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tv   Squawk on the Street  CNBC  November 21, 2016 9:00am-11:01am EST

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>> health care for sure. yeah, you've got costs going up and, you know, they didn't bend the cost curve. we've got a powerful force driving. look at cpi for medical care. it's 5% year on year. that is a powerful driver of revenues for that sector. >> all right, barry, sticking with the k in knapp? >> i'm sticking with the k for sure. >> there's no reason. get rid of it. >> when we go to germany knapp. >> it is knapp, or get rid of the k. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. happy birthday to rocky. holiday shortened week with thanksgiving and black friday obviously on deck. futures steady as the russell coming off an 11-day win streak and the dow is on track for the
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second best month of the year. europe with some mild gains. oil's almost back to 47 on renewed optimism that the opec production cut will survive. our road map begins with the next treasury secretary and donald trump's busy weekend, what the picks will mean for the markets. >> plus, a mu bearish note on apple predicting a decades long malaise, quote, the risks to the company have never been greater. and facebook announcing a buyback, zuckerberg promising changes to combat that fake news problem. but first up, stocks looking to make more history after a week which saw the dow and nasdaq hit record highs. the s&p's within 0.6 of its own high. jim, that russell, that small cap story continues to be intact. >> people just say where would deregulation really impact? it would be the smaller guys. it's so interesting that the analysts take their turn at downgrading and not believing. last week we had multiple downgrades in the banks. those stocks held up better than
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anyone thought. they continue to be in bull market mode. tonight now goldman saying, listen, may be time to shift out of some of these industrials. they go buy to hold 3m, illinois tool works, up 15 points on just an okay quarter. i think this will be as futile as the bank downgrades. there is money coming into this market, and people want to take part. and we are now at a seasonal moment where you're going to start thinking, wait a second, if i lose these stocks now, am i going to close the year without a lot of equity on my sheets? >> so people are chasing. >> chasing. >> this happens a lot in the last six weeks, let's call it, of the year. >> it does. >> particularly in a year where you've got the equity market up. not dramatically but up nonetheless. >> but you're fighting this kind of money in experience. it's not like there's no deals. i mean, there's deals for companies that i don't even think are that good. it's not like there are no buybacks right now. buybacks continue. i'm curious to know, i mean, i
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followed this apple once in a lifetime time to sell, well, okay. i mean, do you want it to go to six times earnings and then really reconfigure? there are so many things that are going right emotionally right now that i watch the banks. the downgrades were so fast and furious. and they didn't do anything. >> right. since '87 by the way the dow has posted gains from black friday close to year end. out of 28 times, 22 times. >> there you go. and black friday, i don't know, i went through every single retailer this weekend, every single one. my wife is saying don't you want to watch the eagles game, i got to keep one step in, one step out. there were many retailers that reported quite good numbers. and i saw someone again, foot locker buy to hold, piper says perfection. the foot locker quarter was fantastic. that was friday's business? >> it was. strong quarter. walmart's however was not
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particularly strong. >> no, it wasn't. we'll see dollar stores this week. i guess i'm portraying a world where it's harder for me to get negative than i would like to after this run. >> though when i hear you say dollar stores that reminds me of the actual dollar which has been strong. and i wonder if some of these are going to act as a ceiling, stronger dollar, higher rates maybe pressuring multiples a bit. and just the uncertainty, of course, continuing with the incoming administration particularly as it relates to trade. but other economic areas as well. we're going to talk about treasury in a second. >> you watch tyson foods today, new ceo, you'll see a forecast not that good. proctor & gamble was a stock that looked quite bad to me this weekend. colgate, these are stocks being sold for the dollar and i find those places not to be. we always felt when rates went up people would begin to sell the kimberlys and colgates and that's exactly what's happening.
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>> some saying, look, we were in a low dispersion environment, everything trading as one trade, now we're getting some outperformance, i will ring the register. is there a problem for that for those you think might miss this year end rally? >> i think if you ring the register, you better be ready to go buy a cyclical. i come in today and i look copper broke down finally after this run. and the copper stock that i follow is freeport. they got gold. they have copper, they have oil. and freeport keeps going higher. >> right. >> now, that should not happen. should citi today announce a buyback -- no, no, i was disputing with someone on twitter, some very smart people talking about citi and how the book value of $64 makes no sense. but here you get an additional $1.75 billion being added to the citi buyback. why? because everything below $64 is additive. so i find banks will continue -- if banks continue to run, get out of the way. get out of the way. that's a fabulous leadership.
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>> i tell you, i go back during the course of this year as we come to its conclusion and think about freeport when it was around $4. >> and it made it. >> we watched that debt level so closely because of course given the pressure that was on copper, the pressure that was on so much of their business, oil. >> remember glencore. >> if you actually sucked it up and bought this thing, not when icahn did by the way. >> no, you have to buy it because copper is coming back. >> in the 5s and 6s, i mean wow. >> i remember the soul searching moment when it was like, wow, they're going to make it. and the equity allowed them to. worried about going into the hillary clinton presidency worried about deutsche bank? donald trump's chief lender. >> those fears have evaporated a little. >> you don't hear a lot about deutsche bank being in trouble. >> not so much anymore. by the way rbc has a list of
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trumped up stocks which includes freeport along with mckesson, anthem, xpress scripts -- >> there's another 492, left out some. >> good one, jim. meantime, the watch is onto see who else the president-elect will appoint to his cabinet. published reports say those being considered for treasury include former goldman sachs banker steve mnuchin who served as finance chair for the campaign, jeb hensarling and though there are other names floating in other reports too. >> there are. there continue to be these reports that president-elect trump would like to approach jamie dimon although that seems still to me to be a bridge too far. john gray's name has come up. >> wasn't that something? >> john who i know well, who is a democrat. but boy, i mean, that's just -- >> would that be something? >> great temperament.
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great demeanor. and also a very decent person. jamie also, but i'm talking about john gray. i think mnuchin is still said to be the -- mnuchin and hensarling, numbers one and two, two and one, however you want to say it. >> but these are sophisticated people who know wall street have everybody on speed dial. >> oh, if it was a jamie dimon or a jon gray, you're going to get a very positive reception, i think. >> you told me -- >> both by the way ghdemocrats. jamie likes to make the point he's barely a democrat, barely hanging on. >> they're both democrats. >> and excellent businessmen i might add. >> i point out when i saw jonathan gray's name floated, i said, well, that would be who i would pick. >> i have no -- >> do you think he would even be interested? >> i have no communication from blackstone or mr. gray. you do wonder, i mean, listen, blackstone buys a lot of real estate businesses. if you're looking to divest something -- not saying that's going to be the case with trump,
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you know. >> there's some messy things about being president -- about donald trump being president. >> i think bring jon gray in to talk about that. >> treasury secretary fair this weekend, right? we get a new treasury secretary gray, he would not be a guy would do a musical comedy about. >> what's that 25 s&p points? >> if gray got in? >> yeah. >> i saw that. i said wait a second. no, you can't pick a guy who i revere. this guy's brilliant. >> he's very interesting. you know, i don't know. just be a real divergent from what we've seen so far from the picks he's made. not to mention mr. gray's considered to be the front-runner to one day replace mr. schwartzman as the ceo of blackstone. that day may not be coming any time soon. >> really? could he really pick gray? there isn't anybody who is not nominally a democrat or someone you thought was a democrat. these are not hardliners. these are people who, again, i
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mean, unlike this current administration, secretary lew is not part of the milieu. these guys are the milieu. >> no, but what it if goes jeb hensarling after all said and done? that's a different kind of a pick. >> yeah, that's different. i don't want to deviate too far but general mathis talking about for defense, general mathis may be the foremost law enforcement leader in the country. i mean, go read the battle for fallujah by bing west. >> general's general. >> bing west is one of the great writers of our time doing a book with general mathis right now about the armed forces. general mathis was someone willing to put his foot down say listen we are done just sacrificing soldiers. so you're dealing with these people, like many of my idols being considered. and by the way, i don't consider any of these guys as republican or democrat. they're not. >> the three we've mentioned. >> hensarling. >> hensarling is, head of financial services committee,
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knows his stuff. >> i think jon gray is a reason to buy. >> i think those are -- that's unlikely, right? you don't want to push -- that's unlikely. >> i worked for mnuchin's father who is the far most trader of our era and his son is a very, very smart guy. >> yeah. >> dan dimicco. >> yeah, long-time supporter. these are all loyals. what's different about gray and others -- >> and dimon, they're not loyalists at all. >> dan i thought was a democrat. >> romney being discussed now too as secretary of state. so not a loyalist at all. >> i think people have to recognize when you read these guys names you start thinking if it's certain guys you really want to get comfortable with this administration because they are go-to guys that you speak to on wall street. meaning that they're not ied logs, they're very smart. jonathan gray is a guy, turn up the volume when jonathan gray is
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on, need to hear him speak. one of the finest minds about the housing crisis. >> he's been a very rational actor when it comes to real estate and made a great deal of good moves for blackstone helping it to of course become the largest single component of their asset management business, real estate. >> these are people need to know that's how we feel about these guys because i think names pop up. >> sure. >> i'm like -- >> they're floated for a reason. >> certainly the president-elect is comfortable with real estate. he likes that. >> knows that business. >> yeah. when we come back, of course a lot more to get to this morning including news involving apple and facebook. also ahead, we'll talk to vanguard's jack bogle, the index fund pioneer. we'll get his take on investing as we head toward a trump presidency. take another look at the premarket. of course on this thanksgiving week more "squawk on the street" from post nine in a moment. what powers the digital world? communication.
