addition to the secret service. and the secret service are frustrated by this because they don't think the private security is either as good as they are or creates frictions because they're not all following the same protocol. >> again, look, i think what you see is everybody bureaucratic note in the government is panicking. this president is playing by a different set of rules. his security is first class and a lot of them are out of that system. but what's happening is the system is starting to bristle. i think that's what you're seeing in the intelligence system. the smartest guys from ivy league schools. most of them are not of joe's political persuasion. and they're panicked. saying, whoa, we have a guy who's taking us head on. what is that going to be? it's a good thing, right?
7:47 am
no matter where it goes, challenging it is a good thing. >> president obama had a lot of really good celebrities. i mean, i just hope trump can get these things done without having all the hollywood people backing him. i just -- i worry. i worry. let me ask you about andrea bocelli. supposedly he was going to perform and then i saw that there's a fan movement. they're throwing his cds away and they're going to be dead to him if he performs. can you give us any details about what's going to happen either tuesday, wednesday, thursday? >> first of all, the celebrities -- it's a simple choice. right? the celebrities need to decide are u you going to be participating and be relevant? i'm not talking about the inauguration. this inauguration is not about them. >> do you have any details on what you put together for that week? >> i was going to wait until the day before and figure it out. yes, of course. >> can you give us some hints?
7:48 am
>> it really starts on tuesday. and there's a series of dinners. right? which are organized to different groups. the monuments themselves are the draw. when you think about washington and you watlk from lincoln to washington, that is the moment. the we the people moment is the moment. it's oriented around that. it's not oriented around let us take spotify and give you everything we can give you. and does he need the celebrities or want the celebrities? of course. but they're all going to weigh in when they find the judiciousness of the man. so everybody's a little bit wounded along the edges. there's a gigantic segment who's not. but this inauguration is not about that kind of entertainment. on friday it starts with the
7:49 am
wreath laying him at the white house, the procession then to the capital. the capital moment is the moment for the world. on the west side there. it's that swearing in moment. that's the moment that the world captures. >> yeah. it's reported that bocelli folded to that threat. theoretically it could have hurt his career. >> he's a class act. >> then other people say trump said there's too much going on. go ahead. neither happened? >> neither happened. bocelli and his wife who is an amazing woman have been friends of trump from the beginning. >> right. >> trump lent him -- and this is a true story. trump lent him an airplane when nobody knew who he was. so bocelli is loyal to him as an individual.
7:50 am
so the bocellis came to him and said if it would be helpful to you, if you would like us to perform, we would consider it. and donald said you don't need to. we're not in that kind of a framework. thanks for the offer. of course the media that bocelli was performing on thursday night in madison square garden. the performance went off without a hitch. it was perfect. it never got to can you will you would you with either of them. they're just great friends. and that was it. >> any events at the trump hotel on pennsylvania avenue? >> sure. there's a series of balls that are held. and another dinner on wednesday night. and there's little subvignettes. we're expecting 2,000 people there physically there. and televised millions. but it will be quite something.
7:51 am
the president-elect's view is -- let's get on with it. >> it's pretty interesting to watch these. what did steve eisman say? democrats wage -- does that sum it up? i mean this is -- i mean, barack obama had much better celebrities. i'm just saying. he got all of them. >> there's a reason, right? >> i know. >> barack obama is a great president that had never made a payroll. right? >> that's true. >> learning on the job and he wasn't a celebrity at the time. so he needed to surround himself with celebrities which is fine. this president is already a celebrity. >> you're being so diplomatic, sir. it's a pleasure. >> president obama came into the office without any successful executive experience and is leaving the same way.
7:52 am
anyway, good to have you here. it's okay. you don't have to counter that. >> i'm just saying the happened -- hand is on the scale. >> pleasure to have you. coming up, media and tech deal. will more deals get done under the trump administration? we asked the ceo of lion tree after the break. (fans cheering) because when you really, really want to be there... but you can't.
7:53 am
(cheering) at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready. because we're helping leading companies lead with digital.
