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tv   Squawk Alley  CNBC  December 29, 2016 11:00am-12:01pm EST

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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 post 9 for
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"squawk alley." >> thanks so much, jackie. 10:00 a.m. at sprint headquarters in oberlin park, kansas, 11:00 a.m. on wall street and "squawk alley" is live. good morning. thanks for join us on "squawk alley." with me at post 9, mike santoli and kelly evans. karla and jon have the morning off. we start with the markets on this thursday. the trump rally taking a bit of a step back as we continue to hover more than 100 points below dow 20,000.
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the blue chip index coming off its second triple-digit loss since the election. major averages are fractionally in the red, mike. the s&p down less than one point, ritch etting stuff here. >> yeah. >> struggling to tread some water. we've been doing that for about two weeks. it reminds me of in august and september we had that really strong rally on the post brexit reaction and the market sort of flattened out near its highs. we ended up kind of going down about 3% i think high to low. wasn't a big, dramatic move but after a while when you lose those thrusters pushing you up, the market starts to rethink the levels and maybe we're in one of those phases. who knows? we have year end and obviously the anticipation of an inauguration, a new wrinkle. >> is this profit-taking or window dressing? what what activity is happening? >> profit-taking and lack of new money coming in to buy the all-time highs two days before the end of the year. you don't need a lot of reasons
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why we're not shooting higher. we have the calm, gentle activity you would expect right now. obviously, you know, you might have had some magnetism of dow 20,000 but wasn't strong enough. >> keeping an eye on the dollar, which yesterday was over 103. if you were looking for a nooufr this environment, that is certainly one. now we're down a little more than half a point on that today. not buying a lot of breathing room, though, arguing that's a reason it's been a tougher slog for equities. >> you also are seeing the treasury yields are backing off a lit lt bit so they're at about a two-week low. bank stocks are softening today. not dramatically but actually underperforming today. >> the new year could change all that, but in the meantime we have news out of president-elect donald trump announcing two seminew deals bringing some 8,000 jobs back to the united states. >> 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
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the united states. and mossa and some other people were very much involved in that so i want to thank them. and also one web, a new company, is going to be hiring 3,000 people so that's very exciting. >> the president-elect yesterday outside his resort in palm beach. for more on donald trump's economic agenda and his one-on-one deal making strategy, we're joined by club for growth president and former indiana congressman david mcintosh. david, we now have pledges from ford, carrier, ibm, sprint, one web. can we call this a trend? >> look, it was very good news, the 8,000 new jobs. i think the key to becoming a trend is going to be what happens in the first 100 days of the trump administration. a lot of this, and i think the market excite as well is there's a sense things will change in washington. they'll cut taxes. they'll reduce the regulatory burden. there's a lot to do, for example, with the federal
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communications commission to pull regulations back sol that companies like sprint and one web can be competitive here in the united states. but the president's going to have to deliver on that and put people in place who will make sure they don't lose the momentum. >> well, speaking of momentum, in the grand scheme of things, the u.s. labor force is north of 100 million people. so it would seem that just a few thousand jobs wouldn't necessarily make a dent, but what would this do to change the psychology of the discouraged worker or the person who has given up looking for a job if they now see that companies are beginning to hire again? would that change the psychology of the american workforce? >> i think it will. you've seen a lot of people in the last eight years just leave the workforce. they had good paying jobs. they went away in the crash of '08 and '09 and they couldn't find anything comparable so they just retired or went back to school or became grandparents. a lot of different stories. and this is a message that, hey, the economy is going to start growing again.
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and they'll be good high-paying jobs, but to get there people are going to have to see action. they'll have to actually see the tax reduce sod that we're competitive around the world. that's what the companies are telling president-elect trump. we're coming back because you've promised to make the environment better, to lower corporate taxes, to reduce regulations. if those don't happen, then the trend could easily be reversed and we'll have to be explaining to people why there aren't jobs or we're losing them again. there's a lot of work to be done. >> we'll touch right on the issue, that big if hanging over a lot of these policy changes that may be coming. how are you going to gauge the progress there in terms of do we need to hear an announcement in the first couple days? is congress going to be able to come together and kind of push through some of these tax reform measures and in what worder should they come in? how do we start to follow the progress of this actually happening? >> i'd look at two or three key things. one looks like it's teed up. the repeal of obamacare.
