Skip to main content

tv   Worldwide Exchange  CNBC  December 21, 2016 5:00am-6:01am EST

5:00 am
the trump rally rolls on. the dow notching its 17th record close since last month's election. and new this morning, shares in the world's oldest bank plunge on word its liquidity will dry out in four months. and swoosh, nike shares rally as the largest footwearmaker beats the street. it's wednesday, december 21, 2016, the first day of winter. "worldwide exchange" begins right now. ♪ good morning.
5:01 am
welcome to "worldwide exchange." i'm sara eisen along with dominic chu in for wilfred frost for the rest of the week. almost at 20,000. >> 26 points lower. >> a check on global markets this morning, another record high for the dow. s&p closing yesterday just a point away from its own record. dow futures, little changed to down points. s&p and nasdaq positive, just barely. little searching for direction here in the early action. ten-year treasury note yield. bond selloff continues pushing yields higher along with a strong dollar. that's the trump trade since the election. today we're backing off a little. 2.55 is the yield on the ten-year. you mentioned banco monte dei paschi and the fact it's halted
5:02 am
for trading. let's see how that's playing out with the european markets. the dax in germany just about flat. the only green speck you can see on the board right. there the cac in france down by 0.25%. the ftse 100 just about flat as well. ftse mib in italy, down by a half percent. spain ibex off by 0.75%. in asia, a more positive picture. the hang seng up by a third of a percent. shanghai composite up by over 1%. nikkei down by 0.25%. 19,444 the last trade for the nikkei market. watching oil prices. new api data out late yesterday showing crude stockpiles dropped by 4.1 million barrels last week, more than the 2.5 billion decrease that analysts were looking for. we'll get official inventory data later this morning.
5:03 am
we are seeing crude prices higher. wti up almost a half percent. 53.54. brent 55.56. nat gas havevk a 2ing a 2.5% dr the broader markets, looking at the macro picture, the dollar trade right now. some weakness in the dollar versus the euro. euro gaining strength, 1.0397. dollar/yen showing some movement as well. dollar using steam against the yen. the pound, 1.2345 the last trade there. gold has been an interesting trade since the trump rally began. gold prices have fallen, but up
5:04 am
in trading so far. the housing market is a huge part of the macro picture in the u.s. >> we'll get some data today. >> on the agenda in today's trade. looking at the housing data, november existing home sales out at 10:00 a.m. eastern time after rising 2% in october. sales are expected to have pulled back a bit last month. forecast to drop about 1%. you have accent chore, paychex and winnebago reporting before the opening bell. after the bell, bed bath & beyond, micron and red hat. still earnings catalysts going on. we know a big one. >> nike and fedex which we will talk about in a moment. on this march to 20,000, it's hard to make too much sense of a big round psychological number except the fact it's a milestone. i like how kit juxx puts it,
5:05 am
until it is broken dow 20,000 it acts as pied piper, perhaps rudolph's nose lighting the way for risk hungry and those scared of being left behind. that's the point. does it indicate that you have to be in the market? or is it a selling opportunity that things have gotten too carried away? >> we've seen fund flows, people putting more none into etfs, mutual funds. is says the retail investor is perhaps back again. every time the retail investor comes back in droves, when they do come out in droves a lot of anecdotal evidence suggests that perhaps it's topping. >> smart money has already been made. >> we're at statistical levels that don't happen much. the markets moved up so far so fast this kind of a move -- >> you have been looking since
5:06 am
the last few down milestones. >> it takes a bit of time for things to work out that way. it's something to watch here. again, markets don't move in a straight line. we do know that when we reach these levels with this speed, things do tend to pull back a bit. >> oil is up. that bodes well. you have this continued rotation. technology rising -- >> participating. >> joining the party finally. a lot of groups still left behind. the question is will the losers push us over the edge? >> people are taking comfort in the fact that fundamentals are returning. drivers and corporate stories being the rule of the day. when you see technology and financial stocks leading the way higher, that makes you feel better. that's typically, in the past without unconventional monetary policy, that's typically driven markets higher.
