tv Squawk Alley CNBC December 28, 2016 11:00am-12:01pm EST
supporting this equity market rally we have watched as well on that march to 20k. a lot of people are expecting energy to perform well next year and that's what's holding crude up right now. kay kayla, back to you and "squawk alley." >> thank you so much, jackie deangelis at headquarters. good morning. it is 8:00 a.m. at amazon's headquarters in seattle, 11:00 a.m. here on wall street, and "squawk alley" is live. ♪ ♪ breaking my back just to know your name ♪ ♪ 17 tracks and i've had it with this game ♪ good wednesday morning. welcome to "squawk alley." with me at the new york stonge at post 9, brian sullivan and
mike santoli. thank you both for joining us. carl and jon have the morning off. we have news from the trump transition and john harwood. >> we've just had the transition call with the incoming white house press secretary, sean spicer. he said that donald trump around 4:00 today is going to have an economic development announcement that will be good for american workers. didn't specify what it is, said he wants to keep everyone guessing. don't know if it's something like the deal that he engineered with carrier to try to preserve some jobs that were headed for mexico or a new investment. of course, he met with the softbank president who pledged $50 billion investment in the united states. don't know what it's going to be, but we will bring it to you when it happens later this afternoon, guys. >> and of course, it is a little bit more, john, than two weeks before we are expected to learn about what the president-elect will do with his own businesses. you mention that this will likely have to do with a company
moving jobs back. any notion that it could be about tax reform or about policy? because we do have congress coming back into session on january 3rd. >> i want to make clear, we don't know what this announcement's going to be, and he hasn't appointed the head of his council of economic advisers yet. and our friend and colleague larry kudlow is one of the contenders for that. so we don't know. it's just the way that sean spicer phrased this announcement, saying it was about economic development would be good for american workers sounded to me like it was something regarding a particular set of jobs associated with a factory or a deal. but we're going to have to wait and see when he announces it this afternoon. >> and john, what we're seeing right now, our viewers, donald trump just coming outside the front door of his estate, mar-a-lago, waving to the crowd. he was meeting with david rubenstein earlier today. we don't know what they discussed. kayla, with regard to your
question on tax reform, my question is it would be, based on people i spoke with the last few days in washington, d.c., more about a specific company or industry, because i can -- and john can probably confirm this -- despite donald trump being the gop nominee, they are ve very, say far apart in what paul ryan or donald trump may want to get from tax reform, are they not, john? >> yes, sure, there's some distance, but i don't think it's a great distance. you know, donald trump revised his own tax plan to conform more closely to the house republican plan during the campaign. part of it was to reduce the deficit impact. but still, the outlines, the rate structure that he moved to in the fall was very close to what paul ryan is talking about. but we're going to have a ways and means process, we're going to have a senate finance process, and what exactly comes out of that, it's going to be different. but it does seem to be clear that the stars are aligning
behind support among these prominent republicans for lower top marginal rate, lower corporate rate, and other changes to the code. >> all right, john, we're going to be checking with you throughout the day as we get more news on what that announcement will be. for now, john harwood, thank you. let's get to our other top story today, the march to dow 20,000 losing some steam. we got to within 19 points right after the open but we are slightly negative on the dow and the other indexes right now with three trading sessions left in 2016. for more, we're joined by a chief international economist at deutsche bank securities and steven wieting, chief investment strategist. torsten, let's start, first of all, you say in your notes that the election of donald trump might have jarred this economy out of secular stagnation? is it not too early to say we are out of secular stagnation, if we were into it? >> the theme over the last few years was slow growth, low
inflation, low interest rates. this has been going on for six, seven years. and if you look at the data since the election, it's striking that it actually shows a jolt that we moved to a higher level -- consumer confidence, durable goods, retail sales. all that suggests that we have unleashed some animal spirits, at least here in the early phase, which gives us some hope that we are leaving the secular stagnation theme behind. >> well, confidence index, that's a feeling for how to look towards the fire the future, but you have seen a move since the election? >> we have seen a move. but if you correlate it with consumer spending, it shows a strong correlation. so, it is a quite significant move we have seen this week and what that means for consumer spending bodes well. >> steven wieting, is the stronger u.s. dollar against the euro a positive or negative for u.s. equities? >> look, i think it's going to be positive for some and negative for others. but getting savings inflows coming to the united states, i would overall call a net