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that has a tax cut embedded in it because of the tax increases that came along with it. but second will be what president-elect trump does on his first day of office. does he signal and order the regulatory agencies to pull back on the energy regulations? does he signal with nominations that the fcc that he's going to put free market people there? those are going to be a second wave of signals. and then finally i think you're going to have to see the actual tax reform bill be introduced in congress and gain support. right now it's just on the drawing table. you've got different plans from the house and the president-elect trump. they've got to come together with a plan and start selling it to members of congress and the american people. >> but, david, i mean, let's say you get tax reform. say you get deregulation, which is some of the lower-hanging fruit. there is still this lingering question over whether a stronger dollar and this talk of trade and tariffs and more hawkish trade policy makes all of this come out in the wash.
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>> very good point. one of the big fumbles that the new administration could do would be to call for tariffs. that would send a signal that they're actually going to be raising taxes and what we've seen is you then get retaliatory tariffs from other trading partners. and the history on that is very bleak. you see a worldwide recession if people truly go to that type of protectionist stance. so i think the new president will have to be very careful. the best thing they could do in that area would be show that he's serious about wanting better trade deals. britain needs one after the brexit vote. they're dying for a trade agreement with the united states. we should negotiate one. put that on the books and show that president trump can negotiate good deals. i think if they focus on that area and stay away from the tariffs then they'll avoid a big pitfa pitfall. >> that's certainly something republicans have been pushing for. we'll see if they get that for
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now. david mcintosh, appreciate your views on this. >> thanks so much. great to be here. >> we want more detail on that web one announcement. 3,000 new jobs being created in this country. josh lipton will break it down. >> one web wants to build a network of 900 satellites that will deliver high speed internet service in rural and emerging markets. greg wileer, the founder of one web, was on "squawk box" this morning. >> we're building an incredibly new and ambitious system that will be providing internet access initially to almost 10 million residential households, we'll be doing enterprise, providing internet access to erick and to ships all around the world. it's a fairly complex system, but we've found a great knowledge base in the u.s. and we do a lot of work also in other countries, but the u.s. has been fantastic. >> with this hiring spree, wyler says he'll roughly triple his
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workforce. they've raised $ .7 billion from investors, including $1 billion from softbank alone. its board of directors includes paula jay sobs, richard branson, and airbus ceo tom enders. oneweb's dream of connect canning the world has been tried before by many other companies with smart founders and tons of money. 20 years ago, for example, bill gates and craig mcgraw backed a $9 billion plan to connect the world with satellites. that company was called teledesic and its goal was grand, 840 satellites circling the earth, but ultimately as nbc news notes, only one satellite was ever actually launched and the venture failed. wyler says this time is different, the need is real and the technology is now both powerful and affordable enough to make this dream into reality. he tells me he plans to have that constellation of satellites up and running by 2019. guys, back to you. >> that is not very long from
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now. we'll see how they do. josh, thank you. when we come back, why bringing thousands of high-skilled, high-tech jobs back to the u.s. may be easier said than done for the incoming administration. and then new developments in apple's plan to expand in india. the details up next. plus an inside look at the snapchat ipo road show. the message where the next facebook, not the next twitter. for "squawk alley" in a moment.
