tv Squawk on the Street CNBC January 4, 2017 9:00am-11:01am EST
leverage, which are generally lower quality companies. so if you believe in a lot of the talk this morning was all about reflation, if you believe the reflation story, you don't buy big cap cyclical names. you buy small cap cyclicals. they're the ones that will have all the operating leverage. >> richard, great stuff. thank you for joining us this morning. >> thank you for having me. >> they'll bring you up-to-date on "squawk on the street" and more @realdonaldtrump is sending out more tweets. stay tuned, "squawk on the street" is next. and good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. waking up to a mildly supportive premarket. a lot on our plate today. fed minutes, auto sales, vice president-elect pence to capitol hill later this morning. euro cpi in slightly ahead of consensus up 1.1 year on year, oil is relatively steady, mortgage apps way down.
roadmap begins with the market and chase for 20k. >> plus the auto industry remains in the cross hairs. we'll get sales numbers today following tesla's numbers last night. and another trump tweet, this one about ford. >> and some fresh scrutiny for the president-elect ceo cabinet. tillerson's pay package with comm exxon. first up, stocks end up with more gains with a best day in more than three weeks including tuesday's triple digit increase for the dow. the watch is on for the 2:00 p.m. eastern release for the minutes from the fed's december meeting which might disclose some clues about policymakers views about inflation, strong data and the president-elect as well, jim. >> there was a time when i feared those minutes. they come out at 2:00, steve liesman come on, start thinking, wow, oh my, so worried they may have to raise rates. i have to tell you, they're not talking about raising rates three more times than j.p. morgan which is one of my fafrt stocks in the dow can go down
big. remember, four rate hikes. the whole dynamic has changed. we saw some of that with byron. we are at one of these moments where we want growth. and we don't fear the fed. and not fearing the fed, not fearing the tape, obviously the market went down yesterday when oil broke and then came back. what was it led by? the oil stocks. we have money coming into this market. i remain thinking, look, if you own stocks, don't sell anything. if you don't, i'm still convinced they'll be moments intraday, maybe a couple days. the bull/bear ratio, everything's so bullish. you will get a moment where someone from the republican leadership will challenge trump. the interesting thing is he rolls the republican leadership. he rolled them on watch talk. >> we got the ethics tweets and basically the house being -- people saying it was a pratt fault to start the year. >> well, everybody's making pratt faults all over the place. i love mark field's comments on
half where he's basically saying, listen, we're not doing this because of trump, but you know what, we're doing it because of trump. united technologies, greg hayes, look, i was born at night, but i wasn't born last night. so you get these situations where these executives say something that is kind of conciliatory, the opening blast always negative for them and united technologies been on a tear. a great stock. i wonder ford you know they cut numbers if they don't move to mexico. but they got the blessing. >> yeah. >> so it is an amazing time where people keep fearing and they're correct in fearing tweets. but the tweets have not impacted the companies yet. i think it's the drug tweets that you have to worry about. >> well, they haven't impacted the companies yet in part because they're just tweets. and there's no policy here. and getting things done to the point where they actually become part of the law. >> right. >> is a little bit different. you can't just tweet it.
>> well, it's not exactly jeffers jeffersonian. founding fathers are not rolling in their graves, but this is a different world. di disintermediates the press. the state we all kind of play with is hapless versus a tweet. >> yes, the president-elect is able to communicate directly in this way. and we cover it very closely. i do wonder at some point if this continues in this fashion whether we're going to pay as much attention on a daily basis. >> wow. >> once he's in office and things actually can occur, got a congress already getting started on various things, then we can actually look at the outcome as opposed to just the sentiment. >> right. and that's absolutely true. one of the reasons why i don't think people should pile in but i don't think people should sell is because the idea that the tweets can have that power once he's in. it may not be as great because there will be a lot more people shooting at him. right now i think they're afraid
to shoot at him. right now there is a president, and his name is obama. the trump people hate me for saying that -- >> the tweets are coming in three schools, ones about trade and there's others -- in this morning's case, julian assange and whether or not to take his word over the cia. using the word intelligence briefing in mock quotes, right? are those destructive to the market or are they irrelevant? >> this market right now seems to like someone new coming in. it's almost as if the market just didn't like anything from before. so you can throw up anything. like trump puts this up, i think people say, listen, what did these guys do? did the cia stop any -- have they really stopped anything? have they really stopped terrorism? and he's looking overseas and he wants us to be safe and i think there are people who voted him in he thinks these intelligence agencies have gotten it all wrong. >> but this is unprecedented for a person coming into office to be dismissive, if i could use
that word, and i think it's a fair word to use of the intelligence. >> who are going to work for him? >> what is he going to rely onto make decisions that impact the safety of this country? >> well, i would tell you that this is an example of what you just said, which is that this comes easily when you're not president. i think it comes harder when you're president. >> yeah, i mean, listen, speaking about the broader market and the themes that we saw play out after the election, jim, they seem to be continuing. >> yes. >> this is not about tweets. this is about rotation into value from growth. certainly we saw that. and that seems to be continuing. it's going to be an interesting year. you know, in speaking this morning to a number of money managers, you know, google's very cheap, but it's a growth stock, do you want to own it? or is this rotation going to keep hitting you? facebook, amazon, you go through the names. >> well, look, they're talking about clayton, a very prominent
lawyer becoming head of the fcc, go look at what he's done. he is a representative of wall street. he's not a prosecutor. the s.e.c. has been adversarial to business. this guy is someone who helps business. it would be the kind of appointment that is in favor of deregulation. >> without a doubt. carl icahn has been leading the interviews of the s.e.c. chair. he has been involved in that choice. >> well. >> what do you think he's going to favor? >> look, but the guy's not some hack. >> no, i'm not say thag. >> he's not some left field guy. >> i think that's interesting, too, don't you? that carl icahn is -- >> well, a lot of things -- do you remember during the campaign we heard that carl icahn was maybe considered for some of these positions? >> well, sure. >> he's part of a kitchen cabinet, we're going to start hearing that term.
does mar-a-lago have a kitchen? maybe it's the biggest kitchen in the world. but i think we're developing a kitchen cabinet, not unlike reagan, of senior people. remember reagan's guys were fabulous car dealers and bankers. why doen't we make that -- isn' that what's happening here? we have to come up with a better term than kitchen. >> in this case icahn is doing business as usual, so he's an informal advisor. >> but that's what we have now. these are people that can't be challenged. i think the democrats are going to go to court every day on some of these things. we have to be ready for that. that's part of the rear guard action. but i think he's assembled -- trump has assembled a group of wisemen. i think kissinger's involved heavily in some of this policy. kissinger. >> there's a piece in bloomberg this morning about kissinger's late in life second act, right? >> those who -- >> 95 years old. >> i had him as a professor. at one time i criticized him on
the vietnam war and he looked at me, and felt it was a unilateral bombing. he looked at me and said to me, my, that's a nice jacket you're wearing. that's a nice jacket. and then hit the head of my department and said i think that's corduroy, where do you think he got that? i got it at marshall's. >> speaking of advisors to the president-elect, secretary of state designate rex tillerson and exxon mobil agreeing to sever all ties to comply with conflict of interest requirements. if the appointment is confirmed value of more than 2 million deferred shares he would have received over the next ten years will be transferred to an independently managed trust. those shares are worth about $182 million in yesterday's close. also surrender entitlement to more than $4 million in cash bonuses and other benefits. interesting to watch. the president-elect himself says he's going to have a presser next week regarding conflicts of