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apple announcing it will replace faulty batteries for iphone 6s smartphones that have experienced shutdown problems with the iphone set to turn ten years old in 2017, oppenheimer's out with a note saying, quote, we believe apple lacks the
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courage to lead the next generation of innovation, instead will become more reliant on the iphone over the next decade. we believe the stock will underperform the market. bernstein looks at gross margin on the phone, 57 in '09 to 41 today, headed to 39 they say next year. >> well, i mean, the company has an r & d budget. it's constantly innovating. the new phone is a great success. people wrote that phone off. now, did i wish they had bought harmin for the mobile phone, yes. i think you the idea of wait -- the people who come up with ideas and the ideas could be important, i don't think it's a
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static target. i think it's a moving target. >> some of the key thesis in this report seems to be the idea that fewer hardware breakthroughs are available today that can trigger a favorable shift meaning higher prices. >> who thought about machine learning? who thought about vr? was anyone really about artificial intelligence? look at nvidia. nvidia was a gaming chip company when it was in the 30s. and they came up with chips that work for artificial intelligence machine learning. the stock's been an unbelievable stock gone up to $90 and change. you could say the same thing about them that they were just an also ran semiconductor, but they were working on things. we don't really know what apple's working on, but the idea why do we have to presume what we see now is what apple is -- >> can they do it organically, jim, i think is the key question? or do they have to step outside their sort of cultural comfortability and do a big deal
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of some kind that brings them -- this is always a key question for a lot of companies that hit this malaise, so to speak, if in fact they're right. >> jimmy carter company, yeah, no, you're absolutely right that they need to use some of that, i believe. but i've put a million acquisitions in front of them. >> but they haven't done it. >> well, i'm not apple, i'm not their banker. >> i know, you're neither one. >> i'd like to be. >> you're under active consideration. >> i'm trying to get the treasury job, trying to get that and keep this job. plus, i want to be down there helping the eagles. >> i think you can do it all because you don't sleep. >> why not? went to bed at 12:30, got up at 3:30, felt great. >> god, i wish i could do that. >> really? >> if you were in charge, they would not be last in the division. i tell you that. >> well, no. if we would have run some, we would have maybe gotten more help there. i mean, we're in the toughest -- how did the nfc east become like the nfc beast again? it's painful. cousins is great, gave me 44
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last night in fantasy. >> by the way you mentioned repatriation, s&p has a note out today that repatriation could result in a 30% surge in buybacks in '17. >> wow. only 5% if there's no tax reform. >> think about what that means for the people who've written off apple. i think that's a huge amount of money to buy back stock. where do people think apple goes, under its cash position? like it's bethlehem steel in 1987, stretch the balance sheet and do something stupid? >> the prospect of meaningful buybacks as a result of huge repatriation is something the market is already trying to start and account for. apple be significant and so many other potential companies as well, we like to think they're going to do more than just buy back stock with that money. the idea is invest it more in capital investment, hiring, things like that. >> if you bring those plants in mexico and bring them to the united states and put up the
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pipelines, you know, there's the dakota pipeline protest, i mean, under the trump regime, you would see lots of pipelines getting utica natural gas down to where it can be exported. that's a giant number of jobs. giant. when we come back, we'll get cramer's mad dash, countdown to the opening bell, look at the premarket looking okay on this monday morning. more "squawk on the street" back in minute.
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we got a few minutes before the opening bell. time to get to a mad dash on this monday. in a kind of shortened week of course with thanksgiving holiday. we're going to talk a little protein in our diet right now. >> one of the better deals that occurred over the last few years was when tyson brought hillshire brands. when it happened we thought they paid too much but they managed to go from a commodity maker to a proprietary maker. took more shelves and space. this morning the architect of that, tom hayes, donny smith is retiring. he's been the ceo of tyson. tom hayes is going to succeed him, but the forecast was very sub par. and it made you think once again, can you be in these stocks in a world where people are piling into freeport? so this was disappointing. and the -- we have campbell's soup this week, i question how good they're going to be. >> jim, can you give us any sense as to what they said specifically? >> no, we're going to have to know more because the actual 2016 call their numbers i
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thought were okay. >> okay. >> but the forecast weak. now, is it totally unexpected that donny smith leaves? well, he was the architect of this great transformation. there had been people who had been saying it was only a matter of time, they paid too much for hillshire. that i don't know is the answer, but this is shattering people. and i say once again will cause pressure on what's been a big source of funds since the trump rally began. >> being sort of food -- >> yeah, this market. those stocks, i think general mills is -- >> and deflation of course is a big part overall. >> yes, it is. that's another part of why kroger can't get out of its way though i think kroger's a good stock here. will proctor do this? proctor's got some dividend protection. i mention being the quintessential american company, they reported good quarter but 3% yield. does that protect you in a world where the 30-year -- well, interest rates have stopped for the 30-year, didn't go up that much, but i'm saying more evidence this is not where people want to be.
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>> okay. we'll keep an eye on tyson. also going to keep an eye on tesla as we head to the opening bell because it now includes solarcity. that deal having closed. we've got that opening bell just a few minutes away right here on "squawk on the street."
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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in a couple minutes on a week where you'd expect it to be quiet because of the holiday, jim, but we are going to start talking about things like durables. we're going to get some fed minutes tomorrow. homes, and then it's all going to turn to retail as we go into black friday. >> a couple things are happening in retail that are really good. one is the cold weather going to clean out a lot of inventory. two is both tjx and ross stores, ross stores by the way excellent number on their conference call, talked about the idea that there is a lot of excess merchandise that they can still markdown.
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hear from burlington later this week. retail is a little better. i was listening to something early this morning with wilf and i found the person saying, listen, there's no real change in retail restaurants. i have to go against that. i am talking to a lot of people in restaurants and retail saying post election we've had a really good time. so i am on record now saying, look, don't count on retail being bad. count on retail being good. i know the amazon factor is very big, but 90% of people as brian cornell said in that excellent conference call still like to go brick and mortar. >> well, an upgrade of anf. best buy has managed to survive and flourish. >> there's a great example of what i'm talking about. the best buy conference call was superb. you got a sense that people are really shopping again, and they're shopping for mobile phon phones. best buy quarter was excellent. children's place quarter was excellent. these are really good quarters
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that i'm talking about. >> let's get to the opening bell here and a look at the s&p at the bottom of your screen. at the big board it's xo group owner of the wedding planning site >> i don't know. people find out proposal, it's new. it's like singles day. it's like combine day. david, remember singles day? this is the proposal here. >> over at the nasdaq it's wsfs, the financial corporation celebrating its 30th listing anniversary. guess there's some proposals around christmas time and holidays. >> i guess so. i don't know. guess so. i'm not that close to that situation. couple of interesting m&a this morning, david. applied materials, amcc, this is always been -- speaking of proposals, always been a bridesmaid, never a bride.
