tv Squawk on the Street CNBC December 29, 2016 9:00am-11:01am EST
$15. there's a huge rally. it's often sectors individual stocks that will be surprises there, as well as the headline. >> and the combination of actually maybe something happening and just people thinking there is something to people just doing more based on, you know, nothing's really changed. but they actually feel better. it's self-fulfilling. >> while certain growth expectations are very high, other expectations are quite low. i mean, you ask people around here what do they think of trump, a lot of people think we're on the brink of having a lunatic in charge. and if he actually behaves in a reasonable -- if he rises to the office, for example. if the office makes the man, that's going to be a huge upside surprise. >> jim stewart, happy new year. melissa, thanks. make sure you join us tomorrow. you're going to be mad. "squawk on the street" is next. good morning and welcome to "squawk on the street." i'm david faber along with sara eisen, wilfred frost and mike
santoli. we're live from the new york stock exchange. jim and carl continue to have this week off like so many of you out there right now watching us, most likely. if you look at futures this morning of course it's thursday. we've got two more days. we backed well off from dow 20,000, but that won't stop us from talking about it, will it? european markets you ask, well, let's answer that. give you a look. uk also open again. of course hadn't been -- well, it was yesterday, not the day before. you can see they add spain and italy in the control room just to make me happy. thank you very much. down let's call it almost across the board other than italy. 10-year note yield hanging right in there right around 2.5, up a little bit in price. and there's a look at wti. our roadmap for the hour begins with president-elect trump taking credit for the 8,000 new jobs coming to the u.s. workforce. will other companies follow suit? and as we drift further away from that dow 20,000 target, we look at what history tells us about the timing of the milestone. >> and apple's attempt at
securing one of the largest smartphone markets, india, one of the latest hurdles. we'll discuss that. but first, president-elect donald trump says sprint is going to bring back 5,000 jobs to the united states while a company named oneweb will add 3,000 jobs. common theme here, softbank's masa son spoke with trump this month, softbank owns majority stake in sprint and also investor in oneweb, here's donald trump at mar-a-lago last night. >> i was just called by the head people at sprint, and they're going to be bringing 5,000 jobs back to the united states. they're taking them from other countries, they're bringing them back to the united states. and masa and some other people were very much involved in that, so i want to thank them. and also oneweb, a new company, is going to be hiring 3,000 people. so that's very exciting. >> and that company's founder, greg weilor was on "squawk box"
this morning discussing the types of jobs he's looking to fill. >> these will be very high-tech, highly skilled manufacturing engineering jobs. so really right at the cusp of highly skilled manufacturing and engineering. >> and where will they be based? >> really all across america. we have a very broad supplier base, so in florida, a lot of jobs in florida, a lot of jobs in arizona, maryland, virginia and of course california and many of the different states around in smaller numbers. >> interesting of course to see these moves. every job is important. it's great to see jobs potentially coming back or being added. but of course there is the larger issue of progress. we talk about it so often and whether or not you can actually stop that, which typically comes in the form of automation and robotics and so many things that are going to continue to dislocate the u.s. and workforces worldwide.
the sprint deal is interesting in and of itself guys, in part because masa son, of course who controls softbank, which controls sprint, has been looking to do a deal for a long time with t-mobile. they have an enormous amount of debt, they're still setting up an off balance sheet hand set financing vehicle. they're going to be potentially parting with some of their 2.5 gig spectrum, and they want time perhaps as well to try to figure out a way to get together with t-mobile again. given the heisman a couple years back by -- actually, the current fcc chair stepping down. you have to wonder if this doesn't figure into that mix. >> stock up about 40% since the election, not just a good year, a really good couple of months. and you have these examples of these companies that have decided to keep or bring jobs to
the united states where one way or another they want to remain in good graces of an administration that's coming in. maybe they have other business with the administration. so i guess the question is this just the way you get good pr, somebody's basically the incoming president saying this is a great thing you're bringing jobs to this country. but also is it a way to run an economy right now? >> on that note -- >> a few thousand jobs at a time, right? >> you were talking about some of the other companies that have made these deals with trump whether it's on cost discipline or bringing jobs back, lockheed martin, boeing, carrier, owned by united technologies, sprint, they're all companies that need a friendly relationship with washington. whether it's part of the defense budgets or trying to get a deal done past the antitrust regulators. it is your honcertainly does no curry favor -- >> and they realize it's in their interest to get in there early with the president-elect and allow him to take credit for this type of thing because it
curries favors with other deals potentially down the line. >> right. to put it in perspective, since sprint was acquired by softbank, the company had shed about 9,000 jobs. so you have to keep these things in mind. of course we're talking thousands here when really the u.s. economy adds, what are the numbers, hundreds of thousands a month? >> i mean, 150 these days is a weak number because we were getting used to more than 200,000 job creation per month. >> and obviously what's lost and added in a given month is much larger than that. but it will be interesting to see. sprint stock as mike noted has moved up dramatically in part after that meeting between trump and masa son, the one at trump tower because of the facts they hope they would be able to revitalize this idea to bring together t-mobile which by the way is larger than sprint now, would you want to use sprint shares and some say in fact now some say over value, has huge
overhang of debt. a good job of bringing them along and stabilizing the subscriber base, but certainly that deal would help a lot to bail out what was a $20 billion deal for softbank. i don't know. >> let's talk about the premise of that deal if it were to happen, right? bring four competitors, big competitors into three. >> right. >> so it's all about efficiencies, it's not about enlarging the market, is it? >> no, it isn't. mike, you know, i just don't know whether even if you were to have a president who was very much in favor of helping you because you've helped him, the staff at the fcc, the staff at the doj weighing in on a 4-3 when you can clearly see the benefits to the consumer of having four competitors in that marketplace for something we all use, our wireless phones, that would be a tough one i think even still. but we're going to be watching this continued relationship and the growth of that relationship. >> let's talk about the political side of this story and
bring in john harwood with more. you know, john, president obama under his watch this economy created, what, more than 15 million jobs? and maybe it's just trump being a brilliant marketer and more politically savvy than he gets credit for, maybe obama should have announced every single company that hired over the last eight years? >> well, that's exactly what it is. it's marketing. he took advantage of a slow holiday week and made -- teased it earlier in the day through sean spicer, his press secretary, and said we're going to have this big announcement about economic development, announce it later in the day. as you guys have indicated, masa son announced after his meeting with donald trump at trump tower a few weeks ago that he was going to invest $50 billion in the united states and create 50,000 jobs. now, this is all part of a fund that he had been raising $100 billion with saudi arabia long before the election. so it wasn't really about trump, but as you guys just indicated, this is a win-win for the companies and trump.
they get to come out and say, yes, mr. president-elect, we're going to add these jobs in the united states. he can say it's because of me. they're facing regulatory hurdles to sprint and t-mobile getting together. and everybody's good, except if you believe the conservative arguments against crony capitalism, which conservatives have been making for some time, you know, will taxpayers get hit in the end? you know, is this back scratching between companies and a politician that will end up costing them? we don't know that. >> yeah. you know, it's also worth noting, i think, this idea of bringing these jobs back or creating new ones for sprint in terms of call centers, i would just mention separately charter communications, which acquired time warner cable, which also acquired newhouse, they committed to hiring 20,000 people not because they were necessarily trying to do a good thing to get in the good graces
of the current administration, but because also tom rutledge, the ceo of that company has said many times actually makes sense to house these people in the u.s., the inefficiencys that are taken away, the lower churn that we can have from dealing with customer problems in a more effective way is better for us. so worth certainly mentioning. this is a trend in part also. >> well, and, david, we have to say, if in fact donald trump has the effect of changing the mindset and having companies look first toward jobs in the u.s., especially the kind of high end manufacturing that the oneweb executive mentioned on our air earlier today, that's a good thing. and that has the potential to create a virtuous cycle. but you guys put it in perspective before. this is 8,000 jobs in 2016 the u.s. economy's created an average of 188,000 jobs every
month. so is this big? no, but it is a pr coup. now, i want to bring in one other issue. you know, we talked separately from this jobs announcement. we talked yesterday about the split between the obama administration, the incoming administration over israel and the back and forth between kerry and netanyahu yesterday. there's another issue that was illustrated last night when donald trump came out and talked to the press, and this was with reference to the russian election hack which u.s. intelligence agencies agree was perpetrated on democratic organizations by the russians. donald trump was asked whether or not russia should be sanctioned for that hack. here's what he had to say. >> i think we ought to get on with our lives. i think the computers have complicated lives very greatly. the whole, you know, age of computer has made it where nobody knows exactly what's
going on. >> now, think about that. he said we ought to get on with our lives when asked about sanctions russia. nobody really knows what's going on. 17 u.s. intelligence agencies have said they think they do know what's going on, and the obama administration has them compiling that information to release before he leaves office. that is going to put the squeeze on republicans in congress, especially those like john mccain and lindsey graham who are skeptical of russia, skeptical of donald trump's relationship with russia skprks we're going to have to see where that goes. but donald trump is making plain he has no intention of putting any daylight between himself and vladimir putin at this stage. and how that proceeds, how it affects rex tillerson's nomination for secretary of state, of course tillerson has made big deals with vladimir putin, those i think in the end are going to be bigger questions than the ones that we started out talking about with respect to sprint and oneweb. >> yeah. with don king by his side. >> that's right. >> john, thank you.