interests some allege of his own. >> there was a time in the last eight years that if anybody was that rich they got the nod in any position we would be suspicious of them. tillerson is someone -- look, i'm not -- is tillerson the guy for russia? all i know is tillerson was a darn good exec. he preserved the balance sheet with exxon. i know they're not important in the vast scheme of things but tillerson is a negotiator, like trump. it's what he did. >> what is interesting and we pointed this out the day he was tapped as the nominee is i think exxon mobil has a ten-year vesting period for these -- for this restricted stock that their ceos receive upon retirement. lee rayman for example i think only finishing up. and in this case we did say, and by all rights it is probably something that is better to happen this way than not because you wouldn't want him to still have significant shares and ownership in exxon mobil. but it's quite a payday for one that they very carefully structured at exxon mobil to
really take quite some time in terms of restricted stock. remember, we've seen the power of that when it came to wells fargo for example and the ability to withdraw if you find something that was not to your liking as a board. >> right. again, the contrast, tillerson. what tillerson has made his money is exxon is a very big company in the united states but not as big as others. i happen to like chevron's assets, more upgrade today after this stock has had a monumental rally. thanks for nothing. but i do think that exxon is in a lot of places that the united states has historically not negotiated well. and he's negotiated -- when you deal with exxon, you look at their annual reports. >> sure. >> marvels. you see where they are. only thing you think is, boy, i'm glad i'm not there. these are some rough and tumble places. maybe this is different secretary of state who's pro business. we haven't had a pro business secretary of state -- frankly, i don't know if i can recall a pro
business secretary of state. i can't recall one. >> no. there's been more of a focus on things like human rights. >> bingo. wow. throwback. can we do throwback thursday? jimmy carter. >> jimmy carter. >> when we come back, latest in sales numbers from ford and gm, plus a look at what's ahead for tesla after they failed to meet delivery goals for '16. take another look at the premarket, first positive start to a january yesterday in three years. more "squawk on the street" from post nine in a minute. c
tesla's down in the premarket. the electric carmaker announced it delivered just over 76,000 vehicles in '16. that narrowly misses the goal of 80,000. deliveries down 9.4 in q-4. tesla citing what it calls production challenges from the transition to new autopilot hardware. they were looking for 80 to 90 for the full year, jim. >> teflon, they should call it teflon, not tesla motors, but i know that's already patented. because i don't think this will matter. i think that candidly, my 80,000 goal, a lot of people thought it
could be 100,000 not that long ago. but this company has its adherence and i don't think they're going to sell on this. well, i don't regard a $2 down after a big equity offering here. i just find that the company's charmed. and some of it is what our partner jay leno says, look, they're making a lot of cars, get with the program. >> apparently they're doing a lot better in china. my friend of warren capital follows these things closely reported yesterday 223,000 units of tesla cars were imported in 2016 compared to only 226 a year earlier. both the model x, which debuted in june of course and now become the most sought after suv in that market, and the model s of course. so they're seeing significant sales jumps in china.benefit. >> wow, that's important. remember they had a personnel problem in china? they didn't have the right salesperson running it. >> yes. >> so they brought the right person in and sales spiked. again, i think that musk -- >> they've also lowered the
price of the model s. >> i thought the solarcity deal was a bad deal for shareholders, to me that's far more important than how many cars they sell because solarcity i think, first solar has been so bad, i don't like that segment under a president trump. but i do think this is not what -- they're not going to react. they're not going to dump the stock wholesale. you have analysts who aren't going to change their view on it. i think that's the important way to look at it. they're just not going to change. no buy to holds. >> do they have any capital needs in near-term or they covered that? >> they did that secondary. now there will be people out there say they have constant capital needs given they're ambitious, but they did kind of cover it. there's a lot of bankers that love doing business with these guys, you know that? >> i didn't know that. >> yeah. bankers love them. >> why? because there's always more coming? >> it's about fees. back from the commercial i'll come up with a smoother way to
talk about fees. >> i'll tell you what, for '16 going short exxon tesla -- >> isn't that interesting. rex represe musk represents old and tillerson represents new. >> that's odd. >> it is. again, big change. i look at these people and this is uniquely in cnbc's wheelhouse, this cabinet. i mean, i've got a lot of people suggesting masco cabinet, jet cabinet, i'm searching for what this kitchen cabinet is but it's a remarkable group of rich people. and i think that is not what our country is used to. rich person after rich person after rich person. >> yeah. >> wow. i have nothing against the rich, at all, but you've got to note that. >> it's indisputable. >> remember what lennon said, if the rich aren't happy, it's their own fault. other than being a mass murderer, that was the one thing he did produce was common sense about the rich people. >> we're waiting for auto sales.
underweight recommending sell of valeant. i thought this was one of the tougher ones. they were talking about how the stock is simply not investable. i think you'll see the stock down initially on this. they're talking about how most of the drugs are going to be challenged by generic entrants, going off patent, saying they're worried about the u.s. dermatology segment. that's a very big segment there. again, shows you nothing really happened to change valeant's debt picture. contrast that with one of the biggest winners in the s&p last year, freeport, where they dramatically sold off a lot of assets to get debt down from 20 to 10 -- trying to get to $10 billion. this company hasn't taken the medicine yet. and i mention it because i think that if you want to talk about what trump might not like, you know, we're seeing all these different price increases at the beginning of the year, what's valeant going to do? remember they were talking about rolling back prices? have they done that yet? >> yeah, i don't believe so. of course that potential sale of salix or what was a part of valeant did not happen.
the market briefly embraced the stock with the idea that sale would be beneficial because you'd pay down a lot of debt. >> right. >> but instead they maintained it. it does come with a couple of key drugs for them that produce significant revenues. >> absolutely. >> you're right. no price increase, significant debt load, spending more on r & d. >> right. >> where do they end up? or can they continue to muddle along, jim? >> well, that's important. i do think the debt load, looking at endo pharma yesterday -- >> one of the worst performers in the stock market last year also. >> incredible cut down to 26 after being in the 50, 60 -- >> yes. >> david, what i think is important is most people, you have taught people over and over again, look at the debt side. the debt side is the one that's worrisome about valeant, not the drug side so to speak because you have cash flow. we're waiting for mr. papa. i don't know if you've spoken
with him. >> i have not in a long time. >> maybe give him a jingle. >> yeah, we can do that. we have about six or seven minutes before the opening bell this morning. a lot more "squawk on the street" right after this. lepe's foods is a locally owned here in santa rosa. as a small business, we're always looking to save money, and pg&e was able to help us. i help the small businesses save money and energy. it feels great.
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"squawk on the street" live from the financial capital of the world. the opening bell in just about three minutes this morning, waiting for some auto sales out of ford and gm. as soon as those hit the wires we'll bring them to you. in the meantime we've got more tweets from the president-elect, fed minutes at 2:00, vice president-elect pence going to capitol hill today to meet with both the house and senate gop leaders. dollar four-week low versus the yuan amid reports they're considering ways to stem the flow of capital leaving the country. >> i think that you're -- i think everyone is thinking about trump. now, the communists control yuan. and obviously trump believes they're the biggest currency manipulator in the world. i think he also believes that by the way europe and mexico are currency manipulators, korea currency manipulators. i think people are reacting to his tweets and saying, you know -- and to his campaign rhetoric. i believe that it will surprise people how much everyone is trying not to upset him.
you can take him on in a communist party newspaper saying, listen, we don't like this, but money speaks louder than words. >> certainly that's definitely his method is to keep people from punching, and when they do punch, to punch back harder than they punched him. >> i think that maybe, again, when you become president, is it more of a bigger thing or is it he kind of president now? >> but it is a bigger thing because you need to govern. and that does involve more than just -- >> tweeting. >> tweeting. or sending one simple message. >> right. >> there's a lot involved if -- in getting people to execute. i don't know if he's going to be muted or if we're going to continue to hear the stream of 140 character sentiments. >> i've got to return to my core.