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and by the way, when we're at it, let's talk about the bridesmaid-bride situation at symantec. >> that's a done deal. >> that company had been in trouble with the ftc at one time. >> lifelock had. >> yeah. really made a comeback. what do you think of that? what do you got there? >> i don't have a lot on that for you, jim. i can talk to you about an area we haven't discussed, thankfully, in a while, that is pipelines and ett and sunoco, they're getting together. sunoco logistics and energy transfer partners, not etp. >> which has the good cash flow. >> under terms holders will receive 1.5 -- >> are you serious? they're buying etp? >> yeah, but warren will be ceo of combined company. >> this is huge. people worried about the williams deal that fell apart over the tax.
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>> 10% premium for energy transfer partners holders. >> holy cow. >> as sxl is going to be the acquiring entity. existing incentive distribution rights in the -- partnership agreement, try saying that, sxl, will continue to be in effect, jim. they're talking of course about building upon their experience working together as partners in several joint ventures to pursue commercial opportunities to achieve cost savings. they're talking about cost savings and synergies in excess of $200 million annually by 2019. and as i said kelsey warren, a man we spoke about so many times in the fight between ete and williams will be -- even though it's being common of sxl. >> this may be the first trump deal. pipelines are going to be winners under trump. energy transfer's been trying to build that national network of
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natural gas. this is very important deal and it's out of nowhere and this group is finally going to breakout. the group has been in a holding pattern for three months. this could cause the group to break out. >> right. ete remember is the mlp general partner 100% of the distribution rights of energy transfer, so everything gets -- >> go up. >> right. all gets sent up. >> where did that happen? that's a big deal. >> that just happened in the last seven minutes. and ete by the way take a look ete shares are the one really benefitting up 8% to your point because the cash flow goes up. and there was a lot of concern about their contracts and where they are and whether or not they'd be able to sustain those dividends. >> you're going to see money coming into that group as people realize they're the owner of the dakota pipeline where the protest is. but what there really is they've got a fabulous natural gas network. and natural gas is what the world is short on. this shinear project people thought wouldn't have enough user, no, it's working, problem
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is mexico has stopped being major power in oil and gas because -- well, the peso is sold to you. >> central banks stepping in last week. >> obviously that's very trump related. but the dakota pipeline protest is really not as relevant as building a national network out of natural gas. that is the key fuel. that's why everyone seems to be going toward coal except for the electric utilities which are moving toward natural gas because they've predicted -- they were thinking it's going to be a hillary victory. >> canada today saying they are going to transition out of coal powered electricity by 2030. >> yeah, don't get into coal. >> i want to make one thing clear, sunoco is by far the smaller company, while they are the consideration here, the fact is that kelsey warren's running this combination and etp is far larger. so saying they're buying energy transfer, let's kind of say that they're getting together in a
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deal under which etp shareholders are being offered a 10% premium. but it really is much more of a merger unit for unit transaction. they're not really buying them. >> it's good balance sheet change. they've spent over $15 billion in organic growth capital in the last several years. that's the build out of pipelines trying to get energy from where it is to where it needs to go. major story. and the pipelines are an incredible place to be if you really think that trump's going to follow up on his let's say pro more fossil fuel. >> right. >> because pipelines a lot of companies were worried -- >> well, while we're in that area, we might mention as well that elliott says it owns about 4% of marathon petroleum corp., jim. >> that's refiner. >> they want to drop down. this all -- this gets complex, you can see. both those stocks actually down on that deal. ete is the beneficiary. >> ete is the winner. >> marathon you can see is up.
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you know, in their letter talking about the things they like including you say the dropdown, also say even if every single one of marathon's separate businesses trade at the lowest ebitda multiple or highest yield of any relevant peer, in their opinion the sum of marathon's business would be about $12 billion higher than today's valuation. that would be about 50% higher, jim. >> these are -- i'm telling you, it does absolutely matter a trump administration pipelines, it does matter. there's always been resistance to pipelines. remember pipelines had gotten most scrutiny to take oil from canada. we don't need those. that's not the system that you should be banking on. it's the system of marcellus and utica, please do not think, wow, we're going to get the keystone. keystone may not even be economic. >> right. and, again, back to the big deal this morning the beneficiary at this point is ete, the parent.
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>> right. that's where the cash flow comes up to. >> speaking of trump trades, top four dow stocks are exxon, chevron, boeing and cat, if that doesn't tell you anything. >> boy, that is really trump. caterpillar by the way is really a battleground. asia better, u.s. doing worse, but if you thought there was going to be infrastructure, you want to position yourself for cat particularly if the infrastructure is somehow protected. in other words that the plan is to say, listen, we're going to give you the money but you got to buy cat, not komatsu. i'm just suggesting that is something that could be floated. because komatsu historically when the dollar gets strong really takes a lot of business from cat. >> a lot of people still have questions about the plan, the infrastructure plan and how much will depend on federal spending, right? how much is in infrastructure bank part of this equation? >> but i saw chuck schumer this weekend, democrat, talk about how this is something that could happen in the first hundred days. if there was anyone that could stand in its way it might be
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schumer. look, we also had putin this weekend say there's going to be a deal to cut -- to freeze. now, we're at the end of november where we kept hearing that there's going to be a freeze. so far we've not heard from iraq and iran who really did need to do the freezing. but in the meantime we got the small cap rally going on again. the animal spirits of this market, the numbers you quoted about what happens between here and the end of the year that might take that these retailers are really in much better shape than people realize. and then you have these stretchers put on wells fargo, i mean really serious strictures. see, how much is wells down? oh, well, look at that. it's not down. isn't that something? what does that tell you? >> four cents. >> how about the fact that mike comes in with more buyback. >> what does that tell you? >> what does that tell you? >> yes. >> tells you that you're going to have a little easing of regulation on the banks. >> yeah. wells now higher than it was
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when the news of that sales practice scandal broke in september. >> it's amazing what happens when you own about a third of the mortgage market and we're about to raise rates. >> yeah. >> geez, that kind of trumps whatever they opened a couple extra accounts, what was that? >> a few. a few million, nothing serious. they closed them very quickly too. open, close, open, close. >> you know, i mean, really -- and the thing -- the restrictions i think are more toward the clawback. look, i'm not trying to minimize what happened at wells. i am saying that the bank stock rally -- to have leadership in the banks is not unlike the rally that we had in '91 which lasted until mexico kind of fell apart. there's just a lot of interesting things happening out there that are surprising. this was the supposed to be the group hurt the most under hillary with pipelines being probably second. that's not playing out. have you noticed the consolidation in the move in semiconductors? advanced micro's been incredible performer. what is the chatter?