positive. the expectation for greater policy divergence in economic outperformance driven by fiscal stimulus, driven by tax cuts, corporate and personal information, these are the sorts of things that will drive outperformance of u.s. assets. >> there's been a huge discussion on capitol hill, steven, about the repatriation of dollars. there's a number of different competing plans, but it does look like democrats like maryland's john delaney, he's got his own plan, are together. if we see some kind of a repatriation holiday, would that automatically give us a bounce in the u.s. equity market? >> look, i don't think it has to flow immediately into equities. i think that there is a good chance, like 2004 and 2005, that companies may put some of this money to work with share buybacks, m&a. but there's a lot of things that are being done. the lower corporate tax rate overall, which could take down effective tax rates from let's
say 28%, not 35%, the statutory rate down to 20%, could mean higher tax rates for some and lower for others. but overall less along with a lower tax rate for foreign earnings and a variety of incentives. i mean, that includes the lower personal income tax rate which will stimulate demand. now, there is a price to pay for this. you have to make the budget deficit larger. you have to take less from someone to give them more. that immediate effect will imply a price over the long run, and the bigger question is what will happen to spending in the very long run. but i think that, you know, markets are about here and now, and we've changed the contours of this recovery over the next two years. >> torsten, one of the ways the market has kind of rushed to price in the implications, both in the economy that we had and the potential policy effects, is to say inflation may actually get a bit of a tailwind from here. what does it mean for the federal reserve and for financial assets, do you think, next year? >> this is the most important
joker on the outlook. if inflation is under control, everything is good, we should see higher equities, higher rates and a higher dollar. the problem is, if inflation overshoots the 2% target that the fed has, then we run the risk that the market gets the idea that the fed is behind the curve. and what does that mean? that means the fed has to be much more aggressive in slowing growth. and in plain english, that means that the fed will need to slow revenue growth for companies, slow earnings growth for companies, and that means that if there's a slowing of revenues and earnings growth for s&p 500 companies that the stock market will probably not like that. >> do you think three hikes next year is below or above that threshold where it becomes a problem? >> so, i think three hikes should be the goldilocks scenario where the baseline will be, that stocks should do well throughout next year. the risks are to the up side, that if we see more hikes, that the fixed income markets in particular will say, wait a minute, maybe they are behind the curve and the fed have to be more aggressive in slowing the revenue growth of corporate america. >> thorsten, steven, thank you, gentlemen. appreciate it. all right, when we come
the research shop says the company's ability to turn customer data into increased traffic bodes well for the e-retailer. this coming as amazon says the past holiday shopping season was its best ever, thanks to a late-december shopping boost. then, aside from a rock-solid holiday, police in arkansas are attempting to obtain data from an amazon echo, hoping it holds clues to a murder dating back to 2015. amazon says it will not hand over any customer data without a valid and binding legal demand. to discuss all of this, let's bring in ed lee, managing editor at re/code and the managing director at menlo ventures. venki, i'll start with you. i want to talk specifically first about this stock call, and let's take a listen to ken senna, who is the analyst who made that call earlier on the show. >> i think that as we look data science just across the space broadley, amazon is leading the charge there, and i think they sit in a position of being able to apply it both in terms of their retail operation as well
as being able to productize and commercialize that for businesses through enterprise. and i think as we start to even think about how video stands to reshape and we look at the large addressable market there, i think amazon sits in a good position there. >> it's hardly a contrarian call, but would you risk betting against it? >> no, i wouldn't. i think he is right. amazon has been on fire. i would say three things. one, they have become the dominant channel for e-commerce. two of our companies use them and one has been sold out, and that's due to their success. two, data science and machine learning, i think they're leading the front over there. and third, with aws, they have the pre-eminent cloud service. so, i think they are definitely well positioned in terms of being the stock for this year. >> but ed, when you think about quarter-to-quarter stability, so many people have favored google because they have the secret weapon of ruth porat and the discipline she brings. what does amazon have in that department? >> a diverse array of businesses. aws is an example.