look, i'm here about stocks. i'm here about the markets. when he's tweeting about affordable care and how he doesn't like it, you should be thinking united health. will united health be brought in to talk about what should be done? look, my focus is -- >> believe me, united health's ceo and their ceo has a lot -- mr. miller, has a lot of significant thoughts about what should be done. >> i think he's going to be really important. >> this is the president walking into capitol hill. a rare visit to the hillside in what is widely expected to be a final push meeting behind closed doors with congressional democrats to try to save at least elements of the affordable care act. >> i know that the president has said, listen, there's commonality here on the idea of 26-year-old stay with the health care and of course on preexisting, which is a huge issue. but i don't know if this is -- we don't know until trump tweets what the real story is. because i think that he's very
unhappy with the exchanges. >> even after his tweets are -- >> right. buy unh, that's your way to play. [ bell ringing ] >> there's the opening bell and s&p at the bottom of the screen xerox, and we're going to speak to jeff jacobsen in a few minutes. at the nasdaq it's jamba, franchiser of jamba juice stores celebrating fit week 2017. we are getting gm numbers. for that we'll go to the very busy phil lebeau out west. hey, phil. >> hey, carl. general motors reporting december sales coming in stronger than expected. increase overall of 10%. the estimate from edmonds was increase of 3.1% retail sales that's what gm has been focusing on over the last few years up 3%. inventories and incentives, general motors reporting
inventory level about 71 days, and particularly when you look at large suvs they're even leaner, some of the models down around 45 or 50 days. here's what's interesting, general motors is estimating that the industry sales rate for december will come in at 18.2 million, much more bullish than other people were predicting. if that's the case, guys, you can expect the full year sales to be a record of probably 17.5 million for the industry. still waiting on ford. oh, by the way, nissan coming in better than expected just a few seconds ago up 9.7%. people were expecting nissan to be down 3.5%. back to you. >> phil, we'll come back to you for ford as soon as we get those. jim, we spent -- peak auto has been talked about for over a year, maybe two years. '17 -- it's going to be hard to beat '16. >> if i had a nickel for all the -- i'd be rich. these are numbers which say that
the auto at least in the united states is very strong. and i find these amazing. i mean, this could be pent up demand after the election. remember we heard a lot about that. how many minutes do we have to wait before someone says i'm not worried about car debt? that's another thing that hasn't panned out as a negative. talked about last night on "mad money," people have been saying they need everything to go right. and here's something that went right. this is a very strong number. gm goes up on this. >> it is up on this, by 2%. >> well, there you go. you tweet, get a chance to buy, come in -- >> actually rebounded very quickly yesterday. i'm not sure it was down at all when it opened. it was down in the premarket yesterday after the initial tweet. >> but this is what things -- remember gm worldwide company. got to hear china, got to hear europe. we shouldn't necessarily be trading all on the united states. that's been a fool's game, particularly with ford by the way because ford has had good numbers here but not overseas. >> we'll pay attention to that. but i assume you're on the look out for things like incentives
rising incentives to keep sales -- >> no one knows. can i just say phil lebeau is great? he's been faster on these tweets and the response than anybody. he did talk about today he happened to be in the right place at the right time, but it's more than that, good rorlters make themselves at the right place at the right time. and he talked about inventories and that is bullish. that's a better read through. he gives you everything. >> let's get back to phil who i think does have ford now. hey, phil. >> i do, carl. thank you, jim, for the kind words there. ford coming in better than expected with an increase in sales of 0.3%. the estimate from edmonds was for a decline of 1.6%. so you put these ford numbers together with general motors and with nissan and we're looking at potentially december being a little bit stronger, maybe much stronger than people were expecting, perhaps a sales rate of 18 million vehicles. again, that would easily put 2016 above the record of 2015. by the way, guys, it would mark
the seventh straight year of higher auto sales in the u.s. we haven't seen that since the early 1920s. >> 1920s? geez, a ford model a there? >> '20s? >> this is about job growth. remember, these do relate. you need a car to go to work. this is -- it bodes well actually for the employment numbers. >> sure. especially pickups often used as a proxy for small business. >> i think it's a great, great analysis. and i do believe this is going to catch people by surprise. it could be a legitimate reason why you want to buy some stocks today, because a lot of people felt a peak auto cycle will be busch we get peak housing, mortgage numbers didn't indicate that. a lot of people saying we have a spike in the ten-year, these will go down, that didn't happen. >> almost all big gainers this morning are almost consumer related, gap, gm, ford, best
buy, urban, tiffany. >> that's so opposite from yesterday. these were all getting hammered. there is some -- carl, we should talk about a tweet you had that was so important. the decline of the mall. [ bell ringing ] >> foot traffic in q-4 was the worst of time in the history of the american mall. and there's talk that q-4 of '17 could be even worse than q-4 in '16. >> and you have these stocks going higher today, i think it's almost like, well, that was yesterday's number. it's not yesterday's number. it shouldn't impact. i am concerned about the department stores. those numbers that you gave -- you can't have those numbers and buy nordstrom stock. >> yeah. not to mention the fact that those who are going to the mall are visiting about two to three stores per visit as opposed to five stores five years ago. so when you go, it's not like you're walking up and down the place. right? you're going in to see one place and go.
>> you know, david doesn't shop much, so right before christmas i went to the mall twice. i went at 10:00 and then went back at 4:00. i just had to do my share because others weren't. >> so you went twice? >> yeah. >> you did a two-a-day. >> i did. two-a-day workouts. >> exactly. i did it on this thing called amazon. i don't know if you heard of it. it's pretty easy. in fact, i just hit like three things -- >> you have to get in your park to do it? >> then it shows up at my house basically by the time i walk from my office to my front area it's there. and i find it very convenient. you might want to try it. >> i think about something and they say if i like that, i should buy this. it's really rather remarkable. look, amazon is i think the core reason of why that number is the case. so i'm not dismissing amazon. i think amazon's a buy. >> the numbers are probably going to be extraordinary for them over the holiday period. >> on web services, i remember a documentary i watched about how amazon web services the low cost of work and how much -- was it
your documentary? >> no amazon web services is a giant and powerful producer of earnings for the company. but they're investing a lot, india, all sorts of other areas and there are some questions as to amazon this year in terms of how the stock will perform given those investments. >> you're right. this may not be year to show profit. they have that ability and not anger wall street. it's really the only company that can do that, maybe tesla. >> recode's got a piece this morning on the company planning its own line of workout clothes. making a big push into private label products. >> right. >> i bought a pencil sharpener the other day, amazon pencil sharpener. >> really? >> yeah. >> taking over athleisure now. that's what recode is saying. >> it was their name plate. >> yeah, i got a paper shredder amazon's own. office supplies. and don't forget artificial intelligence in alexa where they
are amazessing massive amounts data. that is the key thing for a.i. to improve it, you need more and more data because that's all it is, it's not like an actual brain where it sees something once and remembers it. it needs billions and billions of bits of data to help improve its performance. >> need nvidia chips to do that. there was a piece out by wells saying gaming part -- gaming was very strong this year, maybe next year not that strong, but when you hear artificial intelligence, virtual reality, you have to think nvidia. obviously you're not early to the party, but they're the chip for the data center. the data center business. u.p.s., fed ex. but they have to deal with amazon kind of telling them -- >> not to mention they're going to be in the car too, right? nvidia? >> they dominate highest end cars. dominate. really incredible how much. i thought about nvidia when it was 30 because ally north
american guy, said our car is filled with nvidia chips. i said what about intel, he said intel outside. i said nvidia is a gaming chip, he said nvidia is about how that car is going to be driverless, about how the car works so well. they've got a lot of irons in the fire. a lot of people defended nvidia today. >> again, one of the big gainers today. really quickly, cowen cut ratings on some airlines today. their thesis is investors are going to stop focusing on revenue trajectory, look more at cost trajectory. >> that's a very good analyst, but i have to tell you that all these downgrades based on say valuation or what's about to happen have left you out of this market. you have to be careful. i think there's a good reason to get into american, get into united. they've had big runs. i get that. they can have more big runs because they sell it at -- well, southwest does more as a teenage multiple but these are not expensive stocks historically. important to point that out. that's why they're not down.
i thought they'd be down big off this call. united is scorching. >> yeah. within about 70 points or so, 72 points from dow 20k. let's get to bob pisani this morning. hey, bob. >> good morning, carl. it's the advanced/decline line that's important. 5-to-1 advance to decline, this has been happening, very positive market internals. over asia nikkei up 2%, another sort of quasi global rally. banks are leading and industrials are leading, not a lot on the new high list, united technologies, deere among the industrials, but not big new highs. but still slow steady advancing here. let's look right now where we're at in the markets. the most important is the belief in the global reflation trade. improving global economy, we saw that yesterday with the ism and the china manufacturing numbers. we're getting a steeper yield
curve. we're getting improved jobs and improved consumer confidence. and we've got the whole trump effect of the lower -- belief in lower taxes, less regulations and a stimulus program. we've got headwinds. we've seen them popping up every once in a while. stronger dollar trade issues and possibility of a more aggressive fed than the market is anticipating. but so far that has not been -- well, it's been an impediment moving forward in the market, hasn't been a big problem for pulling it back. the state of the markets, here's where we're at, s&p less than 1% from high, advanced decline lines still strong, valuations, bullish elevated, volatility low, what does it mean? a lot of people are essentially neutral on the markets right now. my old friend at canaccord, he's neutral on the markets like a lot of people. tony says key drivers are in place for a rally to continue. put up tony's node this morning, he's looking to buy any weakness as it develops. so everybody's looking for the markets to drop 5% to 10% so
they can buy, not so they can get out. the target 23.40, a lot of people 2350 to 2400, he admits conservative overall here. mentioned cowen downgrading airlines, you just heard mention of that. see the airline downgrade did not hurt them today. but the point was the share gains we've seen have been largely result multiples have been going up. remember the s&p 500 has exact same thing happen to it. we've gone from a 16 multiple in october to about 17.2. and i think you're going to see the earnings come forward. guys, back to you. >> all right, bob, thank you very much for that. bob pisani on the floor. want to check in with rick santelli as well at the cme in chicago. good morning, rick. >> good morning, carl. you know, rates are awfully sticky. they're not moving much, but they're certainly not moving much lower either. if you look at a two-day of
tens, certainly we did pop up and do a bit of trade above 2.50 yesterday, but once again hunkering down a bit very close to unchanged on the year. and the yield curve today actually a bit of flattening as twos and fives are up a couple basis points and tens and 30s unchanged though yields starting to drift higher on the long end. a three-year chart must be the most revealing. considers all these dynamics. right in the middle of that chart you see those three tops in the summer of 2015 all in the mid 2.40s. that's been a good tell. it was a good tell for how rates closed at the end of the year. but as you move further left on that chart you'll see all the congesti congestion, 2.60 to 2.75. we need to pay attention to that. that's going to be hard to get through and we'll have to nick at it several times on a closing basis to start breaking through some of that old wood as technicians call it. one-week of bund yields, you can see that they've popped, but a november 1st chart shows us that we probably are going to hunker in this 30 basis point or less
area. and finally, the dollar index. one-week of the chart looks as though it's not able to tackle its 104 handle, but a november 1st chart really tells you everything you need to know. and it summarizes the market moves we've had over the last couple months. very little giveback on a dollar index that was rather robust in 2016. we're going to continue to pay attention of course to 103.30, current high yield close for the move actually for 14 years. carl, back to you. >> all right, rick, thanks so much. rick santelli in chicago. when we come back, xerox after the split. we're going to talk with the new ceo jeff jajacobson at post nin. in the meantime dow 19,923 as the dow 20k watch continues anew. back in maine.