7:54 am
7:55 am
let's look at some stocks to watch. we have been hearing talks between linde and practiceair. they've agreed to terms in terms of a merger of equals. they signed a non binding term sheet. and praxair holders would get one share for the shares they own. shareholders still need to give approval. square was rated buy at instinet. has been countrily gaining share. stock is higher 1.5% in the premarket. let's get back to guest host martin franklin. rising interest rates in the wake of the election. let's talk about their impact. we talk about it on this network whether it's mortgage rates, whether the ability to borrow from corporations. the turmoil it's describing overseas, what do you think about it? >> that's probably the choppiest water for continued growth. because at the end of the day,
7:56 am
it can dampen consumer demand. it's a question of pace. i think the idea that next year there are going to be three, maybe four fed increases, a question of degree, you know, it's all sentiment. i think people who have refinanced all their mortgages over the last five years and all have more disposal incomes. people can afford to pay less for their homes. it's that simple. >> yes. everybody's very focused on the fed and how many next year, but it feels like the treasury market itself is like -- the fed. they've moved the 10-year to places nobody expected which is really what draws borrowing. any concerns about corporations being able to grow? >> i think it's going to be one of those factors. it's a question of is the momentum going to out-pace the growth rates. i think at the end of the day, it's a question of degree. rates still on a basis extremely low.
7:57 am
a lot of companies are borrowing on -- >> hold that thought. we'll continue in the next hour. >> okay. when we come back, this is a little bit of a fun tease the producer put together. you heard of 3-cpo but what about c3 iot. thomas siebel is going to join us and talk the internet of things. get it? maybe. a look at s&p top gainers. we are back in a moment.
7:58 am
7:59 am
8:00 am
the path to dow 20,000. today's test for the markets. quarterly results from a couple of major multinationals. a slowdown for uber? new reports the ride hailing giant lost millions in the latest quarter. details ahead. all that plus the island of market misfits. ♪ we're a couple of misfits ♪ we're a couple of misfits >> santa's list of the stocks that got left out in the cold this year as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box."
8:01 am
>> welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and michelle caruso-cabrera. the futures at this hour, we'll take a quick look. they were up 40. now up 66. 66 or so after tom barrack was on and delineating some of the actual details of the inauguration. futures seem to respond, andrew. >> really? come on. >> i think when i said it was a done deal after yesterday, maybe everybody hadn't seen the numbers. hadn't seen the numbers. up 65. about 15 now on the nasdaq. look at treasury yields which the 10-year remains below 2.6%. we see the recent highs. it seems we look for higher highs. when they moderate, it's not news. >> the momentum makes you wonder
8:02 am
how far is it going to go. >> that's not going to happen immediately. but you never know. >> dollar is much stronger this morning. >> and the euro is weaker. there's energy. up a little bit now. up a 0.5%. and the euro last we checked at 1.03. >> new 14-year high this morning. >> and almost 118 on the yen. i think it was still 117. oh, it is 118 now. that's a big move there. and a weaker yen and obviously. let's get you caught up on headlines this morning. the bank of japan holding rates steady. the boj revising up its views of exports and output and suggesting the economy continued to recoffver moderately. lost at least $800 million in the third quarter. not including items including taxes and the sale of its china
8:03 am
business. revenue rose to $1.7 billion. that's surprising consider it got rid of the china business. if you can't make it work without that china business, it's complicated. it's complicated. in political news, tim cook telling his company staff why he attended last week's trump tech summit. cook writing on an internal apple message board, quote, personally i never found being on the sideline a successful place to be at. quote, you don't change things by yelling. you change things by showing everyone why your way is the best. so little bit of an explanation. >> he's got to justify a meeting with that guy. is this to his employees? >> i think to his employees. that was for his employees. many of whom were on the other side of this vote. >> he's got his reasons to meet with the new president. i mean, they're not going to immediately understand, but hopefully he can explain -- >> have some sympathy for
8:04 am
people -- >> can justify meeting for this guy. that tim cook gave this guy his -- >> so -- >> have a marginal amount of empathy for the people who didn't vote for him and are frustrated. >> i know. there's those groups you're talking to. >> there's a whole other world not in your camp. so to criticize and condemn and -- >> it's the biggest company in the country. you've got a new president that's got all these pro-growth initiatives. of course -- >> of course he should go to the meeting. >> of course he's going to meet with him. >> but it's also fair for him -- >> don't need to explain to people still in the fetal position that this is the way the world is. they need to get with the program. >> i think it's more complicated than that. >> i know you do. but he needs to meet with the current president as do most. >> i think he should have met with the current president. >> when obama became president, i don't remember republicans going out and having counseling to get over it. it's just -- the conversation