5:07 am
>> sign of a better economy. one loser who is winning is nike. they rose after hours on better than expected earnings in revenues. futures orders, which the company is trying to de-emphasize here did come if below estimates. they talked about it on the conference call after 45 minutes of executives going to great lengths to explain to investors that the metric is not a good snapshot but that the company is doing well. clearly the stock slide down about 17%, is getting to them. they were confident and defiant. they said the business is turning around. north america presents opportunity and china is growing double digits and there's a lot to look forward to from nike. here's the ceo, mark parker, opening the call with a very different tone, that sort of confident enthusiastic tone talking about the competition. listen.
5:08 am
>> i think there's a misconception that growth in our lifestyle business comes at the expense of growth in the performance business. the reality is they fuel each other. performance and lifestyle are not tradeoffs. consumers want innovation that is style right and style with real innovation. it's no surprise our industry continues to attract competition. as in sports competition is a positive thing. it sharpens our focus. >> this gets at the narrative that nike is being beat by the competition, namely addidas whose shares have a rallied hard this year. they nailed that lifestyle, athleisure, high fashion, going back to retrosneakers. that's been the story of the nike versus addidas stock. you heard parker get at that in the beginning of the call. >> what's interesting, if any
5:09 am
company in athletic apparel has the balance sheet to devote resources to athleisure and performance and make them work, it's nike. they're the biggest guys out there. >> they're dominant and in fighting mode. overall the results were pretty vol lid. 6% sales growth. would have been 8%. still getting hit by the stronger dollar. double digit growth in china. inventories were a bit higher. grew 9%, which outpaced sales growth, which you never want to see in a retailer. executives talked that down on the call. the question is will investors listen to them and not focus on the weak light futures orders. nike says it is not a good indicator anymore. it doesn't matter what future orders are showing, but investors are programmed to factor it in. so far looks like they're giving them the benefit of the doubt. >> maybe nike could get us
5:10 am
towards dow 20,000. >> maybe. it would take a 7% move. it's a price weighted average, nike not that much. we'll see. turning to the bigger picture in europe, banco monte dei paschi getting slammed. trading has been suspended. the world's oldest bank warning liquidity will dry out in 4 months instead of the 11 months it previously forecast. the lender is making a last-ditch effort to raise private capital and avoid a state sponsored bailout. claudio joins us from italy with the latest. if we look at banco monte dei paschi picture, how much will the ripple effects affect everybody else in italian banking and broader market sector? >> it looks as though the ripple effect has already been felt here. the stocks in the italian sector related to banks have been down up to 50 percentage points.
5:11 am
they recuperated a bit in december, up about 22% on the idea that whether it be through a private or sub solution, the monte dei paschi siena situation will end. this bank has been in a troubled situation for years and for six months trying to bring the bank back to health is coming to an end soon. we have a huge nonperforming loan situation, almost 30 billion will be spun off if this deal will go through. debt to equity swap will be conclude today at 2:00. offering will be concluded tomorrow. it's looking more and more hour after hour as though this solution, which also included the finding of a private investor of an anchor investor which is qatar, most likely
5:12 am
won't go forward. the government is waiting for parliament approval for 20 billion euro intervention. that means the public money would be coming in to save monte dei paschi siena and put an end to this long attempt to save the bank through a private situation. stock is getting slammed, down 18 percentage point. >> looking at this chart limit down after getting pummelled all year. is your bottom line that depositors are safe and investors are safe in this bank because ultimately there will be a solution from government? is that what we need to know? . >> that is the message that the bank and the government wants to get out. this debt to equity swap they had to made, an addendum
5:13 am
regarding this cash -- less liquidity, let's say. not a surprise in a situation like this the bank itself is not concerned saying either the private solution will go forward or the public solution will step in. if they do go forward with the burden sharing solution, once the public solution is carried out, that will mean retail will be affected possibly by the subordinated bonds. how those will be managed. but that comes later. there's no concern as you can see later by the performance of the sector, there will be an extended impact of what is going on with banco monte dei paschi month. >> develin other financial news swiss competition watchdog is fining several banks over banking cartels. the biggest fine is being handed to jpmorgan, a total of $33 nil on. the fines come after the
5:14 am
watchdog concluded that jpmorgan operated a bilateral cartel with rbs with the aim of influencing the swiss frank libor benchmark between 2000 and 2009. currencies, interest rates and rigging a theme from lawsuits and government intervention. more executive turnover at adam messenger saying he is leaving the site. last month twitter's chief operating officer left. the company has been streamlining its organization the structure and more teams are directly reporting to ceo jack dorsey. shares hit on the news. more talent continuing to depart as the company continues to figure out how to make money. >> twitter below $17 a share. >> i would think donald trump has to be helping. >> i think he is helping.