morning at post nine. welcome. congratulations on everything. >> thank you. great to be here. >> now the question turns to revenue and when that begins to turn. >> sure. >> how far out do you think that's going to be? >> what we've done is we've laid out at our december 7th conference a month ago a strategy for three years. basically we play in an $85 billion market. what we do is develop digital print technologies and managed document services for the largest corporate enterprises in the world, government agencies, school systems, smb market which is very big for us as well as graphic communications providers. look at almost $11 billion in revenue about one-third of that $3.5 billion is about managed dock yum serviument services. big corporate enterprises don't want to manage their documents from communication to how do they interface with the cloud, how can they translate into 35 different languages, how can they have security? they want to depend upon us for that so they can focus on their core competencies.
>> so when do declining revenues end? how many more jobs need to be cut? >> it's not about that at all, carl. what it's about is productivity. we're taking the word corporate out of our lingo, out of our language at xerox. this is a company from the ceo throughout the entire organization we're embedded in the organization with our customers, we're on the front line. we had 140 customers with us here today at the bell ringing. this is about how to provide best customer service drive productivity. how do we provide remote connectivity so we don't have to send a service technician there but interfacing with the customer's device from a security standpoint, how do we drive productivity in our manufacturing operation supply chain? that's what we're really looking at. >> jeff, i'm trying to figure out how to balance what you're going to do. you have 10% share of the overall document technology market, which is good, but you could make acquisitions to boost that but you're also committed to capital return. to the point where i think that because you have a little bit of money from conduit you can actually return some to
shareholders in a very aggressive fashion. which is a better way to allocate that? >> so we have a capital allocation plan. so we have a very strong dividend. if you look at the dividend we've announced, basically it's a little under 4%. so say s&p 500 one of the top 20% dividend bearing companies, that was very important to us. we want to make sure we have a sustainable model. so we had a good day yesterday. i think what that meant is the investors that we've spoken to, and right after our investor conference last month we spoke to another 50 investors and we rolled out our strategy with them. and basically what they're looking for is long term sustainability which is what we're looking at. we're not trying to measure ourselves in one day or one week or one month. so return to capital shareholder very important and driving margin expansion. we've also laid out a plan we're going to have margin exkpangs 12.5% to 13.5%. >> there was talk r.r.donnelly had come to try to buy you -- >> we believe very much. that's the reason we separated.
by separating we believe we're unlocking value for our shareholders and hopefully yesterday was an early indication that the shareholders in the investor population has bought into our strategy. they understand this is not a 2017 strategy. we're coming out in the middle of 2017 with the largest product launch in the history of xerox, 29 new products. for a 110-year-old company that's a pretty substantial statement to be able to make. >> right. in speaking to a couple other investors yesterday, it's not clear to me they weren't buying your stock in part because they think you will be part of a larger enterprise at some point. carl icahn owns 10% of xerox. and it's a scale business. and to your point you are a pure play now, you have a joint venture with fuji people keep wanting to bring up to me. >> sure. >> this idea that in fact you will sell the company. you say no? >> so the plan we've laid out and you mentioned icahn capital, icahn capital owns a little under 10%, they have one seat. >> right. >> john. >> we've worked very closely with our entire board of directors on this strategy. it was a strategy we spent a lot
of time on from a capital return standpoint. how do we continue to lead in this $85 billion market? we've been the equipment share revenue market leader for the last seven years 28 straight quarte quarters. we've got a 75% annuity business which is very cash generative to we can provide dividend yield and provides great deal of stability. what we're doing is targeting those growth areas in this market. print today is not just about print on paper. it's about we print electronic circuits. we still have 12,000 patents. we are still one of the top 20 patent producing companies in the world. we have 5,000 scientists. and as a matter of fact we've taken our ceo of palo alto research center and we've put all research and development engineering under him reporting directly to me so that we can expedite the commercialization process. >> any final thoughts on the business environment that trump's bringing in? >> well so obviously i think the market has certainly responded very favorably. i think as i've heard from watching your shows we're expecting tax reform, we're expecting regulation reform or regulatory reform. what's important to a business
like ours that's a u.s. based business competing globally is that we're able to compete on an equal basis in the countries we -- >> carl icahn is an advisor, is that a help or hindrance or anything? >> icahn capital owns 10% or little under 10%, they have one seat on the board, we work closely with all of our board members and love to associate ourselves with smart people. >> congratulations on everything. >> thank you very much. pleasure to be with you. >> jeff jacobson joining us from xerox. >> we'll get a short break. dow's up 39. don't go away.
let's get strop trading with jim. >> bank of america, hold to buy. they've done fantastic work in the permian, eagleford but then downgrade cabot and southwestern to sells, those are natural gas companies. natural gas yesterday had worst decline in years setting up for a terrific season, i think natural gas will be excellent market. i urge people to hold onto oils and oils and natural gas. i want them to do it because of
the next president, not necessarily because of the price of natural gas now or the price of oil. i think there's going to be so many opportunities because he is a fossil fuel loving president. so don't sell them now. don't do that. big mistake. >> busy night tonight on mad? >> yeah, the guy who knows more about power and how power is given and what power is tom farrell from dominion. and rick stol meyer, this is a software company involved with workout, with places, gyms. and, you know, molly -- the person who works with me, molly, she was saying she thinks this is a terrific thing and she's one of the researchers who put together the piece i'm going to ask about. i don't know when you see these companies say who the heck is mind and body, the answer is maybe somebody you should know. >> jim, see you tonight, "mad money," that's why we watch, 6:00 p.m. eastern. when we come back, thoughts from president of cadillac on auto sales and the president-elect along with mike pence on the hill. back in a minute.
street." i'm carl quintanilla with sara eisen, david faber at post nine of the new york stock exchange. markets doing okay up 37 points, about 80 points from 20k, s&p 2266. we have auto sales on tap, watching for fed minutes this afternoon, speaker ryan and vice president-elect pence on the hill as well. >> and that is where we begin our roadmap for the hour with politics. a possible s.e.c. nomination and scrutiny over tillerson's pay package with exxon mobil. plus, a new report alleging widespread misconduct at the bank run by treasury pick steven mnuchin. we've got the latest. >> stocks pushing higher as we said dow continues chase towards 20k ahead of fed minutes this afternoon. >> and awemakutomakers in the c hairs. we'll talk to the executive vice president of general motors straight ahead. news this morning on the political front including a key nomination that would be very important to wall street. our john harwood is outside trump tower with more on that this morning. good morning, john.