john harwood in washington. meantime, the dow closing down triple digits yesterday for only the second time since the election, jobless claims fell by 10,000 to 265,000. we'll get both crude and natural gas inventories later today. we also have trade deficit number 65.3 billion in november from 61.9 billion in october. and, guys, in terms of the market move yesterday, mike, we were talking about this in the morning, very interesting to see quite a slew of factors which were a turnaround from the first sort of month of the trump rally. we also saw bonds yields come down, so bond buying. and today we're seeing the dollar softening as well. within the sectors financials the worst performing sector yesterday. so it was quite a marked profit taking post trump rally. >> the market had been sort of treading water for two weeks for awhile really staying near those highs making these sort of halfhearted attempts at a new high. and yesterday as you say a lot of the forces that were driving the market higher in the weeks after the election did flag a little bit.
dow transports are down from a couple weeks ago. semiconductors fell yesterday. we're at a two-week low in treasury yields as well. seems as if people are adjusting and we've been talking about the possibility of this shift, at least a reallocation away from stocks into bonds just as a mechanical measure because of asset allocators doing that at end of the quarter. we did see evidence some of that was working through the market yesterday. >> going to bring up the year end funkiness that's going on. art cashin has been mentioning this theme of pension funds especially this last quarter and this last month having to reallocate buying more bonds, selling more stocks because of the short moves and have to get their portfolios rebalanced. there's also this idea of window dressing which always sort of comes in at the end of the quarter and end of the year. and you wonder if that's going to boost stocks that have been winners not so much nvidia but you have that short sale call on that. >> yes. >> probably look out for that final, this is what, this is the final two trading days of the year.
>> that's right. we did see some evidence yesterday it was just a wholesale very much a shift away from the big indexes and into bonds a little bit. so there's no way to know this for sure or if people are just anticipating that. but i think the bottom line is final week of the year, nobody has a lot of conviction about committing a lot of new capital. and so we're sort of left with this treading water. of course the fact we had three bad januarys in a row at least has to be in the back of traders minds. >> i'm not going to say dow 20k today unless we get within 100 points again. >> you just said it. >> you also said that at the top of worldwide exchange and then said it ten times in the show. >> really? five seconds you just did it twice. >> nope. that's it. when we come back, apple's big push into china -- excuse me, india, could be paying off. we'll tell you why. and shares of nvidia falling again this after that citron research report saying the run is over. it's still up more than 230% for the year, but is it time to sell the stock market darling of 2016? more on that. and taking another look at
futures here, a little bit of strength for the dow, just barely. s&p futures up 1, nasdaq down 1. this after the s&p's worst day since back in october. more "squawk on the street" live from post nine at the nyse when we return. e, how do you like t? ooh! elmo likes songs! puzzs! me love puzzle wellpus ara great memorization tnosaurs! yess!!!! ppies! ooh! i love puppies! so do, i. actually..ets teac importanlessons abou- so ddancing! ay then, let's dance. (evebody cheers) so ddancing! yeah b
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goods such as the iphone must be built locally in order for apple to open its own stores. the smartphones currently sold by third party vendors, india's wireless market expected to overtake the u.s. next year. and it is just behind china, that at least according to idc. of course china also continues to be something of a question mark as we head into next year in terms of apple and what may or may not happen as a result of the changing nature of the relationship between our country and that country. >> maybe one reason that tim cook has been focusing so much on india even though china is clearly a gross buy. went back to the october call cook asked about india. here's what cook said. i think it's important to look not only at per capita income, which may be what you're looking at, but sort of look at the number of people that are or will move into the middle class sort of over the next decade and the age of the population. if you look at india, almost 50%
of that population is under 25. and so you have a very, very young population. responding to the fact that the population size and some of the demographics match up to china even if the gdp doesn't per se. >> well, the demographics are much, much better than china in terms of absolute size, clearly china's already a more penetrated market by apple, much more growth of course in china to come than the likes of the u.s., but india much less penetrated and very attractive demographic. so they really want to be there. there's no doubt about that. >> it is interesting to see apple playing by these rule say you have to manufacture there if you wanted to sell there in the context of incoming president who would like apple to make some goods here. clearly apple has to navigate those rules all around the world. >> i think that's not that surprising. they paid lip service to china over a lot the last year, we've seen that with various investments they've had to make into companies you wouldn't traditionally expect need to do it, but it's worthwhile. interesting point is timing as you say, is this something that's going to see a bit of a
kickback from the current elected administration. >> absolutely. coming up next, we are counting down to the opening bell. art cashin will be with us to see what he's watching this holiday shortened trading week. take a look at futures here. looks like a pretty calm open. no real selling pressure from yesterday's drop, at least right ahead of the open. we'll have more "squawk on the street" from the nyse coming up straight ahead. wh? [pony neighing] hey gary. oh i'm crazy stressedrying to afigu out this cox trerse? i bught in my cfort pony, i'm crazy stressedrying to afigisn't that right wren? wellyou could get support om thinrsm's in-app ct. lets u chat share your screirecy with a live person right frome, so you d't need comfort pony. oh, so what out my tivatialeerk? -app chat tnkorswim. with a live person right frome, so you d't need comfort pony. only at td ameriad ♪
i know you do. doesn't feel like it's going to be this week. >> no, i don't think so. as we discussed earlier in the week, the closer you get to year end, the more possibility of that pension fund rebalancing taking -- >> it's got to be happening doesn't it at this point? >> it could still occur, and it might put some pressure on. the other interesting thing to note, david, was that yesterday the reversal to the downside seemed to kick in just as the dollar was weakening against the yen. so i don't know if that's part of the kerry trade unwinding for year end, but i don't know that it was causative, but it was certainly coincident with the selloff -- >> so correlation in terms of currencies in the broader market. >> art, do you think -- i mean, we enter january, we've been talking about the past three have been bad. i mean, is there really a flip of the switch that's going to happen this year again in terms of people just very quickly repositioning? you see kind of some stealth moves under the surface with this sort of people paying a lot
to hedge the dollar and all this other stuff going on around the world. china's currency a little slippery, but yet oil's more calm, credit markets more calm this year than they were a year ago. >> yeah, i think so, but you can't rule out the fact we're still waiting to find some things out about the new administration. how soon will they be getting some of these programs that they're talking about? will they be diverted to look at the judiciary first that some people are saying. we're going to be seeing hearings on some of the nominees even before the inauguration. so if you're thinking of january pivot points, there are a couple right out there that could change things around. >> art, thank you as always. >> my pleasure. >> art cashin. >> and his holiday tie. the opening bell just moments away. so, harris,
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you're watching cnbc "squawk on the street." and we are live from the financial capital of the world. the opening bell will ring about a minute and a half from now as we get set for the second to last trading day of the year. mike, you were asking art about january, of course, which continues to be a focus now that it's just a couple of trading days away. >> yeah.