5:15 am
i don't know how much they'll monetize that. >> or bring in new users. >> he has a lot of followers. twitter is not the only stock to watch today. you have fedex. their second quarter profits rising. they missed results in terms of the overall forecast. ceo fred smith addressing the holiday shopping season on the conference call yesterday. >> our traffic mix this year is a bit different by design as an effort to continue to grow margins, interest, cash flows and returns. christmas falling on a sunday created anomalies in shipping patterns, and this week we'll see disproportionately higher demand versus other holiday seasonal patterns in the past. >> the all-important holiday shopping season front and center for fedex. saying the integration of the tnt express acquisition is going well, but fedex cannot forecast what accounting pension
5:16 am
adjustments it will have to make. gopro setting aside $17 million to cover severance and other related costs. those shares unchanged right now. $8.90 the last trade there. steel case reporting better than expected third quarter earnings. offering fourth quarter profit guidance that topped forecasts. shares down by about 7%. more stocks to watch. shares of actelion after talks with sanofi are reportedly progressing. stock is up 5%. pandora's coo sarah clemens is resigning after two years with the company. comes amid speculation pandora
5:17 am
itself may be a takeover target with sirius xm a possible buyer. microsoft won a nearly billion dollar contract from the pentagon. they will be providing tech support and consulting services includi and intelligence building is good. everything you need to make money in social media next year. and we're on dow 20,000 watch. as we head to break, here's the dow winners and losers since the blue chip average hit 10,000 in october of 2009. united healthcare higher by 555%. goldman sachs has seen shares rise by 25%. "worldwide exchange" will be right back. king like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom?
5:18 am
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
5:19 am
5:20 am
welcome back to "worldwide exchange." let's get you up to speed on what's happening with the market. u.s. equity futures mixed. s&p looks like it will open about flat. dow jones off by 4 points. not that much at all. nasdaq up by 2 points as well. very much a wait and see ahead of this whole dow 20,000. oil prices showing some gains on the heels of private industry data. ice brent crude futures, $55.54. a third of a percent to the
5:21 am
upside as well. as 2016 draws to a close, cnbc is breaking out the 2017 play book. looking at ways you can make money in the coming year. this hour we'll focus on social media. with that here's julia. >> reporter: now that social media is a destination for streaming video, even nfl games and played a critical role in the election. here are three predictions for the next wave of social in 2017, snapchat will expand ad offerings, making it easier for brands big and small to spend reaching growing user base, making it a serious competitor to facebook and google. second, twitter will find a buyer. as the embattled flat form struggles to grow its core user base, and increasingly becomes a
5:22 am
platform for media such as streaming nfl games, it will second to a tech giant like microsoft or google. third, look for facebook to implement more artificial intelligence across all of its apps, from a smarter news feed that filter out fake news to smart bots that offer customer service on messenger and new voice interfaces to talk to those bots similar to alexa. >> i wonder if mark zuckerberg will include his own jar sis, personal ai assistance. >> did you hear what the voice will be? >> no. >> possibly morgan freeman. >> just for zuckerberg or -- >> for the jarvis ai system. coming up, an oracle senior staffer resigns after the company's ceo joins the trump transition team that office drama next on "worldwide exchange."
5:23 am
my business was built with passion... but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one.
5:24 am
with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet?