>> morning, carl. you got several business related developments that are popping here outside trump tower this morning. first of all, as you mentioned, jay clayton, a securities lawyer, is in line to become the chairman of the s.e.c. under president-elect trump. he's been a major lawyer -- wall street lawyer for some time represented goldman sachs among others. he appears to have taken the lead over a former u.s. attorney debra wong yang in california for that spot. secondly, rex tillerson has made an agreement to sell his interests in exxon mobil, it's $182 million worth of interests and put that money in a blind trust. that resolves some of the conflict of interest questions that could arise if he's confirmed as secretary of state. and finally, steve mnuchin is the object of a report from the intercept, which is a liberal online publication that is making charges about misconduct related to one west foreclosures
in the wake of the housing crisis. i expect this is going to raise flak for steve mnuchin and his confirmation. so far though not to the level that i think has potential of derailing his nomination at this point. but beyond those economic related issues there's a remarkable drama playing out between the president-elect and the u.s. intelligence community. he has sent out tweets this morning invoking julian assange of wikileaks suggesting maybe russia wasn't behind the hack. last night he tweeted that the intelligence community that was going to brief him has delayed a briefing until friday, maybe trying to get their story straight before friday. that open criticism contempt even of the u.s. intelligence community is very problematic for somebody who is going to be in charge of that community relying on them in just a little over two weeks time to lead his fight against isis. we're just going to have to see what happens after james comey,
raymond clapper and other officials come up here to trump tower on friday and brief the president-elect. we'll see if he has a different tune. one final thing, guys, intriguing tweets from donald trump. remember, we haven't had a press conference from him since the election. all we're getting in terms of his communique is except for brief q & as are these tweets. he tweets republicans have to be very careful on the affordable care act and make sure that democrats own the mess. he said that it's going to fall of its own weight. now, whether that was a suggestion that maybe they not repeal and let it fail to avoid republicans getting blamed from taking insurance away from people, all we know is what he has put out in the tweet. but very intriguing suggestion from donald trump this morning, guys. >> yeah, we're going to see pence on the hill soon meeting with ryan and other republicans in the house and senate. john, i wonder on the russia issue if the republicans in congress, especially some of those tough hawks like lindsey graham and john mccain will get
behind their new leader. because this issue has been one in which it's been stark differences. but after votes like we saw yesterday remains to be seen what the republicans are going to do. >> i think there's real potential for conflict there. john mccain's having a hearing of the armed services committee tomorrow. this is a man who was held by -- a prison of war during the vietnam, he's very skewed to viewing russia in a skeptical and adversarial way. tom cotton, young republican senator, i interviewed him at the republican national convention and he said, well, donald trump's going to have a different attitude toward vladimir putin once he gets classified intelligence briefings. tom cotton expressed that same view within the last 24 hours. now, i think that the significant part of the republican party that views vladimir putin as a thug and a kgb agent are not going to rollover for somebody who describes him in much different
and more sympathetic terms. we're just going to have to see who blinks, who changes and how that goes. >> john harwood. john, thank you, outside of trump tower in new york city this morning. meantime, keeping our eye on the dow up 38 points, continuing to gain despite policy uncertainty in the incoming administration. joining us now is tony and jim knight, head of global investment solutions. so, jeff, the fact we've started off this new year so strongly and a continuation of the trump rally, is that a bullish sign for the year? >> i think it is. it's nice to see. if you think about it the last two or three years we've had just the opposite starting the year. i do think it's a good sign of continuation of the trends that have been in place since the election. >> tony, do you agree with that, especially as that pertains to bonds continued movement out of -- out of bonds, excuse me, into stocks? >> very powerful force that will shape the bond market are years
to come, demographics. the nation is aging, there are 80 million people age 55 and older. this is a contingent with a lot of wealth that wants to move higher in the capital structure, which is to say get safer and safer with respect to portfolios over time. that's one element that will be a very powerful force of demand for some time. along with the global story on yields. the bank of japan is committed to keeping policy rate near zero probably through the rest of the decade. and the same for the european central banks. those are two major parts of the world interest rates are likely to be low and make it difficult for yields to rise significantly. i wouldn't look for meaningful move in yields from here, for yields to move significantly requires a change in the view on the path on destination for fed's policy rate markets viewing that to be around 2% in 2020. only that view changes meanfully would rates move up more me meaningfully than they have
already. >> you've been warning people from getting too crazy on where yields could go. >> absolutely. >> so are we in a lull here where they could take a breather? >> yeah. in previous clips before we spoke you see various uncertainties people have to think about and numerous elements with respect to policy formulation in the months to come that will make investors a little uncertain. so investors probably are taking a breather. and looking at technicals you see a lot of pessimism in the bond market. looking at report from the cftc, massive liquidations. record net short positions held by so-called speculators in the bond market. so in terms of the selling, there's been a lot already. so one shouldn't look for another big move from here given the story i've just mentioned and the backdrop globally. >> jeff, i think you guys have been big proponents of having a diversified portfolio. what's the right amount as you look forward to this year? and how has that view changed if at all since the election?
>> if you think about back on 2016 we say, well, it was a year when stocks were up, when bond yields moved higher and the dollar strengthened. but at midnight on election night none of those things were true. so i think we're still very early days in sorting out what the new administration means, what the new policy agenda means. i think at a very high level we should probably be careful not to overthink it. that an agenda that emphasizes increased nominal growth is not an agenda that in general is compatible with low rates, the kind that we've seen lately. so for me sort of the headline is don't expect a lot of strength from bond markets. but i do have two sort of positive observations along the lines of what tony just shared. one, that the correlations have snapped back into form, that is a negative correlation between stocks and bonds. which we liked to see, in other words, if we do hit a correction patch for equities, that's reassuring that bonds might be there to pick up the slack very
much as they were last january, last june. and the second thing is yields have moved so much now that you start to do the bond math for say a five-year treasury and it gets to be a pretty difficult to get those numbers to confess that there's a lot of downside return risk in shorter duration treasuries now. so i think there's a little more resilience today and a little more diversification power. >> all right. so we're going to hit stocks, bonds and finally currencies, tony. the dollar sitting near the highest level since back in 2002. does it get stronger? byron wean predicting we go below parody with the euro 110 against the british pound. do you agree with those kind of calls? >> yes, we expect continued upward pressure on the u.s. dollar in part because the markets are still not quite priced for what we think will be three rate hikes potentially in 2017. so it's a little bit more to price -- but not significant amount. we wouldn't look for a big leap. we would be short asian currencies in particular cny which is chinese currency, we'd be long a basket of --
>> even though they're stepping in to strengthen it here? >> yes. because there's still massive outflows, that's the big deal. finally, emfx, long brazil, mexico and the russian ruble as a basket against long in the dollar we think just as a carry play we expect lower volatility in those currencies in 2017. >> well, you're getting an opportunity. the peso's getting slammed again today. >> that's why we would have that in a basket and not by itself. >> all right. guys, good to see you both. thank you for helping kick off the markets in the new year. >> when we return, president-elect trump taking aim at the auto industry. plus, we are getting fresh auto sales numbers. we're going to be joined by general motors executive, the president of cadillac straight ahead. one more look at stocks as we take you to break. much more "squawk on the street."
want to keep your attention focused on capitol hill this morning. we are expecting to hear from speaker ryan, vice president-elect pence as they meet with both senate and house gop leaders. this is all happening by the way as the president himself is on capitol hill at the same time in a relatively rare trip to the hill meeting with senate and house democrats about efforts to salvage what they can of the affordable care act. as the headlines come and of course as they get to the lecterns we'll bring you that live. in the meantime shares of gm
gaining nearly 4% this morning. the automaker reporting this morning u.s. sales up 10% in december. results not as rosy for the cadillac brand which has seen a 3% decline in u.s. sales since 2015. joining us this morning here exclusively at post nine is cadillac's president and executive vice president at gm johan de nysschen. good to have you. >> thank you. >> '16 is going to be another banner year. >> strong market for the industry, strong year for general motors and stunning year for cadillac despite the headlines. >> yes, walk me through that. where does cadillac demand fit in the overall picture? >> so i think we need to recognize cadillac is a global business. it's not just u.s. only. and that i think 2016 must have been about the best year for cadillac globally in the last three decades. our global number came out -- there's still a few markets that have to report in, but we'll be
