Transcripts For CNBC Squawk Box 20161201

Index that is normally, joe, thought of as a leading indicator for a bold market. What time do you get up in the morning . That was a great segue. That just flowed right into that. What time did you get up . 3 30. Did you watch this show yesterday . Yeah. If we analyze that, what kind of return it is is . Thats incredible. So you dont know. You need a ti calculator. Sorry. I wasnt taking notes. Well, you would remember. Youre a mathematical genius, right . It is 1250 . You do it on the ti calculator. You get three and a half times your money. Pretty good. I thought that was interesting. You didnt like the facts . We probably wont. I dont think so. But it would be nice. We do need, like you should probably have that program. What is 5 impounded over 12 months . It is a lot more than 60. Yeah. It is the eighth wonder of the world. We need a ti 83 calculator. I think mine got sold at a garage sale for like 10. That is not a good return to our investment. Youre at the early part of your career. The impounding that can be done with saving money with you and mr. Right. Is that his name . Anyway, its very powerful. If you can do an ira, deferred comp. Or even in a 401 k where your employer matches you. Right, right. Trying to save some money. Lloyd said that. People mocked him. No. There is a social thing. All right. Wow. Lets get a check on the markets overseas. I thought japan was pretty interesting this morning. Up 1 , 204. What worked. Suddenly theres 1,000 carrier jobs staying and japan weakened. We have different plans this week. On the pound. Ftse did well at 122, 123 post brexit. Ftse is one of the better performing markets since brexit. I would say the answer to jump in here. The burden of proof is on the globalist. All the doomsday scenarios, if trump were elected, frankly the markets in both places have performed quite well. Did you watch at least in the morning . Did you see mnuchin . I was traveling. Mack, the one that runs the cameras. Did we not have a long discussion on strong dollar or weak dollar . What would a treasury secretary want . Should want a strong dollar. You hear all the ceos whining. But doesnt it attract capital . Isnt this the best place to invest true supply side people do not see a concept between a strong dollar and strong market at all. Is it global person . It absolutely is. If you have superior products. It is a question whether there is a virtuous circle. Do you get a dent in gdp. How does that change the psychology of the market . The real risk in my opinion is that u. S. Almost becomes or the dollar becomes too strong and you suck up all the oxygen from the rest of the world. So particularly for emerging markets, it is more of a problem than it is for the u. S. Longer term. The u. S. Is not a particularly big import export economy. We may have some gdp to the work with where that wont be. Im to not saying we wont have any. Well see. Theres tax cuts, less regulation. Were also watching crude prices. Historic agreement by major producers. Opec and russia agreeing to cut oil 1. 2 billion. Almost 53. Of course everyone, jason, is trying to figure out where they can poke holes in the opec agreement. Do you see any bad news were ignoring . Exempt for the eventual cheating that will inevitably happen. I think, you know, Stable Oil Prices are best for everybody involved, i would imagine. I am not an expert in that area. Im more comfortable with 50 a barrel oil than i would be at the beginning of this year, we had 26, 27. There were real questions whether we were going into an industrial recession. Stable is better than other alternatives. We will talk a little bit more about some of the contours of that deal. Here are some of the other big stories were watching today. President elect trump will kick off a thank you tour, visiting cincinnati, ohio and indianapolis, indiana. Meantime, Goldman Sachs coo is considering leaving the firm. He met with the president elect this week and politico reports he could be a contender to head the office of management and budget. Cohn has been seen as a likely successor to plankf he ein. He has been a deputy for a decade. He is considering whether it is time to move on. Fit bit is in advanced talks to acquire pebble. They launched a smart watch years before even the apple watch. The company has benefited from funding on kickstart thor. Thats where it got its start. The combination would help fitbit ebs panned on on product offerings. They are reportedly hoping to sell for 200 million. That would be a big deal to swallow if you are fitbit. Stock is up in premarket trading. Weekly jobless claims are out at 8 30 eastern time, followed by i is sm Manufacturing Index and construction spending. Loretta mester and rob kaplan reporting today. Dollar general, workday and smith wesson report today. In ever National Newspaper includes a story on president elect trumps pick for treasury secretary, Steven Mnuchin. And it matters what the treasury secretary does the at the behest of the president. Yesterday he said americans should expect the largest tax change since reagan. Our most important priority is sustained Economic Growth i think we can get to sustained 3 to 4 gdp. That is absolutely critical for the country. This will be the largest tax change since reagan. Weve talked about this during the campaign. Wilbur and i have worked very closely together on the campaign. Well cut Corporate Taxes, which will bring huge amounts on of jobs back to the United States. He he also talked about doddfrank. Also talked about lending and a lot of other issues. The number one problem with doddfrank is its way too complicated, and it cuts back lend. We want to strip back parts of doddfrank that prevent banks from lending. That will be the regulatory side. Lets get back to the markets on the first trading day of the month. Sarah hunt at alpine funds. And paul hickey of Bespoke Investment group. And jason with research partners. We had already talked a little bit and sarah and paul about the interview with mnuchin yesterday. Did either one of you have strong feelings about what you saw . The pick and what he discussed is shows where all the bomb throwing in his rhetoric on the campaign trail, he is a practice ma activity in nature. And picks from the practicing ma activity. Trumps tax plan mnuchin was one of the key proponents of the 33 tax rate. Other people wanted it lower on trumps team. His rationalization was we are not going to get lower than that. So we will go with a number we can get past. They are going in with realistic expectations. As it was pointed out yesterday, theres campaign talk. Yeah. But then theres legislation that needs to be written. Who knows what that finally looks like. Maybe something between paul ryan, mnuchin, donald trump. Will it be productive do you think . I think certainly a lot of talk about Corporate Tax reform for a couple of years. If we can get something done on that it will help the perception and help some of the issues that have gone on versus more competitive versus less competitive for the u. S. There is a will to do it. You might be enough to get some people to the table. But do you have the enough to get it passed and how much horse trading is going on. How closely do you think the tax reform that well get matches the reform that the Trump Campaign was discusses before the election . Because the house plan calls for Corporate Tax rate of 20 . President elect trumps plan calls for 15 . Obviously that would be a huge cost of revenue at the federal level. If i could handicap that i could do a lot of other things pretty well. I think there will be maneuvering around that. The question, is it going to be as much about the headline numbers and what goes on underneath. Even for personal taxes, if youre taking away some things, are you putting in lower rates but taking away deductions. There is optimism something is going to get done. So it is just optimism that we will move forward and reign in some of the regulation, reform some of the tax code. I would say my own opinion, not to recap jack lew. The treasury secretary, as long as he shows up basically to block deals. Having a treasury secretary that actually seems to be pro business is that like a technocrat. Its good. Its a change. I was actually watching the show before us, which is even earlier. We had the typical guy on. Typical strategist saying three to four, no way gdp growth. No way you can do it. Probably the same group that said if trump is elected, the markets will collapse. But then it was the same thing. He said, you know, productivity. You cant get the growth. Population growth isnt enough for three to four. You can do the stimulus maybe for a couple quarters. Absolutely no credence to supply side stuff, like cutting taxes or deregulation. All we can do is that is the kind of thinking that got us 1. 