5:25 am
welcome back to "worldwide exchange." good morning. let's get you up to speed on the market action the day after the dow closed within 25 points from 20,000. still closed at a record high. futures off 7.5 points. nasdaq and s&p futures are barely positive. the s&p yesterday closed a point away from its own record high. even the nasdaq went up and tech has been joining in the rally. the only big economic data of
5:26 am
note today is housing later on in the session. tomorrow a lot more. >> as for the early indications in the currency market, the dollar hit a new high against the euro yesterday. it is sitting below the key 104 level. 103.90. the dollar giving back some recent strength, and the british pound under pressure to welcome wilfred frost back for the holidays. a developing story this morning. authorities in mexico are not saying what may have caused an explosion at a fireworks marketplace yesterday afternoon that killed at least 29 people and injured more than 70 more. the market was busier than usual with some 2,000 people present at the time of the blast. similar explosions occurred there in 2005 and 2006.
5:27 am
certainly watching that video right there. hopes and thoughts and prayers with everybody that has been affected. let's switch gears now to some political news. an oracle senior staff member publicly resigning after the company's co-ceo joined president-elect trump's transition team and stated her enthusiasm for her. the staffer managed oracle's cloud services, and in a letter he described how he refused to help trump in any way. the post reads in part when trump's policies border on unconstitutional, the criminal and morley unjust, i'm here to oppose him in every possible and legal way. he had also created a position for other oracle employees who want to protest katz's involvement in the transition team. coming up, the top stories, including shares of bmps
5:28 am
plunging in italy. in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence.
5:29 am
5:30 am
good morning. closing in on 20,000, the trump rally pushing the dow closer to the milestone than ever before. global market alert. shares in the world's oldest bank plunge on word that its liquidity will dry out in four months. and secret santa and this gift giver looks a lot like bill gates. it's wednesday, december 21,
5:31 am
2016. you're watching c nshg"worldwid exchange." good morning. welcome back to "worldwide exchange" on cnbc. i'm sara eisen in for dom chu in for wilfred frost. the first day of winter. let's check on global markets. how has the dow not reached 20,000 already? we got within 13 points during yesterday's 9:00 hour. it was exciting. pulled back away. the dow finishing at a record high. >> still 26 points away. >> from dow 20,000. the s&p closed about a point away from its own record high. futures are positive there. nasdaq also participating in the rally with tech really starting to heat up yesterday. we'll see if that continues today. nasdaq futures are up less than a point. early action in europe, a pause in some buying. they had run up those stocks to the highest levels of 2016. the german dax barely positive.
5:32 am
everyone else in negative territory. i'm watching the minute down a half percent. that doubled oldest bank in the world goes limit down closing and halting down 18% on some liquidity concerns. the word from milan, as we heard from our reporter earlier, they are prepping a bailout that could come very soon. we'll keep an eye on that. so far not harming the rest of the sector and the market. as for the action in asia overnight, saw somes s spositi in shanghai and hong kong. shanghai closing up 0.1.15. >> oil prices right now showing some gains on the heels of some inventory data from private industry sources that will drive trade early this morning.