over 309,000 units globally. which represents about a 15% increase on 2015, which you can see why i'm so pepped up about the year. and then our key drivers are the u.s. market and china as our two major markets we will do about 170,000 units plus in the u.s. china about 116, the rest of the world 23,000. so that gives us the overall performance. and the u.s. number, which is down 3% year on year, we need to understand that it's a year of two halves. we had our mainstream model, the srx run out in the first half of the year. and our new absolutely red hot xt5 introduced second half of the year and sales in the first half were down about 10%. second half strong growth taking us through to december at over 21,400 units, which is a brilliant result. and it settles up with really
good momentum into 2017. >> so what would happen to your business growing fast in china if we did have a trade war, at least a more confrontational trade relationship from the trump administration with china? >> well, we're obviously watching the situation closely. and to be candid that wouldn't be good for business if there were a trade war. china is an important new volume hub for cadillac. and we export untold many times more in terms of components and by dollar value than we import from china. in fact, we import only a handful of vehicles as cadillac from china. all our vehicles are produced globally, in the u.s. and then for china for the domestic china market only. >> sir, given the long lead times in models coming many years from now that you're already planning for, we talk a lot here about autonomous vehicles. i would assume you also spend a lot of time thinking about when
that's going to be coming to the cadillac brand. can you give us any sense? >> i think autonomous vehicles certainly are the flavor of the month. it's an important growth area for the industry for the future. and setting up a whole new industry dynamic. for cadillac we think we are right on the vanguard of development of the technology. and in fact 2017 will see us introduce what we call super cruise. >> yeah -- i don't mean to interrupt but i want to go to capitol hill because kevin mccarthy has just taken the podium. we'll get right back to you. >> good morning everybody. it was interesting day yesterday to see all the members get sworn in about seeing this new majority to go to work for the american people. there's a lot we want to do and are going to do working in tandem with our new president and vice president. it's great to welcome our friend and former colleague mike pence back, not as a member of congress but as the soon-to-be
vice president of the united states. a great partner in working to get our country back on track. there's a lot we need to do. there's a lot we're going to do. but you also know that there's somebody else that's going to be here at the capitol today, and that's barack obama. and i think when the president comes back here today, maybe for the last time as president, it's important to remember the first time that barack obama came here as president. barack obama came here and made very specific promises to the american people about obamacare. he came here and said if you like what you have, you can keep it. how did that work out? today millions of americans lost the good health care plans that they liked and expected to keep and are not able to today because of the broken promises of his law. barack obama came here to this capitol and said that if his bill passes health insurance costs will drop dramatically for families. instead, what have we seen? the reverse. dramatic increases in health care costs. in my state of louisiana over
25% increases that families are paying in higher costs for health care because of those broken promises of his law. i hope he comes here to apologize for those broken promises, but i don't think that's what's going to be the case. i think he's going to be here more concerned about preserving his legacy than about fulfilling those promises. the good news is we are here to fulfill those promises to the american people. we told the american people that if you give us this great opportunity that we're going to work hard every day not just to repeal obamacare but to replace it with reforms that actually put patients back in charge of their health care decisions, that actually focus on lowering costs and increasing access to health care. and to bringing doctors back in the practice of medicine who are getting out of the practice because they don't want unelected bureaucrats in washington telling them how to deliver the health care they were trained to provide. so it's an exciting time for the country. we're really excited -- >> that's majority whip steve
about to introduce vice president-elect. we'll see if we get any headlines from that. of course vice president-elect no strange tore capitol hill briefings as he was indiana congressman and head of the conference for many years in the early 2000s. quickly wrapping up our discussion on cadillac with johan desps nysschen. >> actually, making really good progress. this is also for me one of the success stories of the year behind us. in terms of the demographic more than half of new cadillacs now are bought by members of general x and general y. they bring with them also a lot more affluence. and this is reflected in increasing average transaction prices of the cars. we've seen about a 14% rise in average transaction price over the last two years. this is unprecedented and unequalled in the industry. and this is coming through these new customers specifying higher end models, better equipment and
just to put into context average transaction price on cadillac now is about $54,000. that is about $11,000 ahead of lexus, about $6,000 ahead of bmw and these are j.d. power data. so it means we're attracting a young affluent demographic. and that too is going to make us very optimistic about the future. >> is the same dynamic at work in countries like china? or is it different -- >> china absolutely so. the average age of a cadillac buyer in china is 32 years old. it's sort of at the vanguard as what is seen as cool and trendy in china. so we're in a very strong position there. >> so yesterday president-elect trump threatened to impose a tariff on general motors, your parent company, for manufacturing versions of the chevy cruze in mexico. how has that gone down inside the company? >> well, i don't think that it's an issue for general motors. it's an industry issue. and i would have to say that
it's a very complex subject that is very difficult to do justice to in the space of a sound bite. there are pros and cons to every decision. i would simply say that for cadillac we produce all our vehicles in the u.s., except for the ones that we sell in china. for general motors the subject in question was the chevy cruze and, yeah, we have a vast manufacturing facility in ohio where we produce chevy cruze sedan for the u.s. market. we have a mexican plant that produces cars for the rest of the world. and the rest of the world prefers hatchbacks and not sedans, that's what the u.s. preference is. so we import a very low volume of cruze hatchbacks for the u.s. market, all being exported to the rest of the world all for major important market for mexico itself. >> johan, it's good to see you. thanks for talking about that and the brand at large. johan desps ny-- we go to capit
hill. >> -- in so many parts of the country as you've always heard, even if you want to look for better coverage, you are stuck with one option. one choice is not a choice. the health care system has been ruined, dismantled under obamacare. the answer here is not to ignore the problem. the answer here is not to ig no noer the problem to keep some legacy, the answer is solve problems, bring relief to americans. we will help americans crying out for relief from obamacare. and we will keep our promise to the people. as you can see we'll be working with the new administration on every step of this law every step of the way even before day one. with that, i want to hand it over to somebody that we all know very well because he served here with us, we're so proud of him, and we're so pleased about this new working relationship with our new vice president-elect -- mike pence.
[ laughter ] >> i was there until the end. nice notes. >> yeah. >> thank you, mr. speaker. thank you to the speaker and to the leadership for the warm welcome today at the house republican conference. i'll be meeting later today with members of the senate at their weekly luncheon. and this is a day that our message is very simple. on behalf of the president-elect and on behalf of all the leadership that we are 16 days away from the end of business as usual in washington, d.c. today our message is very simple. working with the leadership here in the house and in the senate we're going to be in the promise keeping business. president-elect campaigned all across this country. he gave voice to the frustrations and the aspirations of the american people. he laid out an agenda to make
america great again. and my message on his behalf today before this congress and before members of the senate is we intend to keep those promises. that begins with assembling a government and the energetic effort to -- through the course of this transition to build a cabinet that will be able to implement that agenda speaks for itself. it will literally begin on day one before the end of the day we do anticipate that the president-elect will be in the oval office taking action to both repeal executive orders and also set into motion through executive action policies to implement promises that were made on the campaign trail. working with the congress we're going to have that classic three-part agenda that the president-elect talked about so often on the campaign trail. jobs, jobs, jobs. the focus is going to be from day one. and to work with the congress and you heard about the efforts
this week to begin to roll back the onerous regulations that have been stifling growth in the american economy and stifling jobs and opportunities. we're going to be working with the congress over the course of the first several months to construct the kind of tax reform, for businesses and individuals that will unleash the bound up energy in the american economy. we're going to keep our promises to end illegal immigration, build a wall. we'll have an infrastructure bill. we'll invest in rebuilding our military as our commander in chief marshals strategies with our military commanders to hunt down and destroy isis. but the first order of business is to repeal and replace obamacare. and that was our message today. and it will be our message on capitol hill. and it needs to be done. not just as a promise kept, but because in the course of this election the american people
have a choice. and what appeared to many as against all odds oftentimes with overwhelming opposition our president-elect took his case to the american people to repeal and replace obamacare. and the american people voted decisively for a better future for health care in this country. and we are determined to give them that. the reality is that i was here in march of 2010 in another capacity when obamacare was signed into law. i remember all those promises. we were told that if you like your doctor, you can keep it. not true. we were told if you liked your health insurance, you can keep it. not true. we were told that the cost of health insurance was going to go down. not true. the reality is today premiums this year are increasing by an average of 25% in some states, in arizona premiums went up this year 116%. 63% in tennessee. 53% in pennsylvania.