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>> well, you know, a lot of people saying this thing should get taken out in the consolidation wave. >> it's been giant refinance. >> i know. i'm not saying anything to it but keeps coming up on all the list of companies that people speculate about as being potential takeover prey in what certainly has been a consolidating industry. >> when you take an industrial like dover, okay, has industrial in oil and gas, that thing's flying. baker hughes and ge, that combination, i think that's going to be used for acquisitions. currency to acquire. 3m downgraded, i think it's down a buck and change until what? facebook announces a buyback and immediately the bears tell me that's because the cover-up, the chief accounting officer's resignation. he's not going to resign, he'll be there until february and facebook wants to have nothing toot with 6 billion, facebook
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has so much money, why not buyback earth before you dominate earth. >> meanwhile, we're one point away from an s&p all-time high. 2193, about to break 2192. >> incredible. these oils leading the pack, let's get skeptical, throw some cold water on this rally. could you do that for me? >> i can do that for you of course. what would you like me to start talking about? how about higher rates? >> oh, that's the -- that's not the rally. >> higher rates. i could throw that one out there for you. higher rates, moving up. i can give you trade war. trade war not going to be good for stocks. >> what's about amazon up 11? prime? built into some of this weekend you boycotting prime. >> unwind of the low rate period and all the dislocations that's going to cause. where else can i go here? >> the boycott against stocks
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lasted for about a decade seems to have lifted because there's money coming into companies -- i mean, last week i heard that t-mobile and sprint were going to merge, but then there's no merger and the stocks go up. >> i think even a trump anti-trust department would have trouble with that deal. >> you think so? >> well, don't you think done pretty good for the american consumer? >> so you're presuming -- maybe you've got that backwards. >> there will not be any anti, in it, it will be trust trust. >> pro trust. >> yeah, double trust. >> we don't know. everything's a mystery, but people buying the mystery. they are getting ahead of the mystery and they're buying the mystery. i mean i'm surprised he doesn't have like some bullish stock guys out there in bedminster. >> we trust you. >> look, i want to be skeptical. >> of course. >> i want to say, listen, watch tyson. tyson is the play where the future is. and then i read this cowen, here
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it is. cowen upgrade on freeport, like it, love it, got to have it. i mean, okay. what is that about the lombardi trophy? no, it's about copper. >> let's get to dom here with s&p 2192. dom, good morning. >> good morning, carl, guys, trust all over the place for this marketplace right now at least in the early going. the russell 2000 at a record high right now. major indices showing fractional gains, dow up about 53 points, nasdaq by about 31 and s&p around 10 points. half a percent generally for the broader market these major indices. if you take a look at what's driving the market today, oil prices certainly a factor there. oil about 2% or 3%, again, wti oil on possibly some comments coming out from russia, president vladimir putin about maybe them agreeing or maybe wanting to agree to a possible production freeze.
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that's helped bid the stocks in that sector. you mentioned a few with activist ties perhaps in the headlines today but still you have anadarko petroleum, other names moving higher on the heel of oil today. we do see some strength in certain cyclical parts of the market here besides energy. you've got some moves higher in real estate as well. on the downside interestingly enough you look at telecom and consumer staples, laggard so far in today's trade the interest rate sensitive sector again moouing with that particular trade. and we want to talk about a couple of stocks and immaterial cramer's take on this as well palo alto with the deal with -- they report earnings again symantec huge focus, jack in the box, this is a stock up 33% year-to-date, could that consumer be a real indicator for jack in the box, back to you. >> dom, thank you very much. >> well, jack in the box has
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been best performer in the group. neither company has confirmed but numbers show it unequivocally. palo alto, companys that have done the best in cyber security are actually just related to e-mail, palo alto soup to nuts these are both great performers although palo alto most recently still as great performer still not back to where it was. jack in the box has been on fire, best performing restaurant. totally understand why there could be some profit taking. let's get to rick santelli in the bond pits at the cme in chicago. hey, rick. >> good morning, carl. at least for the moment the dollar and interest rates are taking a breath. now, taking a breath doesn't mean they're giving up much ground, because they're not. let's take a big view of some of these markets. now, the five-year we're closing at highest yield since the fall of 2014. but let's look at a six-year chart to step back to see how it really has started to clear a lot of congestion. the same can be said for ten-years, of course they go back to the summer of 2015 since
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we've closed at some of these yields 2.27 the close of '15 is now just a bit below us. many traders will continue to use that as the pivot for the rest of the year. where's the wild resistance should this market really gain a head of steam? well, probably in the low 2.60s, but there's a lot of areas between 2.37 and 2.45 as well to congest. if we look at the 30-year bond even though it's been lagging so to speak, meaning it's closing at yields we've seen just as recently as about a year ago, december of last year, you could clearly see it's also had a large move. but the best chart and maybe the one you're supposed to pay closest attention to is how we've de-linked on the relative value trade. if you look at a one-year chart of tens minus bunds, you can clearly see that we have really started to show a wide separation of over 200 basis points, rather historic. so on the way down with all the
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policies and the negative rates and the fact that there was in very tight knit investment community that was taking all global sovereigns down, on the way up our central bank is odd person out and definitely post election we've seen a real magnification in the differences between what many perceive as u.s. potential and of course what's going on with the central bankers. the dollar, well, the dollar is king in so many ways. one-week chart we're taking a bit of breath, but boy, we had a 101 handle. if you step back to june of 2014 what you'll see is we really have a lot of room here. we're hovering at highest levels since spring of 2003. carl, back to you. >> rick, thank you very much. rick santelli. when we come back, a spectacle involving snapchat. also ahead, michelle caruso-cabrera in paris talking to marine le pen, the far right leader looking to follow in the footsteps of donald trump and brexit. dow's up 51, the s&p within a
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point of an all-time high. we're back in a moment. attention: are you eligible for medicare? the medicare enrollment deadline is just a few weeks away. changes to medicare plans could impact your healthcare costs. are you getting all the benefits available to you? new plans are now available that could increase your benefits and lower how much you pay out of pocket. to update your coverage- or enroll for the first time -- call healthmarkets. we'll help you make sure you have the right medicare plan. hi, i'm doctor martin gizzi. it's a new medicare year.
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snapchat has been rolling out its spectacles campaign by deploying bots or vdsing machines across the country. one popped up in new york city, this is the first on the east coast, steps away from the apple store and trump tower. this weekend bot appeared in las vegas. both sold out within an hour. company expected to go public next year. this store going to be open pretty much to the end of the year as they're making a big push on this hardware. >> they sure are. google is making a big push on the phone. i went to their store this weekend in soho. now, there's a lot happening and exciting in that group and i totally understand where is apple's part of this. but i went to the apple store just to be able to get some stuff and, you know, very tough to get people to -- they don't have enough people working
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there. place is overrun. i don't want to be too anecdotal about it, i'm saying there's a lot of excitement in technology and a lot of spin going on from best buy and this is a sign of, again, people willing to open the purse. i just think we have to notice that this is part of the era of spend fueling that's been going on. it's important not to keep your head in the sand. >> have you jumped in on snapchat? just out of curiosity. >> you know, my kids have really made a major move into it. you know, they do snapchat, my daughter does snapchat fashion shows. i mean, snapchat is literally half of what she does. instagram being the other half. periodic updates of facebook. i find i do twitter and some facebook, but snap's for younger people. >> it does. requires a little education, even for those of us who think we're used to social media. when we come backstop trading with jim, dow's up 44. still have an eye on s&p record high. back in a minute. 's connecting of the world's most innovative campuses.
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i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. time for cramer and stop trading. >> you know, foot locker had a great quarter on friday, but they dropped a bomb in the middle of the conference call which is they said that the curry 3, that's the new shoe from under armour, started off
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slower than the other models. that's why under armour did not participate in the rally. i think that one of the problems that you have is that each data point's going to be re-evaluated constantly. curry 1 and curry 2 haven't done very well. when you try to figure out what's participating and what's not participating, you listen to the conference call and you realize there are certain lines that are not doing very well. timberline at vf not doing well, so it's selective. >> remember we talk about the shoe not doing well, we all sort of theorize it's because curry is not a player for whom performance, right, classic performance, is key. it's about shooting from middle of the court. >> yeah. and it's not resonating. now, they didn't say under armour doesn't know what it's doing, they were talking about how nike has a full line. and nike stock has not been doing that well. but i just point out a lot of people saying, jim, what is going on with under armour and the answer is you just read that call and you'll feel a little more uncertain about what's going on with under armour and realize that apparel is not something people are buying here
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other than say hanes brand. so, i don't know, i mean, this market does not like certain brands. it just doesn't. it's a crazy market, what goes up and what goes down. in the end it likes tech. it likes some health care, it loves industrials. and the banks and anything that benefits from -- to charles schwab, e trade, they're all doing fantastic. >> tonight? >> we have a line about my theory people do anything to look good. that's the braces that you can't see. i want to hear from mark br bristow, the gold stocks have been horrendous, i got to do something on this pipeline. critical. >> okay. move on that. >> see you tonight, jim. "mad money" 6:00 p.m. when we come back, jack bogle and we'll watch s&p record highs. don't go away.