5 , isnt it . The one Thing Companies have been doing because of low rates and high regulations, as long as Financial Engineering as opposed to cap spending. The reasonist has been weak, most are issuing bonds to the buyback stock. They are using the money to buy other companys bonds. Right. If you do something affirmative to build growth, productivity wont be close to zero. It will be like one or two. Im not as defeatist i think as some of the other people on 1 to 2 growth. What about 3 to 4 . I think it is very possible. For more than two quarters . It is is certainly possible. Youre not going to get there shooting for 1 to 2 growth. As so many people seem to think that is the maximum potential. If youre going to spend eight years with our basic goal as redistribution, youre going to accept 1 to 2 . That looks okay under certain circumstances. Do you think it is possible . I think it is. I dont think you can get it out of the gate. Reregulation will help. Taking some of the shackles off some of the things we have had. And changing some of the health care might help too. That has been a big cost to the a lot of firms. And that made people somewhat reluctant to say, hey, i want to hire people full time. People, generally speaking, are optimistic. I think it takes a little while. You have to the see what they can get done. Okay. Sarah, thank you. Paul. Thanks. Jason, youll be with us for the entire time . If youll have me. Ill be here as long as you want me to. He did get up this early. At least, jason, if youre here, youll see the show. Where were you yesterday . I was in chicago and milwaukee the last two days. For business . For business, yeah. No cnbc in milwaukee. Coming up on cnbc, the trump transition is at a historic moment in time with ripple effects in every is sector of the market. If youre not sure how to play it, stick around. Well run through potential changes to the tax code, and regulation that could break or make your portfolios. Squawk box will be right back. Welcome back to stock box. Heres what president elect trumps pick for treasury is secretary said on squawk box yesterday about Economic Growth and his expectations for Interest Rates. I think that Interest Rates are going to stay relatively low for the next couple of years. And were in a period of time of low Interest Rates. And i think well stay there. Interest rates have come up a little bit, which i think makes sense. Well be looking at the treasury, all different types of opportunities. We will look at potentially extending the maturity of the debt. We will have higher Interest Rates. That is something this country is going to have to deal with. All different opportunities. But we went from everyone you talked to were talking about the savings, supply problem. And we were fully comfortable thinking we would have another three, four years of sustained. You know, we go up a little with the fed. We were all convinced this new normal will keep us at low interest. It was an aberration. We will go back to this mean of 2 or 3 . All of a sudden people were thinking were immediately going back to 8 or 9 . When he said it, it was like, wow, maybe the dollar doesnt go so high it cuts off exports. Maybe we do still stay we go up a little today, 2. 4. It doesnt mean we go to 5 , 6 . We dont blowout the deficit. Hes not even president yet. Do you worry we blowout the deficit and worry about a bond market collapse . No. Usually the rule of thumb is it is where nominal gdp is. No matter we have been low. We are about half where you would normally be. So exceptionally low, artificially taopg because you have had all of this input from Central Banks around the world, getting back to normal Interest Rates is good. Its particularly good for bank. The steep epping of the yield curve is good for interest margins. You need banks to participate in monetary policy. In many ways the policy we had under the Obama Administration is sterilized by tight regulatory policy. So the irony was only the wealthiest people really benefited. The average person that had a savings account did not benefit. So this is a good in my opinion, its a good policy mix. What happens when the fed begins to unwind its own Balance Sheet at the time . Thats an interesting question. I dont think theyre going to do that. I think they will keep the Balance Sheet pretty high for a long period of time. Thats the plan. You grow into the Balance Sheet, which i think would take 2023 or something. You would get back to where it would have been normally. But i dont think i dont see the fed tightening aggressively. I also say, to be fair, despite some of the rhetoric of president elect trump on the campaign trail, i dont see him replacing first of all, he cant really do it. Right. A lot of people talk about tight money until theyre president. And they had we dont have to be dramatic, tight money people. Central bank input. Growing into the Balance Sheet. Cut someone off at the knees. Joining us now with more on the trump trade, Chuck Gabriel is managing director the a Capital Alpha partners. Lets bring you into the conversation. We were talk building what happens to a trump presidency, what happens to spending, Interest Rates. Which are you more focused on right now . Im very much focused on the legislative side of it all. Like jason was suggesting, is cognitive dissidents and disbelief about what is doable, if you will, and the process well have to go through. The fed will be dancing like ginger roplgers with fred astaire with the physical side of it all. We have be gown see warnings from fed chair yellen not to get too ahead of itself or for, too, aggressive. You say the street may be enjoying false confidence right now. Why dont you think its real confidence and whats to come after january 20th . Again, there are a number of pieces to all of this. Clearly, you know, there are certainly reasons optimism after seven, eight years of what weve been through. An administration has been coming in. Dethe regulation is very important for medium to longerterm bases. Beginning to make assumptions about that immediately. That is certainly very rational. They are beginning to make sump you shuns about lower or corporate insurance rates. The next leg, for instance, for financials, youre going to have to see a number of things fall in place. Im not suggesting theyre necessarily ahead of themselves. But particularly in terms of what they are expecting in washington i watched cnbc yesterday. The tphoegsz of a big trillion dollar giveaway is ahead of itself. And a former cbo director saying, hey, listen, you guys are way too focused on the trump proposal thrown in at the very end for the American Voter in a package that the House Republicans put together for an intellectual exercise. Were starting fresh. There will be pressure to create at least some bipartisan support for a bill. I think the markets are expecting 2 trillion doctors to 4 trillion. I put the over under at a trillion and i go with under. I think theyre hoping for a 20 Interest Rate. I think it would be herculean if they could get it down to 25 . And there would be pain involved for some Companies Just based on the tradeoffs. Well Interest Rates are going to stay low . Well, i think they will stay lower longer. I think mr. Mnuchin is right. I dont think youre right about a lot of this stuff. Joe, ill make you a one dollar bet. Why dont you think im right . Im more optimistic that mnuchin trump is not supposed to be president either. Were you predicting that . I had 45 odds at the end what was going to happen to the markets if he was president , in your view . I felt strongly that the worries were grossly overdone and you would have a reversal just like with brexit. I think it will do over a trillion probably. And i think we can get under 25 out of the Corporate Tax rate. We have a Republican Congress. It is just not that easy, joe. Right now you have 5149. Hopefully it will be 5248. Maybe with reconciliation. Again, let me just say, what a lot of people are missing is the dollar number is associated with net tax relief, 2 to 4 trillion you can do an awful lot that will have a market impact. But there is a big difference between tax reform and tax relief. Mr. Mnuchin himself talked to you about tax reform yesterday. He has to get confirmed. How much opposition do you think mnuchin will face . Oh, it will be loud and noisy. But there are a number of factors will will give him the right to have his treasure seu secretary. He will win. Goldman sachs will be blashemed in the process. The Company Announced results of one of its cancer drugs. The ceo is next. What i love most about tempurpedic mattresses. Is that they contour to your body. It keeps us comfortable and asleep at night. Get your tempurpedic. The most highly recommended bed in america for as low as 25 per month and 90 night free trial. Welcome back to squawk box on cnbc. U. S. Equity futures at this hour are up. At least for the dow. But next because the down fraction a alley on the s p. Nasdaq is down 2. 5. Yesterday was weird. I looked at it about 3 15. It was still up 30 or 40 points. Then i looked away. When i checked at close, up a point on the dow. All right. Now, though, the check on the latest news and rumors from the trump transition team. Three ts in a row. Did you see broadcast news . Youve used spray or something. We havent seen your fauxhawk since that one day. That got a lot of play on twitter. That was quite something. I love to be known for my hair style. Im a fashion forward kind of gueye tv person would never be be known to be concerned with their hair. That would be the first concern ever. Whats going on . Has it stopped raining yet . 