5:33 am
data later out today from some official government sources. wti crude, 53.52. ice brent crude, 55.53. ten-year note yield, seeing a slight pullback. 2.55% the last trade there. the uptrend intact for yields but a hair of a pullback. as for the dollar, euro, 1.0395 is what it will cost you to buy the euro. that's dollar weakness. the yen, $117.48. gold prices, just bit of a move higher. futures 1,135.09. i told you about the italian bank news. banco monte dei paschi shares getting slammed. trading has been suspended, this
5:34 am
after they warned liquidity would dry out in four months versus the 11 months they previously stated. they are working to raise state capital. shares of nike rising on better than expected earnings and revenues. on the conference call, executives went to great lengths to explain to investors this metric is not a good snapshot anymore since it only shows retailer demand, and nike invested heavily on selling products directly to consumers. back to our quest to help you make some money this morning. we continue our monthly sectornomics series with a look at materials. landon dowdy has more on which stocks are winning and losing in materials. >> materials having a decent run. really jumping after the
5:35 am
election on president-elect trump's promise to invest on infrastructure. here's a look at biggest winners and losers. freeport soaring 109% year to date. david gagliano telling me that comes to management's turnaround efforts in 2016 followed by the recent rally in copper. new month mining up newmont mining up 76%. martin marietta materials up more than 62%. so who are the losers? cf industries tank 30% on low coal prices out of china. pbg industries and international flavors missing out on the rally
5:36 am
in materials, down 3% and 2%. back over to you. the dow notching its 17th record close since the election closing yesterday within 25 points of 20,000. joining us to discuss the rally, mike holland of holland&company. mike, landon pointed out a number of these construction and material companies that have done well in the trump rally. you are not a trader per se. you take more of an investing type view. has this trump rally gone too far too fast or do you think it is still worth buying into some of these sectors? >> i think what we -- where we are right now, dom is the early flush of, oh, my god, this really is going to be a big change to how much is it actually going to change? i think we're seeing continued movement in the direction of it could be better than anyone
5:37 am
suspects. sara was nice enough to have me on here november 9th, the morning this thing all started. i just started laughing when i heard the news. i went to bed early. you have to get up really early for this show. i predicted hillary clinton would win. then it's this. as i hear more and more stuff coming out of the election, which is the people that have congregated around trump, it's actually looking as if it may happen. if it does happen, stocks are not yet priced to perfection. having said that, this can all go wrong. a lot of thing can screw this up. china can screw this up. >> where is that priced? >> all the risks are not priced. you have to have some cash. looking at stocks, like ge, comcast, jpmorgan, which have had big runs, if this actually comes about the way it looks like it's coming about now, it's wrong to be not invested at all. >> why? what is your best case scenario? the this might happen if all
5:38 am
things point in the right direction? >> best case scenario is that there is a reproach among all the people who have been screaming at each other for the last eight years, charles schumer and these people get some stuff done in washington. not everything, but some of the infrastructure stuff done. interest rates do go up some. that would be a good thing. you lose some money in bonds, but make more in stocks. going back to dom's original question, you could see more earnings coming out, more jobs being created. higher paying jobs in the u.s., which could give the animal spirits to the rest of the world. >> are there parts of the market that are still attractively valued that have not run up quite as much that you think could be in catch-up mode? have some of the banks run up too far too fast? where can you find value? >> the rising tide has lifted
5:39 am
everything. you have to look at individual companies. this morning it's all about monte dei paschi. jpmorgan has this. i own it, they had this incredible run, but it is still yielding nearly 3%. probably going to earn more money than anyone suspects over the next few years if the wonderful world we were talking about comes to pass which it may. >> are you buying more? even at these levels? >> the cash i need is already in place, we talk about an all-weather portfolio. to be an investor to stay with this long-term, you have to sleep through the sleepless nights for other people, so you need a cushion of cash. i've got that. i would be looking for things to buy. >> we talked about some of the run-ups in stocks. people say there are no risks in the marketplace, any time anything happens, nothing can take the market doiwn. are there things you're really
5:40 am
worried about that could derail thing? >> sure. just like you said. for an investor, a long-term investor, whether endowment fund or wealthy individual or modest individual just starting out saving for retirement and college education, you have to have a reserve. so when it happens, and it will come out of nowhere. the trump rally came out of nowhere. you had to be prepared on the upside. i talked about it that morning. i said it could be better than anyone suspects. right now we're set up for a correction when you have cash to buy stuff. >> you were right, i remember, it was wild to watch the futures to go from down 800, down 200, down, and then positive on the day. >> i remember that. >> you also liked china as an investment. now there's some worries that made its way to the front of the business section of the "new
5:41 am
york times" today. vast bond market slumps boosting investors. can you still be in china? >> the market there, as the rs priced the trump thing to good levels, the market over there has punished the stocks. the companies we've been investing in for 20 years are companies growing at high single digits, low double digit rates of return and multiples are less than ten times earnings. you have -- it's a situation where headlines really speak troubles, and they are real. the bond market has been challenged it will get more challenged. the currency is getting slim. the government has been able to figure -- each time we've had this situation, they figured it out. >> not going out of business. >> my guess is that it's still a good place. the people who have chosen stocks for us over the years have made tons of money.