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street." i'm carl quintanilla with kayla tausche, david faber at post nine of the new york stock exchange. sara is off today. we have a holiday shortened week with thanksgiving and black friday on the way, but for the time being we are awfully close to an s&p record high. just a few tenths of a point at this point. nasdaq has hit an all-time high and oil's helping out over a buck. and that's where our road map starts this morning. markets in a post-election whirl. stocks continue to break records. the russell hitting all-time highs. we'll speak exclusively with legendary investor, the founder of vanguard, jack bogle. trump transition talks, the president-elect hosting meetings over the weekend. what do some of these names for treasury and commerce mean for business? plus, she calls herself madame brexit. we'll hear from the leader of france's far right marine le pen, her take on trump and why she wants to lead the euro. first we're coming off a week of record highs for the dow, nasdaq and russell 2000, but the big focus remains on president-elect trump's cabinet picks and what they mean for the
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markets. legendary investor and founder of the vanguard group jack bogle joins us this morning in a cnbc exclusive. jack, good morning to you. how are you? >> how are you, carl? nice to talk to you again. >> i would love to get your take just on this giant rotation we've seen in bonds, within equities. we talk a lot about you've preached for a long time that speculation is not a healthy habit, but people are making bets on what the next four years are going to look like. >> well, they are, but i think they're making a mainly on the basis of the short-term outlook. and it's pretty difficult to say that the trump program such as we know about it and complicated as it would be to implement is a lot of debt, a lot of infrastructure investing, big deficits, tax cuts and things like that. he's basically the new keynesian, carl. but that can't go on forever. in the long run i have a concern that anything that divides our
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economy further in terms of econom economics or race is bad for the society, bad for the economy and bad for the markets in the long run. and i think it takes trade barriers and raises them is bad for society and bad for the economy and bad for the markets in the long run. and the same thing you can say about breaking down some of the ties with europe, communism, things like global warming, all these things are long-term problems, but the market, carl, you know this better than i do, the market is very focused on the short-term and the heck with the long term. so we're in kind of a balancing act between long and short. in the long run it's the fundamentals that apply. >> all right. we've seen a lot of charts being passed around today essentially looking at leverage and the amount of net debt up against ebitda or however you want to measure it. and the fear of course is that as rates rise, if they continue to rise, the leverage gets
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unwound and equities become vulnerable. how likely do you think that is? >> well, you know, i think it's awfully difficult to plan that out. you know, it depends on how far rates rise. it depends on the structure of anybody's leverage. you know, your interest payments don't change. they don't rise when interest rates rise. you know, you're paying the same amount as you were before. so it really depends on the structure of your debt. and i don't have any reason to think that's going to be particularly dangerous. >> it is the absence of yield though, jack, both here in the u.s. and around the world these macro forces that are beyond any politician's control that have led investors by in large into u.s. stocks calling them the only alternative, the only game in town, but now yet again people are saying maybe this is a stock picker's market, maybe this is the time to get out of just your broad index funds. what would you say to that? >> i always laugh. i guess i'm doing it now. when i hear about a stock
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picker's market. there's in fact no such thing. because if i'm a smart picker, one of you or somebody out there is a dumb picker. but i buy stock from somebody, and they sell it to me. so we're just making opposite picks about what's going to happen. so the simple reality is investors as a group inevitably gain the return of the total stock market. and they lose by the amount of their costs. this is fundamental indexing theory, but that is the way the market works. so we all zero out in the markets return finally less cost. >> but so where people say forces like a strengthening dollar, rising interest rates, while that may help some companies, it will effectively hurt others. and you'd be better off going with the one bucket of stocks that those forces will help rather than those that it will hurt and just doing that by buying the indexes. why not pick the stocks like ge, like the banks, like some of these health care companies that
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you think might actually benefit? >> well, first the stock market hardly has a generous yield. the s&p yield is probably 2%. and i think our high dividend index fund here at vanguard probably has a yield of maybe a little bit short of 3%. but the bond market is now getting more competitive with that. and as interest rates have gone up, these yields have not gone up. they've actually gone down a bit as the stock market goes up. that's just the mathematics of it. so yield is hard to find. and yield is a very, very important contributor, everything for bonds for say the next ten years. today's yield establishes the return. and for stocks dividend yields are very important component, half of the market's return in the next decade. so we just have to live with very low yields. and in a way hope they go up. because bond buyers want higher
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yields. they just don't want to pay the penalty you get in the near-term. so i would still be wary of long term bonds, but focus on intermediate term bonds or in some of our funds we have a short-term or limited term portfolio very much shorter maturities than the regular short. and the regular intermediate, i should say. and take your chances. i do believe that in a very uncertain world and uncertain stock market most investors need a bond component to give them a little anchor to winward when trouble comes and it often comes in a very unexpected way. >> jack, this morning the journal takes a look at what happens when we come out of these so-called low dispersion environments where there's very little change in the way stocks trade and argue active managers don't do any better when that comes around, i assume you agree.
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>> yeah. we all zero out. index gives you your share of the market return, less tiny cost, and active managers, remainder of the market, give you the exact same gross return, i guess i'm repeating myself a little bit here, carl, at a much higher cost. i mean, it's really a pretty simple thing i came up with 40 years ago. >> when you hear names that are being tossed around as part of the cabinet pick, like a dimon or mnuchin, are you warm to that? because you told us in june that while you're a republican you didn't think trump had the character for the office. >> well, i'm sure i did say that. we'll find out that. i said to someone the other day, carl, my main hope is he will be like saul on the way to damascus, but his picks seem to me to be in a way quite extreme on the right side. but he does seem to be entertaining a little bit on the other side. so i don't know if romney will
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get the job or not, but he would certainly be quite a throwback to breitbart and all those people. so it's a very mixed bag, but it's still early. you know, we've still got an attorney general, an attorney general designate who's got quite a record of racism earlier, and that's going to be a tough thing. and i hope they will get the idea as much has been discussed of tend to charging hillary clinton with some sorts of crimes and misdemeanors because that would be idiotic. so i hope we'll get an attorney general and president that don't want to have anything to do with that idea. >> at least here on wall street though the talk has turned to the nearest term expectation for the administration, and that is tax reform. there've been estimates, jack, anywhere from 150 to 300 to 400 points that simple tax reform in bringing money back to this
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country could add to the s&p. how big do you think that one-time gain could be? >> well, i don't know how to relate tax reform to the market in that obviously it would be good for the market if corporate taxes say go down. it's a little hard to translate much lower individual taxes for the wealthiest people in the country by the way, which i'm not sure -- i believe is not a very happy idea at all. you know, we can pay our own way, we ought to give some tax relief to the people that really need it in this country. and there are an awful lot of them. so i don't know how to translate that into a market action because it will be overwhelmed by how the stock market finally reacts to this. will they value stocks at a higher level or lower level as a result of this? rather than the fundamentals of how much this will do for s&p earnings. >> finally, jack, when market watchers come up to you and say, look, this is like nirvana, we're getting the promise of
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deregulation, the promise of infrastructure, repatriation, these are the things we've been looking for for eight years and it's all positive about bringing manufacturing jobs back to middle america. what do you tell them? >> well, you know, i think if it's not good for the society and not good for the economy, as i said before, the long term effects will be very bad. but the short term effects, i have to say, i agree with what you just said. you know, all looks good. you should realize though as i'm sure you do, nothing has been enacted yet. these things are complex. the new president's going to have to deal with a republican congress that is not particularly submparticular ly smitten with many of his ideas. i think any package of a lot of infrastructure spending at the same time as we reduce taxes is
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going to be very, very hard to resist politically. so i think it's going to happen one way or another. >> yeah, yeah. that's the bet that's going right now anyway, jack. the hard work still begins. we'll talk to you soon. >> yeah, the hard work begins. >> thanks, jack. good to see you. thanks for your insights. jack bogle. well, coming up, the trump transition is underway. the president-elect hosting meetings over the weekend. we're going to break down the cabinet front-runners, and we're going to hear from the leaders as well of france's far right party, marine le pen. she's called herself madame brexit. her take on trump's white house win and the future of france in the eu, much more ahead on "squawk on the street." whether it's connecting one of the world's most innovative campuses.