8:05 am
has gone -- >> what they think is normal and day-to-day that -- >> i don't remember the president-elect criticizing all sorts of groups based on race, ethnicity, and other things. so i don't understand why you will criticize the fact that he sends a nice note to his employees some of whom clearly voted on the other side and have their own concerns. i think it's completely crazy. i'm sorry. go ahead. on the other side, hedge fund billionaire ray dalio weighing in on the president-elect last night. he said the economic shift from the trump administration would be greater than the sum of his policy changes because it could ignite animal spirits and attract productive capital. dalio said if this administration can spark a cycle in which people can make money, the move out of cash ta risk on investments could be huge. dalio also shared a rosy view of america saying, quote, a
8:06 am
pro-business u.s. with its rule of law, political stability, property rights, protections, and soon to be favorable corporate taxes offers a uniquely attractive environment for those who make money and/or have money. switching gears, we are following a developing story out of europe this morning. a migrant from pakistan has been identified as a suspect in a truck attack on a crowded christmas market in berlin. but as geoff told us last segment, there are some conflicting narratives out there. can you tell us any more? you're joining us from germany with more. >> reporter: within the last hour we've had a press conference here involving the police and the mayor of berlin and the interior ministry. they have come out and pretty much said that the pakistani gentleman they have in custody, this 23-year-old, is the perpetrator of this horrendous
8:07 am
crime. what they're saying at this stage is that he continues to be held for questioning although he is denying any involvement in this terrorist attack. so that changes the whole nature of what's going on here on the ground and the nature of the investigation. because we know that there was a man killed in the cab of the truck by gunshot and that means that there is a gun involved and they do not have the perpetrator in custody at this point. so now the police are changing the nature of the alert that they are giving to the public here and suggesting that people should take care and there could still be a dangerous man on the loose with a firearm. so we have a slight shift in the investigation taking place. also coming out of that press conference, we understand that there will be a stepping up of security measures around christmas markets going forward in this city.
8:08 am
there is a football match to be played tomorrow by a berlin team, increased security there. but the police at thus stage are saying that new year's eve celebrations around the brandenburg gate will go ahead. as far as this investigation is concerned, things are still changing on the ground. back to you. >> important development. thank you very much. especially because gun control is so strict there. so that's going to be something they discuss a lot, i bet. stocks to watch this morning, praxair and linde signing a non-binding term sheet for a merger of equals. linde shareholders will get a share and a half for each of the shares they hold. while praxair holders would get one share. darden restaurants reporting better than expected revenues. topped forecasts. and black berry beating the street on the bottom line raising full year estimate as well. that stock nearly 3% higher.
8:09 am
general mills missing revenues. hurt by brands like yoplait yogurt and progressive soup. eu antitrust regulators are charging facebook with misleading information about its takeover of what ts app. bank of america sold its uk credit card business to lloyd's banking group. the price tag about $2.4 billion. our next guest is one of the media world's top deal makers. setting up his own firm four years ago, advised $300 billion with a "b" of transactions. and our guest host good friend of his as well martin franklin still with us this morning. good morning. >> goork. >> happy holidays. >> and to you guys. >> so this has been a big m&a year in media. where is this going in 2017?
8:10 am
>> i think it continues but with a lot more hurdles along the way. because of the political environment. we have an intersection now of politics and technology and deal making around the world that we've never seen before. i think tim cook's comment and getting involved is something you'll see more of. the regulatory environment, the political systems, the populism around the world, the elections coming from france and germany have a big impact in how we deal with global -- >> in what way? >> you've seen dislocation of asset prices. if you look at a broadcaster in germany, you've seen much more fluxuations of value because of the political environment. than you are seeing for a europe or u.s. broadcaster as much of a global outlook. so there's definite tension between a global corporation that's focusing on different markets. and an economy that's tied to a particular -- >> so to the degree we do see
8:11 am
m&a, would you imagine you'd see a big american corporation try to buy a cable asset in the uk or in germany, or do you think there's going to be protectionist move there? do you think there's going to be a protectionist move here? for example, if a foreigner were going to try to make a play there? >> there's never -- you see global technology companies, all the u.s. technology companies play on a global scale. the u.s. media and telecom companies are basically global but just starting. you're going to see a lot more activity in europe and latin america, maybe asia. you can see asset locations guinn the local political environment. >> i get the price piece of it. i wonder the political piece of it depending on how we act here how easy or hard sit going to be to complete deals there? >> look, i think the regulatory environment for a deal usually is tied to the local market. you don't see sort of a global regulatory regime that will