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as part of the president-elect's plan to bring jobs back to the united states, oneweb says its jobs will be high-tech positions sourced from all around the country. >> these will be very high-tech, highly skilled manufacturing and 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. >> the narrative by many companies since the great recession including those in silicon valley, we have jobs to fill but no one qualified enough to fill them. did trump and oneweb find a solution to that problem? lawmaker good, senior editor at the verge and kate mitchell, skill venture co-founder and
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partner. lauren, what's interesting about what oneweb's mission is, it's also something being tackled by facebook and google and i wonder whether they'll be poaching from other companies versus just bring nug peoping new people in workforce. >> it's hard to say at this point. we know during the election and the campaign season president-elect trump did, you know, express pretty strong views around immigration, but that was specific to illegal immigration, and it's unclear at this point what exactly this will all mean for high-skilled workers, high-skilled immigrant who is come in with proper work visas. we know for silicon valley, immigration is a huge issue, an important issue in the sense that according to some reports, you know, 43% of silicon valley companies founded in the past seven years have been founded or co-found by an immigrant, so it's vital for these companies to sort of retain the same kind of workforce that has powered silicon valley in recent years. >> we just heard the chief of
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oneweb talking about these jobs which will be anywhere from arizona to florida to maryland. a couple weeks ago 6 "60 minute profiled a county in mississippi trying to retrain worker who is had previously worked at a pork processing plant who were going to be managing robots. this is a hyperlocal problem. how do you get at the local level that training for workers? >> yeah. you've hit on the key point and i think you've talked about it that we have so many skilled jobs that are going wanting. the most unfilled job in the united states today one would think as a computer program issed a manced manufacturing as people just -- as you're referring to in mississippi that actually can run the manufacturing jobs that are begging in the middle of the country. and i think what i didn't hear enough of and i hope to hear more of in the next months is not just bringing back old jobs, new jobs are here, but new jobs for people who understand them. advanced manufacturing. where is the retraining. that needs to be at community colleges, local colleges, states, cities, counties need to
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support them. there can be national programs that provide funds for retraining because there are so many unfilled jobs not just in silicon valley but as you say in places like mississippi and michigan and indiana, that call for skills. interesting is skills where you also need expertise in something like manufacturing. i hope there's more attention spent to that because there's opportunity and they're high-wage jobs. >> lauren, whether or not there is still this gap between the supply of high-tech jobs and the available workers to fill them, it seems as if perhaps we'll have this new corporate tone out there where it seems like the thing to do to claim you're going to be creating some jobs in this country and maybe silicon valley, which has already had all these job openings can kind of rush to say hey, we're on the team, we'll try to do this. is this a place where tech companies do you think might want to sort of remain in tune or seem in tune with the incoming administration? >> absolutely. and i think the key is completely right that it comes down, a lot of it comes down to education.
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you can't just say, oh, we have these job openings, or, oh, we're looking for high-skilled workers in this particular area. there has to be some type of education sort of at the base level to train people in these high-tech jobs as robotics take over more and more jobs, whether it's in warehouses or in vehicles. i think people need to have the proper education level in order to, you know, stay relevant and i think silicon valley, it would be wise to participate in some level on, you know, on that education. >> it will have to be a multiyear solution and we'll see how it pans out. we're also watching shares of apple this morning. indian officials are reportedly planning to meet early next week to discuss apple's request to manufacture products in the country. this is according to "the wall street journal." as part of the request, apple is seeking several financial incentives as part of the country's make an india campaign. kate, if you're apple, how do you balance the current economic narrative happening in the u.s. with the desire and the need to expand where you're trying to gain market share and where you
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hope your new customer is? >> well, i think, you know, we're talking about the jobs that we just talked about with oneweb coming to the u.s. or apple contemplating where it goes, remember all these companies are created in the service of the shareholders, number one. their job is to, you know, provide returns for their owners, their shareholders. in the case of apple, then, what they've got to balance out is their slow growth and a lot of their growth is coming from emerging markets, not new products at the moment. one pod is interest, and lauren, you probably cover that actively. but they need that growth that comes out of india. india has all kinds of impediments to doing business there. apple is in the process of negotiating, being able to change the labeling, being able to do some manufacturing, getting incentives to both build manufacturing and stores in india, which will be a huge growth engine and i think really important. if you're tim cook, you have to be open and communicating with this administration, but you also have to do the best thing for your shareholders, which is
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to drive growth. >> it's funny because the front page of "the new york times," you were pointing out, talking about the reality of how this is all going down in china, let alone in india. >> this big feature in "the times" spotlights the fact that literally billions of dollars in incentives and manufacturing, the creation really of whole towns in china, iphone city is behind apple's involvement in china and all the manufacturing that will foxconn does there as a partner. it seems globally there's clearly an arms race. it's not just about the head of state saying we'd love for you to make more of those products in this country. >> this article talks about the government is literally working on these phones. is india's approach vastly different? because it seems to be we're not going to hem you at all unless you help us first or does it ultimately -- >> in india it seems like it's more checking off the boxes. this is what we require for anybody who wants to sell products domestically in india. you have to make certain things here, label your products a certain way. not clear it's an all-out