40 days and 40 nights. It did. It is a little bit dryer out here than yesterday. It is probably a lot more rumors and news than today at trump tower in terms of who is going to sit on the sidelines. We have a couple wall street related surprises. The u. S. Attorney for the Southern District of new york stopped by here at trump tower yesterday. Folks were surprised to see him, wondered what that meeting was all about. When he came down from the meeting with donald trump, he stopped and talked what it he was doing here. Heres what he had to say. He is aware of the great work our office has done, asked to meet with me to discuss whether or not id be prepared to stay on to do the work as we have done it independently and without fear of favor for the last several years. We had a good money. I would absolutely consider staying on. I agreed to stay on. I have already spoken to senator sessions who is, as you know, nominee to be attorney general. He also asked that i stay on. So i just assume i will work at the Southern District of new york. He is a democrat. Started out his career working for senator Chuck Schumer as his being a democrat on capitol hill. He said he spoke with him and schumer said he endorsed ferrar ra to trump. Thats where we are here at trump tower. Also 12stopping by is gary coh rumored to be the consideration for omb chief. We will see whether that materializes and goes anywhere. Clearly a lot of new york and wall street connections here in this upcoming Trump Administration, guys. Amon, ive got bad news for you. Theres more rain coming today. Good to know. We have our umbrellas out here. We have everything covered in plastic flt were ready to go. Well be here all day. Donald trump, by the way, will not be here. He is going to indiana. And cincinnati. Gods country. Thats right. We were missing an i. If anyone doesnt have the sound up, they think he is sad. He said he will stay on. I dont think he expressed. He looked happy. I cant see the graphics because it is floating in the air. Ifs trying to read his facial expression how he felt about this. Okay. If you want me to think about it. I think he wanted to the stay on. It can be tough to tell. He is not the most emotive guy in the world. Kind of cant tell. Hes nonpartisan. He is pretty well regarded in all circles. So thats a good sucking up to him. Sorry . You set up a dynamic where the u. S. Attorney now has a direct pipeline to the president of the United States. That makes him something of a super u. S. Attorney in terms of his power and he will be seen, the fact that he met directly with the president elect puts him in a different level maybe than some other folks around the country. Good point. That will be an interesting one to watch, particularly if he handles any cases that implicate the Trump Administration, friends trump, anything like that along the way. Thats a good point. Thanks. Well see you later. Gene therapy. Bluebird out with news late yesterday that blew the stock up 20 . We have the details and a special guest. Thats right. Bluebird coming out with data approximate using cartine immun on o therapy, beefing them up, and then giving them back. Were joined by the ceo of bluebird bio. Nick, thank you so much for joining us stpwhrfp. Hi, meg. I cant see if youre wearing your signature blue sneakers. This is showing surprise among investors. What does this mean potentially for people with multiple myeloma. This is for patients who have tried pretty much everything. They were willing to take a risk where we try to harness the immune system to attack their cancer. As you said, this data is clearly early and exploratory, but also quite exciting. The efficacy is quite profound. Its coming with a mild toxicity profile, which is i think what maybe the a little bit of extra excitement is around the field. So were very pleased. This doesnt happen often in our world. So its a good day. You mentioned the safety. That being a focus last week with juneau, having to the stop one of their programs because of safety issues with their cartine program. How has that affected how you are thinking of testing this drug . This is early, right . My heart goes out to the patient that juneau is trying to help as well. I think they are doing the best they can. Again, this is quite a different disease. This is a different construct going after multiple myeloma. It hasnt affected our plans. We are watching this carefully. Were getting pretty profound responses, which is unusual at this stage for these unfortunate patients. So that coming with very little of what you said the immune system starts to attack. Were seeing little early on, but were getting to the efficacy part. That is the exciting piece. We will continue to explore it and see where it takes us. Nick, i also have to ask you more broadly about the political environment in the drug industry right now. Obviously you are precommercial. Kwrao you not pricing drugs just yet. There has been alevation of that pressure on biostock since trump was elected. And it may free up cash for mna. How has it affected you guys . It wasnt. Maybe im naive. The way we focus on the bluepeurd and the approach were going to take, which we are fortunate enough to bring this is to really think about the value that it brings forward and be considerate of all stakeholders. There are patients, access that has to be considered. There are payers, private and public, that has to be considered. Because if year thinking about bringing one time potential transform active treatments to the market place, the system is not ready to digest that. We have to find creative pricing models that work for everybody. We share risk. Everybody feels good at the end of the day. Innovation of our type and others in the industry are coming along with us and behind us and can be supported by that. And i think thats administration independent. A lot of our viewers out there saying, what about the response . But is that typically one of the problems is that you can see that . Is it fullblown sepsis or just a little bit of a response . Because that will kill you, right, if its bad enough . It can. It absolutely can. Remember, what we are trying to do is we harness the immune system. We are taking out part and engineering cells to basically go into the bead and specifically target the cancer. And then basically set off a reaction at the site of the tumor. Imagine if it goes off at the wrong place. Thats what we have tried to focus on. How do we get it to go off at the right place. Nick, thank you for joining us. Thank you for having me. Riding the trump rally. Blue chips gaining 4 . Small caps gaining twice that. A live report from americas oldest studentrunnin vesting club. Thats up next. Were drowning in iormation. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential stocks rallying big time since donald trump won the election. But are millennials getting on the action . Morgan brennan joins us from pennsylvania, home of americas oldest studentrun investing club. Morgan, what are they saying . Reporter as you mentioned we are here at lafayette college, enrollment of about 2,500 students. They do not offer degrees in business or finance but is home to the oldest studentrun Investment Club. It manages about 560,000. It is is part of the schools larger endowment. United health, activism, expedia, boeing. It has been a mixed bag so far this year. United health has been a big winner. Not all have been quite that good. But it is a learning curve. We will be sitting on the clubs meeting a little bit later today. In light of the big rally we have seen post election with trump taking the presidency, joining me now is the lafayette Investment Club co president. Thank you for joining us today. Thank you. How is the Club Approaching this rally . Well, just recently we bought a big bank, barclays. This was due to Donald Trumps election as president of the United States. We thought might as well take advantage of that since some of his plans included raising Interest Rates and reducing regulation on banks. So we thought this would be a great time to get into the financial sector. We were already pretty heavy in it. We wanted to continue buying barclays. You have certainly seen forema financials. Are you looking into other stocks . Mainly health care. Now that hillary is not our president. She was planning on raising prices for prescription drugs. This has definitely helped health care sector. We will continue the staying heavy on that sector since the health care is 80 of our portfolio. The other major events we have seen, we had the opec deal reached yesterday. The big surge in oil prices on the heels of that. We have the fed meeting. A potential rise in Interest Rates as well. Are there other things that youre looking at . Well, were just looking at the general trends of the market. Especially with the opec deal. We are trying to look into investing on the oil company. Do you think this market could go much higher . Definitely. We could definitely see that happening, yeah. Othman, thank you for joining us this morning. We will be sit issing down with the rest of the students a little bit later this morning. Kayla. An interesting conversation. Well be watching Morgan Brennan out at lafayette college. Thank you. All right. I wonder if they have to meet incognito . Are you allowed to be part of capitalist, the whole system, and betting on trump and trying to capitalize on his election . Energy stock. Really . The safe zones. I dont know. Trigger. I dont know. I hope we dont trigger anyone with that. Coming up, small caps soaring. Up 11 since donald trump won the president ial election. Well tell you how to ride the rally next. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Why pause a spontaneous moment . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. 