8:12 am
block an anti-trust transaction. companies that are maybe full in one market may go global to get more diversification. >> where do you land on the biggest of big deals? >> it's unclear. at&t and time warner has no reason it should not go through. meaning it should go through. but we have a new regime and a new president coming in. we don't know his views yet on concentration and how it all plays out. >> it's a much smaller transaction, but it's in the news virtually every day. verizon/yahoo. what do you think there? >> our job is pretty much done now. i think it's more in the camp of the board and lawyers figuring out what to do. it's strategic. >> cbs/viacom seemed like it was going there. now it's reversed. there was a new report in "the
8:13 am
new york post" yesterday, les moonves over to japan to buy sony pictures. they've been hoarding cash for quite a while. >> when you have a parent put their two children in a room together and say work out a deal, it doesn't usually resolve itself. it doesn't always happen harmoniously at that time. plus you have companies that can stand on their own two feet. cbs has more assets to -- thinking we can build these companies up separately if they don't have to get together. >> when do the tech players get into the game in a meaningful way? amazon has done so. but i'm thinking about is google ever make a big play to buy one of these big content providers or studios? >> i think so. you see first with the telecom companies and cable companies going more vertical. technology is next. what's interesting is technology
8:14 am
companies as large as they have, they haven't done large cap m&a. the largest deal for them has been about a billion dollars. you're now going to see a shift in cash. they're going to be able to bring their cash from overseas. >> this is part of the repatriation story. >> correct. they have to do something with it. i think there's going to be a close tie between government and trump and with the technology companies are going to do to reinvest their cash. part will be m&a, parts will be new investments. >> rising interest rates make it easier, harder? is it like the mortgage market? buy now because it could get worse later? >> it makes it harder over time. but the onslaught creates a bit of an urgency. back to ray dalio's note today. there's more of an aggressive policy and more of an aggressive posture in deal making as well. given the changing dynamics. it is getting riskier. >> one of the tech companies that's long been in play with a media partner has been a guy who didn't make it to the trump
8:15 am
meeting which is jack dorsey. what do you think happens with twitter? >> well, twitter is a media company in my mind. it's a news outlet. it's a place for content. plus having major impact now. i've never seen more impact than when the president-elect says -- >> you would think with the president being behind it, there would be huge money to be made. >> well, money to be made and having impact are two different things. >> right. >> which news organizations have grappled with for years. >> yes. >> but i think it is a great platform. has to be managed more effectively. and combined with a media asset. and speculation that disney was looking at it before. that's just one of the media companies. >> i do find it confounding, though, right? that it could be this very powerful platform. without any money. i know. it seems to me the two go together. >> if you're a big conglomerate,
8:16 am
it doesn't matter whether it makes money. it gives influence. >> think of it as a newspaper. >> ultimately we are tied to the same metrics in the markets. media is the creation of content distributed through technology. that technology medium has shifted. using to be newspapers. that technology now is social media. you still have to make money in the creation of content. >> before we go, you're not just a media mogul you're now becoming a director of sorts. this is the mannequin challenge. you put this together, this is your office. >> that's our office. we tried to do more of a holiday card than just a simple piece of paper or a link. we decided to mannequin challenge in deaf rans to our media clients, be a little more creative. >> how many people there and what kind of -- is there union scale on this? how's this work?
8:17 am
>> they're paid well for this commercial. >> how long did it take to get it? >> three takes to have everyone frozen. >> you edited it here. you could do different -- it's not like scorsese where it's all one. >> and were you behind the camera at all? i see you in front of the camera here. >> no we finish up on running the 2017 themes. it was not easy to hold this long. but we're proud of it. >> thank you. ari, great to see you. happy holidays. thanks for coming in. >> thank you. a lot still ahead on "squawk box." coming up next, how donald trump's boost could be on the internet of things. plus a rundown of the once favorite stocks that got left out in the cold this year. and later, technology and innovation in 2017. we're going to get predictions for the year ahead from silicon valley from a top venture capitalist. stay tuned. "squawk box" will be right back. 3w4r5
8:18 am
they are the natural borns enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.