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investment by india. >> how different is what india or china is doing to work alongside these companies to try and create an economic boon there to, you know, what tesla was doing when it was drumming up rival bids for the giga factory several years ago? >> let's talk specifically about what this means for apple and india. you talk about this article that came out in "the times" today about how there's an entire city called iphone city devoted to making 500,000 iphones a day and that's just one of them. the manufacturing infrastructure is already in place in china. in india, the big question will be whether or not vendors can actually make or sell the premium parts apple needs in order to make iphones. i believe one of the articles that came out today is around 30% of the parts that would go into iphones manufacturing in india would have to come from indian vendors to make the whole deal work. it's a very important market for apple. it's projected to be the second largest smartphone market in the world next year surpassing the u.s. just behind china, and apple only has about a 5%
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footprint in india right now. so it's kind of critical for apple to make this deal work in order to get their stores in india. but it's a very different environment right now from china. >> finally, snap, inc., has an early message for ipo investors. we're the next facebook, not the next twitter. according to "the wall street journal," sources close to the company's road show are pitching the snapchat product as something that could evolve into a content powerhouse led by founder evan spiegel. they're portraying as millennial and product advertising and visionary. interestingly, kate, when you think about twitter versus facebook ipos, at the time of the ipo, facebook was viewed as a flop and twitter was viewed as this runaway success. so how should any company who's going public even try to compare themselves to those two situations which have turned out vastly different? >> well, you're right. and i think you have to look at the broader trend in both cases.
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looking at snapchat one of the things that's interesting, like twitter and facebook, they've developed themselves initially as a social environment, one of the fastest growing ever by the way, particularly for len yals. the thing that snapchat is doing that is smart is taking a page out of facebook's plans, is they already with their recent acquisition of an israeli-augmented reality company, are already beginning to lay the groundwork to go beyond that instant communication, the disappearing communication, making themselves friendlier for advertisers. that israeli company as an example can help you put on augmented reality glasses and see furniture you might want to buy in your own living room. that starts going already much further beyond that core communications that twitter had into more what facebook is providing for its users. i think they're off to a very promising start, thinking big early on, which is smart. >> it's interesting. i don't know what you guys think because i'm looking at it from the outside here. facebook managed to take the
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cool fact or of the social networks and kind of build business and messaging into that. snapchat seems to be much cooler than facebook right now. is it an issue of can they follow the same kind of integration, get people using it to do commerce, to really kind of make it stick? >> i think time on the platform is going to be a big issue for one thing, but i would also point out that facebook was a very financially mature company when it came public. it was at a $4 billion run rate of revenue, had a billion dollars in net income the year before it came public. they were going for a $100 billion valuation. it was already proven this was a massive platform. >> the company was several years old, mike, $4 billion run rate versus snapchat's when it goes public will be about $350 million. what the company seems to be peddling here is scarcity. and it really -- that does wonders to drive up demand for something. you can't get your hands on the spectacles. we rarely hear from evan spiegel. our show has gone after him a
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dozen times for an interview. >> he's engaged. >> how much will scarcity work for this company when it goes public? >> well, i mean, scarcity is really just around the hardware right now aside from the fact that evan has not yet responded to your request. evan, you should come on the show. just come on sometime. scarcity is arnold the hardware specifically, and the hardware is just a means to an end of getting people on that platform. this isn't like a gopro play where they made hardware first and then tried to convince people and is still trying to convince people it has a platform. this is snapchat, started as plet form, as messaging, makes money through advertising. that's how it plans to grow. it may develop more hardware products but ultimately it's about bringing people back to the app. at the end of the day, snapchat's biggest challenge will be becoming that massive utility facebook has become and being more than an app for len yals. someone said len yals before, i think it was kate. that's true. but my grandmother is not on
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snapchat. i don't know anybody's who's is. i think the big question will be getting more mass market appeal as it strives to go public. >> my mom's not on snapchat. my grandmother certainly is not. but our bosses are. which i don't know if that detracts from -- >> i think we have to be in the media now. >> all right. well, we'll learn how this ipo goes in just a few months. for now, lauren good, kate mitchell, happy new year. >> thanks, guys. >> when we come back, details on amazon's warehouse in the sky, plus count do you think to the close in the uk and across europe. been a mixed bag in those markets overseas. those detail are next. >> later, slipping further away from dow 20,000. the s&p 500 heat map, two days of trading left in 2016. hey gary, at yogohere? thisso tt i can take my trading platform wherever i go. you know that thinkorswim amlessly scs across all your dices, rit?