>> and we've had weakness in the last few years. >> and the question is does something become more likely in the markets because it's happened three times in a row and people think it's a pattern? or does it become less likely because people get overconfident they think they know what's going to happen? it's very unclear. clearly january's no longer that reliable signal of what the full year is going to be because we have a double digit up year this year when january was a disaster. but does seem we have maybe built up selling going into the new year whether it's tax purposes or performance purposes, we'll have to see. i think a lot of people would look at that chart and say we were due for a 2%, 3%, 4% pullback having nothing to do with dow 20,000. >> volume's been pretty low as well. that's one sense of optimism that moves do get overpronounced when volumes are low. volatility on the other hand has just started to pick up over the last couple days. that's something to keep an eye on. in terms of today's moves, europe really resilient today in face of the wall street selloff yesterday afternoon hardly
moving. and asia also for the most part in the green apart from the nikkei. slight encouragement in terms of what to look for in the open here. >> look at the realtime exchange. looks like they're having some issues there. come on. come on. there's nothing going on. that's why. there's the opening bell of course. and here at the big board by the way bank of america celebrating bank of america winter village in manhattan's brian park. there goes the realtime exchange. nasd nasdaq, food bank providing over 160 million free meals to new yorkers. nvidia's down, yesterday, that's a great model. picture coming out with a report that's short or that's negative, i would assume nothing stops from shorting the stock. so they're good for ten points already at least. >> and cnbc to explain it. >> of course. >> seemed like he might have been waiting to pick a pretty
good entry. the stock had gone vertical for quite a while. maybe you get bang for your buck when the stock looks that vulnerable to a little bit of a pullback. >> now only up 215% year-to-date. >> though mike noted yesterday in a tweet, you see, i read them, you were making comparisons to '99 and qualcomm. by the way i remember those days on "squawk box" when we had this qualcomm sound. when it was above 2,000 percent. >> a stock left for dead, only stock left to own going into -- by the way, i also looked up in '99 there were 12 stocks up in the na nasdaq 1,000 percent. >> yahoo. >> i don't know, possibly, might have been in '99. so the point being this looks like a very overheated stock, kind of like people say amberelo was, but nothing like emblematic of broad silliness in terms of the overall nasdaq or tech sector necessarily. >> the theme will continue to be a strong one. it's funny i typically go through my notes i have all over the place to kind of go through things at the end of the year
and noticed notes earlier in the year from a hedge fund manager who said keep an eye on nvidia, a.i. is going to become a much more important theme. i don't know if they held the stock through it. a lot of these guys own it and get rid of it after a month. quite a move from being considered a gaming chip company to one now so much embedded in this whole theme of a.i. as ilt grows and grows machine learning, all the data that's got to come off so they can get smarter. >> and what kind of competition is there. and also what chunk of the business. i think luck's point last night on "fast money" is this is still a business where dominant theme is gaming. >> right. >> bullish on that to get that valuation at this point. >> and threat of rivals whether it's big names like intel or other smaller names to fight back. even if they don't steal all of the market share, they certainly hit the margins nvidia's been performing on pretty impressively. interesting to see not much of a move in apple. i suppose we wouldn't have expected much off the back of that, but it's down fractionally but nothing too meaningful.
>> some of the health care names are up. they're leading the dow, pfizer, unh and merck. obviously health care is going to be an important one to watch in terms of leadership and lagging, mike. it is still the worst performing s&p sector year-to-date. and it is one of the few that is negative. i think real estate is still negative for the year as well. >> yeah. >> but boy did it go down to the bottom of the list with continued ideas about drug makers and what kind of policies we're going to get there out of washington. not to mention any rewrite of obamacare and what that would mean for some of these insurers and hospital stocks. >> there is actually kind of a simplistic idea buying the worst sector from one year and planning on -- actually i know of another one, for whatever reason the second worst sector in a given year tends to be a more reliable outperformer the following year, this year would be consumer staples. >> i sort of remember you saying that last year. >> yeah, that would be consumer staples. now, of course always when that's the case when you have a laggard sector, somebody's going to give you 14 reasons why it's lagged and why it will continue to do so. that's why you have to basically
be kind of a blind contrarian a lot of ways and buy these for value purposes if you think it's worth it. >> you do need to discern, i mean, we've got the drugmakers that have been under pressure, but united health care insurers have been very strong, one of the strongest components of the dow up almost 35% or so during the course of this year. but it will be of course very important. rewriting obamacare, what you get there, and then the tax code itself. i mean, i talked to so many portfolio managers and number of senior executives who are sort of waiting and wondering what are we going to see and what will be this potentially massive overhaul of the tax code. the ramifications for which will be dramatic for so many businesses. i mean, just consider simply the deductibility of interest. that alone will change the business plans for a lot of companies, levered companies for example. will they still allow that? is ryan going to lead the day? where's trump going to be on all this? these are questions we don't have answered but we can expect it's going to have hugely
important reverberations. >> and, david, i think that's something that the bankers are particularly excited about as well that could give their stocks an extra leg up. here i'm talking more about the investment bank parts of the businesses than retail banks which of course have been benefitting from the interest rate cut move. your own interview with john wald ren a couple weeks ago saying it doesn't really matter what the change in the tax code is the fact they're going to address it and change it is a big positive just to get these ipos and these m&a deals moving again because they say it is a big backlog and that kind of thing is incentive to kick start in 2017. >> we'll see how much capital comes back from overseas and what it is deployed with. but again, it's also what they allow and don't allow in terms of deductibility that could change the -- if you're private equity and they actually do go ahead and say you can't deduct interest anymore, that's got to change -- >> the whole premise for so much of how you structure a balance sheet, right? >> yeah. >> and it really does seem if you take literally what the proposed tax code adjustments are going to be, it's sort of this brute force we will force
you to invest capital in assets in this country and not do financial engineering. i mean, that seems to be what's behind it. but all of big corporate america has been oriented in the other way for a very long time. >> i guess david rubenstein, interested to hear what he had to say, carried interest not so much they're going to get this lowered interest anyway basically lowered than tax on capital gains, so i guess they're not going to care as much about that. >> but away from the -- if we see deregulation of sorts for the banking industry specifically, that margin is bad for private equity names because they've been seen as something within the financial space that have been less regulated over the last decade. again, at the margin, the investment bankers are thinking, great, we can start to take more of that share back from the m&a advisory teams of these big names like blackstone. >> speaking of m&a, another stock to watch here, kate, k-a-t-e, kate spade, a company
i've covered after dow jones/"the wall street journal" reported yesterday bankers talked about selling itself, the stock shot up. this was a $2 billion company market cap before this report. and i think for a lot of people who have followed this company and analysts, speaks to a number of things, but it has been seen as a ripe acquisition target. why? well, it has a strong brand. it knows its customer. it also has strong same store sales for a pressured retail industry. the problem at kate spade, guys, has been if you follow some of the earnings reports especially lately, the margins have not improved. they've been shrinking, profitability has been difficult. it's a company that is mostly in the u.s. and that has all these ambitions of expanding internationally but operationally there are questions about costs and how they're managing to do it. so a lot of people think it could benefit from being under an umbrella company like a michael kors or coach, both companies with cash and have
already that infrastructure and international footprint. so a lot of speculation here obviously just fueled by that report. could be one to watch into the new year. it's gotten cheap. and that's another reason why people say it could be a good takeout target. >> accessories has proven a very tough business. you go on these streaks and all of a sudden you have a bad season and the stock suffers. so sub scale $2.3 million market cap for kate spade maybe needs a larger home. >> absolutely. bob pisani's on the floor with more on what is moving this morning. bob, good morning. >> good morning, sara. once again, while we're fractionally to the upside, not a lot of leadership. and that's been the problem -- one of the two big problems we've had. let's look at the sectors once again. most of them on the upside. utilities, health care, consumer staples, industrials, trying to figure out a pattern? don't bother. there isn't one. and hasn't been for the last couple weeks. we're getting this reversion to the mean remember people talk about financials, industrials, to a lesser extent energy were market leadership groups in november, in the first part of
december. that has since flipped around. but we're not getting anything coming to the fore that's decisive, not consumer staples, not technology, not interest rate sensitive groups, nothing compared to the rally we had after the election. here's where we are right now. market today stocks, two big problems, no leadership and no bids. seasonally weak period. now, we've noted stock volumes particularly on etfs have been weak, however seeing interesting pattern in bond etfs. they've been strong. look at the agg or bnd, that had notably higher volume yesterday, like 80% higher on a day when most stock etfs were 25% to 40% below average volume. this sort of supports some of the ideas that there may be some pension rebalancing going on here where you have to sell stocks and essentially buy bonds here. if you look at what happens in this quarter, we've been talking about this for awhile about big
stocks versus big bonds, the s&p essentially stocks up about 4% and bond aggregates, bond etfs down about 4%. this would suggest an imbalance between pensions who need to now buy bonds and sell stocks. and we've seen some heavy volume in the bond etfs at this point. now, dow 20,000 i think a lot of people are now starting to move past that and talk about the 2017 issues. and there's two big issues that are coming up time and again this week. number one, will high consumer confidence actually translate into more consumer spending? and number two, how will the tax cuts in the fiscal stimulus impact the 2017 and 2018 earnings? these are the two big questions. and everyone's trying to develop models that they can plug in with real numbers and get to some affect on the earnings situation. so i've talked about rather than bulls versus bears, the pragmatists versus the optimists. the pragmatists are out saying that investors are wildly optimistic on where the numbers
are going. and that a large scale global reflation is going to be unlikely and indeed the action in global markets indicate a large scale global reflation is not that likely stocks in europe are down, emerging market stocks have been down. the optimists on the other hand are insisting that consumer sentiment and business surveys have been improving rather dramatically. we saw the recent national federation of independent business surveys show a dramatic improvement in business sentiment amongst small businesses since the election. optimists are saying this will translate into higher spending by small businesses. and then there's of course the idea that even modest tax cuts could raise earnings 10% or more. there are a lot of studies out that suggest small improvements in tax cuts will translate into 10% and in some cases wildly optimistic 20% improvement in earnings on this the optimists are saying stocks are not overpriced right now. you don't need dramatic expansion in multiples. that 10% expansion in earnings would be sufficient to say the
market is fairly priced and not overpriced right now. so that's where we're at right now. final thing to bear in mind about all of this machinations about dow 20,000 is we hit historic highs on the s&p and dow jones industrial average in the last two weeks 2277 was the historic high less than two weeks ago on the s&p 500. and as you can see here we are less than 1% from that historic high, essentially we've been churning for the past two weeks. right now the dow up 38 points. guys, back to you. >> okay. thank you, bob pisani. now that we've covered equities, let's check on fixed income with rick santelli at the cme group in chicago. >> good morning, david. well, rates are melting a bit, but it's a rather significant melt because everything escalated of course on november 8th, but also december 14th, the first being the election of course where 10-years were in the 180s, they're currently now slipping under 2.5.