8:19 am
8:20 am
. welcome back to "squawk box." donald trump has promised to go big on infrastructure spending. this could mean more business for companies that monitor our 21st century data streaming from all corners of the internet of
8:21 am
things. joining us no is tom siebel chairman and ceo of the company c3 iot. we tried to do a c3po -- it was not good. >> good morning. >> good morning. where do you see this all going given what the -- in a trump administration world, if you will? >> well, i think that the president is going to invest -- make massive investments in critical infrastructure. and the last mile, in highways, in airports, in smart cities. all these will be censored. and so in order to really o optimize everything from traffic security, it will require an entirely new generation of software. so -- >> who are the big winners, if you will, in this? besides the folks who lay cement to do construction. the tech world? >> of the -- >> of the internet of things
8:22 am
folks out there. >> in that space? >> it says undetermined. it's a jump ball. there are about two juggernauts that have spent $2 billion to $4 billion. one is quite public about it. but so far they have no production -- >> who are you referring to? >> the world's largest and greatest 19th century industrial -- >> general electric. >> yeah. >> okay. >> all of a sudden decided one day they were the leading. but today they don't have one production customer. >> amazon is a winner. doing with iot is changing. amazon as you know is larger than the sum i think of their 16 largest competitors.
8:23 am
>> you explain why. i think of them as a commodity supplier of cloud space that other companies lay their know-how, software on top of. are they addtive itive to that? >> yes. amazing connectivity capacity. we sit on top of that plot form and enable these large scale iot big data for the largers corporations of the world. we go to market with amazon in a huge way. >> what do you think of brad and those guys? >> he was in the coupon business. >> years ago, yes. >> they had a coupon business that went public for $30 billion or something. >> my understanding was he had gotten into the iot business with caterpillar. >> they raised $45 million, they have 650 employees. do the math on how fast $45
8:24 am
million lasts with 650 employees. not very long. >> they have questions about that. >> i believe they have no customers and i believe that he was pretty good with the coupon business for awhile. >> i'm sure brad will have to come back to answer that. >> talks trash. >> yeah. come on back. we got to have more time to have this conversation. appreciate your time. great to see you. >> thank you. coming up, fedex set to post quarterly results after the bell today. how the company is fairing during peak shopping and shipping season. what to expect next. "squawk box" will right back.
8:25 am
8:26 am
8:27 am
coming up, what do ralph lauren, nike, and l brands have in common? a few stocks were left out in the cold this year. we're going to head to the island of market misfits next. i think that she's a very nice girl. you never got the brakes looked at? oh yeah...no.
8:28 am
at cognizant, we're helping today's leading manufacturers make things that think and do, automatically. imagine that. a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready. because we're helping leading companies lead with digital.
8:29 am
8:30 am
♪ welcome back to "squawk box." one of the morning's big premarket movers is acadia pharmaceuticals. acadia says its drug to treat psychosis in alzheimer's patients met its study. already approved to treat hallucinations in parkinson's patients. nike has the distinction of being the dow's worst performer this year. and one of only two dow stocks lower for 2016. the other, coca-cola. the government launching an investigation into complaints
8:31 am
regarding fiat chrysler pickup trucks and suvs. customers have complained that the cars roll away after being parked and have reported 25 crashes, 9 injuries related to the problem. the automaker says it is cooperating. >> that's not a self-driving car. that's just a car. >> well, depends what version you're talking about. >> it's that time of year again. the rock and roll hall of fame. the newest inductees including tupac shakur, pearl jam, joan baez, journey. >> i love journey. >> now, does that mean yes and electric orchestra or yes is yes? >> yes is a band. >> yes is in. >> i love tupac shakur. >> yeah. that's -- this is like late yes. you remember early yes? >> i never got into it. everything i cut off at like
8:32 am
1975, '77. everything after that -- >> i saw them live. >> back when they had albums, right? >> yes, they did. fedex is going to report quarterly results after the bell today. morgan brennan joins us with more. >> i don't know how to follow the rock and roll hall of fame. i'm just saying. 12% earnings growth on $14.9 billion in revenue which would be a 19% jump. so the biggest factor in focus is going to be e-commerce and whether surging package volumes continue to pressure ground segment margins. other items to watch, signs of stabilization in the freight business. an update on the tnt express, commentary on trade which fred smith recently met with donald trump to discuss. and since fedex is considered a
8:33 am
bel bellwether, should also include an update on the peak season so far. ahead of that, however, the company issuing a service advisory. this happened overnight warning that winter storms across the country, quote, often cause pickup and delivery delays and disruptions for fedex customers looking at the national weather service map. some of that weather is strike in the memphis area which is where fedex's express hub is located. so far their service numbers were looking pretty good. we're in the final days here and this could be changing. looking at some of these weather advisories. meantime, take a look at shares of fedex, they have soared this year. they're up nearly 33%. one of the best performers in the transports for the year. >> thanks so much. and several once favorite stocks getting left out in the cold this year. dom chu joins us from the island of misfits. dom? >> andrew, this is my favorite time of the year to cover the
8:34 am
markets. i get to whip out this land of misfit stocks. rudolph makes a cameo appearance down there as well. if you look at the overall picture for stocks, we're hovering near record highs. there have been five sectors in the s&p 500 that have hit record highs so far this year. only two during the holiday season. that's consumer discretionary, retail stocks. no surprise there. given the season we're in for shopping. and the industrials as well. so consumer discretionary and industrials, two sectors that made record highs. however, there's a handful of stocks that have not participated whatsoever in this particular rally. if you look at the discretionary side of things on the retail part, ralph lauren shares have posted a 16% decline year to date. you mentioned nike before. one of the only two dow stocks down year to date. it's down 18%. signet jewelers, 24% year to date decline. then l brands down 28%.