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it's the ftse 100 that's captivated the attention of investors as it is once again in striking distance of its all-time high with those mi minors gaining ground. also in focus, a heated discussion around the euro-dollar trade, trading at 104 against the u.s. dollar. of course the u.s. monetary policy will likely be significant significantly changed in 2017. goldman sachs hitting sees it hitting $1 by the end of 2017. down nearly 3.5% so far this year against the u.s. there are. shares of credit suisse in focus a day after "the wall street journal" reported that the s.e.c. is probing the bank over a bond sale in mozambique. shares down 1.5% today. but as you can see, for the year, it's down 34%. just highlighting the distress many of those european financials have been in in 2016. russian president vladimir putin announcing this morning that an
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agreement had been reached between assad's syrian government and opposition forces with a cease-fire to go into effect at midnight. on the bond front, just take a look at the yield on the german bund. now at its lowest level since the u.s. election. of course policy divergence not just a theme that we're following in the currency market, but in the bond market next year as well. for the year, though, european stocks are vastly underperforming stocks in the united states. a very different scenario that we saw last year. as you can see, the european stoxx 600 index down 6.1% for the year, but as we look at the s&p 500, holding on to a gain of 10%. i want to highlight the performance of individual markets in europe. that really tells us the full story. politics, of course, have increasingly been a big part of the market discussion in europe, specifically the ftse 100, the uk stock market, up 14% for the year. the outperformer despite the brexit, germany, france higher as well. on the down note, we're looking
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at spain lower by 2% for the year. italy, the worst performing european stock market, down 10%. of course after that italian referendum and of course weakness in its financial sector. kelly? >> seema, thank you. a lot happening overseas and yet the markets taking it in stride. thank you. amson is being awarded a patent for a giant flying warehouse that will act as a launch pad for drones to deliver its products in just minutes. the e-commerce giant describing olympian plans for as you can see here an airborne fulfillment center, like an airship or a blimp that would float at an altitude of around 45,000 feet. they say that kind of high platform would give the germans a chance. they could almost skydive. skydive off it. >> glide down. wow. >> this is amazing. apparently they were granted the patent back in april. but man, here are some of the drones that he've been working on. >> there's some history of patents bag little bit of a tease, right? just in case anybody's going to go this far, let's put a flag in
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the ground on this. >> they can't even get clearance to test their drones in this country, we're going to be a very, very, very long way off. >> this is an excellent point. does donald trump -- >> floating warehouse. >> a lot of drone regulations. they go to the uk and other countries to develop the technology, even though there's programs at virginia tech and others trying to do as much as they can within the parameters, but do you start to look at this and say it could help commerce and we should deregulate this thing? huge question. i don't know if you should campaign on a pro-drone platform. >> although pro innovation is sort of all encompassing. >> exactly. we'll see. big one for amazon if it happens. when we come back, the call getting desperate for dow 20,000. next week is a whole new year. tom mcclellan from the mcclellan marking report is here.