maybe more important the fed tightening on the 14th. so as you look at a two-day of tens and you see we've dipped under 2.5, keep in mind we are revisiting the day before the fed tightening. so let's look at a december 13th of five-year, it's also dipping below a psychologically large area at 2%. 30s, you can see in the same timeframe seem to be a little bit more aggressive as the long end does offer some glimmer to investors of course reaching for a yield at a time where equities are looking better. by the way, the longest maturity of the week will be auctioned at 1:00 eastern, last auction of the year seven-year notes. look at bunds you can see they've melted much more significa significantly. they're now hovering over 18 basis points. should they close in this area it would be the lowest yield close since november 7th, the day before the u.s. election. and finally, the last chart dollar index may be slipping a little bit like rates but keep in mind yesterday it eked out by
one tick, a higher close, a fresh high close going back 14 years to december of 2002. and as you look at this chart since december 13th, you want to pay particularly close attention to this 103 area we're challenging right now as i'm speaking. wilfred, back to you. >> rick, do you think people are buying back into these bonds for a proper investment long term to hold the bonds again because yields have ticked up? or is it just a short term end of year trade? >> i think for most of the curve it's the former, but i think in particular for the long end it's a combination of both. >> okay. rick, great stuff. thanks very much. rick santelli for us at the cme group. let's also check on energy, jackie deangelis is at the cnbc energy desk. jackie. >> good morning to you, wilfred. we're watching crude prices just under that $54 mark. remember, we had to settle over yesterday. slightly lower on the session. but what's been interesting in the last couple days is you've seen crude go up and energy
stocks go down. we've seem to see the opposite happening today. stocks are telling us maybe we've gone a little too far too fast as the equity market is saying in general right now. but the support we're seeing in crude oil prices are saying the shorts are probably out of this trade and you're seeing some repositioning here, some setup for next year for crude prices to go higher. now, rick santelli mentioned that higher dollar index, that should typically take crude prices lower, and it's not right now. people are very bullish on crude for 2017. back to you. >> all right, thank you very much, jackie deangelis. well, coming up. >> before you get ahead of yourself, you wake up and say maybe i should buy this stock at $119, i just came out and said, hey, here are the risks, why can't this stock go back to -- and i believe it will, where it was 14 days ago? >> that was andrew left of citron saying nvidia will go back to $90 a share. of course you can see the stock still about $14 ahead of that, but falling again today. is the run over for what was the best performer on the nasdaq
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shares of nvidia, top performing sent lower by a tweet sent out by citron's andrew left yesterday. he joined "fast money" last night to explain. listen. >> there's still bottom risks to this business going forward. and when i say risk, it's really transferring the revenue from where it is right now from gaming to more data center and capturing more of the auto market and it's maintaining margi margins. obviously they have amd coming in, the gaming marvegt right now, if you own the stock, the easy money's been made. buying it right here is a bit more challenging. >> joining us now is matthew ramsey, senior analyst , thanks for joining us, matthew, as an analyst who covers the stock, do you agree with this premise that nvidia's rally had gotten overdone and should go back to the low 90s? >> first off, good morning,
happy new year, thanks for having me. certainly the valuation of nvidia has moved quite a lot with change in fundamentals and perceptions happening at the company. and seen upside and downside pretty wild moves, but i think nvidia has earned the valuation expansion they've had and i think the point people have really started to argue about their gaming business on a go forward basis. and i think the research we have done points to only about a quarter of their gaming installed base so roughly 80 million units globally being upgraded to their highest performance really driven average selling prices for the company materially higher. i think it's a growth franchise even in their core gaming platforms and obviously some of these areas of a.i. are very intriguing. we'll see what happens into next year. >> isn't the bull thesis here, matthew, that it's about the forward looking sort of businesses of a.i. and machine learning and the data processors that has this rally going here? and the question, i guess going
forward there is, how much competition is there going to be in some of those opportunity spaces? >> i think those are great questions. i would make two points. first, as i said, i think the gaming platform nvidia has tons of growth over the next five years from some of the metrics i've pointed out. but second, certainly you're right, artificial intelligence phenomenon that gpus are very well suited for in medical, automotive, data center, big data analytics and other markets, nvidia has growth legs well into the future. so i think there's plenty investors can go after with this company on a go forward basis. if you look at the stock's up 35% for the year and relatively low semiconductor growth for a macro, i think investors continue to seek out themes like nvidia that can check three or four of the boxes over the next three to five years and i think that holds valuation. and we'll see what they talk
about at their big gpu tech conference late in the spring with their new voltage gpu and what that can mean for the business going forward. >> matthew, you know, this sort of rule of thumb is typically that you don't necessarily want to pay up very high multiples for very cyclical semiconductor stocks. do you think there's three to five years visible in earnings that's really going to under -- >> in certain markets doi. if you look at the various entry and competitive landscape in certain markets nvidia goes after gaming number one where there's essentially one competitor, cpu acceleration where amd is making a move in that market and obviously intel made acquisitions in that space, but i think they have very high barriers to entry in terms of not just computing but the software work nvidia's been doing for the last five to ten years in those markets. i think a doubling of the company's earnings from today over the next three years is likely. and margins has potential to
stay in the really high 60s. so i think there is a long-term secular -- multiple secular trends that underpin the business. am i going to argue that the stock's cheap here? no. >> well, it's not just nvidia, the whole semispace has been hot, hot, hot this year. we'll leave it there, matthew. thank you for joining us. matthew ramsay of canaccord. up next, what history tells us about approach to dow milestone. let's take a look at the markets as we go to break. looks like a pretty flat open, but we are firming up after yesterday's more than 100 point loss on the dow. "squawk on the street" will be right back after this. s s r ur to win, every millisecond matters. both on the track d thsands of mileswa with the help of at&t, redull racing can share critical inrmation abt every inch othe car from virtually anywhere. bres areetting warm. confirmed, diel you need tocoo. giving them the agily to have eed & precision. cause no one knows & like at&t.