5:42 am
>> mike holland thank you for being here. emojis taking center stage in their own movie. the first teaser for the emoji movie sending social media into a frenzy. a sony pictures film set to be released next summer takes place in the world of techstopolus and stars james corden as the high five emoji. >> you're the emoengcy person. i don't get involved. >> i'm not, i only like emojis for myself. bill gates billionaire -- >> we don't have them today. we can't give you his emoji. let's talk about bill games. the epic gift giver, is he? for the fourth year in a row, he's participating in the reddit gift exchange which involves about 60,000 people worldwide. a user named eric's laurel
5:43 am
received a large holiday package from the microsoft founder. get this, among the gifts received, an x-box, a nintendo entertainment system, dvds, and a framed photo shop picture of er erics with bill gates himself. that's a heck of a secret santa package. >> i used to it with limits of $25. >> yes. 20 bucks. any way, coming up, today's must reads, here first as we head to break, today could be the day the dow reaches the 20,000 mark. here's what's changed since the dow hit that 10,000 mark back in 2009. oil prices lower by more than 20 bucks. the yield on the benchmark treasury note at 2.55%. in 2009, it was closer to 3.5%. you're watching "worldwide exchange." we'll be back after the break.
5:44 am
5:45 am
5:46 am
welcome back to "worldwide exchange." time for our must-read stories. my pick is in the "washington post." could trump's freewheeling foreign policy have its benefits? i picked it because you don't often find complimentary pro trump pieces in the "washington
5:47 am
post." says several prominent foreign policy analysts argued there's some benefit in creating ambiguity and uncertainty about what the united states might do abroad especially after years of prudent and predictable obama administration policy. but they caution that this is a high-risk strategy which may create consternation among allies even as it enhances deterrence among adversaries. speaking specifically about russia and china saying these are the two challenges, and it's quite unusual to see both engaged before president-elect trump even assumes office. but on the taiwan call, ignatius concludes that maybe this wasn't such a high -- maybe this will be effective. put china in a place where they'll have to figure out the next move and get in a negotiating stance when it comes to trade. kissinger backing that up. >> yes. >> that's a huge vote of confidence. >> it's testing boundaries.
5:48 am
like floating weather balloons out there, early indicators to see what's happening. the whole idea about negotiating is keeping people on their toes. so nobody knows what you will do. >> russia, ignatius argues, will be trickitier. and that the u.s. might be on the back foot. we don't know. the art of the deal. >> yes. coming up, joining us is michelle meyer from bank of america merrill lynch. she will share her 2017 forecast coming up next.
5:49 am
5:50 am
♪ we're drowning in information. where, in all of this, is the stuff that matters? 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. just a few trading days left in 2016. joining us with the economic and market outlook is michelle meyer from bank of america merrill lynch. welcome. >> thank you. >> are you skeptical of the rally that it's matching up with the economic reality? >> i think there's a question of
5:51 am
timing. stock market participants in general are always forward looking, thinking about what's happening next. for the data, the hard data has been weaker. q4 is tracking high. q1, we think something comparable. if you look at survey measures, consumer confidence, things forward looking, they all skyrocketed high. >> is it fair to say that from an economics perspective that there are tangible forecasted benefits for what could happen in a trump administration? there's been a lot of surveys, consumer sentiment, maybe that plays into this idea that americans are feeling better about the future. could the economic fundamentals live up to some of those expectations? >> that's an excellent question. time will tell. clearly confidence is high with the markets, with the surveys. the reality is that there's a
5:52 am
big hurdle. the economy is in later stages of the cycle. we have lower structural growth. dealing with low productivity growth. there's things that could be done to create some cyclical gains. fiscal stimulus, for example. it's not an easy task. >> how far does a boost of confidence, whether across business, investment, consumer go for its own right in lifting the economy without doing any policy? >> i think the gain in confidence is very much predicated on the idea that you see some sort of policy change. the question is how much time will the markets and will these surveys give the new administration to actually implement the changes. so i think, you know, we could see some kind of upsets maybe in the beginning of the year as we sort through some details. generally speaking the medium term outlook looks more
5:53 am
favorable for the economy. we'll see some change, is that could support growth. >> there's been a lot of positive points made over the past few years about the idea that housing has been in a decent recovery mode since the financial crisis. we'll get houses data throughout the course of this week. as we talk about the picture for the trump administration in the first 100 days, year or two, that the housing market will be key. how much can we expect that housing market to build on some of the gains we've seen over the past few years? are we late cycle there as well? >> for housing, one thing working against it is interest rates. a big gain in rates which means it becomes less affordable. what's interesting is if you look at the nhb home builder confidence survey, they don't care rates are rising. they are confident that a greater flow of credit or greater income creation will be more impactful.