even their retail business, they don't own all their inventory. a lot of it's the marketplace part, and that's actually the faster growing part of their business, where third-party sellers use amazon to sort of sell their wares and warehouse it within amazon's warehouses. i think that's a big part of their secret sauce. >> venky, is there a headline risk to amazon? i hear everything you're saying about their core business, about amazon web services, but let's not forget the variable of donald trump, because donald trump has made some critical comments about amazon. i think he said something like, oh, do they have problems if i become president. do you fear there's some sort of an antitrust headline risk around the president-elect? >> well, someone i know in washington said that politicians campaign in poetry but govern in prose. so, i agree that mr. trump has said a lot of statements, but i believe when he comes into office and they look into it they'll realize that amazon is good for america and amazon's success is good for america and that it makes sense for the government to support companies if you want to make america
great and you want to put america first. you do that by supporting innovation and entrepreneurship and job-creation, and amazon does all of those. >> you know, ed, if you extend the logic of the bullish call on amazon ken had this morning about data science and essentially using customer data to get an additional edge, it really does put you in mind of saying, look, scale begets scale. the biggest are going to have a competitive advantage on that basis. i mean, does that make them even more of a target because you're going to be that much more dominant? >> it does. a little more skepticism on it, data science i think is an emerging area that companies like amazon are trying to capitalize on, but let's look at this. irecl their echo, their most popular selling device, they ran out. where was their data science on that? shouldn't they have built enough to get a sense of, oh, wow, demand will be higher, we need to produce more? so, they were suffering like any other retailer -- >> definitely a nice problem to have. >> definitely nice to have. >> you create demand and the mystical nature around the echo. >> but during the holiday
season, if it's not available, you'll move on to somebody else. it's a sale you missed out on. i don't think any retailer wants that situation ultimately, but yes, it is a good problem to have, certainly. >> or you buy it anyway and just tell the gift recipients they're going to have to wait a few days. but when the company says this holiday was its best ever, its prime day was its best ever, these are sort of voodoo metrics. at what point do you think the company needs to open the kimono a little bit and actually give you a little bit more to chew on? >> this is not nuclear. jeff baseos has been good about not revealing a lot of things going on. i don't think a lot of people knew how big aws was until they finally released the data. they're going to manage the information. the street believes them and their performance backs up what they have said. so they have a lot of credibility in the street and they can manage not sharing a lot of information. >> is valuation ever going to matter for amazon? 86 times forward earnings, 5 times peg ratio, 3 times
price-to-book. does valuation ever matter? it has not in 15 years. >> so, valuation, like gravity, does matter, but it's also like beauty in the eye of the beholder. and i think what bezos has been able to frame is have the discussion be based on growth and opportunity and cash flow and not on profits. how long that holds, time will tell. >> well, it's been holding for 20 years. >> another metric i'll give you. enterprise value to ebert on amazon, something like 33, 34 times. netflix, 159 times. so you know, in terms of -- >> but netflix is incredibly asset liked -- >> shoes. >> that's true. streaming is a big, growing part of their business. >> nobody's going to buy amazon, either. >> as a reporter, what is the metric that you most want to be able -- >> how many prime members are there, you know? that's what we want to know. what's interesting is we talked about streaming. >> do you have a guess? >> the streaming companies, the producers who are selling the shows, who are sort of working on that, a big part of how they figure out how much they should sell it for, they want to know how many prime members there are. that community has a better
window on exactly what that -- how big or how small that universe is. >> we can't leave this conversation without asking about this murder investigation. >> oh, yeah, right. >> whether this invokes the fight that apple and the fbi brought to the floor, the debate, rather, about privacy, and how much of this data as it's getting swept up, ed, is ripe for authorities' taking. >> i think amazon's position is basically, we need a proper warrant, we need proper probable cause information before we hand that over to you. we're only going to see more of this as time goes on. not just for companies like amazon, but google and apple, for that matter, that have their own sort of ai devices or their own ai systems that are recording all kinds of information from people. so, i think more. >> isn't there a risk to this? because if they do subpoena the information and if amazon does turn it over -- and again, these are ifs -- won't we learn what many suspect, which is that alexa, or even the google device, is always listening? you voice act siraivate it, you
the songs on, but isn't there a risk when you say this is always listening to me? >> absolutely. >> why would you want that in your home? >> samsung has always shown, their tvs are always listening. i think pleem always have this trade-off between convenience and privacy. and the reality is, imagine, we all go on facebook and share so much information about us on snapchat. why? because the convenience triumphps the privacy. and i think, again, these tech companies are betting that the products like google home or alexa or echo -- i'm sure apple is going to have one -- the convenience will trump the privacy. and as someone who just opened a google home in my home yesterday and had my daughters play with it, my daughters didn't care whether they were listening to what they were saying or not. >> although it is worth saying this case is coming out of bentonville, arkansas. i'll leave that there. >> and it involved a hot tub. there's a lot of angles here. >> although there is a big competitor of amazon's that is