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good morning. facebook has taken the top spot as this year's most popular smartphone app in its annual rankings, nielsen says the app had over 146 million unique users each month, representing a 14% jump from a year ago. facebook messenger was the second most popular followed by youtube. africa's cheetahs appear to be racing toward extinction. a new study of the big cats' population found just over 7,000
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live in the wild, so scientists are now asking that the species be placed on the ep dangered list to help slow further declines. a fight is brewing in north dakota over which town is the geographic center of north america. the slogan and trademark were owned by the town of rugby for decades until it allowed the registration to lapse. that's when neighboring robinson acquired it. rugby officials say they are pursuing legal options to get that title back. and what would a times square ball drop be without confet confetti? officials in charge of new york's famous festivities did a test run this morning to ensure things go smoothly on new year's eve. nothing goes to chance for new year's eve. they even rehearse the confetti. looks like it went well. this as i'm tossing it back to "squawk alley." but let's face it, we have you outnumbered, kayla. this is an early edition of "closing bell" right now. >> i'm the luckier for it. >> yes, you are. >> i'm glad the folks in times
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square are testing gravity. >> it worked again, yes. >> now hef to clean it all up. what would not work about it? it's just confetti. >> do you worry about that, who has to clean that up? you don't have to, kelly. >> it's going to cost a lot of money. >> i have somebody inside at that organization. >> there you are. mike knows everybody in new york city. >> thanks a lot, bill. the dow trying to rally, just its second loss of 100 points or more since the election. tom mcclellan is editor of "the mcclellan market report" for where we might be going from here. you're saying the post-election honeymoon period might be just about over. what does that imfully in terms of what kind of downside we might be looking at or what might be needed to give the market some life in january? >> well, when you have an election of a brand-new president from a different party than the party that was in
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before, investors attach all sorts of hope to the new guy and think he's going to solve whatever problems they can imagine so they're joyful and happy about it and bid up stock prices because of that joy. we're seeing super high readings on all the sentiment indicators showing everybody is excited and happy and complacent about the future and he'll solve all the problems. then usually after the new guy's been in office for an entire week and he hasn't solved everything already, people get down hearted and start to sell. when you see this pattern over and over, when you can average the patterns together from market's behavior, you see there's a peak law enforcement official at the end of the calendar year, right around this week, there's another peak just after inauguration with a little dip in between, and i'm expecting to see a little dip next week as people who have been holding off selling their stocks based on hoping for a better tax rate next year will try to crowd all those sell orders into january 3rd and 4th. >> so, tom, you're saying maybe a little bit of a dip ahead of the inauguration, so for the
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next couple of weeks. but is this something that is almost immune to whatever specific policies might come out of the trump administration once it gets going? >> right. it's just a pattern of human psychology and human expectation. when it comes to the stock market, there's only two fundamentals that matter, how much money is there and how much does that money want to be invested. and the second one follows regular and consistent patterns, which is why a technical analysis even works in the first place. we're seeing that pattern play out according to the script very well. a little better than average performance since the election versus other elections in the past of a new trt president from a different party but still following the same dance steps just going a little higher. remember, an average pattern is going to be in the middle, some will be better and some worse. i would look for a dip next week and then a rally at the end of the month and then a chance for a more significant dim p in february. >> what about the dollar? i know we're looking at these in isolation, but i guess we're
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hanging together somehow. interesting we had it pull back today and it's not clear does the market want a stronger dollar or a weaker one? what's the interplay and where do you think it's all going? >> a big part of the there are's strength recently has been problems in china and thus in japan. china had huge money market problems in their own bond market which necessitated injection of over $100 billion equivalent of yuan just to stabilize that market and keep it trading. that seems to have abated chinese bond yields on the ten-year chinese bond starting to come down and that's been helping u.s. bond yields, which trade in sympathy with them and also alleviated the pressure pushing money and wealth into the dollar so money can flow back out of the overvalued dollar. >> tom, you expect the market to hit another top in late january, early february. what do you expect that to be driven by, just a lack of demand for any further buying? something that happens overseas that's out of u.s. control, or just basically lowered expectations for the administration? >> well, the rush up into the
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top will be a renewal of the enthusiasm for how the new president's going to solve all problems and then when the president hasn't solved all the problems right away, that enthusiasm starts to wane and the buying starts to wane and people realize they've got some reasons to sell. one reason to expect a positive in 2017 is that if we do get corporate tax rates cut, then that's going to change a lot of the valuation metrics. everybody's talking about overvaluations on p/e and other ways of looking that the. if the corporate tax rate is at 35% and a corporation only gets to keep 65 cents on the dollar of everything it make, if it gets cut to 25%, that 65 cents you keep goes to 75 cents. and that's a 16% jump in your profitability and that changes a lot of the valuation metrics. so that's one poz they've we can look for, but that's way down the road long after congress takes it up. >> yeah. we'll see if the e can come up even if the p doesn't come down.