40% in north carolina. obamacare has worked a hardship on american families, on american businesses and in a very simple conclusion the american people have sent new leadership here because obamacare has failed. and it has been rejected by the american people. but now is the time for us to keep our promises. step one will be to repeal obamacare. but as the president-elect said today, and i admonished members of the house republican congress today, it's important we remind the american people of what they already know about obamacare. that the promises that were made were all broken. and i expect you'll see an effort in the days ahead to talk about the facts around obamacare. and secondly of course is to begin that orderly transition to something better. the truth is that the commitment
that the president-elect made was to repeal and replace obamacare. and as he said this morning in a tweet, it will be important that we be careful as we do that. that we do that in a way that doesn't work a hardship on american families who've gained insurance through this program. doesn't work a hardship on our economy. as i told the house republican conference today, we're working on a strategy in concert with the leadership of the house and the senate for both a legislative and executive action agenda to ensure that an orderly and smooth transition to a market based health care reform system is achieved. the speaker of the house used the word stable, and we will do that. in his famous speech in philadelphia, the president-elect spoke about an orderly transition, and it will be that. but make no mistake about it we're going to keep our promise to the american people. and we're going to repeal obamacare and replace it with
solutions that lower the cost of health insurance without growing the size of government. now, there's a broad range of ideas about how we do this. and republicans have been offering those ideas again and again literally every year since obamacare was first signed into law. we're going to be working with dr. price both before and after his confirmation when he steps into the role at hhs working with the republican leadership in the house and senate to bring forward those solutions and to take the case for those solutions to the american people. that being said, i couldn't be more humbled and more excited to be back in the capitol today. i'm -- i was encouraged by the president-elect to come here to capitol hill. its first full day of work and for members of congress because it's time to get back to work. and while others are visiting the capitol today talking about defending the failed policies of the past, we are here today
speaking to republican majorities in the house and senate to advance policies that will make america great again and have a more prosperous future for all the people of this nation. >> question? diedre. no shouting out. >> question for vice president-elect. >> that's fine. no shouting out. >> earlier today the speaker called julian assange -- [ inaudible question ] >> president-elect and i will receive a briefing from the leadership of our intelligence agencies this coming friday. and we'll be listening in. but, look, i think that the president-elect has expressed his very sincere and healthy
american skepticism about intelligence conclusions. we're going to sit down later this week, the president and i have been receiving since the election regular intelligence briefings, received presidential daily brief with the president yesterday, and we'll be looking at the facts and the information. but i think given some of the intelligence failures of recent years the president-elect's made it clear to the american people that he's skeptical about conclusions from the bureaucracy. and i think the american people hear loud and clear. [ inaudible question ] >> mr. speaker, the president-elect is warning to be careful here. is there a danger here? repeal obamacare when we still don't -- >> the president-elect is making an important point we're trying to emphasize here today. that is so much damage has already been done to the country. obamacare is a story of broken promise after broken promise
after broken promise followed by failing program, higher premiums, higher deductibles. so we want to make sure as we give relief to people through obamacare we do it in a transition that doesn't pull the rug out from anybody during that transition period. that's the point that we're all trying to make. this law has failed. it's getting worse. families are hurting. no one has choices. we've got to fix this by replacing it with something better. in that transition we want to make sure we don't pull the rug out from anybody during that transition. that's the point we're all trying to make. >> but why still no plan to replace it? >> we have a plan to replace it. we have plenty of ideas to replace it. you'll see as the weeks and months unfold what we're talking about replacing it, how we can get better choices with lower prices by not having a cost of government take over health care which is causing all this problem in the first place. sherman. [ inaudible question ] >> we're talking about a transition that's going to happen quickly, it's going to
take action, is it possible to extend some of these provisions when the president-elect and you have all said popular for a temporary period of time i think people want to know what this is going to look like. [ inaudible ] >> well, jake, i think it's -- i want to be very clear. i would commend you and anyone looking onto look into -- no, i was commending you to do something. that's nice. it's good to be back. it really is. i would just commend all of your attention to the president-elect's speech in philadelphia during the waning weeks of the campaign where he laid out a plan to repeal and replace obamacare. he laid out the principles of harnessing the power of health savings accounts, allowing americans to purchase health insurance across state lines. but his commitment was very clear in that we will insist upon and implement working with
the congress but also using executive authority to ensure that that is an orderly transition. and we're working right now, the white house staff is, on a series of executive orders that will enable that orderly transition to take place even as the congress appropriately debates alternatives to and replacement of obamacare. >> sounds like you're saying some provisions might stay in place until there's a new -- >> we've been saying all along we don't want to pull the rug out from people while we're replacing this law. the point is in 2017 we don't want people to be caught with nothing. we want to make sure that there's an orderly transition so that the rug is not pulled out from under the family who is are currently struggling under obamacare while we bring relief. >> question -- >> vice president-elect pence, on the repeal and replace, can you give detail on the executive actions that are planned? and how did that square with the
complex of -- process also involved? >> they're hand in glove. we're working on the legislative process right now. as you know the senate's going to be acting first this week and congress will follow which gives us budget we need to bring legislation through while the administration works on the executive orders that they're talking about to deliver the kind of transition relief that we've been talking about. the problem is just remember obamacare is failed, families are hurting, they broke the health care system, it's a string of broken promises. so we're going to make sure that we have an orderly transition to a better system so we can get back to what we all want, which is lower costs health care, more choices so that families can actually get affordable health care at a decent price with more choices, more competition and not a costly government takeover that is really bankrupt this health care system and left families struggling. >> if i can respond to that, i'd be happy to. we're working out right now with the white house staff and in
concert with legislative leadership a two-track approach to ensuring that it is an orderly transition as the president-elect has directed. you read his tweet this morning that he is admonished the congress to be careful. and i reiterated that before the republican conference today. look, we're talking about people's lives. we're talking about families. but we are also talking about a policy that has been a failure virtually since its inception. and we intend t over the course of the coming days and weeks to be speaking directly to the american people about that failure but about a better future we can have in health care, a future that is built not on growing government, not on mandates, not on taxes but also -- but rather a future that's built on giving the american people more choices in
health care, allowing the power of the free marketplace to flow in. but the transition to that we will work out in a way that reflects the compassion of the president-elect and the compassion of every member of congress to see to it we do that in a way that serves the best interests of the american people. look, i think what's clear here is the american people have spoken. they want to see us repeal and replace obamacare. and today my message to members of congress is that we are going to be in the promise keeping business. and the first order of business is to keep our promise to repeal obamacare and replace it with the kind of health care reform that will lower the cost of health insurance without growing the size of government. >> thanks everybody. appreciate it. >> all right. that is vice president-elect mike pence returning to capitol hill speaking briefly about
donald trump's tweets about the cia and julian assange this morning saying that president-elect is expressing a healthy american skepticism about intelligence briefings. obviously a more expansive discussion about the aca and that balance between executive orders on day one to rollback policy along with transition relief as the speaker called it before legislation can make its way to the hill. eamon javers watching all of that this morning and has more from capitol hill this morning. hey, eamon. >> you're right, carl. you heard vice president-elect there mike pence saying that repealing obamacare will be the first priority for incoming administration's year on capitol hill. but also saying president-elect on day one will go straight to the oval office and repeal some executive actions of president obama's and take some executive actions of his own right on the first day after he's sworn-in that afternoon. so that is a sense of how aggressively republicans want to move here in washington in terms of repealing obamacare. but you also get the sense that
politically there might be a little bit of daylight here between what president-elect trump wants to do when it comes to obamacare and the enthusiasm here on capitol hill among republicans to immediately repeal and then begin the process of replacing obamacare. you mentioned those tweets from president-elect trump this morning. i think they're worth going back to read in their entirety. start with this first tweet this morning. he said, republicans must be careful in that the democrats own the failed obamacare disaster with poor coverage and massive premium increases like the 116% hike in arizona. also, deductibles are so high it's practically useless. don't let schumer clowns out of this web. dems are to blame for the mess. it will fall of its own weight, be careful. the president-elect there, carl, seeming to suggest that the democrats have a political problem in that they own obamacare right now and warning republicans here on capitol hill that whatever action they take from here on out means that they will own obamacare from here on
out politically. and they will be the beneficiaries of any successes but also take the blame for any failures here. trump seeming to sound a more cautious tone here, carl, than some of the republicans up on the hill who are anxious to get to work right away. >> yeah. of course, eamon, all we have are these tweets until that next press conference. and some had looked at that language fall under its own weight as code that perhaps they would delay any kind of repealing and replacement, but clearly that's not the message that came from pence this morning. >> well, that sounds like what trump is saying to me when i read the words fall under its own weight, he's say if we step out maybe this will collapse and then take action, seems to be reasonable interpretation of that tweet this morning. but you heard mike pence very much quoting that trump tweet saying we have to be careful and i admonished fellow republicans up here we need to be careful as we take steps to replace this legislation. but mike pence saying this is priority number one, we want to be in the promise keeping business. so that's the political box that
republicans are in right now. they've promised to repeal and replace, they have the votes to repeal. replacing would be much more difficult. and they've got the president-elect warning them now that they take on a lot of political water when they take on this task because it is a massive task as president obama found. president obama meanwhile is also up here on capitol hill, he's rallying his democratic troops both senators and members of the house of representatives to defend obamacare, his signature achievement as president of the united states. he won't be here, he says, but he envies them and wishes he was a player on the field going forward. so there's a real pep rally sense of emotion up here on capitol hill today, carl. >> eamon javers on the politics. eamon, thank you. for more on how this could effect the industry, bertha coombs has been following obamacare and reporting on the policies for years now, bertha, i guess the important point is for insurers and companies and hospitals that they are going to repeal and replace but still wide open uncertainty as to what
they're going to replace with. the house speaker sort of punted that question from the reporter. >> yeah, the issue is as the obama administration found out, you can lay out your roadmap, but then you need the insurers and the other players to head on that road with you. and insurers really need to figure out what the risk is. and while they are not expecting that things are going to get upended here for 2017, the clock is actually ticking now for 2018. take a look at the roadmap a little bit of where we need to go. during the first quarter right now this is when insurers start to prepare their rates. they look at their plans, they look at their network, they start getting things together for 2018 because they've got to submit those rates under the law by the beginning of may. and if you recall last year, that was when things kind of started to blow up. united health said we've got such big losses we're not going to take part in 2017. and everybody else had to rejigger. so things over the summer were
fairly rocky as people tried to figure out what things they're going to participate in, what ones they weren't and they have to get all those rates finalized and approved by the end of august. then in september they decide whether they're going to participate in exchanges. you recall this year aetna and humana at the last minute pulled out a number of exchanges. that kind of left insurers holding the bag. and in december open enrollment begins. so the feeling is 2017 will stay the same, but now the focus is they've got to act quickly to get things ready for 2018. and they can't leave that replacement hanging for very long. if they don't get a real roadmap for replacement by the end of this year, insurers may not want to show up for 2019 because they don't know what the rules of the road are. >> absolutely, bertha. one big reason, eamon, that the american medical association this morning sends a letter to lawmakers warning about the dangers of having people thrown off the roads.
that's obviously why pence and ryan are trying to make that point over and over again that's what they're trying to avoid. >> that's right, carl. we're also getting word trump will pick jay clayton as the head of the s.e.c. that will be an interesting one. he'll be a familiar face to a lot of people on wall street. and we know that carl icahn, the billionaire activist investor was actively involved in advising donald trump on who he should pick for the s.e.c. but you see a president-elect coming in now who's got a very different sense of how a president should deal directly with individual ceos, individual companies, individual corporate decisions how that relates to his s.e.c. pick is going to be a fascinating dynamic to watch play out here on capitol hill as well, carl. a lot of news this morning. >> eamon, you've covered also this other point -- we're moving from point to point, but there's a lot of news made in the press conference with vice president-elect mike pence. he said that there should -- that donald trump has a healthy amount of american skepticism about the intelligence findings.