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or bringing wifi to 65,000 fans. businesses count on communication, and communication counts on centurylink.
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♪ the trump transition is underway as you know, we're expecting more white house and cabinet choices ahead of thanksgiving. our eamon javers joins us this morning with the latest on that. hey, eamon. >> yeah, good morning, carl. donald trump holding meetings in new jersey all through the weekend, he's going to be holding meetings here at the tower today. here's a list of who we expect to see meeting with donald trump starting with tulsi gabbard, we'll see whether they can find some common ground perhaps on
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trade see what donald trump is up to, also expecting to see governor rick perry here, elaine chao, that will be an important meeting here and also newt gingrich expected here at trump tower today. you saw over the weekend donald trump getting in a number of controversies, a twitter spat with the cast of "hamilton," also feuding with the cast of "saturday night live" over twitter over the weekend. and also taking some criticism for this meeting he held here at trump tower with some indian business executives. that's raising the question of whether donald trump can effectively separate his private business interests and his governing role as president-elect of the united states. some are criticizing that. mike pence was on television on cbs over the weekend though saying that trump will be able to effectively separate those two roles. here's what he had to say. >> all of the laws pertaining to his business dealings and his service as president of the united states will be strictly
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adhered to. and he set that tone from the very beginning. >> and, carl, we saw kellyanne conway coming in here to trump tower earlier this morning. we're expecting some news today, they've been hinting we might see some major names rolled out today. nothing yet. we'll keep you posted as to what's going on here at the tower, carl. >> eamon, thank you so much for that. eamon javers. for more turn to veteran political strategist former dnc senior advisor steve mcmahon and former rubio advisor alex conan, good morning to you both. >> good morning. >> alex, let's start on the optics parading these candidates back and forth in front of that front door while tweeting about "snl" and "hamilton" as eamon mentions. what does that tell us about the tone he's trying to strike? >> i think if you look at all the people he's bringing in to meet with him over the weekend and today at trump tower, he's casting a very broad net. he said he wants to bring the best and the brightest into this new administration. and i think it's encouraging for
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conservatives like myself to see him reaching out to people like mitt romney who obviously was a big critic of his during the campaign. and now mike pence on "face the nation" yesterday said he's actively being considered for secretary of state. it's very encouraging for conservatives like myself to see people like that under consideration for these big posts. >> yeah, steve, the candidates under consideration are diverse, the ones who've made it through the net though are from the flank. >> right. it's interesting, i think alex is right. there's sort of trump kind of on a knife's edge right now. he's got his base. and he has to decide about how much he's going to appease the base by putting some of the loyalists and sycophants into his cabinet. and then he's got the establishment republicans who run this town and who run the congress and who would like to see some reassuring signals. i think mitt romney is a great and reassuring signal to those people. i think elaine chao would be another. i think there are others he's looking at more sort of establishment republican types and i was encouraged by the
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report of tulsi gabbard who is a democrat and was a sanders supporter, so i think to the degree that it's real and he really is looking for divergent voices and a cabinet of rivals if you will, bringing in rick perry, i mean, i don't agree with these people's politics for the most part except for tulsi gabbard, but i think if donald trump is serious and makes a legitimate effort to reach across the spectrum, he would be very well served to do that. >> well, alex, we'll have to see next year whether congress agrees with the politics of those who have been appointed thus far. i mean, what do you think happens during the confirmation hearings of someone like senator jeff sessions who is denied by the senate for a judiciary position three decades ago? >> yeah, i mean, i think trump is very fortunate to have a republican controlled senate. i think the republican controlled senate wants to get the new administration in place as soon as possible so they can get on with the big policy changes we have in store, repealing and replacing obamacare, tax reform, regulatory reform. these are big ticket items that are going to take time to get through congress. and i think they're going to want to get on with that.
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and you can't really get on with that until you have the administration in place. so i expect for the most part we'll see very smooth confirmation hearings. so that the new administration can get in place and move onto these big policy challenges. >> steve, do you agree with that? >> i mean, i think if he puts people up like mitt romney and elaine chao, absolutely agree with that. to the extent he continues down this road, if rudy giuliani is nominated to be secretary of state after giving speeches and taking money from terrorist linked organizations, i think you're going to have confirmation hearings that get out of control. if he brings -- if he tries to bring chris christie into his cabinet, i think you're going to have confirmation hearings that explore bridgegate. he has the opportunity here to bring in cabinet choices that would be reassuring to the republican base -- i'm sorry, not his base voters, but to the republican establishment base to the folks who run this town and run congress and he needs some of that right now because he doesn't need to start off fighting with the people who at the other end of pennsylvania avenue who are going to be responsible for passing or defeating his legislative
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priorities. >> steve, have you begun to hear methods with which the democratic party will address their failings in the campaign? or is right now all about establishing a credible opposition? >> well, i mean, i think there's no question that there were some shortcomings in the campaign, but there's also no question that hillary clinton is going to end up winning the popular vote by about 2 million. the democratic party does need to do some re-examining, but we did win the popular vote. so it's not a party that's failing. it's a party that could be improved. obviously there was some turnout issues in some of those northern industrial states. i think we have to take a look at the working class voter and what it is the democratic party needs to do to begin to appeal to that volter more than we did in that last election. but, you know, there's a lot of good that this party represents and that the candidates ran this cycle fought for. and we need to keep the good and try to improve on it. >> yeah, alex, that popular vote count gets mentioned a lot, and then it also gets mentioned that
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it's essentially meaningless. i mean, is that leverage or not? >> as a republican i'm emboldened by what steve said. i hope they think everything is okay because the truth of the matter is democrats have less power now than they have in nearly 100 years of the united states. not in just the white house but in terms of congress the supreme court once we get a new republican appointed member on the supreme court, what's happening in the states, republicans are dominant nationwide right now. and for the democrats to say, oh, well, everything is okay we won the popular vote even though that's meaningless in our form of government, that does not bode well for them moving forward. they're going to have very tough midterms. ed running for governor in virginia or is considering running for governor in virginia, he's going to be excellent as another opportunity for a big pickup for republicans in 2017 this fall. so as a republican i'm very excited about the state of our party right now. democrats have a lot of soul searching to do.
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i don't think they've come to grips with how crushing the defeat was for them in november. >> gentlemen, stay close. a lot to talk about in the days ahead. thanks, guys. steve and alex. when we return, we'll head to paris and hear from the leader of the far right front national marine le pen, her thoughts on trump's historic win.