8:35 am
misfit stocks. one more here to look at. industrial side of things. other airlines making record highs. delta is one of the worst performers down by 1%. pitney bowes down 23%. and stericycle down 36%. these ones have been left out in the cold. throughout the day we'll look at other stocks that have fallen behind this time around. >> i think the elliptical machine putting stericycle out of business. >> i use the elliptical. >> you mean real stair? >> i think that's what stericycle does. right, dom? >> it does not. it disposes of medical waste. >> oh, you were making a funny. okay. it was funny. >> that was for your misfit thing. when i saw a market misfit
8:36 am
segment, why did i know it would be you? >> because i am a total misfit around here. >> i wasn't going to say it. but i said i bet dom chu is coming up. we've got to use that animation every year. >> we'll work on one for easter. it'll have the easter bunny. i'm thinking about it already. >> thanks, dom. the fed finishing 2016 with a rate hike. what's ahead for janet yellen and company the new year? steve leisman has three possible changes. beyond rate hikes. >> yes. 2017 is shaping up for big changes at the fed in three areas. the fed's normal rotation of bank presidents will see four bank presidents leave and four come in. viewed more dovishly. evans there from chicago, he's viewed as the most dovish
8:37 am
president. wild card is president-elect trump will get to elect two fed governors. will they be hawks or doves? it's a split. 50% said they'd go along with the board. but 46% suggest that whoever the appointees are will support faster hikes than the average board member. yes, joe? >> so you polled 101% of the people? >> the numbers don't add up. >> what was the other one? probably rounding, i would think. >> that does say 96% say faster. yeah. that's the real -- once in office in general, the president
8:38 am
tends to want the fed to do less. on what fiscal policies come o out of congress. more fiscal stimulus could mean higher rates and faster rate hikes if they see it as boosted both growth and inflation. finally does congress pass to -- to follow a monetary policy making rules -- such a rule though is opposed by most central bankers. here's our survey. 84% of respondents don't like the idea very much at all. they worry it could lead to political interference. it depends if congress has issues for the debate. also back to the issue of who's on the fed. does the fed chair -- >> who do they think is next? >> one is person who we had on this show john taylor. the stanford economist. he has a ph.d.. and he is also well known for a thing called the taylor rule.
8:39 am
>> so specific to monetary policy? >> yeah. a way to follow it. i have some sympathy with the rule idea. how do you know if the fed did a good job or not. what the fed says is all of the uncertainties and lack of clarity in the economy, how could you ever possibly follow rule? for running your company? >> no. doesn't work. >> and you report the shareholders with a share price. essentially with a gdp number or with an unemployment number. an inflation number. those are the ways to report to congress. if those things are not working, it's not doing its job. >> doesn't have to be quite as subjective as it is right now. it could be -- you could put some -- everybody likes some type of guardrails. everyone likes some type of -- >> here's a compromise i heard of. which i don't know if it comes from taylor. but somebody suggested this idea. congress passed a rule that tells the fed to come up with a
8:40 am
rule. so let the fed come up with its own rule. >> i think back to this whole process we heard when unemployment gets to 6%, when it gets to 5%, when it gets to here. so they kept changing the metric that mattered to them. they had said all along we also think that inflation needs to do whatever. but they were never really clear about that. at least i thought in terms of the messaging. >> i think that's right. i think there was confuse and volatility around it. i think they could have been clearer. but circumstances change. what they could argue is january we had a huge fit of concern over recession and economic weakness from china before that. all these things kept coming along. that changed their policies. how do you fit that stuff into a rule? these shocks to the economy. and maybe you could argue that if they had had a rule you wouldn't have such volatility in the economy. i don't know. to me, it doesn't work all that
8:41 am
badly. when i go to see how the market anticipates what the fed will do, they pretty much price it incorrectly. what happens at each meeting. and there doesn't seem to be a whole lot of volatility around that. >> what's going to change, i think, under the administration is you're going have a vocal president on -- >> fed policy. >> i think that's going to be different from -- that's always been -- >> there's also another outlier that's important which is are any gold reserve people appointed. people who don't like the way how policy is set now which is basically by fiat. >> cold would be a rule. >> people who go back to duss donald trump support gold as a rule? >> there are no sacred cows in his world. right? fed independence, i'm not convinced he gives a darn. goes the same way maybe as one china -- >> stupid decision to raise
8:42 am
rates this week. >> thanks, steve. coming up, donald trump's policies could be a shakeup for tech leaders. we're going to talk to aspect venture's jennifer fonstad. that is coming up next on "squawk box."