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Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. Small caps were the big winners in november. The russell 2000 outperformed all major indexes ending the month 11 higher. That was the best 30 days for that index in five years. Joining us with more is founder and ceo of sedoty and company. Thanks for being here. Its great to be here. You dont generally think of small caps as the ones that are going to be repatriating a lot of cash, that are going to be the biggest beneficiaries of tax reform. What was it that propelled the russell . In the last month, three things. One is just think about who actually pays taxes. Small Cap Companies pay taxes. Much more so than large Cap Companies. They cant transfer money from overseas. They dont have e the ability. If you look at money actually paid, small Cap Companies actually pay taxes. The second thing is if you look at the regulatory environment, regulations generally are beneficial to large Cap Companies in that they prevent competition, create costs. Made most small cap managers very, very happy. As they look into the future. But of how much farther they can go and how much more room there is to run. Yes, theyre up 11 for november, but in the last year theyre only up 9 . Theres an idea they had just fallen out of favor and they got a bid. Think about two things. Jason certainly can speak to trends and whats gone on. The second issue is youre right. Theyve been out of favor for a very long time. Generally tend to come back into favor. What are your picks . What are you betting on right now . Again, we think overall the industries are Going Companies are going to do very well. We only cover Profitable Companies in general. Were watching the earnings improve, everything pick up. The two names were most that i would recommend today. One is amn health care and the other is nautilus. Why those two . Both have great growth, great track records in terms of where they are. High returns on equity and reasonable pes. In this market its difficult to find some that meet all those. The small cap indexes are benefitted when more go public. Theres more supply and more stuff to buy for investors. Were going to see more of that . I hope so. But again, between regulations and the consolidation among five or six large firms, youve really created some real barriers to ipos in the market today. Its good to see you. Thank you very much. Peter sidoti. Jason, thanks for being with us for the hour. We were talking during the commercial whether you think main street and the Retail Investor will finally come back into stocks. Im hoping so. Theres been people have been expecting this great part out of bonds and into stocks. It hasnt happened mainly because people continue to make money in bonds. But now i think when they get their statements in the next week or two, they see some of the gains that have happened in small caps. Perhaps this will be the impetus for people to move out of bonds and into stocks. Coming up, were going to talk about tomorrows jobs report and trump nomices with Paul Mcculley. Could president elect trump and santa claus be headed for a collision on wall street . Well get you ready for the last trading month of the year and find out if investors will be Steve Mnuchin making global headlines this morning. This will be the largest tax change since reagan. Reaction to that interview and more from former deputy treasury secretary robert kimett straight ahead. And at t is entering the streaming warhead first. But is it enough to pull you away from your cable carrier . Well debate as the streaming wars heat up as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc. Im joe kernen along with Kayla Tausche. Futures are now indicated up 21 on the dow. Kind of interesting. But the s p is still slightly in the red. But by less than a point. The nasdaq under two points. And look whos here. Kind of in a Holding Pattern the last couple days. People dont know youre here. Theyre like, whose voice is that. Top of the morning to everybody. Weve got a full house. We do. Should i get if you want to. Kelly evans is here. Are you working this afternoon . No. Just coming in for this. Thats a good gig. Like many im cramming for saturday, its the cfa level one exam. Unlike many, i dont have a shot of passing this thing. But ive been taking some time. A few busy things have been going on this fall. Are you trying to get another job . Why are you taking the cfa . In this job you can know too much. I would know about that. I wouldnt know about that. Im nowhere close. Here are this mornings headlines. U. S. Automakers will be out with november sales. Estimating sales will be up 2. 7 from a year ago. Sales would register their best november ever. Mcdonalds is also apparently closer to selling its china operations. Financial times reporting that a joint bid from citic and carlyle is the most likely winner. That sale could be worth 3 billion. And the largest owner of rental homes in the u. S. May go public soon. Blackstone Invitation Homes has filed for a public offering. Invitation homes is potentially valid at 7. 5 billion. Thats a really big deal. Many dont know blackstone is the nations biggest landlord. Its the biggest rollup of Single Family homes in this country. They went out and bought all of these properties out of foreclosure, picked off the inventory in the market. I talk to people in their markets who said why am i bidding against someone who wants to rerent this out . Im trying to own this home and theyre out bidding me. People who want to buy homes wont stand a chance. I wonder what this would look like as a public company. Also American Homes for rent, that was another biggie. This is what has changed the Housing Market the last couple years. All of a sudden the investors arent in there. They snapped them up at cheaper prices. Paul, thoughts on this . Who are you . Paul mcculley. Okay. I thought we were going to introduce you as bob lear from the grateful dead. But youre Paul Mcculley. I am. Youre not leon russell. Good to see you, joe. Good to see you. You got the glasses going. What are you doing now . Are you up on that mountain still in the lotus position . Actually, i just finished teaching a semester at the law school at cornell up in ithaca. No way. Tuesday was the last class of the semester. The next couple weeks ill be grading exams and all of that. Teaching what course . Actually, i created a course thats a joint venture between the Business School and the law school. Dealing with finance, law, and macro dynamics. Its a seminar level class. It was great fun. I really enjoyed doing it. Excellent. Youll be here all the way until 9 00. I will. Good. Fantastic. The front page of every International Paper includes trumps pick for treasury secretary. Steven mnuchin. He said to expect the largest tax change since reagan. Donald trumps pick for commerce secretary wilbur ross was also here on squawk box yesterday. Our most important priority is to sustain Economic Growth. I think we can get to sustained 3 to 4 gdp. Its also not true that all jobs are created equal. A guy who used to work in a steel mill now flipping hamburgers, he knows its not the same. So its the quality of jobs as well as the quantity. And one of the problems with the recovery is when the newly created jobs are not nearly as remunerative as were the jobs that were lost. Were going to cut Corporate Taxes which will bring huge amounts of jobs back to the United States. The treasury secretary designate also talked about dodd frank and lending. The number one problem with dodd frank is its way too complicated and it cuts back lending. So we want to strip back parts of dodd frank that prevent banks from lending. And thatll be the number one priority on the regulatory side. And were going to have a lot more reaction to trumps pick for treasury secretary in just a bit with former deputy treasury secretary Robert Kimmit. He has been called the new face of American Business but he is very familiar to squawk box virus. And businesses that run the gamut. Not just domestic but globally as well and finance and autoparts. I mean, hes had an amazing career. He has. And hes got, you know, a couple of billion dollars to show for it too. Not that thats a good thing or any measure of anything. Well, that was quite a coup yet to have both of them here yesterday to talk about all of that. Kicked into overdrive by the plans of the president elect and his newly formed team, certain stocks have found a striking new lease on life. Dom chu joins us now with a look at what were calling the redemption. Rotation. Stocks once left for dead now seeing a renaissance. Absolutely. The election plays a part into the strength. But many sectors have seen a huge resurgence, rebirth, a phoenix from the ashes move since their lows over the past 52 weeks and maybe exacerbated a bit by the possible trump policies we will see. One well talk about here in the s p 500 Energy Sector. We know about the massive moves in prices for oil. We know about the trading volumes in energy futures. While we have seen a nice surge just over the past few weeks or so, check out whats happened since the lows we saw in january for the s p Energy Sector. We talk about oil all the time but three of the best performing stocks within the s p 500 Energy Sector are actually related to natural gas than they are oil as well. Lets take a look at some of these stocks that have posted the biggest gains since their respective lows this year. First of all, the biggest one out there in the Energy Sector since its 52 week low, chesapeake energy. Also williams, natural gas play as well from the pipeline side of things. As is oneok. 