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donald trump's victory sent a shock wave through european politics. it's led to the realization that candidates once thought to be on the fringe could actually win. and many of those candidates want to abandon the euro. our michelle caruso-cabrera sat down with the leader of france's party, the far right party, the national front, marine le pen, and joins us now with more from that conversation. michelle. >> reporter: hey there, kayla. do you remember in the run-up to the u.s. election a lot of skeptics about trump said he would never win because he never really got above 40% in the polls? well, they say that here about marine le pen in france, and the elections that are coming in april. she never seems to get much above 30% in the polls. however, after donald trump won, headlines like this one popped
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up across europe. we just picked one from the telegraph that said -- in the uk, after donald trump's victory, marine le pen as french president seems dangerously plausible. why dangerous? in part because she wants france to abandon the euro. she says the country's currency is key to its sovereignty. >> translator: if you don't have your own currency, you allow others to impose on your economic policies, your immigration policies, your social policies. the political austerity that is imposed today by the european union is founded on the euro. i don't want to accept the euro, which is no longer a currency in the spirit of the european union, but is in reality a weapon that it sticks in our sides to force us to go where they please. the euro is a failure. it's an economic failure. it's a social failure. it's one of the reasons for which france has seen such a high rate of unemployment, for which france has become so much
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poorer, for which our industry has failed, for which we are confronted with an unfair international rivalry. there is no reason for us not to return to our own national currency. >> reporter: now, if she wins and if she becomes president, she says she's going to negotiate with the european union for new terms and depending on what she gets she's going to ask for a referendum here in france. the other political news is angela merkel of germany announcing last night she's going to once again seek candidacy to the leadership of her party. marine le pen has little patience for angela merkel. >> translator: angela merkel is a force of inertia. she wants nothing to change. submit to the same remedys that are killing them. today ms. merkel is very isolated. those who defend her position are very isolated with her. they have not understood that the world is changing. i think that the days of the
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ideology supported by mrs. merkel are numbered. something incredibly important is happening in the world. i think that the 20th century ended with the fall of the berlin wall. and the 21st century has just been born with these series of electoral events that is turning its back on the wild globalization that has been imposed on us for decades now. >> reporter: so the election in france happens in april. remember, they generally have two-step elections here. you have to win the majority. so the first two contenders if nobody gets a majority, the two face-off a week later. this is one of the key events where a lot of analysts are wondering if europe is going to become, quote, more trumpian. back to you guys. >> michelle, interestingly it was marine le pen's father who was the founder and face of that party half a century ago. and i'm wondering if there's any frustration like there was here in the u.s. about this creation of political dynasties and the idea that politics needs to involve more people than just
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singular families? >> reporter: so political observers here do say, listen, she likes to compare herself to donald trump, the donald trump of france. but remember, she's actually been around for a very long time, whether she's an outsider or not is debatable at this point. but you're right, and her father did run. her father came in, went to the runoff and then all the establishment voters backed the other guy, right? her father lost. the question is, if she gets to the runoff and many people believe she will, will that same phenomenon happen? will they back the establishment candidate or in this wave of anti-establishment maybe they go to her if she can paint herself that way? >> great interview, michelle. really important, too, right about now. michelle caruso-cabrera in paris. when we come back, what president-elect trump's new positions mean for markets, m&a and your money. how you might be positioning your portfolio with two months to go until the president-elect
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takes office. take a look where stocks are trading at this hour. dow's up 23 off the highs, more "squawk on the street" straight ahead. my hygienist said the most random thing. she said i should think of my teeth like an apple. it could be great on the outside not so great on the inside. her advice? use a toothpaste and mouthwash that strengthens both. go pro with crest pro-health advanced. it's uniquely formulated with activestrength technology to strengthen teeth inside and is better at strengthening the outside than colgate total. crest toothpaste and mouthwash makes my whole mouth feel amazing. advance to healthier gums and stronger teeth from day one. my check-up was great. crest. healthy, beautiful smiles for life. or keeping a hotel's guests cuttinconnected.i to 35,000 fans...
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comcast business. built for speed. built for business. i'm melissa lee and here is your cnbc news update this hour. the search for a st. louis police shooter ending with the suspect being shot and killed. the search began last night when the officer was shot in an ambush style attack. the death toll from india's worst train accident in years rising to 146 after rescuers used cranes to lift the last of the twisted metal wreckage to check for bodies underneath. another 226 people were injured and taken to local hospitals. in afghanistan a suicide bomber killed at least 32 people and wounded dozens more including many children in a crowded shiite mosque in kabul. the taliban denying responsibility for the attack. shiites in afghanistan make up an estimated 15% of the population. and some varieties of sabra
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hummus being recalled over possible concerns of listeria contamination. recall includes products with a best before date of january 23rd, 2017, or earlier. and that's our cnbc news update this hour. kayla, back to you. thanks so much, melissa. markets meanwhile have notched some early records for the nasdaq and russell 2000, this as president-elect trump continues cabinet build iing from a marke perspective treasury secretary and commerce secretary still remain open. christian, what do you make of the political transition so far? it seems to be expedited compared to 2008. good for the markets? >> so far we really haven't had any significant appointments on the economic front. we're still waiting. at the end of the day it's really not the treasury secretary that matters. it's really how trump works with congress to get his legislation
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passed that is really critical for the markets. >> terry, you say you think that senator sessions for attorney general could be good for m&a because of antitrust? >> yes, good morning, kayla. i do think that. and the reason i think it is because the prior administration, the outgoing administration, has had mostly a red light policy on that and not provided any certainty to the markets about what's considered to be a good merger or bad merger and i think that probably changes with senator sessions. i think his views at the justice department will be among other things to apply the law and provide markets with more certainty. >> terry, how soon do you think we could get things like comprehensive tax reform, a replacement for the affordable care act and perhaps some watering down of dodd/frank? >> well, these are very much influx. and i would urge markets to be patient on this. there's political time and there's market time. and market time of course wants to know exactly what's going to happen nine months from now.
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i don't blame people for that. at the same time, you have to understand that the old congress is still very much in session and will do some things before they leave. mr. trump has more than 60 days before he's inaugurated. this is all going to take some time. and i think tax reform probably won't happen before next summer at the earliest. >> a lot of talk that corporate happens before personal. you think that's the case? >> i believe so. i think there's broad consensus on that front far more than on the personal tax front. >> goldman has a note out this morning trying to put a dollar figure on exactly how much money could come back to the u.s. but they say about 20% of the money that comes back will just go straight into corporate buybacks. how do you get companies to spend it on capital expenditu s expenditures? >> i think that's really hope against reality. so if you go back and look at the experience, it never was used for investments the last time around. and money is fungible. likelihood that it gets used for investment again, unless the
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investment environment changes dramatically, and it hasn't so far, i think is pretty small. it will still be used for buybacks and all sorts of other things. >> christian, you know, there are so many forces at work in the market right now. it's easy to chalk up the post-election gain to the fact that we have some answers coming out of washington. but then you have the potential for an oil deal by november 30th. you have genre tail optimism this time of year. how much do we chalk up the market's gain to each of those factors too? >> so i think we're getting a combination of things that are working well for the market, so fourth quarter growth is coming out reasonably good, so i think that's a plus. after the election s&p typically goes up, so that's certainly helps. and the fact that trump is inflationary and changing the conversation from deflation -- disinflation to inflation, i think that gives people sentimental boost as well. having said that, i think a lot of this has to happen over the
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next three to six months, otherwise the markets may kind of regret the rallies that we have had so far. >> terry, what happens to the d.c. economy? because there've been comparisons that d.c. has ballooned to the size of brussels, that beltway commercial real estate is overheated because of all of the spending that has taken place. do you expect any meaningful changes? >> well, if what you mean is the d.c. economy sort of advocacy and lobbying world it will be very good. markets crave certainty. but d.c. thrives on uncertainty. and so what you'll have here is for the first time in very many years, at least eight years, a situation where everything's on the table and advocates need to come in and actually advocate what it is they want. otherwise they're going to get left behind. >> before we go, christian, an outlook for the dollar for interest rates? fed's december hike all but baked in at this point? >> sure, the fed's going in
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december. the dollar is going to be persistently high. unless trump fails in his economic agenda. and finally, the path of least resistance for rates right now at least for the next three to six months is higher rather than lower. >> kirshna, terry, thanks to both of you for joining us. appreciate it. we have a deal to discuss in the pipeline arena. earlier carl, jim and i were talking about this deal as it crossed the wires. have a little more analysis for you right now. it does not appear really based on the trump administration or what the expectations are in terms of regulation. it is a lot more about the ability of ete, energy transfer, ete to pay a dividend to its holders. and the deal itself, well, it involves sunoco logistics buying or essentially merging with etp, energy transfer partners. important to note that kelsey
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warren, remember him man at the center of the long dispute between ete and williams, eventually that deal was put to rest. he is the general partner of -- controls a general partnership of sunoco and also controls etp. and so he's the force behind this deal. a deal that does appear to be taking place largely to try to help secure the dividend at ete. the cash flows of which at least are thought by some to be in question and rating agencies certainly have had their share of call it concerns over time as to whether or not there would need to be a dividend cut. you get these two companies together. you see their owners are not particularly happy about it given the stock prices both moving down. but potentially create some synergies and cost savings that will put ete in a better position to continue to pay down its debt and be able to afford to pay its current dividend.