8:43 am
8:44 am
welcome back to "squawk box." shares of rite aid are on the rise.
8:45 am
the company has reached an agreement to sell 865 stores to a company called fred's pharmacy. the price $950 million. the deal is part of the process for gaining approval for rite aid to be bought by walgreens boots alliance. silicon valley start-ups may get a major boost from incoming administration's infrastructure plans. with more on that and predictions for the year ahead jennifer fonstad from aspect ventures. >> good morning. >> are you a believer that whatever is coming under the trump administration is going to benefit the tech community? >> i think trump has an opportunity to connect with -- i think trump has an opportunity to connect with the community around infrastructure projects. he wants to wire up -- connect up the united states. i think we have the opportunity to wire up all of our infrastructure for opportunities for autonomous software vehicles, opportunities for car communication, and all types of iot devices to enable better
8:46 am
safety profiles for workers on the road. >> so we just had tom siebel on the show and said who are the winners of that. who are the winners in your mind? >> i think we have a whole infrastructure -- we have a whole new network of start-ups that are playing to that space specifically. so we have companies in the securities space that are -- we have companies that are playing in the communications space. we have companies doing all new mapping software that i think trump will take advantage of. >> can you name some? >> some are small companies. looking at how you map and connect all infrastructure devices and how you use that from a communication from car to your license -- a car to your lighting pole, for example. >> and so one of the companies we mentioned was general electric which is sort of -- tried to make its name or at least talk about being a 21st century company based on the internet of things. are they a beneficiary of this?
8:47 am
>> i think ge is one of the companies. we've had a number of companies playing in the ai space, for example. we've seen ge being an inquisitor to the companies in the ai space. for example, i think google has acquired about 11 companies. ge has played in that as well. we've had over 40 companies in ai acquired this year playing in that space specifically. >> i'm going to lower this conversation a little bit. this is all very high important stuff, but i'm nervous about having an echo in my apartment. which i think speaks to a bigger issue. you talk about all the internet of things and everything connected. i'm worried about being listened to, being hacked, et cetera. >> sure. i think that's a good question, good challenge. we're seeing things particularly around security which used to play primarily in wall street going down main street. we think about security as something that's going to be touching everybody, everything from hacking into your appliances to your lighting system, for example. we have companies that today one
8:48 am
of our companies for scout enables you to see devices connected to your network that they don't previously see. so if you're a cooperation, you have a million devices connected to your network, you plug in four scout's visibility and connectivity device and they can detect up to 300,000 more devices you didn't even know were hanging off your network. something like a warehouse where you may have an iot network that isn't connected into your network but may not be necessarily visible from a security perspective. >> i want to go back to the infrastructure piece of this. because i think there could be an investment opportunity potentially or not in some ways. which is to say do you think that the government in these big infrastructure projects is going to be willing to partner with small start-ups as opposed to the big companies like ge? meaning are they going to be more inclined to have a service contract with a ge which ends up then going downstream to some of these smaller companies than going direct to them and what does that mean?