195 gain. These are among the biggest gainers as people look to see whether or not they can find some way to buy these value stocks. The question now becomes whether or not these are gone a little bit too far too fast. There are only a handful of sectors that have seen this massive move higher. Energy is certainly one of them. But joe, certainly from at least a trading point of view, you got to wonder whether or not some people are thinking maybe these stocks have taken great profits so far. We got to see whether or not we can keep up these types of gains in the future. By the way, joe, i want to say mr. Mcculley is a cornell graduate. Im happy you were teaching at that school. I know someone else who is a cornell graduate. Usually sets right here. In that spot right there. Him too. Thats what youre standing in front of one of my favorites. My entire life i thought it was like a native american oneok. Its oneok. Its not well, move out of the way so we can see it. The best way to learn how to pronounce the name of a company, i learned this one of my first days. You pick up the phone, you call the company and you see what they say. Ive done that like 25,000 times. Its a good trick. Let everyone into the fold on that one. Sometimes they dont know. Used to think that about jbill circuit. Its jay and bill. A couple of dudes that started the company. Jay, what should we call it . I dont know, bill. Thanks, dom. Lets talk more about the trump rally. Joining us now jeff stoudt. Jeff says small caps, industrials, and tech are all places investors could make money. And also paul is here, our guest host this morning is Paul Mcculley. Senior fellow at cornell law school. Former chief economist at pimco. Ill start with you since youre not going to be here quite as long. I remember all your calls. I remember the rally that was going to really be good and then it didnt happen. You got really bullish again. Most recently. February. And now were seeing it. Yeah. I think the first leg of the secular bull market began in october of 08. It peended in may of 15. I didnt think its going to be longer than the first leg. In were transitioning from an Interest Rate driven secular bull market to an earnings driven bull market. And i dont think youre on my list of people that were just dead wrong not only about the election but about what would happen if the election turned out this way. I was dead wrong when i called the second week of december of last year for a rip your face off rally. Im not talking about that. But for the election, you didnt automatically think hillary was going to win. Thats right. You didnt think if trump did win that it was going to be trumppocolypse. Because it hasnt been. Its been i think the people hes appointing are, you know, people that can get things done. And i think the market is sniffing that out. All right. Lets get to a bond market expert. Whats the worries of blowing out you have never been the big hawk on things like that necessarily, right . Youve liked the feds accommodative stance. You thought we needed maybe even more of that. Are you worried more about blowing it out . Ive liked the accommodative stance. My ax to grind in recent years is we needed more fiscal policy expansion because were in a liquidity trap. And were putting too much responsibility, too much duty up on the fed. And we needed some help with quite frankly larger budget deficits. You shouldnt throw duty at the fed. Nobody should. Thats what monkeys do, dont they . You better watch out. Because youre almost going to sound like youre happy trumps going to do the fiscal spending. Youll sound like a trump guy. In a narrow sense, i am. Oh, my god. I think its about like this. No. Ive never had an issue with increasing the size of the budget deficit. I think its been too small. You have zero problem with increased Public Investment and funding it with deficits. And to the extent that mr. Trump wants to do that, i think that is the right keynesian policy. My complaint about the person i voted for mrs. Clinton is i will not add a penny to the national debt. That basically was putting you in a straight jacket of fiscal austerity forever. You dont have to worry about that anymore because shes not thats not going to happen. But i look at the market right now essentially is celebrating the end of fiscal austerity. It just happens to be in the vehicle of mr. Trump. But the end of fiscal austerity is the key economic issue. Im sure you like the deregulation and the tax cuts. I dont think hes going to get to 15 . But even if he gets to 25 , you get another 10 in earnings for the s p 500. And whats happened so far, it makes the 130 bottom up operating earnings estimate for next year look achievable with whats going on in profits. Quick question on that. Its unclear to me how Many Companies are reporting close to the statutory rate or how many of them have an effective tax rate thats lower or not affected that much . Theres a lot that have lower than 35 . But i would point the negatives came on here and told you Third Quarter earnings would be negative. But came up 5. 2 . But you said 10 million you can put on the if you get a 25 tax rate. So that takes into account the fact they might be reporting lower effective tax rates than 35 . Yes. Even with that being the case, because thats a big deal. Its a big number. You bet. Let me come back at you on that one. Youre saying were going to have an earnings driven bull market from here which implies that from the standpoint of corporate profits as a high share of gdp in our lifetime, youre going to continue growing corporate profits. So what is the cap in your viewpoint of how big profits can be a share of gdp . Remember mr. Trump got elected from the standpoint of main street finally getting a piece of the pie and effectively youre forecasting that wall streets piece of the pie is just going to get bigger and bigger. Square that circle for me. I think profits as a percent of gdp are around 7. 2 right now. I dont know how high that goes but i am in the Ronald Reagan camp. If company dos well it will filter down to the guy on the street. But the guy on the street wants a bigger share of that right now. I think theyll get a bigger share of that. As businesses do better, i think it flows down. That means if the gal on main street gets a bigger share then corporate sector gets a smaller share which implies growth less than the economy. Why doesnt that arithmetic work . I think that u. S. Companies have gotten so lean and mean as revenues pick up and revenues are picking up across the board that profits to the company will increase and i think that valuations are too low, by the way, in the s p 500. I believe in trickledown economics. Fair enough. Hes honest. Coming up, hes splashed across every major newspaper this morning. The president elects choice for treasury secretary Steven Mnuchin telling squawk box yesterday the largest tax change since reagan is coming once donald trump takes office. We ask Robert Kimmit about the trump tax plan and the challenges he faces. Squawk box will be right back. Our most important priority is sustained Economic Growth. I think we can absolutely get to sustained 3 to 4 gdp nap is critical for the country. To get there, our number one priority is tax reform. This will be the largest tax change since reagan. Weve talked about this during the campaign. Wilbur and i have worked very closely on the campaign. Were going to cut Corporate Taxes which will bring huge amounts of jobs back to the United States. That was Steve Mnuchin yesterday here on squawk box on what to expect from the Trump Administrations economic agenda. Investors are expecting some pretty sweeping changes. Joining us now is former deputy treasury secretary Robert Kimmitt. Thanks for joining us. Thanks very much. How quickly can the Trump Administration move on some of the things that mr. Mnuchin was talking about . Some quickly. Particularly in the tax and Bank Regulatory area, theres ban lot of activity by the Current Treasury Department in the regulatory area. The treasury secretary working with his Bank Regulatory and tax counterparts will be able to go after those right away. Of course tax reform of the sort of mr. Mnuchin was talking yesterday in your rather extraordinary session with the two nominees will take at least a year, probably a year and a half before it could be enacted. And what ultimately do you think the numbers are going to be . As you probably heard in the last discussion, thats the mind of where people are. How low can they go . Should we get our hopes up yet for Something Like that to happen . I think that the chance for major tax reform is as good as it has been since 1986 when we had our last major tax reform. I was jim bakers general counsel at that time. Very involved in our tax reform effort. By the way, at that time tip oneil was speaker of the house. Mr. Mnuchin and president elect trump face a Republican Congress both in the house and senate. I think that will give a good chance for moving this and moving it within the first two years. As to numbers, i think first of all having the overall theme of sustained Economic Growth is the right one. Secondly, i think putting a 3 to 4 number out there even as some people might view as a stretch is a good thing to do. And of course i think you should put out where you think this should land. I think 15 is a great starting point. I personally would like to see it end there. If it doesnt, it will end up closer to 15 than 20. Today the president elect is in indiana to discuss the commitment of carrier to keep a thousand jobs at a plant in indiana instead of moving it to mexico. It follows fords commitment to keep jobs for its lincoln mkc production in louisville, kentucky. And im wondering how often it happens where the president or president elect will pick up the phone and ask a company to keep jobs in this country. How often it works and how powerful it is to have this specter of tax reform behind that ask. It is an unusual step for a president and president elect. Personally i like to see candidates following through on the campaign trail. Said in indiana that he was going to address this issue even before he became president. He has done so. I like to see that. I will say once he becomes president , i think theres going to be less time for him to be involved in inindividual cases. That would be for people like wilbur ross, Steve Mnuchin and others. The other thing is to create a good Investment Climate in the United States. Both for existing companies to grow. But also to attract new domestic and i would say foreign direct investment. Theres 6. 