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will that be the case for the long term? unclear. but that's why the only beneficiary at least economically thus far in the markets are shares of ete, as you see it's an all stock unit for unit transaction. we're talking about 1.5 common units of sxl for each common unit of etp they own. they are talking about some accretion. but that really seems to be what's behind this, not because of some changes in administration or anything else that we may have been discussing earli earlier. sometimes it does take time to look to these and explain motivations. >> we look to you to explain that for sure. as we go to break, tysons under pressure after an earnings miss, the worse than expected forecast. news on the ceo that's going to take you back to levels we last saw right around february. stay with "squawk on the street." who do you work for? your boss? yourself? your family?
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our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird.
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take a look at the s&p 500 today. energy sector leading the way up better than 2%. seema mody's back at hq with more on that. seema. >> hi, kayla. yeah, nearly all of the c constituents in the s&p 500 energy sector are positive with marathon oil, chesapeake energy, concho resources all leading the way up over 5% this comes ahead of that opec summit on november 30th where there are now mixed opinions on whether we will get an oil production cut. interestingly enough despite the sector rotation that we've seen since the u.s. election outcome, energy is still the best performing sector in the index up about 18% this year, kayla. >> all right. thanks so much, seema. now let's get to the cme group.
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rick santelli and "the santelli exchange." good morning, rick. >> good morning, kayla. i'd like to welcome andy johnson. good to see you in person. >> good to see you. >> why are rates moving up so aggressively? >> first, for the first time in a long time -- >> all the pieces -- >> along the yield curve the 30s versus 10s versus 2s that spread's widened. why? deficit spending. the market expects deficits and that causes that term premium to increase. >> i'm glad you brought this up. i'm going to interrupt you. i'm being rude. >> that's okay. >> there was a lot of deficit spending the last seven and a half years especially 2008, 2009, 2010, 2011, budget deficits well over $1 trillion. didn't see any rates going up then. >> yeah, but we had a financial crisis that was the difference. now the economy's strong growing above potential and unemployment -- we're at full employment for sure very close if not full employment and very close from here deficit spending will be inflationary, that leads
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to uncertainty about term premium. >> what about how central banks and specifically our fed, how do they figure into that dynamic? >> well, that's the second point, right? so central banks have been smoothing the economy for a long time. i call it over smoothing. they've been way too involved. they're going to be pulling back, fiscal policy will be taking the lead. and so that means you can get yields higher than you could have gotten them before. >> all right. yields moving higher means that there's less intensity to own fixed income paper. people just don't want to own the space. what does that mean for investors globally especially those overseas investors who are looking at their yields not budging looking at u.s. yields skyrocketing, looking at these spreads. i mean, if you take 10s minus bunds over 200 basis points. >> and that was from 170 basis points two or three weeks ago. now, here's the issue, before they step in they need to feel comfortable our rates aren't going to continue going higher, right? higher rates, prices go down,
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you lose money. no one wants that. at some point, rick, if those spreads are too wide, to 3%, which i don't fore krast, then you'll see foreign investors come in. so that's a natural governor on how far rates can go. >> you bring up a good point. in the old days my grandparents always used to say, pay for the best. when you buy the best, that's the way to go. okay. well, the best technically best credits are sovereign paper. let's stick with the u.s. why would any investor looking to buy a security not invest in a 10 or 30-year versus a corporate security or high yield security considering the credit issues? >> well, look, clearly sovereign credits are the best, there's no doubt about that. >> air quotes. >> for sure, rick. now, what's been happening though is that at least in my opinion investors have gotten chased out of their preferred habitat, right? as sovereign rates came down to negative in the eurozone, 1.4%
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on 10s here, investors needed yield. where could they go? they had to go to credit. they had to go to high yield emerging markets. that's not really where they want to be long term. so at some point as rates get higher and higher in u.s. treasuries, they're going bab to their preferred habitat. i don't think that's now but as we get to rates say 3% on 10s, god forbid 3.5, credit could be in trouble. but not today. i think credit's still pretty strong for the next 50 basis points or so on rates. >> andy, many investors took advantage of this dynamic was to buy etfs for things like high yield investment grade. are there any risks there that the demand for very obscure securities have ended up in the coffers in the portfolios of those that manage these etfs are now on the sell side and need to sell these securities might be hard to find buyer, final comment. >> etf providers will tell you no. i happen to believe -- look, a couple things happened at inflection points. when you get markets going one way or the other, etfs tend to
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lag because they have to buy what's hard to buy or they have to sell what's hard to sell and they have to take prices at a much lower than they otherwise would have to take. that's the problem with etfs when you get the market moving one way or another in a very violent fashion. >> andy, thank you very much. fashion. >> andy, thank you very much. kayla, back to much. >> thanks so much, rick, now a look at what's coming up on "squawk alley," john? >> as snapchat or snap inc. gets running for an ipo snap specks are spreading. what's the spre strategy? we'll dig in. also facebook continues to wrestle what to do with the problem on fake news behind mark zuckerberg's weekend statement on the matter. also president-elect trump assembling his cabinet. there are implications for tech, for the economy, perhaps. all that and more coming up on "squawk alley". ways wins.
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especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. hundreds of workers at chicago o'hare international airport planning a strike ahead of the travel season. phil has more on the story. phil? >> david, in just a couple of minutes we'll be hearing a press
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conference, presumably i think at o'hare airport, but we'll be routing it to you shortliment essentially, this is a press conference where the service employees international union, which doesn't represent workers who are independent contractors at o'hare, they are not part of the union, but they represent these workers announcing when they are going to be holding work stoppage either tomorrow or wednesday. we're talking about approximately 500 workers. these are people who do everything from their cabin cleaners, they escort passengers in wheelchairs to the gate, some of them for some of the smaller airlines are baggage handlers, so the potential here is that they could cripple o'hare in terms of one of its busiest days of the year. these are workers who some of them make the minimum of $8.25 an hour here in the state of illinois. they want to make at least $15 an hour, and this is part of their demand. we've seen similar types of work stoppages at jfk, in washington, at reagan, by independent
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contractors and typically when we've seen this in the past, it has not stopped a number of flights. it has the potential to make it a longer, more troublesome day for you if you're traveling through o'hare, but we'll hear from the service employees international union in a few minutes when these workers plan to go on strike. guys, i spend every thanksgiving and i will be there this year at o'hare. we already know we have long lines. it could be longer because you have some of these workers who may not be showing up tomorrow or wednesday for work. >> phil always in the trenches there. to say it's a busy week is an understatement. thank you. as we head to break, take a look at shares of netflix, which says the video streaming service has what it calls an unstoppable lead in the internet tv business. stock up 2%. much more "squawk on the street." stay with us. what powers the digital world. communication.
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welcome back to "squawk on the street," reporting crude oil december breaking through its 50-day moving average well over the $47 mark. remember, it is going to roll over to january in the afternoon. that does create a bit of volatility here, but you have opec optimism taking the trade
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higher. a lot of people are talking this up at this point. the headline is iran is being more cooperative, but really a lot of people are questioning if the market is setting itself up for disappointment here. opec may not deliver anything, or they may deliver just a freeze, or give us that 750,000 barrel cut, but is it even enough? some traders are looking for a cut of more than a million barrels now that production has moved up. the dollar still in focus, as well, dollar index well over 100, certainly going to weigh on commodities there, and i do want to mention the protests continue in north dakota. i had a visit there last week. remember, the obama administration not doing anything here really, kicking the can down the road, so you've got a very heated, tense situation there. more clashes with police officers, as well, and that could continue well into the new year. remember, the expectation is that if this flows into the hands of the trump administration, we will see a decision in favor of the
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pipeline company here. carl, i'm going to send it back over to you. >> definitely a national story now, jackie, thank you so much. it is 8:00 a.m. at snapchat headquarters out west, 11:00 a.m. on wall street, and "squawk alley" is live. good monday morning, welcome to "squawk alley," john ford, kay kayla tausche. roger mcnamee, good morning to you. facebook today, mark zuckerberg detailing the social n


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