based in arizona. just leave that there. >> that might be a factor. >> all right. turning now to the markets. as 2016 comes to a close, some tech investors have reasons to celebrate. for others, this year can't end soon enough. let's send it over to josh lipton at one market with the details. josh? >> reporter: that's right, kayla. so, let's start with one of the worst performing tech stocks in the s&p 500 this year, and that would be salesforce. ceo marc benioff says the business software maker could reach $20 billion in annual revenue faster than any other enterprise software company. but the stock is down some 10% this year. analysts say the street is still worried in part that benioff might make a big acquisition, given his flirtation with twitter earlier this year. >> for salesforce to start moving higher in 2017, i think it's simple. first of all, they need to get back on message around growth plus margin expansion equals
mid-20% cash flow growth. this is a strong, fundamental company. they've got a lot of open-ended opportunities from a growth perspective, but you've got to move away, frankly, from a lot of the discussion about m&a. >> more than 90% of analysts rate crn a buy, pointing to strong top-line growth, a growing product portfolio, an attractive risk-reward. now, from a laggard to a leader, the best performing tech stock this year is nvidia. it has surged some 250%. nvidia semiconductors are powering many exciting fields that investors want exposure to -- ai, self-driving cars and video games. still, not everyone is a fan. citron research tweeted this morning that the market is disregarding headwinds for nvidia. in 2017, citron sees this stock heading back to 90 bucks. nvidia, by the way, declined to comment on that report. guys, back to you. >> thanks so much, josh, for that. ed venky, the stock reversed
course on that citron tweet, as josh just mentioned. we have so many people coming on and saying invest in the semis because they can only go up from here, they're value stocks. but the sector as a whole, when you look at the s&p subgroup, most of them are up 20%-plus this year alone. >> i think the big "x" factor, what's hard is a lot of the front suppliers, whether it's apple or amazon for that matter, they tend to switch out on the back end just to diversify their supply dhan. they don't want to be beholden to one supplier versus another. that's a part of it. and nvidia, their processors are well regarded and can be applied to a lot of this data science we were talking about, so i think that's a big up side for them. but the "x" factor is when will the frontline suppliers switch them out? >> venky, do you agree that there are some risks coming ahead for nvidia? >> well, see, i think there are a couple things going on in the semiconductor space. one, the space has consolidated massively.
there's not a lot coming in to threaten the incumbents, so it's the one area where incumbents have leverage. yes, there are a lot of people switching out, but they are the leaders in gpu, which plays a big role in mission learning and mission learning and ai's a big driver. i think of all the semis, nvidia has a great ip portfolio. i would be supportive. i wouldn't back jaffna individuala at this point. >> we have to leave it there. ed lee, venky, thank you for joining us. citron research's andrew left will be joining "fast money" today at 5:00 p.m. eastern with more on that nvidia note. bill griffeth has a news alert involving airbag maker takeda. bill? >> we may be near to an end of this story. takata and the justice department, according to dow jones, are talking about a settlement that could be announced early next year, would involve them pleading guilty to criminal misconduct and a penalty, a financial penalty of up to $1 billion. of course, we've been reporting
for a few years now about the takata airbags that would rupture, and they've caused accidents and injuries and deaths over the years. 42 million vehicles have had these airbags recalled here in the u.s. and around the world. and they've all -- the common denominator was they're all made by takata. so, takata is nearing a settlement with the u.s. justice department, according to dow jones, where they would admit criminal wrongdoing in the handling of the airbags and recalls and a penalty of up to $1 billion. back to you guys. >> bill griffeth, thank you very much. still to come, we are breaking out your stock playbook for the year, hoping to help you make money. come on up, we'll examine opportunities in travel and leisure. they do go together. we're back after this.
ining ne you. one that help save kids li love s jude.here. me too and so do reerywhere. gidonate now at jude.org kids in yourife. shop wheryou see the . jude logo. as 2016 winds to a close, it is time to do what we do, a look ahead. so we are breaking out our 2017 playbook, finding ways for you to make some money next year.
susan li looking at what to expect in travel and leisure. >> reporter: the travel industry is big, employing 1 out of 11 people on the planet. and the focus for the industry next year will be on trump, terrorism and closed borders. first, the trump effect. with business travel slowing the last few years, that has dragged down on the hotel industry. but with trump's pledges to cut corporate taxes and regulations to speed up the u.s. economy, marriott, hilton and ihg are hoping cash-rich companies will usher in the return of the business traveler. meantime, more americans might be booking a cruise on carnival, royal caribbean or norwegian, with lower income taxes giving consumers money to spend at sea. though sailing to cuba is back in question after trump's threats to revisit the relationship. second, terrorism. paris, brussels, nice and istanbul have all taken a hit to visitor numbers as a result of terrorist attacks.