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tom, appreciate your time. >> happy new year. >> you too. despite recent losses, investors have generally profited off of donald trump's win. one group that continues to struggle are home buyers over gear of higher mortgage rates. so what does a trump presidency in the new year mean for those rates? let's ask diane olick. diana? >> reporter: mortgage rates took a big jump after the presidential election and just consumer sentiment on going. so if you were in the market to buy a home last summer but you just couldn't pull the trigger, well, it's going to cost you more now on that monthly payment for the same priced home. already we've seen the hit from rising rates. pending home sales dropped in november unexpectedly to the lowest level in almost a year and were lower than november of 2015. pending sales measure contract sign, not closing, so people out shopping in november factoring in those higher rates. average rate on the 0-year fixed is now well over 4% and while it has been moving in a narrow range the last few weeks, the expectation that it will move higher in the next year as the
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economy strengthens. add even faster rising home prices to the mix and you have something of a toxic cocktail for housing in 2017. but there is an antidote. you can buy down your mortgage rate. it's not as complicated as it sounds. yes, you have to have more cash up front, but lenders will lower the rate if you pay a percentage of the loan in fees up front. it's called points. one point is 1% of your loan amount, so you are getting a 30-year fixed loan of $300,000, you might get a rate of 4.25%. but if you pay one point, which is $3,000, you might get a rate of 4%. lowering your rate by that quarter of a point lowers your payment by $44 per month and lowers your interest costs by about $62 a month. one thing, though, this is only a savings if you stay in your house for at least seven years. that way you're saving more than you paid up front. if you want to see all those numbers again, they're online, cnbc.com. back to you. >> thank you, diana.
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when we come back, big news for the nfl and china and it has to do with streaming. but first rick santelli, what are you watching? >>, you know, i'm watching the days wind down to 2016 and thinking about what 2017 may hold. i think it's going to be a year of disruption. but not the classic disrupters. correlation disruption. tune in after the break. what's the value of capital? what's critical thinking lik a basketba costs $14. capital? at's team spirit worth? (cheers) what's it worth to talk to your m? what's thealue of wan the ods? thvalue of capital is to crte, not just weabut things . morgan stanley
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today on "the halftime report," the only sector he thinks investors should schas right now. and why amazon says to get out today. and the big industrial bear calls its top pick of 2017. "the halftime report" top of the hour, noon eastern. see you in a little more than ten minutes, kayla. >> sounds good, scott. now to rick santelli and "the santelli exchange." good morning, rick. >> good morning. you know, disruption, disrupt or thes, these are all kind of new words. think some of the biggies, uber. we've seen major disrupters and creative destruction in so many different areas, but the one area that i think we need a little disruption is in some of the correlations. how many guess the last couple days point to some of the positives we've seen in the last month in equities and think, wow, remember last january? and as we're talking, you could look at some januaries in the equity markets, whether in europe, china, japan, the u.s.