welcome back. it's been 12 days of flooding the dow 20,000, but if history tells us anything we may be close to getting out of this holding pattern. eric joins us with all of the numbers. >> that's right, wilf. 12 trading days since we've crossed 19,900. yet we haven't touched 20k, contrast with how quickly we got the last 100 points closing above the major levels in just a couple days. so these 12 days of crawling now matches what we saw back in 1999. that's how long it took to go
from dow 9, 900 to closing above 10,000. but our close this month is nowhere near dramatic as to what happened back then within a couple days of passing 9,900, the dow closed to 9,997 and fell all the way to 9,625. seriously. before rallying back to close above 10,000. that entire round trip happened in 12 days. so those were much more volatile times back then. our moves now are nothing compared to that. relatively flat, if you put the two charts on top of each other. so here we are 12 days later effectively going nowhere. history has shown us you either get the last 100 points right away or you have to be really patient. it's obvious now which situation we're in. back to you guys. >> thank you very much, eric. coming up, vice chairman of kissinger associates bob hormats going to join us in the next hour.
faber and wilfred frost. we are live at post nine at the new york stock exchange. carl has the day off. let's take a look at markets bouncing back just a little bit in thinned out holiday trading. the ultimate day of trading of 2016 dow rebounding just a bit, 3m and home depot interestingly adding the most points to the dow. s&p 500 is up a little more than a tenth of a percent. wti crude though not helping in the rally. it is just below $54 a barrel. our roadmap today starts with president-elect donald trump announcing 8,000 jobs moving to america as part of softbank's investment in the u.s. we've got the details and analysis straight ahead. >> and the trump rally taking a bit of a pause. markets limping to the finish of an otherwise upbeat year. will we make it to dow 20,000 in the final two trading days? >> you said you weren't going to say it again. >> there we go. >> plus, new year, new you. we'll speak with the ceo of planet fitness, how new year's resolutions may boost his
company's bottom line. president-elect donald trump announcing yesterday that sprint and the satellite company oneweb will bring roughly 8,000 jobs to the u.s. as part of a pledge by japan's softbank to invest in the u.s. john harwood joins us now from washington who has been following this story along with us back here. john. >> david, they weren't exactly new jobs, as you indicated, masa son had announced the existence of those jobs several weeks ago. but when you're in a slow holiday week and you're about to become president in another three weeks, why not claim credit? that's what donald trump did last night. take a listen. >> i was just called by the head people at sprint and they're going to be bringing 5,000 jobs back to the united states. they're taking them from other countries, they're bringing them back to the united states. and masa and some other people were very much involved in that, so i want to thank them. and also oneweb, a new company, is going to be hiring 3,000
people, so that's very exciting. >> now, the president-elect was also embroiled in two different foreign policy issues yesterday. the first was over israel and that u.n. resolution that the united states did not veto. we had a war of words yesterday between u.s. secretary of state john kerry and israeli prime minister benjamin netanyahu. donald trump sided squarely with netanyahu and said the policy's going to change on january 20th. but there was also the issue of russia and its hack of the u.s. elections. donald trump was asked whether russia should be sanctioned last night, and he pointed not to russia but to computers themselves. take a listen. >> i think we ought to get on with our lives. i think the computers have complicated lives very greatly. the whole, you know, age of computer has made it where nobody knows exactly what's going on. >> now, the obama administration and u.s. intelligence agencies are in fact pointing squarely to russia. they think they do know what's going on.
the obama administration's assembling the information behind that hack. it's going to make it 3ub u public, or says it will make as much of it as possible public before donald trump takes office. and that's going to increase pressure on republicans in congress like lindsey graham, john mccain, who were skeptical toward russia and skeptical toward donald trump's position on russia. potential issue for donald trump with this new republican congress, which is otherwise very friendly to him. >> yeah. interesting, john, to watch this. i wonder how long -- i mean, obviously you don't know, but what is your sense in terms of trump's willingness to continue to talk about 1,000 jobs here, 2,000 jobs here, 3,000 jobs h e here? is this something we're going to hear about time and again throughout his administration? >> i think four years of it, david. but the difference is that now we're in a period of where attitudes -- moods are good, consumer confidence is up, markets doing well, we're still
waiting on that 20,000. we'll see if sara gets satisfied with her answer today. so donald trump can try to feed that by statements of this kind. but reality has a way of hitting you in the face when you're president of the united states and things go wrong and economies change and turn. and so some of the tactics that work well in one set of circumstances may not work well in a different one. but if donald trump can avoid a recession in four years and have announcements like this every day, we'll see whether that works. more power to him. >> you wonder how many jobs, david, can be created. we just got jobless claims numbers in this morning, down another 10,000. fewer and fewer americans filing for first time unemployment claims. there's a debate in economics about whether we're in full employment and especially if we see more m&a. you just wonder where those jobs are going to come from. >> it's true. it will be very interesting especially on part of m&a
focused in part creating efficiencies that come through job losses -- >> synergies. >> well, that's beyond revenue synergies, exactly. but john, thank you. let's bring in bob hormats now, vice chairman of kissinger associates, foermer undersecretary of state for economic growth, energy and the environment. bob, i'm just curious as to what your take is here in these transition days in terms of these kinds of announcements we're getting from trump about keeping jobs here, bringing some back, even if they've already indicated they might have been brought back. you know, progress indicates that we're going to have a lot more automation and a lot more job losses far in excess of 5,000 here or 8,000 there. what are your thoughts? >> well, i think, david, that's right. i think basically what we're trying to do is to create jobs in this country, but we also have a lot of new technology which is being brought onboard. and a lot of the technology
while driving growth does not create a lot of new jobs. so that's the dilemma that you have today. most of the job displacement is not from imports, it's from technology displacing old jobs. the numbers are quite overwhelming in that respect. >> yeah. another area of course that the president-elect though is focused on is china. and i mention that to you, kissinger associates of course the key being advising companies in terms of their doing business there, what is your sense again early days but clearly seems as we're going to have a different relationship between the u.s. and china. can you put it in some perspective for me? what are you hearing from your clients as well in terms of their expectations? >> well, i was actually just in china for ten days a week or so ago. and i think there are a couple points we should note. one, trump wants to bring jobs into the united states. well, china is a growing and increasingly large investor in
the united states. so he's got a dilemma there. on one hand he's concerned about chinese investment in the u.s. and members of congress have expressed concerns. on the other hand chinese investment does create jobs here. obviously there's chinese competition in the united states market. we've seen this over the course of years. trump clearly and his advisors around him clearly have some idea about taking a tougher line on trade with china, which trump expressed during the elections. the question is that a negotiating tactic? does he actually plan to do this unilaterally? what are the chinese going to do if the united states does take such actions? and what will be the impact on markets? we haven't really talked so much about that, but a big trade war between china and the u.s. would affect both countries but have a major affect on financial markets. there are a lot of things that i think the trump people ought to think about very carefully before they take action.
they can use it tactically, and they might, but they ought to think through the implications, what you do on day two, day three and day four. and what the chinese do in response. the chinese are not a small economy. and they have consequential things they can do. >> can you just elaborate, bob? i mean, you're the expert here. what does a potential trade war between the u.s. and china look like? and who has the upper hand? >> well, i think in the end both sides are going to be disrupted if there were a trade war. the fact is that on trade we talk about checks and balances in the united states. in fact, the congress over the years since the early part of the last century has given the president a wide degree of authority and discretion to impose trade barriers of various sorts for various reasons. so the president could decide that the trade imbalance requires him or induces him to
take some tough protective action that he will take action to restrict chinese investment in the united states if chinese restrictions continue on certain american investments. he could do a wide range of things. it's very hard to predict now. he's said tough things during the campaign. what he's planning to do actually is very unclear. and he planning to negotiate a tough deal with the chinese and simply dangle these threats in the background, or is he actually planning to unilaterally use them and then say, well, come and negotiate with me? in any case, the consequences are first of all, a lot of importers particularly walmarts and others buy a lot of chinese goods because americans buy them and they get them cheaper on the shelves of these stores. what happens to the price of those items? what happens to the large number of american companies that are selling in china whose profits depend heavily on it?
it's too early to predict with any precision, but if you were to get into a trade war with threats on trade, on investment, on, then you would have a lot of disrupti disruption. i would say the cautious and right strategy for the moment is think through carefully what you plan to do, don't do it by tweets but have your negotiators and the chinese sit down and try to work these things out before you take action. the chinese are not particularly keen on being threatened, and probably are going to be very reluctant to act under -- over threat or particular series of actions. if he wants to be tough on china, he should talk to the chinese in a negotiating environment and not do it through tweets. >> well, bob, more broadly what do you make of some of the cabinet appointments? fairly heavy -- do you think that's going to work?