expect visitors to continue avoiding hotspots in the new year. and finally, closed border backlash. with politicians threatening to build a wall along the border with mexico and pushing heavy vetting of muslims entering the u.s., expect the number of tourists from the middle east and mexico we saw last year to possibly cool off. booking sites like expedia, priceline and tripadvisor will also be looking for more clicks as tax cuts spurs on more travel spending, hopefully, on the internet. back to you guys. >> yeah, susan, and that strong dollar, maybe you've got some more outgoing traffic from the states. we'll see how that plays out in 2017. thank you so much, susan li. when we come back, donald trump working to avoid conflicts of interest ahead of his inauguration, cutting ties with charities, companies and much more. but our next guests say it's easier said than done for the president-elect. plus, we do remain on dow 20,000 watch. you see right there very slight losses. we were down about 23 at the start of the hour.
it's inching closer to the flat line for the day. we are less than 60 points away. more on "squawk alley" in a moment. hey! i just wanted thank r walkg me through my firstptio trade.we . well, i feel prey smart. ll, we'rall ababt educating pelwelldon'worry,agies. i won't let this aomplishmen go to myea i'm still the same old gary. wait, you forgot your french dictionary. ohmucho gracs. gehelpn options trading with thinkorswim, ohonly at tdmeriade.
keeping the power lines clear,my job to protect public safety, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it. public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers. we want to keep our community safe. this is our community, this is where we live. we need to make sure that we have a beautiful place for our children to live. together, we're building a better california.
a special guest dropping in to the new york stock exchange, apple ceo tim cook is touring the floor today. in his capacity as a private citizen. so, we hope that he has a good time in the place that we enjoy every day as our workplace. >> yeah, and just to quell any -- you know, if anybody, loose lips -- he's here just for fun. he's on vacation.
a little family holiday action in new york. there's no apple news. there's nothing going on. want to make that clear. but we urge mr. cook to spend some money and at some point give us his prediction on the auburn/oklahoma sugar bowl game, which is taking place -- >> why not? he might be looking at the tablets these guys are carrying around on the floor. maybe he's got ideas for update. clearly learning about the market-maker system here on the floor as well. >> yeah, there you go. so, apple ceo tim cook down here. >> let's get out to headquarters with bill griffeth and our "cnbc news update." >> kay lar, thank you very much. the man convicted of killing nine people in a church says he still plans to represent himself in the penalty phase of the trial. dylann roof told the judge he will not be calling any witnesses. utility crews are trying to contain a gas leak caused by a sinkhole in bethlehem, pennsylvania. at least 30 people needed to be evacuated from their homes and a four-block radius is closed to
traffic right now. meanwhile, amazon says it shipped over 1 billion items this holiday season. the retail giant said its voice-activated echo dot was the best-selling product on its site this year. and new york city is famous, of course, for its traffic jams, but listen to this. one uber driver did not have any trouble cruising the streets early one morning. he posted this video and claimed to have hit 240 consecutive green lights. somebody called the guinness book, folks, because that has to be a record that will never be broken, i would think. michael. >> that is our news update. i think you had a good bet there, bill. appreciate it. >> i believe, yeah. >> i believe if you go 30 miles an hour, that's the timing. the question is, can you get that much free space in new york? that's got to be unprecedented. but if you go exactly 30 miles an hour -- >> that's the thing. >> -- i've heard you can time it perfect. >> there is a way to get the pacing correct. you have to stay off the two-way avenues --
>> and you have to do this at 3:00 in the morning, too, by the way. >> i see a santoli/griffeth showdown coming up. >> get the dash cam ready. >> it's coming. >> let's do it. >> see you later. >> appreciate it. markets closing in, the uk and across europe moments ago. let's get to seema mody back at hq with an update. >> hi, michael. it's really interesting to see that despite that strong industrial profit number we got out of china, stocks in europe are mixed. the ftse 100, though, near a record high after having been closed for the last two days for christmas and boxing day. the rally really being helped by the miners. we're looking at bhp billiton up. and investors are digesting the sales data. is weaker currency drawing more foreigners in, and is political uncertainty stopping consumers from buying goods? at this point, the data shows it's too early to say, but the big names like tesco and marks & spencer trading lower in today's trade. meantime, focusing on european financials, specifically the
spanish banks with ties to mexico. the concern by some analyst sthas president-elect trump's policies could be bad for mexico and hurt the banks with exposure to mexico, like banco santander. they're up since the election but underperforming the european banking index. now, meantime, politics. uk government is bracing for more brexit drama with questions arising over whether prime minister may can trigger article 50 without parliamentary approval. lloyds bank is looking to set up a european arm in amsterdam or germany, if the uk loses access to a single market. this is to ensure the bank can maintain its german and dutch retail clients. now on to italy. monte paschi remains in focus after the lender was told it needs to plug in $9.2 billion of capital shortfall, more than estimates were showing. this, of course, as the bank looks to the italian government
for more support. european stocks, though, on track to end the year slightly lower by around 1.2%. but as you can see, we've come off the lows since the summer. a lot of that being helped by the currency. the euro trading at $1.04, the pound also trading at levels we haven't seen since before the election. brian, i'm digging those glasses. >> seema, thank you very much! i appreciate the kind words. now i can see also, which helps. donald trump continuing to face questions over the divestiture of his companies and business interests as he heads to the white house. what should the real policies be, though, regarding corporate ownership and being commander in chief at the same time? for more now, we're joined by former special counsel to president obama, norman eisen along with chief ethics attorney richard painter. first to you, norman. donald trump has said very plainly that the law's on his side, he does not have to do anything regarding divestitures. would you agree with that?