>> interesting. >> you talk to so many sources inside the intelligence community. i just wonder how that's going to play. >> well, the intelligence community is really agonizing over how to deal with this new president-elect who does have an enormous amount of skepticism. we see that reflected in his tweets nearly every day in recent days. the question for the intelligence community is what do you do with a president who does not necessarily agree with the findings that you're bringing him. we'll see how the president reacts to this russian hacking report we're expecting to see at some point before president obama is out of office here. but the challenge for the intelligence community is briefing a president who doesn't necessarily want to hear the conclusions. and for trump's perspective, how different this republican party is now under donald trump than it was under george w. bush. you remember the weapons of mass destruction, the intelligence conclusions there. now you see republicans here on capitol hill saying that the intelligence conclusions of that era are the reason why they are skeptical now in this era.
so a huge sea change here on capitol hill in terms of intelligence. >> yeah, not to mention the intelligence about citing julian assange. we'll leave it there for now, eamon. >> right, there's a lot there. >> a lot to talk about. busy day on capitol hill. our eamon javers. we're going to stick with the business and politics here, secretary of state designate rex tillerson cutting ties with exxon mobil ahead of his confirmation hearings. joining us now with his take, the former chief white house ethics lawyer under president george w. bush and the vice chairman of citizens for responsibility and ethics in washington, richard painter, good to see you. good morning, richard. >> good morning. >> so let's talk about this news by exxon and tillerson an agreement he's going to cashout some immediate stock, little over $50 million. and put the $180 million set to be vested i guess in an independent sort of trust that cannot invest in exxon mobil. do you think this clears up the issue of conflict of interest? >> well, i think we need to see the form 278 and the ethics
agreement. those need to be released to the public so we can all talk about this with the same information. so we aren't sure until everything's publicly released, but the sale of the exxon stock, the breaking of ties with exxon, that's exactly the direction which he should be going. i understand there is an arrangement where if he ever goes back into the oil industry he's going to have to give up a lot of money. that's above and beyond what's required under the ethics rules. i think that's an excellent idea. we'd be a lot better off if we'd had treasury secretaries who did not go back to wall street. i do not want to see a secretary of state go back into the oil industry. that's definitely a step in the right direction. what we need is for the boss, mr. trump, president trump, to do the same thing. to divest his financial conflicts of interest just like the people working for him, just like mr. tillerson, as wilbur ross, new commerce secretary, he's also going to have to
divest, he has private holdings may be difficult to divest, but everybody else is going to be making these financial sacrifices. the president should do the exact same thing so he can have a conflict-free administration. >> mr. painter, you've made this point a number of times of course in previous appearances with us. we've got 16 days until the inauguration. there are no signs that president-elect trump is going to say do as you advised. what's going to happen when he takes office with the trump organization still fully intact, even though as he says, he's not going to have anything to do with running it? >> well, we have yet to hear what his announcement is going to be, that it's apparently going to come later on this month. but mr. tillerson is apparently making very substantial financial sacrifices in order to become secretary of state. wilbur ross will have to make sacrifices in order to become commerce secretary. there are going to be others as well. we saw the same in the bush administration when i was the chief white house ethics lawyer. you need to make financial sacrifices for public service.
and i think the president's going to need to do the same thing or he's not going to have credibility as president. i still believe that he is going to turn around on this and come up with a plan for divestment of the trump business empire, but it's going to need to be genuine. divestment of ownership interest as well as just management of the trump business empire. >> we'll see if we learn more. that press conference set for january 11th. richard, stay close. we'll need to talk to you again. richard painter. >> thank you. when we come back, we'll talk more about these markets this morning. dow's up 19. relatively new to the intraday range compared to yesterday on this second trading day of the new year. s&p 2,266. a lot more still ahead. stay with us. ♪
welcome back to "squawk on the street." rick santelli here. i'd like to welcome my special guest to the exchange today, chris almond. thank you for taking the time, chris! >> you bet, rick. it's good to be with you. >> listen, 16 years cio of calstels, california teachers retirement fund. you obviously are market aware. you wrote in a recent paper that basically the treasury market has given us three years of janet yellen tightening in pretty quick fashion. explain what you mean by that. >> well, janet's been going at -- so far, last year, 50 basis points a year. the market's already moved up 150 basis points in yield, so she's got room to keep tightening, and long end has already reacted to that. so, as you reported, we're in a long term, a 33-year channel on interest rates on the 10-year and 30-year. if they break out of that, that's going to be a huge shift and people have to pay attention to their fixed income portfolios. >> you know, chris, like that
you brought up that channel, because to me, technical analysis is getting a handle on aggregate behavior as it shows up in the investing marketplace. and i come up with 3 to 3.03 in a number of ways, whether it's the channel or the only single close above 3% since mid-2011, and that was december 31st of 2013. what do you think happens when we get to 3%, if we do in a timely fashion in 2017? >> well, you hit it on the head -- technicals really show human behavior. and the 3.03% level for you, you're looking at a chart over the last four to five years. i'm looking back at the last 33 years. and i asked my trade desk this morning and they said nobody's called that long channel a name. so i'm going to put it out there that that's the santelli channel, that interest rates have really just stayed -- for 33 years, we've been in a down trend. so for me, that's a profound breakout. if we hit that maybe in the next three to four months and break
through that 3.03 level, then i think you're seeing a change of a 30-year time period of declining interest rates to more rising and normalizing interest rates. so, it is something that people have to pay more attention to. >> well, i like the name, but i couldn't agree more. and that's what i was saying. you could come up with that 3%, at least in my work, on six different technical possibilities that gives it importance. okay, switch gears to equities. you've also written that you think the equities are a bit ahead of itself. i think you're talking about post election. explain. >> well, just exactly that. wall street's gotten very excited about a changing government, but we haven't seen anything yet. just like you for the last half an hour we're showing, it seems like every time cnbc has to show washington on the screen, our equity markets just go flat. so, i think the markets have counted on washington acting like a business, and we'll see if that really happens. so it's going to be a challenge. i think the market's gotten a
bit ahead of themselves. i like the trend, but i think we're going to see more of a flat market once we get past january. >> in our final minute, chris, you also nailed something. most look up at the movement in the markets the last month or so and they say, ah, this is all based on just hope, nothing has really happened. my final observation is, donald trump is not, has not, and will never be really a politician. and to understand what that means, i don't think he's going to washington to put a new roof on or to paint the country. i think this is a demolition crew that's going to tear everything down, keep a couple laws and rebuild it in what is perceived to be a better fashion. do you agree or disagree with that? finish this up. >> well, rick, i would use part of what you're saying i think is spot on, which is donald trump is a real estate guy, and people have to realize that. and real estate is very much about talk. you have to see the action. think about everybody that's viewing can think about their real estate transactions, and
there's lots of hyperbola, but let's see the closing and what really takes place. right now we're listening to all the noise and apparently the 144-character tweets. let's see what the action is and then react to that. >> chris, thank you for all of your thoughts. a pleasure listening to them. and we're going to go back to sara. >> and to yours as well. thank you, rick. let's check in on oil, which is rising at this hour. jackie deangelis is at the energy desk with more. good morning. >> good morning, sara. crude is slightly higher today after that big drop yesterday. now, remember, the drop that we saw yesterday was a number of reasons, but expectations of a larger-than-expected inventory build tomorrow delayed for the holiday in cushing is part of what prompted it. overall, we are expecting to see a draw, though. the api will set us up for those numbers tonight. pricing on a relative basis is still holding up well over $49 and change. that's the 50-day moving average and that's where there is certainly support right now. oil traders saying they're focused on the fed this afternoon, jobs numbers on
friday and earnings kicking off shortly as well. all the things equity investors are watching. and that could bounce prices around. meantime, yesterday's move shows you how tentative this market is. finally, just on natural gas stabilizing, although a little lower after that big drop yesterday. back over to you. >> all right, jackie deangelis. jackie, thank you. watching stocks here with a mini rally, second day in a row. haven't seen that for the first two days of a year since 2006. over to you, carl, for "squawk alley." >> good morning at 8:00 a.m. at tesla headquarters in palo alto, 11:00 a.m. on wall street, and "squawk alley" is live. ♪