and also on the case of these appointments getting approved, could there be bigger delays than we expect? in the short term hard for the trump administration to kick off on day one? >> yes, those are very good questions. i've had to go through confirmation process twice. it takes time. i think the -- some of the people he's picked a very qualified people. elaine chao, wilbur ross, steve mnuchin i worked with at goldman sachs, there are a number of very talented people on the roster. and numerous others at the cabinet level and the sub cabinet level. and then there are those who perhaps have almost no or no government experience going to have to begin to understand how the government operates if they're going to be successful how to work with congress. it just doesn't come to you. you have to spend time working the process in washington. this is a democracy, you have to
work with both sides of the aisle. and you have to get a lot of members of the cabinet together and a lot of your staff together to organize things. in terms of the delay, that's a very valid question. it takes a lot of time under the current rules. first of all, you have to divest yourself if you're other than the president of virtually all your holdings unless you hold treasury bonds or very widely diversified mutual funds. and when you sell these assets, you do get the benefit of not having to pay cap gains. on the other hand, in order to get that benefit you have to put your assets into broadly held mutual funds or broadly held etfs or government securities, that takes a lot of time particularly if you're a person who owns a lot of private equity investment and you have to unwind that. that takes a great deal of time. you have to have a lawyer probably or accountant. you have to report to the congress and then you have to have your hearings.
they take a lot of time to schedule. cabinet members probably won't take too much time. but then they ask you a series of questions, what they call qfrs, questions for the record. that takes weeks and weeks to answer those questions. so the confirmation process can be very long and very difficult. and for people with a lot of money, very complicated. >> all right. spoken like somebody who's as you said been through it a couple of times. bob, thank you as always. >> they can call me up, i can give them advice, tell them how long it takes. >> all right. bob hormats joining us. >> thanks. >> sure thing. as we head to a quick break, take a look at stocks at this hour. you've got a mini rally going on. the dow's up 26 points, reversing just a bit that triple digit decline yesterday. s&p 500 up one, nasdaq still barely negative. two trading sessions left, will we hit that historic dow 20,000 mark? we're more than 100 points away. plus, doing business and announcing jobs in the trump era. former medtronic chairman and
the dow -- second since the election. joining us now to discuss where we go from here is hank smith, cio and aaron coally, bmo investing rates strategist. hank, you are bullish on this market and expect 7% to 10% returns next year. what keeps it going? and does that mean that there are going to be bumps along the way say now until january until we get there? >> well, there are always bumps on the way. what keeps it going are corporate earnings and the absence of a recession. bull markets don't die because of age. they don't die because of geopolitical almost always in anticipation of a recession. i think that is a fairly safe forecast for 2017 that there is not going to be a recession materializing even well into 2018. so therefore this bull market goes into the eighth year and
continues. and we think without any p/e expansion you can get a 7% to 10% return just based on s&p 500 profit growth. >> hank, at the same time markets are forward looking and we've had quite a few years of growth already unemployment's already pretty low and we've had a very strong run up both this year over the last seven years and this quarter, which doesn't provide much room for further growth in the market. >> well, i would say, wilfred, that is a risk if we get a return ala 2013 of 30%, you're going to have a real valuation problem. but i think with relatively low inflation, relatively low interest rates, a 7% to 10% return for the market still keeps you in a range of a fairly valued market. in this economy, despite being 7 and a half years old, we're getting a mid to mid late cycle
uptick in the economy. that's very rare. and we're starting to see facets that have been a headwind such as business investments pick up. and so we could be looking at finally an economy approaching 3% by the end of 2017. that will be healthy for the markets. >> so, aaron, we're looking at the ten-year yield right now. 2.46 is the low, if hank gets the economy and markets he wants, what does it mean for interest rates in terms of economic outlook and how high yields go next year? >> i think there's a very good risk that if you start to see growth of the type that hank is talking about, you could easily see ten-year yields push towards 3%. although that's really not as much our base case. i think our view is that you're likely to see a lot of that punctuated with very significant rallies that yields are likely to kind of stabilize around 2.70. what's been great so far for the fed inso far for rates, one of
the reasons the real economy the growth hasn't gotten hit so much from the increase in rates is that inflation has been rising as well. and as you get closer to the end of the year to answer the other part of your question, you're likely to see the fed focus more and more on that and what it means for the economic growth as we approach the end of -- or at least one of the longer periods of expansion that we've seen in the last several decades. >> in terms of fiscal stimulus that we might see next year and possible deregulation, do you think the markets over optimistic on that front? >> absolutely. i think the markets have priced in a good deal of that. we've seen estimates ranging anywhere from 0.3 to 0.8% of gdp growth on the back of those estimates. if there's any sort of hitch or political issue, if any of the extreme political projections we've been talking about either a trade war or any other conflict starts to arise, i think you can see yields drop
quickly. we've also got a market that's very short. i think investors have broadly bought into that belief that rates are going up. and as a result they've been willing to bet against the market quite easily. and that gives you the potential for a very strong rally if the right spark emerges. >> so, hank, add it up for us in terms of how your portfolio looks, in terms of sector exposure. you've got a bullish case on the economy and the markets, does that mean you want to be in financials and industrials and some of the other winners from the trump rally? >> absolutely. i think you still want to be balanced. part of the trump trade is what has not worked and consumer staples is an area that's seeded ground here. and you've got some wonderful opportunities with very generous dividend yields in that sector. so i think you still want a balance between offense and defense, financials, industrials, but also consumer staples and health care as well. we would avoid utilities, the
strict yield plays we think are going to be challenged going forward. >> well, they're doing well right now on this yield move that we're seeing today. we'll leave it there, thank you for joining us to talk next year hank and aaron. >> coming up, a tough year for emerging markets. the eem etf underperforming the s&p 500 by more than 12% in just the fourth quarter in itself. we break down what's in store in 2017 for emerging markets coming up next. assion... bui keep it growingby making ev. that's why i have the spark sh card from capital one. with it, i earn unlited 2% cash back on all of my purchasing and that unlimited 2ca back from spark means which ds fuel tolars each year my btom ne.into my business... what's in your wallet?
as 2016 draws to a close, cnbc's breaking out the playbook for 2017 looking at ways you can make money in the coming year. this hour seema mody has a close look at what to expect from emerging markets in 2017. >> 2016 was a banner year for emerging markets, that is until the election of donald trump who was cast a cloud of uncertainty over emerging markets. no matter which policies come out of trump's cabinet, expect 2017 to be a challenging year facing tough headwinds from rising interest rates and a stronger dollar. here are three predictions for
the new year. if the president-elect goes forward with protectionist trade policies and a tariff on foreign goods, it would likely threaten some emerging market countries' competitive edge. as a destination for cheap labor, specifically china with analysts forecasting a nearly 4% decline in the world's second largest economy. the other country likely to get hurt is mexico, which is a big trading partner with the united states and has already been hurt by the depreciation in its currency, the peso. one bright spot in the emerging world, russia. rising oil prices and a friendlier relationship between trump and putin could draw more investors in. hsbc echoing that sentiment calling russia the cleanest play in emerging markets next year. well, we should point out that russia has already been a favored destination for investors in 2016. in fact, the rts, which tracks russian stocks, is up 51%
year-to-date making it the best performing major global market this year. sara. >> sort of a surprise winner. what did you say, seema, about the chinese growth forecast? what are economists looking for there next year? >> i think we expect growth to stay steady in 2017, but again, a lot of it is riding on the potential trade policies that are coming out of washington once trump enters the white house. that of course could have a detrimental impact on china's economy. some people are saying that protectionist trade policies plus that tariff could potentially result in a 3% to 4% decline in china's gdp. of course that's something we're going to watch very closely next year. >> wow. we certainly will. seema, thank you. when we come back, the president-elect's jobs announcement and how businesses should be preparing for this new trump era. harvard business school's bill george weighs in. much more ahead on "squawk on the street." the dow's up 26 points. i just wanted to thayou for walking me thrgh my first optio trade. wenldo it for evyone gary.