>> thanks for having me, and no, i do not agree with that. like many things that donald trump says, it's a half truth at best. he's neglected in that assessment, for example, the constitution, which expressly says that the president of the united states cannot get foreign government payments. that creates a conflict. it's call the imoluments clause of the constitution. so starting with the constitution, he cannot hang on to these businesses that allow him to get a constant flow of foreign government payments, and there are a bunch of other rules that apply as well, some that don't, but many that do. >> ambassador, though, there is a question of, let's say he exits the business completely, he sells his stake to someone else. isn't the end buyer of that business or the end investor of that business who takes it off the president-elect's hands, isn't that as problematic as him
simply owning it himself? >> well, it still will have wrinkles and complications, but it's much less problematic. look, for donald trump, there is a very simple thing he can do, a one-page piece of paper. he just has to sign it and turn all of these businesses over to an independent trustee who will worry about all that stuff and figure out how to sell them. donald trump needs to focus on managing the government. and while it's true that that trustee is going to have a lot of headaches, the first step, the most important step, the critical step is for donald trump to move those headaches to somebody else so he can focus on running the country and leading the free world. >> mr. painter, i guess this discussion always comes down to, or what if he doesn't? so, in other words, if he's willing to accept the appearance of conflict of interest out there and maybe he'd risk the
fact that maybe bureaucratically he'll get bogged down or get criticism, what happens next if he just says i don't really mind that? >> well, i think he will in the end because there are just too many problems if he holds on to the businesses. we have the problem under the clause of the constitution. he cannot receive any payments from foreign governments or companies controlled by foreign governments. that includes bank loans from the bank of china and leases to foreign government-owned companies. he could also get into the middle of the robbery investigation. the minute somebody in his organization starts talking united states government business side by side with trump organization business in a way that could imply a quid pro quo, he may not want it, he may not condone it, but he could get dragged into that. we have the problem with the plaintiffs' lawyers who are going to be running around trying to sue every little piece of this business. we've got state attorneys general who are investigating. we already have a situation up in new york where the state attorney general is
investigating his foundation. and i hope that hurries up so he can shut down that foundation. that was a very good move on mr. trump's part to do that, but there are just going to be a lot of problems if he holds on to these businesses while he's president. he really does need to divest. >> but norman, there's really no precedent here. i mean, yeah, george bush ii had a stake in the texas rangers and some oil, but we have to go back to herbert hoover to find really a true businessman who has become president. i hear your points about the constitution, but we're talking about law that has not been explored or dug into ever. >> well, there are novel questions presented, but we have had some very wealthy individuals who have served in the presidency, and every president for the past four decades has used this mechanism of appointing an independent trustee, setting up a blind trust, or the equivalent. the fact that donald trump is so much wealthier is only an
additional reason, an extra reason that he should go that route, in addition to all the headaches that professor painter pointed out. there's another one that's very familiar to your viewers, and that's the insider trading liability, which is fully applicable to mr. trump and his family and people like carl icahn, who he's bringing in in a very undefined role. there's a tremendous danger, perhaps inadvertently, that some inside information will get past, somebody will trade on it. >> right. >> then we'll have an insider trading investigation! why does donald trump need all these headaches? it's simple for him -- sign the paper, appoint a trustee, let the trustee worry about all of this. >> right. and the insider trading piece of this was something that congress was under fire for during this administration, but mr. painter, ultimately, if it comes down to congress to enforce whatever conflict of interest rules or