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everything moved just about the same and memories are very good. we had jim bianca on today talking about that very january effect. i remember when january effect was a bit different. but right now everybody's january effect is similar on this trading floor. they're thinking what will happen in january that could take away much of the glitter we've seen over the last six weeks? well, i have a different slant on this. we now have the central bank going in one direction while all the other central banks go in the other direction. we're coming off year that had a profound amount of supply due to issues that are so strained it's hard to imagine they actually occurred like trillions and trillions of dollars of securities with negative interest rates being the medicine for financial problems. makes very little sense. but i think we're going to see something different. i think that if we see outflows like we expect or continued outflows in china or think
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italian banks in europe, potential outflows there, think about all the medicine that's been prescribed in japan and what the outcome has been. we may see a disruption that one country or many countries' outflows ioutflows, i think, could turn into stock market in flows in the u.s. now that isn't a novel idea, but i think we've now become a beacon for confidence whether it turns out or not is what the experts question. are we going to get the policy that seems to be the underpinnings of some big moves in the u.s. that have actually transferred to other parts of the globe? i think the answer is yes and, even more important, do you remember when the stocks were crashing last january what happened to interest rates? they were moving down. think now about one of the nervous areas about the markets for '17, the rapid rise in interest rates. list en, when you run over a bup you're glad you have shock absorbers. i think the same capital outflows from other countries coming here could be that very same apparatus for the u.s.
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treasury market. a shock absorber for a rising interest rate environment. kelly, back to you. >> and we could use one, rick. thank you. we'll see you soon. when we come back breaking out the 2017 playbook looking to make you money in the new year. up next, small business.
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welcome back. we are in the final days of 2016, so cnbc is breaking out the 2017 playbook looking at ways you can make money.
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kate rogers with what you can expect in small business. >> reporter: main street is feeling more optimistic hoping a donald trump presidency issues in business friendly policies. the halting of the overtime rule, expect more to come. trump ran on promises of deregulation and small businesses are hoping for more including joint employer rules and policies under the environmental protection agency to be loosened. it's unlikely the employer mandate stays in place. the rule requires it as an impediment to job growth and expansion. the federal minimum wage stays unchanged. while trump said he was open to the idea of a higher federal minimum wage his nomination of fast food executive puzner for
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labor secretary and republicans in control of congress mean a hike in the minimum from $7.25 an hour seems unlikely but expect more action at the state and local level to raise pay for low wage workers. wall street is more optimistic. the latest survey from independent business found sentiment soaring post election. whether or not that feeling stays remains to be seen. >> the small business playbook for next year with kate rogers. when we come back, first twitter and now the nfl in a major deal with the largest social network in china. the details up next.
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the nfl inking a deal to stream on one of china's networks. the new deal extends it to the final sunday night football game taking place this weekend as well as three playoff games and the super bowl. they can show on-demand clips, videos, and other nfl footage. i wonder, mike, if this is for
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the broader chinese population but apparently already there are 1.5 million online viewers each week. >> that struck me as a high number because it's not a sport that has any ground in it at all. the nfl wants to be a global business. they play several years in it london. it's not clear there's a groundswell of affection for american football there but seems very low cast and china interestingly paid this big contract to a soccer player, paying $20 million a year, but it's interesting that they're willing to kind of open up to western sports. >> also it's safe content in china, too. not much about that you would need to censor. >> halftime shows, are they going to show that? >> also the commercials. >> a decade overdue in actually playing a game in china. they were going to do it before the beijing olympics. they were going to london, as
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you mentioned, now it sounds like they're within a year or two of having games over there and some people in it the league, do we want the 12-hour trip? do we want to send everybody there? >> the nfl players hate the london stuff though they won't say it out loud. >> tweter announcing 360-degree live periscope video adding a new bell and whistle to this platform. that does it for "squawk alley." over to scott and "the half." all right, kayla, thanks. welcome to "the halftime report." i'm scott wapner. the state of the trump rally and whether a correction is coming. with us for the hour joe terranova, the brothers najarian, aaron brown is here as well, the head of macro investments with ubs o'connor. the eve of the final trading day of 2016 seeing a modest move for the major averages lower today. there's the dow down nearly 20. s&p and the nasdaq following suit. so, doc, is it time to take some profits? >> well -- >> is the

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