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good morning everyone. i'm bill griffeth. here's your cnbc news update this hour. a new cease-fire agreement has been reached on syria, vladimir putin saying the deal is backed by both russia and turkey, who have supported opposing sides in that conflict. the cease-fire begins midnight local time. meanwhile, u.s. senators are visiting eastern europe promising a round of tough sanctions against russia over its interference in the presidential election. republican john mccain called moscow's actions a threat to democracy. and nbc news is reporting that the white house will release details of those sanctions as soon as today. cars with even numbered plates are being banned from madrid roads today as that city looks to curb rising air pollution, which has risen above european union limits. the restrictions will switch between even and odd numbered plates until the air pollution dissipates. and fans in hollywood are remembering screen legend debbie reynolds. visitors brought flowers fo her star along the walk of fame as
well as her dance studio. ms. reynolds, who was 84, died just one day after her daughter carrie fisher. that's our cnbc news update. let's go over to jackie deangelis for the highly anticipated eia inventory report. how does it look, jackie? >> good morning to you, bill. the eia reported natural gas withdrew 237 billion cubic feet. it's a very large withdrawal. five times greater than last year and five-year average is around 80 billion cubic feet to give you a sense of context. the largest ever draw was 14240. this was a highly anticipated report. it's largely priced in. we were trading at about 381 before, so we've recouped some losses trading at 3.85 now. but right now the expectation is that colder temperatures are going to continue to bring the demand forward as we head into the rest of the winter heating season. and i would say this, stocks were -- total stocks that is
were in great shape 4 trillion cubic feet not long ago. we're now closer to 3. and people start to get worried when we get at those levels and there's still a lot of winter left. back to you guys at post nine. >> all right, jackie, thank you. the president-elect announcing that sprint will be bringing back 5,000 jobs to the u.s. and create an additional 3,000 jobs from oneweb. it's the latest of donald trump's calls to companies to bring jobs back home to the u.s. for more on the new trump era business leadership and a trump america, we're joined on the phone by former medtronics ceo and cnbc contributor bill george. bill, thanks for phoning in. >> thank you. >> so there's one question here, and that is does donald trump deserve credit? he is taking credit for bringing these jobs back to the u.s., what say you to that? >> i think the real story here is masa son who is a very, very astute entrepreneur, the number one entrepreneur japan has ever had, he's worth $19 billion. and he took the initiative with president-elect trump back in
early december and promised him 50,000 jobs. these 5,000 from sprint are the first tranche of that. i think the oneweb he owns he's invested there and i think that's probably another 3,000. but it's good news. i mean, we can only say it's good news. i think son is a very creative, brilliant entrepreneur. he has one idea a day. and japan's never seen anything quite like him. i think it's great. so president trump is naturally going to claim credit for every opportunity he gets to create jobs. that's his mantra, and it's good news for the country. maybe he's giving us more hope. i can't be negative about anyone that's going to come in and create jobs. substantively i think there's a lot more we need to do long term. but in terms of short term, but this is old news. i mean, this was announced back in december around the 10th. >> well, the other question that raises is what is masa son and softbank getting out of it on the other side. clearly it doesn't hurt to have a friendly relationship with the
new administration, but this is someone who's tried to get a big deal done, sprint and t-mobile failing because of u.s. antitrust regulators. >> well, i think -- i met with masa back in june. he didn't reveal all his strategies, but i think he'd like to still get that deal done. marcelo claire is doing his best, but not as large as they need to be compared to at&t, verizon and the merger with t-mobile and u.s. would give them more clout and ability to compete. certainly he has that in the back of his mind he's u he'd like to get that done with a series of negotiations and promises. and i think you'll see something happen during '17 if that will come back on the table, i don't know, no one's told me, but that's what i think will happen. >> bill, more generally, do you feel that the next administration is going to be pro or anti m&a? clearly there was some rhetoric on the campaign trail that was against certain deals, but that was sort of opportune timing if you will and clearly changed his
view on certain parts of his campaign rhetoric since being elected. do you think he's going to be pro m&a in the way he's generally pro business? >> i think he's going to be pro jobs. and if these jobs are -- if the m&a is seen as reducing jobs, i think it won't be positive, but seen as creating jobs in the u.s., i think you'll see him being very pro m&a. you can go too far with that when you see the number two and number three in an industry combine like you're seeing among the health plans, there are lots of questions about that. so i myself have reservations about going too far. but i think if people are really committed to growth, i think that's the question. or are you just doing parallel mergers to shrink? the at&t-time warner deal, you know, to me is a parallel deal. it's not just -- i mean, it's a different kind of deal. and i think they are committed to growth. i think that's the question. >> right. you know, bill, you made a veiled reference to this and,
listen, like you, everybody applauds any job is good to have come back to the u.s. or to be created. but we are dealing with automation certainly as a key issue. robotics. so many of these things, i've mentioned them many times, but you've run a company that's taken advantage of this when it comes to surgery for example. i mean, these are the things i would assume you're referring to when we talk about the big herb -- biggerish sh issues when it to performance. >> getting the skills, germans have done that, why can't the americans do that? we've got to get more young people going into the system and take mid career workers and retrain them. the running robots for running machine tools or running 3d printers or running very complex equipment for computer graphics, there are millions of jobs unfilled. some 6 million jobs are unfilled today because we don't have qualified workers. and companies will naturally go outside the u.s. to find people to fill those jobs. so that's the big job.
but that take longer. you don't do that with a few tweets and just short term thinking. you've got to make a massive commitment to do that. that to me is number one issue in creating jobs for the future to have american workforce that has the skills wed noo. >> so, bill, what's the takeaway? what's your advice to ceos that if they have any hiring plans at all they should be calling the president-elect and telling them and saying thank you, i'm going to be hiring in the u.s.? >> well, i think they probably should, but remember there's a carrot and stick approach the president-elect's using. so you saw that with boeing and lockheed. i think we have to be pretty careful. i think most are trying to stay under the radar screen. but i think ceos should be investing more and training their workforce and working with local colleges and institutions to do that. that's the number one thing. if they have the workforce for the future, the silicon valley folks are very concerned about that with artificial intelligence and all the automation that's coming. it's going to come. and it's a good thing. and that creates other kinds of
jobs, creates office jobs. so the old time factory jobs i'm not sure are ever going to come back to the numbers we saw before. >> yeah, we're going to see if those jobs of the future can be created in an environment where it's america first. bill, we'll leave it there. bill, thank you. bill george, harvard university, former medtronics ceo and a cnbc contributor. sticking with the incoming trump era, a new administration is going to mean perhaps a big change in taxes. cnbc.com's personal finance and consumer spending reporter kelly grant joins us now. some tax tips for the year ahead, we don't know what's coming but we can assume there will be changes to come to personal returns, not to mention corporate which we talk about here a lot. >> that's true. we don't know a lot of what's coming, but one of the year end moves advisors are talking to consumers about now is make sure you're getting and taking advantage of the losses which could be less valuable next year if some of these changes in cuts go through. make sure you're offsetting those gains taking that extra $3,000 deduction against your
income. after that of course you want to be thinking about topping off your college savings accounts. it's one of those moves that goes kind of under the radar at this point in the year, but it can be pretty valuable. you're not going to see a federal tax break there, but you are going to get some extra tax breaks from the state. more than half of the states actually do offer some sort of a credit, a break might be an extra bit of matching money or scholarship funds down the line. and then a third thing you want to look at just a regular year end tax tip, get that fafsa in. we saw an earlier start date this year and a lot of families are taking advantage what we're hearing from colleges they're getting that money in even if you don't think you're going to qualify for need-based aid, a lot of states and colleges are doing first come, first serve on merit aid as well and you'll need the fafsa in to take advantage of that. >> head into next year with some people expecting tax rates going to go down, capital gains may go down, is there anything you should be thinking about now? i mean, i guess some people can try to defer income if possible if they think they're going to be paying less in it next year. >> a lot from advisors is defer
any income you can take and try to accelerate any deductions that you can take advantage of this year that that could be more valuable. >> all right. thank you. >> thanks. >> we're going to need you in the new year. going to be confusing. >> right. as we head to a quick break, take a look at shares of mylan rising after the drugmaker launched generic version of allergan's zovia, drug used by women to prevent pregnancy. much more ahead on "squawk on the street." mylan up 1.3%, market just above flat for this hour.