5 million americans who work in the United States for companies headquartered overseas. And interestingly, 40 of those jobs are in manufacturing versus 13 of the overall economy. So i think making this a more attractive investment location, lower tax, less regulation is going to help bring those jobs back. But more importantly great new jobs. Certainly that is the focus of the administration. But how many jobs reasonably do you think we could keep in this country . Do you expect what ford and carrier are doing to be one off situations or is it the beginning of a domino effect . I believe personally its the beginning of a domino effect. I believe the word is going out that this is going to be an administration committed to Economic Growth fundamentally to produce Good American jobs. And the movement i would say first on the regulatory side is going to take some time obviously for legitimaslative change. Theres a lot that can be done on the regulatory side. Then broader changes to get dodd frank, volcker rule, and others amended. Even fannie freddie. Thanks for joining us. Thank you. Coming up, the cord cutting wars are heating up. It looks like pressure is coming to get you to leave your cable company. But is it worth it . We find out. Plus president elect is already negotiating deals before he takes office convincing carrier to keep a thousand jobs in the states. He plans on visiting that plant today. A live report is straight ahead. Squawk box will be right back. Manage my portfolio. D since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound still to come, were watching oil prices this morning after oil output production agreement. Rising above 50 for the First Time Since i believe late october. More on crude in just a minute. Squawk box will be right back. Welcome back to squawk box. Among the stories front and center this morning, were watching shares of Filtration Company clarcor this morning. Being bought by an 83 per share price. Nearly 18 premium over yesterdays close. Those will be stocks to watch. Parker probably wishes it was or hannifin probably wishes do we tell everyone garmin is a guy named gary. This is im trying to think of how youd rename squawk box in that philosophy. Jobecken. Squawk didnt either at 25 years ago. As long as it starts with joe, hes cool with it. As it should. Its also a busy day for economic data. In about an hour, well get the weekly figures on jobless claims. Later on the november autosales, november Manufacturing Index from the october construction spending. Those will all be headed our way. And passed a bill aimed at speeding up drug approvals. Observers say its likely to pass. So theres something to happen in the lame duck session. President elect trump, meanwhile, will be in indiana today after striking a deal with carrier, the air conditioner manufacturer who is a unit of United Technologies. But it is keeping a thousand or so jobs from moving to mexico. Phil lebeau joins us now with more. Some weird backdrop to this, too, phil. I guess pence as governor didnt try to do this as governor. But then he did it now as president elect. Is that got that right . Well, he tried. He tried as governor. He tried as governor, but its a lot different when you have the president and you have the United States government saying maybe you should reconsider. By the way, remember that youve got about 6. 5 billion worth of defense contracts with the United States. Thats not the sole reason according to people who have been tracking this, but certainly was an influencing factor. Heres whats been happening here at indianapolis at this carrier plant. This is the plant thats been the focus of so much controversy ever since during his Campaign Candidate donald trump said were going to keep this plant from moving to mexico. And thats whats happening. The furnace plant here for carrier will stay open. There are 1400 employees here but those 1400 employees, its going to end up being about 800 who stay here. Over a thousand when you factor in the staff. What did they do to get it to stay . Theres an incentive package of about 700,000. That package by the way brokered the entire deal brokered by Vice President elect mike pence. Keep in mind utx has about 6. 7 billion in defense contracts. And it doesnt you dont have to go far to imagine the utx leadership said we dont want to start things off on the wrong foot with the Trump Administration. Understandably workers here are thrilled that this plant is staying open. It was shocking. It just seemed surreal. The phones going off and people telling me our jobs are being saved. It was just crazy. They started talking and being happy that they would be able to maintain their jobs, their homes, and take care of their family once again. Take a look at shares of United Technologies over the last week. Essentially this has happened within the last week. Remember the first tweet came from donald trump on thanksgiving saying working on a deal to keep the carrier plant in indianapolis. The shares really havent done a whole lot. President elect trump along with Vice President elect mike pence will be here. We want to show you rxn. This is rexnord. They are familiar with it here in indianapolis. They have a bearings plant not far from here, guys. And that plant is in the process of being shut down and about 300 jobs will be shipped down to mexico. The Steel Workers union said this morning he plans to meet with president elect d. O. T. Ask him to keep that plant, the rexnord bearings plant from moving down to mexico. This goes over the question you were discussing on squawk box. What happens with all these other companies as they discuss moving facilities outside the United States. Does the administration become actively involved in trying to convince those companies to reverse their decisions . Guys, back to you. You can take this too far, i guess. Theoretically. I like it. Its great. Im so happy for the people. So the government decides youre going to move . Then were not those contracts are canceled. That gets a little incestuous. Well, joe, heres the thing. But they certainly implied it, right . I like it. I do. But it just seems like someone that didnt like it could make a case that its a little too i dont know. Joe, you could also make the argument that if youre the ceo of United Technologies, the prudent thing to do is to look at this and say pragmatically does it make sense to move it to mexico . Probably bottom line it does. Business sensewise, is it wiser in the broader perspective to say, okay, well take the hit here but its going to help us in the long run. That might be one of the considerations there. Phil, for the bottom line, these agreements are put in place years before the move actually takes place. And carrier had nearly completed a 645,000 square foot facility in mexico. What happens to that once those jobs stay . Good question. One of the questions a lot of us would like answers to. We have not yet heard officially from the United Technologies leadership about the details of this deal. Weve only gotten bits and pieces from third party sources. So thats one of the questions thats going to come up when the ceo of United Technologies finally sits down and says heres what happened with this deal. This is why we made this deal. Certainly that facility in mexico, its there. Its ready to go. You would have to think at some point it will be utilized in some capacity. Okay. All right, phil. Thank you. Well have some cameras there, i guess. Probably be pretty raucous, dont you think . Theyre going to be happy, happy, happy. Workers, anyway. Oil touches 50 mark for the First Time Since october. Heres crude up again. Today up 1. 25 over 50. And brent up. Jim burkhart is ihs market chief. Crude oil market research. Do we move up our range now, jim . Is it 50 to 55 now or still 45 to 50 . Its probably above 50 on average. This is a deal agreed to in vienna. Its not going to instantaneo instantaneously change in the oil market. But it does tip the scales away from the surplus and into the deficit into 2017. Whats happening in the past when they try to do things like this . Whos going to cheat . People cheat now . Are we now the swing producer here . Do we turn everything back on and lessen the impact of this . The u. S. Story has been a bit forgotten. Over the last couple of days. Going to return to month to month growth next year. And historically yes, theres not full compliance. But you dont necessarily need full compliance. A unique deal here is russia is part of it. If theres modest contribution from russia and the three that could tip the scales over the next six months. So, what could cause this to unravel . I mean, are any of the producers in such dire straits or could they be in a worse position based on emerging markets of currencies that have been hurt since the election . Things like that. Are there any real vulnerable players that are just for their own budget deficits or whatever theyre going to need to sell more . Is there an inducement for some of these to cheat . Whos the weak link . The reason this deal came about is the vulnerability. The pressure has been so great over the past couple of years it really led to this deal that essentially iran and saudi arabia were able to come to an agreement. That is really remarkable. Thats the result of this pressure. So there are going to be some opec members, you know, venezuela for example, production of venezuela may fall not because their complying to the agreement but because its come down anyway. Nigeria and libya, two wild cards. Theyre exempted. Production could double in the next six months. Or it may not. Theres some big wild cards. What if we went flatout in this country . Ive seen president obama giving a speech saying youre going to thank me for 2 gas. I dont thank him for 2 gas. I think a lot of it has been in spite of what the Obama Administration has been trying to do. What if you really had a government say go crazy with hydrocarbons. What could we do and where would oil prices go . Government policy is important, but whats more important is the oil price. And the reason we have that great revival thats good. At least its a market. Good. Thats what did it this time too. Right . Right. And costs have been deflated tremendously. The average break even price for shale oil in the u. S. Is down 30 , 50 . We can turn it on quickly though. We appreciate it. Thank you. Well check back with you, see what happens. I dont know what to think of this. Well see. Thanks. Coming up, at t unveiling its answer to the cord cutting wars earlier this week. Were going to talk cord cutting and the companies trying to win you over right after the break. And heres a look at futures. Its been more of a mixed bag this week. But on the first trading day, first day of the month of december, by the way, the dow the lone index in the green there. Well be right back. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. The media sectors battle for eyeballs getting more congested this week with at t unveiling directv now option. With some new smaller channel packages. Joining us now for what they see as the future of tv streaming content and the media landscape under donald trump is larry halverty and porter bibb. Larry, you say this is going to be like the cigarette industry . Well, i think what you have here at the end of the day, kayla, its the Free Cash Flow. And youre probably looking at the paid tv universe. Its mature and probably going to decline 1 to 2 . But like the cigarette industry who has been doing this for more or less 30 or 40 years, it still has pricing power. The prices are going to go up, the units are going to go down. Theres a tremendous amount of Free Cash Flow thats going to be generated. Use the Free Cash Flow to retire stock shareholder value. People are fighting for the fringe customer. This is not the 10 of the universe that generate 90 of the cash flow. These are customers you really wish someone else would have because theyre price sensitive, they switch. You know, give them to someone else. And it makes great news. And if youre at t and have a little bit of an issue with the government maybe getting approval for a merger, youre showing the government that theres a lot of competition here. And this is really a good thing. But porter, if you think that or if you had thought in the past that the Television Industry was going to get killed, thought that cable was going to kill traditional television. And for a time people were scared about it. But it just expanded the pie. Why cant this expand the pie . Well, theres a flipside to the future of Cable Television as well as all of video. And that is the fact that the largest Cable Companies are also the largest Internet Service providers. Eventually they will start to diminish in terms of what larrys emphasizing the Free Cash Flow. But theyll make it up on new charges for faster and sharper internet delivery streaming. Which is where its going to be 10, 15 years from now. How does the m a landscape play out under this new administration who appears to be talking extremely tough about potential consolidation in this space . So can any other deals get done if people are trying to make this a land grab for content . I think in the content area, theres still too many people producing feature films. And the six studios now, the six majors are probably going to consolidate into my guess would be in the next five years. So the studio business, i think is overcrowded. Some of the Cable Networks will probably consolidate as the people who own a few networks will decide that they need to maybe a couple hundred of those. And at some point i think something will happen with the number three or number four cellular provider. So i think therell be more mergers. Its hard to say who will be doing what. Big conference next week. Everybody will have an opinion. But its very, very good for the investment bankers. I think i would want to be a Media Investment banker in this environment. Before we came back, i was talking about espn. According to nielsen data, espn lost 1. 5 million subscribers since february. Lost 10 million since 2013. So theyve got 89 million now down from 99 million. But since february theyve been losing 10,400 subscribers a day. Thats not troublesome . Not because espn is going to pick up on streaming what theyre losing in cable. Are they . Theyre starting to already. And youre going to see more and more traffic going to the internet for live sports. Its not going to be just and you make money the same way there . Well, thats where the advertisers are going. Theyre advertising on streaming. And the internet is going five times faster. You guys follow disney stock. It hasnt recovered since when was that . The initial time august 2015. Its 99 now. It hasnt been near 120 since then. So theres nothing happening here . I think that espn if you would ask me five years ago i would say its the highest multiple in the media industry. I think right now its a very high quality business and probably a 12, 13 multiple. If i apply a multiple to what i think is the espn cash flow there, im getting the rest of disney at an incredibly powerful price. And their ability to monetize this content, what theyve done with marvel is just amazing. I think youre going to see what theyre doing with lucas films when rogue one comes out. I think theyre well reflected in the price of stock. Its still 99. Well, you know, im a buyer of the stock. All right. You have to be a buyer of disney. If its death by a thousand cuts were going to be having this conversation for many, many years to come. Its not going to be over very quickly. Thanks to both of you. We should mention cnbc is part of universal owned by comcast. We have some skin in the game. Coming up, controversy surrounding drug pricing shining the spotlight on pharmacy benefit managers. Meg tirrell will join us with the cmo of express scripts to talk about this after the break. The scandal over the price of the epipen this year turned a spotlight not just on pharmaceutical companies but also pharmacy benefit managers which negotiate drug prices on behalf of insurers and employ s employers. Meg tirrell joins us with express scripts. Good morning, again, meg. Good morning, joe. Nice to see you again. Dr. Steve miller, thanks for joining us. Thanks for having me. Joe was just mentioning that spotlight thats been turned on the role of pharmacy managers. Do you think theres been a war turned on pbms amid this talk . Theres been turned up heat. The reality is the pharmaceutical Companies Set their prices, plans actually make their copays. We administer this. We can survive in higher low cost environment. Our whole goal is to get lower net price. The argument that the drug from the middle men like pbms to drive up slicprices so your sli will be bigger. How do you explain that . We pass the rebates back to our plan spon source. Where it falls apart is when a patient is in a high deductible plan and theyre paying full freight for a drug. The members paying the full cost. The thing is when you sign up for a high deductible plan, you should understand youre going to be responsible for that first amount. Thats how theyre keeping the premium low. Theres no incentives for pbms to drive the list price higher . 90 of our dispenses are generics. Thats what we like and there are no rebates for generics. We can live with a high rebated drug or nonrebated drug. Our model will work in either way. Where are you focusing in terms of containing costs. Drugs for cancer, inflammatory diseases. Whats next . So were working with the pharmaceutical companies to come up with valueadded programs. So for inflammatory disease is were letting patients try drugs rel tiffly risk free. The plan will give back twothirds of the cost of that drug. That way doctors and patients can dry drugs risk free. We get them lowest net cost. But we also get them a refund if the drug doesnt work. For diabetes weve actually contracted a network where pharmacies are now going to be responsible for quality outcomes. Is the patient achieving better blood sugar control . Unfortunately were out of time but would like to have you back to talk soon. Thanks for having me. Back to you guys. Thank you. Coming up, trading the trump rally. Where you should be putting money to work in the final month of the year, hard to believe. Plus more reaction to yesterdays historic interview with truDonald Trumps pick for treasury secretary. Squawk box will be right back. Santa claus is coming to wall street. And he looks a lot like donald trump. Investors wish list coming true with the postelection rally. Can the climb continue . Well debate straight ahead. Making America Great again. President elect trump taking a victory lap today touring an Indiana Manufacturing plant thats keeping jobs here at home. Plus a sweet change. Well tell you how nestle plans to use less sugar in its candy and keep the taste the same. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc. Im joe kernen along with Kayla Tausche and kelly evans. The dow currently indicated higher. The nasdaq and s p both a little bit lower. Oil prices were above 50 as far as wti goes. Still are. Up 1. 5 after a big gain yesterday. And then weve got ice brent all the way up to 53 this morning. A key economic report is due within the hour. The weekly jobless claims. Expected to climb slightly to 250,000. Theyve been at a low level for months. Were also tracking the automakers today. Theyre 17. 7 Million Units last november. Thats up by a 2. 7 on the year. But down from the 18. 