5:54 am
you have to consider those offsets. if it's the case we're seeing greater disposable income, seeing greater flow of credit, that could offset some rise in rates. housing could do fine. >> does that mean the fed won't ruin this party with no longer waiting a year to raise interest rates? will they spoil it when they start really raising? >> there i think the conversation becomes more interesting. m my view is that the fed will be patient in the process. even though markets are convinced, i'm not sure the fed is convinced that the outlook is that much more favorable until they see the implementation of the policy and see it change the real economy, whether it's growth or inflation. my view is the fed -- the forecast is that the fed hikes once next year. i could see the case they hike twice. i have a hard time getting behind the idea they'll hike three, four times.
5:55 am
even though that's what they say. >> they say they'll hike three times. but they generally throughout the cycle have tended to overpredict. there's no shocks, but the reality is there could be offsets. >> as we talk about the way things are shaping up. you'll be watching a multitude of data points next year what are you looking for specifically that would give you an advanced sign that things are picking up steam? what indicators would you see start to pick up? >> to me, the area that could surprise the upside early next year is the consumer. consumer confidence is stronger. consumers have strong balance sheets. they have a low financial obligations ratio. they have enjoyed asset price inflation. they have savings buffers. so in theory, even before you see the change to income, you could have consumers start to draw down savings and borrow a
5:56 am
bit more. that could stimulate spending if it is the case that animal spirits picked up. to me, the consumer will be important. for businesses, in terms of actual investment, they'll want to wait to see details. >> what could go wrong? what are you most worried about? is it trade? >> you have to look to what's happening externally as risks. a lot of wild cards, whether it's elections in europe, how brexit ends up enfolding. i think there could be the natural bumps along the way in the markets and in the economy. we've seen it time and again. we've called this the recovery of fits and starts. i don't think it's over. the medium term looks more favorable. that's clear as we see the changes in policy. but it could be bumpy. >> michelle, thank you. >> you got it. >> michelle meyer with the 2017
5:57 am
outlook. thank you for being here. >> dow 20,000 watch. we are on guard all day on cnbc. that does it for "worldwide exchange." "squawk box" is next. generosity is its own form of power.
5:58 am
you can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues. don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1.
5:59 am
the dow is just 25 points away from hitting 20,000. crude inventory data could be the catalyst to push past the milestone. we will talk market strategy and crude prices straight ahead. the dow is being made great again. earnings alert. shares of nike rising after the dow component results beat estimates. there was one number from the conference call that has analysts more cautious. and breaking news out of europe. shares of the word's oldest bank plunging on word that liquidity will dry out in four months.
6:00 am
it's wednesday december 21, 2016. it's the winter solstice. and we have the least amount of light i think is the wi to say it. it's the same length of day as 24 hours. "squawk" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc. thank you to the producer force that graphic. this is the sweater of the month. i'm andrew ross sorkin along with kayla tausche. getting so lows to hitting 20,000. the dow looking like it may open off down a little bit. may get harder to get to the 20,000 mark. nasdaq looking to open up briefly. s&p 500 up sli


info Stream Only

Uploaded by TV Archive on