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welcome back. now let's get to the cme group. rick santelli with the santelli exchange. rick. >> thank you, wilfred. like to we can my second to last guest of the year, jim bianco. >> i'll take it. >> there we go. jim, for 2017, two issues i would like your opinion on capital outflows from countries like china and the european union. and, b, how the world of passive investing in etfs may harbor
some secrets for 2017. >> i think you're going to see capital outflows from europe and china and would largely be a beneficiary to the united states. but within that the bigger story's going to be capital outflows out of china. let me be blunt about this, china's biggest problem in 2017 is going to be wealthy people leaving, leaving with their money. china cannot talk about that. no one can talk about that because there's been reprisals in the country for the last 18 months any time anybody brings that story up, but it's clear even in today's "the wall street journal" where they had a story about wealthy people trying to get their money out. they've lost confidence in the government. they won't say it out loud because of reprisals, they're just leaving. that's going to be the big story for china as we work through the year. >> now, does that mean we could still have a january in 2017 like a january in 2016? or does history not repeat itself just because china has a problem? >> history repeats itself. let's call what the first week in january usually is. the first week, the first day of the year, tuesday, usually one of the most volatile days of the year. you could see a several hundred
point move in the dow. now that i said that, the question is which direction. the last couple years it's been down, but there's been other years where it's been up. i joke to you off camera, you could see dow 20,000 -- 21,000 two weeks from each other. dow 20,000 and 19,000 within two weeks. that's what to expect within the first couple weeks of the new year. >> you know, being kind of a contrarian at heart, i think many do believe there's a repeat of january. they don't believe in the current 1,600 point rally although it's a bit less now. if we don't see something diabolic in the markets in the first couple weeks in january, could that end up being a real catalyst for more of a surprise move to the upside in stock sns. >> i think so. i think a lot of people remember the last three januarys, especially last year. we came out of the gates and just went straight down. and there's a little bit of a fear that that's going to happen, especially after yesterday's selloff. and you're right, if we can get to around the 15th of january and we still have all our fingers and toes and we haven't gone bad, then you can probably see a little bit more excitement come back into the market.
>> all right. let's finish up with our last three quarters of a minute or so, etfs, a lot has changed there. passive investing is king, but there are issues you brought up some of the issues we learned during the energy crisis. quickly, how could etfs be a real fundamental story for stocks in '17? >> it retards the capitalist system of giving money to good ideas taking away from bad ideas. went to $80 by early '15. everybody said that's going to be painful. you're going to see production shutdowns. you didn't because a lot of the energy companies found that through passive investing they could issue secondary stocks or bonds to those kind of companies. >> so you had to pull the price of oil way lower than normal to shake it. >> to $26 because they kept finding funding through the indexization passing people. >> so pay attention to how investors and etfs act with regard to longer -- >> exactly. >> jim bianco, thank you.
sara, congratulations on the wildcats. back to you. >> oh, thank you. yes, they won. i did get an e-mail about that. rick santelli, thank you. and congrats to you as well, you're in chicago. >> i like the glance to me as to check. >> pinstripe bowl, that's what they won. yes, go wildcats. when we come back, new year's resolutions may mean big bucks for the fitness industry. we'll be joined by the ceo of planet fitness. wilfred eager to get some tips. >> there's me in this video. there we go. >> for the new year. much more ahead. stay with us.
welcome back. planet fitness taking over times square for the second consecutive year this weekend to ring in a judgment-free 2017. the ceo at planet fitness, chris, thanks for join us. >> thanks for having me. >> how big a boost does it mean? is it significant in terms of the numbers you see and how long does it last? >> it lasts through april. but january is the big one. new year's resolutions, wellness and health is usually the big one, and new year's eve being it will sponsor is big for us. 87% of the u.s. population doesn't have a health club membership. with our affordability and atmosphere it's top of mind
coming january 1st. >> does it drive new subscribers to take um membership or your existing members come and use the gym more regularly for those two or three months? >> it's both. more use and more joins, which is good as well. come spring, you get spring fever, people start to work outdoors, kids have outdoor sports and usage drops offer a little bit. >> do you have that space for extra usage of members? some of the criticisms analysts have, 8.7 million members so over 7,000 members per gym. that's very high. >> it is very high. >> do you have space to allow them to come back in? >> so our usage, we're open 24 hours a day at most of our stores, so usage is spread out. they're big stores, 20,000 square feet, up to 100 pieces of cardiovascular equipment, which most members use, a lot of circuit equipment. they're not coming in for the big balloon classes so we're able to service a lot of customers. >> if we think about the themes that have driven the fitness
injury, the cycles, trendy new ideas and with it also a lot of obsession with younger people about fitness trends coming up on instagram, it's quite image based, you guys don't really go for that part of it, judgment-free zone one of your things. does that make it harder for you to make the most of the newer trends that you see in the fitness industry? >> i think when all this excitement comes around, whether it's wearables or soul cycles, when tides rise, all ships rise. it's good for the industry and americans in general. 80% of the l population doesn't work out. to start with a high fee and boutique, a lot of exercises are more difficult. come as you are, first timers we'll show you the ropes. the other thing in our industry is a big trend in duel memberships, which is great for us because you might pay for that higher price boutique experience but you want to do a cycling class every single workout and they supplement with a $10 membership like ours to do the cardio or circuit training. >> what are you seeing in terms
of trends of how many people who have signed up actually come work out regularly? >> it's about 50% of our members come within a 30-day period. so they're very episodic. they come in, come out, get busy with life, they come back. luckily at $10 a month, if they miss a month for the summer, they come back in cement when the kids go back to school and they get back into the regimen. >> what are your plans in terms of expansion next year? more gyms opening and whereabouts the locations, just u.s.? >> u.s., canada, and the dominican republic today. we'll open about 200 a year. 90% of our units are opened by the existing franchisees so, it's not a onesie twossie system, they're opening their 10th or 25th store so they're excited about the brand and moving forward. >> the stock has done well. talked to you one year out from the ipo and i guess one of the risks that come up from the analyst reports is that competitive environment. you mention it's good for you, but are gyms across this country growing at both the value end and the high end? >> i think the wellness trend
has changed. it changed the last couple years. acceleration of that has been very dramatic compared to 20 years ago when i started this. and you think about the wearables, all the farm to table restaurants, good eating, no gluten, all these thing, the general trend in wellness has accelerate sod rapidly it's great and more people are joining gyms and getting healthier. >> chris, great stuff. >> thanks for having me. >> you didn't show your fitness tip. >> what is the main one? >> the main one, consistency. people get fit fitness as a crash diet, no. two, three days a week, stick with it forever. >> i'm going to take that on board. sara suggest ld i needed to lose weight. point taken. advice noted. chris, thank you very much. >> thanks for having me. >> we all need to tone up in the new year. coming up on "squawk alley," former indiana republican representative and club for growth president david mcintosh, his new take on the president-elect's new jobs announcement and the economic
road ahead. and looking at stocks at this hour, we've lost a bit of steam. the dow now down about 7 points. s&p flat to negative. art cashin is watching the dollar. it is weakening further against the euro and the yen. that dollar and stocks have been marching hand in hand. both moving south today. much more ahead. stay with us. miles per hour.raveling ov 200 to win, every millisond matters. both on the track and thousands milesway. th the help at&t,ed bull racingan share critical information about evy inch of the car from virtuly anywre. brakesre gting warm. nfirmed, daniel you needo ol yr brakes. undetoodbrake bi back 2clicks giving them the agilitto havesp ol yr brakes. unbecae one knows & liklicks at&t.
the dow has turned negative, down about six points. searching for direction and leadership. love this shot, guys. thank you. the nasdaq doing the worst of the bunch. we could be looking, if we continue this sort of downtrend, at the first down week in eight. we're coming off seven strong weeks for the dow. >> exactly, but for the quarter as a whole we're still looking at about 9% of the gains, the dow, s&p, and nasdaq a little behind that. but it's been a strong quarter. little bit of profit-taking, not something to be too worried about. >> we are now solidly more than 100 points away from dow 20000. art cashin doesn't think we're going to hit it this year. we've pulled back away from that number after getting as close as
13. >> a day and a half left. >> now to jackie deangelis for a check on the energy inventories. >> hey, sara. just waiting for the department of energy to release that data right now. the an api gave us a build last night of 4.1 million barrels. that was expected. traders are looking for a draw of about 1 1/2 to 2. crude prices are pretty much trading flat but holding over the $54 mark. the doe is out with that number. it's a build of more than 6 million barrels. that's actually bearish for crude oil, but none of the bearish factors are having an impact right now on this trade. you can see we're actually just trading a little higher here. what's interesting to note is that the short squeeze probably is done. we're looking at a trade right now where people are repositioning for the new year. they're bullish on equities. they're bullish on crude oil. and they're setting up for that move that we've talked about to about 60 bucks. kayla back to you at