whatever types of disclosure or introducing any new policy on this matter, do you see congress having the app tied to do that? >> well, it depends. i don't think the republicans in congress are going to want to take conflict of interest baggage into the 2018 elections. and remember, only some of these provisions enforced by congress. criminal statutes are enforced by the grjustice department. if we have people leaking confidential information that's used for trading, that will result in an insider trading investigation. if we have quid pro quo, that could lead it a bribery investigation. we have a situation where the president's name is up on buildings around the world, and we hope something bad doesn't happen. but you know, if something did, we'd end up with a hearing to make the benghazi hearing look like nothing. so, there are a lot of risks here for the president holding on to these businesses. >> okay. >> i think he really wants to be a good president and i hope he will get rid of the businesses and sell them, make a lot of money and then be a good president. >> we'll see and we appreciate your points of view. obviously, the president-elect may feel a little bit
differently, and it should come to a head fairly soon. norman eisen, richard painter, gentlemen, have a happy new year. see you soon. thank you. >> thanks for having us. happy new year. when we come back, shares of qualcomm under pressure. find out why, next. but first, rick santelli, what's on your mind today? you know, we learned from deallogic that 2016 is a record year for debt. global debt $6.6 trillion. does that mean rates are going to be ugly to the up side and go much higher? that's what we're going to talk about after the break. ♪ w're drowning in information. where, in all of thi is the stuff that matters? the styo fute. so high,youre how do you s this? you don' yopartner with am that advises governments and the fortune 50 and, can delivernsight person to person,
they tell me february 19th. can you speed up production for us? >> i'm trying the best i can. >> been a great time. tim, thanks for coming down. >> pleasure. always a pleasure. >> tell everybody at cnbc -- >> i will. >> take a picture? >> there you go. apple ceo tim cook touring the floor of the new york stock exchange. again, he's on vacation here, but he was kind enough to give a few words to our bob pisani. as you can see, a lot of interest. he's literally directly behind us. i'm more interested in his points of view on auburn/oklahoma. he is on vacation, but we'll see, very nice guy, tim cook, obviously. spending time with cnbc's bob pisani. let's bring you in. you're right behind me. literally, i could look over my shoulder and talk to you here. couldn't hear the conversation. what'd you guys talk about? >> he's here with his nephew, getting a tour of the floor. he was standing there talking with jason for a while about what was going on and how the
floor operates. i asked him how he felt about what goes on on the floor, and he said it was very interesting. he wanted to learn a little bit more about what we do here on the floor and how it operates. didn't give me any indication -- of course, apple lists on the nasdaq, not on the new york stock exchange, but said he was happy to be here. i did ask about how he's feeling for 2017. he said he didn't want to talk about how business was, but he felt optimistic. i think importantly, i asked about the airpods, the new wireless earbuds that apple has just put on sale and which is the scarcest product in new york. brian, i've been wandering around like a homeless person for a week trying find a pair. there is not a pair to buy in new york. earliest date is february 19th that they're available and he says he's doing the best to keep production as fast as possible. he said it's a big runaway hit. that's exactly the way he skribd it. but he looked happy and had what looked like his relatives standing next to him, his nephew, i believe.
>> stars, like us, they take vacations and they come to the most historic places in new york city, this among them. >> i'm actually just kind of -- which, i normally don't do, which a moment of silence for me is extremely rare event. but tim is standing right there, i wanted to see if he wanted to come up and take a picture or see if he had any earpods in his pocket. he's a corporate celebrity, or just a celebrity in his own right, so there is a lot of interest around mr. cook. >> they're looking at the new under renovation podium where i believe they're installing big screens and everything. so, seeing the latest technology on the floor. >> yeah. so you know, listen, apple's stock has come back a little bit late lately. it's up about 3% in the past three months on the dow. so you know, obviously, apple's stock of interest to most cnbc viewers. i believe it is the most widely owned stock in the united states, probably the most widely owned stock in the world. >> it is up 11% year-to-date, although the dow for its part, which apple is a component, is up 14%. >> yeah, you need to get $8 or
$9 on apple stock right now to get the dow to 20,000. >> what did our awesome folks, peter shackman and other folks who you don't see on camera, but they do amazing work, providing us with the background data we use. thank you very much. i think peter sent out a note yesterday that we needed 10 bucks a share because the dow is a price-weighted index. 10 bucks a share on the dow to get us to 20,000. so, here's my incredibly scientific theory. the numbers 2017 add up to what? ten. we will hit dow 20,000 in 2017. that is not a prediction, just a random comment while we stall for time hoping for tim cook -- >> for the entire 12-month period. >> with that, we'll get back to paying the bills and we'll see you on the other side of a break.