8:49 am
>> i think that's a fair question. that's one of the challenges that the administration will need to think about. because sometimes some of the best innovation comes from the start-u start-ups. but the best lobbyists are some of the larger ones. >> a great example of that but also spent an inordinate amount of money for a lobbying system so they had a front face to washington in a way so many of silicon folks don't have. and donald trump's position towards technology with the exception of twitter is not so much. so to the extent you think technology is going to benefit from these plans, why are you convinced it's not going to be more of the traditional stuff? >> i think that trump has tried to get to know a little bit about silicon valley. the reality is it's just the tip of the iceberg. he's touching some of the companies. the challenge is how does he get
8:50 am
to know what's coming along from an innovation perspective? i think that's really going to drive change in his administration. when you think perspective because that's what's going to drive change and to know that's where he's got to start. >> thank you for coming in. happy holidays. up next, jim cramer will join us live from the new york stock exchange. we'll get his take on the top stories. the futures is up over 62 points right now, s&p up 8.75, and the nasdaq up 14. we will be coming right back. at the marine mammal center, the environment is everything.
8:51 am
8:52 am
we want to do our very best for each and every animal, and we want to operate a sustainable facility. and pg&e has been a partner helping us to achieve that. we've helped the marine mammal center go solar, install electric vehicle charging stations, and become more energy efficient. pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment. together, we're building a better california.
8:53 am
down at the new york stock exchange, jim cramer joins us now. i tell you, jim, i thought about what to ask you and i decided it used to be we'd get very nervous about corporate profits and the dollar and any type of rally that we were having would sort of be cut short by that and it just is not happening this time. we must be thinking that something is going to counteract or offset what is going to be a real headwind for exports. is it growth? >> well, it's like my friend, martin franklin, said.
8:54 am
yes, it's growth. you can decide that i'm going to ignore for honeywell, i'm going to ignore for ppg, i'm going to ignore for united technologies, for ibm, and what matters is going to be growth. a lot of companies, i've seen a lot of research saying 2018 is going to be good. i mean 2018. since when did we look through a year? but we are in that moment, joe, where people are just saying forget that. forget that currency, it doesn't matter, we've got growth. it is such a change of pace. and frankly i find it delightful because what it says is if we get top line growth, all is forgiven. how much have you and i wanted top line growth in the last four or five years. now we're going to get it. i think martin is right. >> i don't want to think about if it doesn't come true that we're playing it forward and that we're ahead of ourselves. i want to just embrace it and i don't know whether i'm being gullible, i don't know. it is a big leap of faith that all this is going to happen because nothing has been done yet. >> not yet, but i have that leap
8:55 am
of faith. i just think you have a pro-growth government. it may not produce enough wealth for everybody but it may produce top line growth which could ignite the stock market further than it has. there's a lot of companies that are really kind of pricing in a lot of growth, i know that. but if they get it, we'll want to pay more for them. >> all right. so even if it's par, even if it's parity, we don't worry about that. >> by the way, europe is stronger than they think. i think they have been keeping the currency down. i know that is an unpopular view because everyone loves europe, but i think you and i are suspect of any country or any continent that tries to keep their currency down to get more business from the u.s. >> great, jim. >> thank you. >> thank you. coming up on "squawk alley" don't miss a first on cnbc interview with blackberry ceo john chen. stay tuned, "squawk box" will be right back.
8:56 am
i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.
8:57 am
8:58 am
our guest host this morning is martin franklin, founder and ceo of mariposa capital. we haven't talked but you're born and bred in the uk. are things going to be uk there
8:59 am
with brexit? >> i think that the uk is the most sort of underrated place, hasn't got the credit where credit is due. you have the first coalition government, did all these tough things that were politically unpopular, got their fiscal house in order and haven't really been complimented for it. they're the first western democracy that really didn't kick the can down the road. >> they stayed out of the euro. >> they stayed out of the euro. and i think, frankly, when all of this brexit noise calms down, you're going to have a stronger pound, you're going to have a continued -- you know, europe can't afford to punish britain for not being in europe. they have too much trade, 65 million people. germans want to sell their bmws and porsches. >> if the uk plays its cards right, it could be way more competitive than the eu and they're going to be the winners. >> and for all the noise, the financial community all running out of london, nonsense. everybody wants to live in
9:00 am
london. >> visit london, hang out. london for christmas sounds pretty good. >> fantastic, it's beautiful. >> wet. >> thanks, martin. >> thank you for having me. and that does it. make sure you join us tomorrow. "squawk on the street" is coming up next. ♪ good tuesday morning, welcome to "squawk on the street." dow 20k watch will not quit. futures suggest we could come within 60 points of that or so at the open. europe mostly green. bank of japan leaving rates unchanged. oil inventories of course are tonight. our road map begins with futures point to another day of gains as the trump rally continues. dow 20,000 in sight.

37 Views

info Stream Only

Uploaded by TV Archive on