coming up on t"the halftime report" what famous market washer marc faber thinks. plus, the top internet pick for 2017. it hasn't done well since the election. we'll talk about what that is. finding opportunity in health care. it is the worst performing sector of the yeefr. all that and more starts at the top of the hour on "the halftime report." brian, we'll see you in about ten. >> we certainly will. thank you very much. now, let's go over to chicago and the cme group. check in with rick santelli and the santelli exchange. >> thanks, brian. well, tell you, if if you consider that it seems so
logical that in a time where debt is king, everything is about debt. reconstituting, manipulating it, or trying to massage equities. it really is about king debt. in a global environment where it keeps moving at record levels, interest rates would be skyrocketing, but it's not true. it's not true. as a matter of fact, if july we were under 140 in terms of interest rates. let's look at a chart. since july of 2011 for ten-year note rates, other than literally one session, december 31st, 2013, we have not had one single close above 3% since july of 2011. think about that. where it's all about debt. where it's all about deficits rising. you know, there was a time where you are thinking, hey, if deficits are historic levels, most likely interest rates are going to reflect a.
not the case. we have learned that we issued $6.6 trillion. that's not including sovereign debt that goes through the regular auction process. half of that were corporates. now, does this mean that 2017 has to be a bad year? well, i don't think that's what the markets are telling us. as a matter of fact as a matter of fact, they're not telling us that at all. let's look at the credit spreads and the relationship between lesser quality like corporates and junk versus the highest quality like sovereigns. let's look at investment grade. let's look at a one month chart from barclays. these are all barclay charts. let's open it up to five years. the spreads are narrowing and very well behaved, as you see on that five-year chart. well, you are thinking, aha, high yield is where everything is hiding. let's look at high yield. very similar. as a matter of fact, on the five-year chart, you could almost argue as well behaved. now, how did we come to end up
in this predicament? largely in many ways through negative rates. yegtive rates were the big story, in my opinion and arguably the biggest story in 2016. there wasn't one point where we were over 13 trillion in outstanding negative debt throughout the globe. what that did was create an environment where the only way you could make money on negative debt was to be sure that there were others that were willing to buy it from you. well, all of this is changing. it doesn't mean that interest rates have to skyrocket in a disorderly fashion. as a matter of fact, to me the key are the other two markets. equities in the dollar. the dollar is going to be key in terms of servicing debt. much of it is dollar denominated, and lastly, it's the competition for investor love between equities and rising rates that is going to be a governor. now, can it get messy? absolutely. early indications are it's not. at least yet.
zpliefrmgt shares of qualcomm are under some pressure. regulators say they will fine the company $854 million for anti-trust violations. that's the highest penalty handed to an individual company in south korea. specifically the korean fair trade commission said they broke the law by limiting the access of competing chip makers to its patents. they forced cell phone manufacturers into unfair license agreements and refused to do business with firms that disagreed with its terms. qualcomm saying it would contest the decision. mike, have you to ask the question of at what point lench is a good thing and at what point it becomes a bad thing. >> it reminds me if you read the descriptions of what the south koreans said that qualcomm did. bundling. you have market power in one product, and you try to bundle other stuff and make people pay for other stuff on top of it. also, withholding the i.p. from other companies, i guess, is the other piece of it.
we had a special guest today at the new york stock exchange. apple ceo tim cook touring the floor just a few moments ago. here on vacation, of course, touring as a private citizen. not an official capacity with apple. our bob pasani, though, did catch up with him a moment ago, and let's take a listen for what they discussed. is. >> i'm just here with my nephew and enjoying a couple of days in new york. >> do you enjoy the floor of the nyse? >> i love it. i wanted to see what you do. they're showing us what they do. >> how is business? how are you feeling? >> i can't talk about that, but it's been a great holiday. >> how about the earpods? can't get any of them in new york. >> earpods are a run-away success, and we're making them just as fast as we can. >>ive auto been wandering around like a homeless person trying to get one for the last week and a half, and they tell me february 19th. can you speed up production for us? >> i'm trying the best i can.
>> a run-away success, those airpods. for the $159 price tag, you can get a fit bit, you can get an amazon echo and a lot of stuff for athat. >> it is the time of year to buy a fit bit as well. jo that was the big thing people didn't like about the new phone, and now everybody -- >> happy new year. >> you get a few more days on those resolutions. let's go to scott wapner and "the halftime report." >> thanks. welcome to "the halftime report." i'm scott wapner. our trade this hour, rates, risk, and the trump rally. with jeelds up more than 60% over the past three months alone, famed market watcher mark faber says something has to give, and it could be stocks. with us for the hour joe, jim, the brother najarian. let's give with marc faber, the editor and publisher of the boom, gloom, and doom report. mr. faber, welcome