3 Million Units, that was a big eyebrow raiser. Speaking of jobs, manufacturing and the economy, donald trump will kick off his thank you tour today at a carrier plant in indianapolis. Hes expected to tout a deal to keep 1,000 jobs from moving to mexico. United technologies which owns carrier says its receiving state financial incentives and a pledge from the Incoming Administration to create a more competitive u. S. Business climate. One employee at the plant talked about how he found out about the deal. It was on local news, but it was not on National News at that point. Except for cnbc. They had that was where i got most of the information about the what i knew about the carrier deal. And credit, of course, to david faber for first breaking that story. The deal will save about half of the 2100 jobs it said earlier it would cut by closing those two indiana plants. As we were discussing with phil lebeau this morning, they already built the plant in mexico. The question now is what theyll do with it. Yeah. I think people are still losing their jobs. There were 2,000 people. Only going to have 1,000 or something staying there. I dont know. Well get more details. Another wall street name could be headed to washington. Goldman sachs president and chief operating officer gary cohn is reportedly considering leaving. Cohn could be a contender to head the office of management and budget. Hes seen as a likely discusser to goldman ceo blankfein. Well, if hes going to be at the head of that firm, you know and he has said he has no plans in the foreseeable future to retire, that he loves his job. Its what gets him up in the morning. Hes early middle age. 61 . I like that. Early middle age. Are you early middle age . I will be in a couple years. Begin a new month of trading today. We talk about the huge post election rally. Check out these numbers. The dow up 5. 4 . It says 4. 7 there. The s p now up 3. 4 . It says 3. 2 there. The nasdaq up nearly 2. 6 . Just might check before we throw up. The russell 2000 might finish with a gain of 11 . Yesterday on squawk box we did talk with president elect trumps treasury secretary pick and heres what Steven Mnuchin told us about Economic Growth and plans for tax changes. Our most important priority is sustained Economic Growth. And i think we can absolutely get to sustained 3 to 4 gdp. That is absolutely critical for the country. To get there, our number one priority is tax reform. This will be the largest tax change since reagan. Weve talked about this during the campaign. Wilbur and i have worked very closely together on the campaign. Were going to cut Corporate Taxes which will bring huge amounts of jobs back to the United States. The interviews on the front page of just about every major paper this morning. Nice to see cnbc is all over the place. Although carrier news. Yeah. But its on newspapers which no one really reads anymore anyway. So you can frame it and put it in your office. Thats a good idea. I subscribe to three or four. What if i dont have an office . Yeah. Hang them back here behind you. Then youd be fooling a lot of people. Markets usually have a joyful ride in the final months of trading, but will the trump rally outshine this december . Our guest host Paul Mcculley is still with us at this hour. So, mark, what do you think here . Stocks a good bet at record highs . I still think so. Obviously were due for a pause. If you annualize these gains, youre talking between 50 and 100 predicated on which index youre looking at . We know that certain subsectors like the semiconductors are up some 20 above their longterm trend lines which is unsustainable. Id be prepared for a pause, a pullback of some sort. I think it needs to be bought. And of course were in a timely period of the year where the seasonality typically being a strong month with a santa claus rally suggests you dont want to be out of this market. I think theres more gains to be had. Actually it would be between 50 and 250 . Even better, joe. On the russell. The 11 in a month if you do 12 months compounded its 250 . If youre speaking to, like, your broker and everything, just 50 to 100 sounds good. But its actually 50 to 250 . I underestimated. Youre right. Thats fabulous. You know whats really weird . And Paul Mcculley may be the only guy smart enough to explain this. 250 is three and a half times your money. Thats weird. Isnt it . Thats the way the arrhythitc works. I actually have a question for you from the standpoint of independent of whether the market goes up or doesnt go up this month, what are your thoughts on valuation . Obviously the market has been celebrating increased expectations for growth because going to stimulate the agate demand. Of growth and Interest Rates and go the other direction. What is your take on the net net between the positive growth and the negative Interest Rate expectations with respect to what constitutes fair valuation . Well, paul, i mean, thats a great point. Thats one of the concerns that at least at the moment the market seems to be overlooking. But the fact of the matter is we are trading rather fully in relation to what are being pencilled in at the moment for 2017. Now, the good news is weve been getting the economic validation of recent. Weve been seeing better than comparable numbers on the economy. We know the citigroup has moved higher again. The good news is the underpinnings for Economic Activity for corporate Profit Growth is pretty good. Posted a positive Earnings Growth. If we build on that, then i think obviously stocks can advance. However, the advance in the stock market is more likely going to be dependent upon that Earnings Growth picture. Which under a scenario like perhaps our secretary of the treasury is expecting, thats a sound return for stocks. In the absence thereof, i dont see how market multiples will continue to support the stock market in the absence of a follow through in either the underlying fundamentals economically or corporate profit gains. Can corporate profits in perpetuity grow faster than the economy, what does that imply about share of gdp and corporate profits if youre always forecasting growth and profits faster than growth in the economy . Just as a matter of arrhythmita youre right. The fact of the matter is youre talking about corporate inequality relative to the benefits that have fallen to the shareholders and the stake holders opposed to labor. And thats widened massively. It is unsustainable. The fact is Profit Margins have been shrinking. Weve seen labor get this gains in form of wage increases that will continue to work counterproductively to the benefit of Profit Margins. I dont suspect thats a sustainable outcome. Can profits go up with Profit Margins going down but absolute profits can go up. Youve got three variables. Overall growth in the economy but you can have profit continue to rise at cooperations and you can have margins shrinking so that wage gains are greater than shareholder gains. But you can still see profits rising. You would be rising at less than gdp in that context, right . I dont know. Would it . Not necessarily. I mean, if the economy is growing at x and if labors getting a bigger share of x, then arithmetically youre therefore profits go up. As ma gins come down and were at 4. 9 , people start getting wage gains from market right. Because theres a tight labor market. Maybe Profit Margins arent where they were. Profit margins might not be as high as they were. But can go up. Can you just say arithmetic one more time . Arithmetic doesnt work. By definition, if corporate profit as a share of gdp are shrinking, then corporate profits are growing less than gdp. Thats arithmetic, joe. Im talking about that margins we dont need to stay at alltime highs in margins to have it go up. Wage gains can grow, you can have better wage gains and still do 10 a year Profit Growth. Right . Arithmetic is a tyranny. Im not talking as a percentage of gdp. Im talking you can still have higher absolute profits based on you actually can and an important factor is that larger itll be good if profits go up. And wages will go up as well. You can square the circle by saying that Large Companies in america dont make profits just from u. S. Gdp. But global gdp. And therefore you can do it from global growth. The dollars are negative, obviously, in that equation. So actually you can get there. But i want to point out the simple arithmetic that if labor is going to get a bigger share of gdp, capital gets a smaller share. Thats arithmetic. Weve argued how walmart has done. The stock has gone from 20 to 130. Have workers not gotten increases . Do all the shareholders need to be disenriched. I can see how maybe you but you dont do it necessarily by the government stepping in and setting price controls or wage controls. You do it with growth which causes, you know, workers to be more you absolutely do it with growth and do it on the demand side of the economy. This economys got plenty of supply. It needs more demand. It needs a bigger budget deficit. Youre going to be here until the end of the hour. But if we still have mark with us do we still have mark . Mark, what would cause you to take a contrarian view . Theres so much pervasive bullishness in this market. We were talking about eight year high, it was 2008, the precipice of the financial crisis. Obviously were nowhere close to that. But im just wondering with bullishness at the level it is, what would you say maybe it pays to be skeptical . Well, theres a couple of things. Obviously we havent discussed the worries that are more to the United States. And that is the strength of the dollar could undermine the emerging market economy whose fiscal about is commodity laden countries that are going to suffer under falling commodity prices. Obviously we could have an emerging market crisis renewed again like in the beginning of this year. Chinas economy is slowing as well. So at what point does it stop decelerating and destabilize . I think the worry would be all the things that the market has pulled forward into this trump advance, this rally on the back of the election. And the Single Party System that would enact everything on the campaign trail suddenly stalled. And we dont start to see some of the policy put forward. Regulatory relief, infrastructure, some other form of fiscal spending. If all these things either get delayed and pushed out deeper into 2017 or 2018 or get watered down by way of some kind of a gridlock in washington that obviously the market isnt anticipating at the moment, that could undermine this rally. Im not suggesting its a cause for a bear market, but it would certainly, you know, certainly take back, if you will, much of the gain ifs not even more that weve had since the election. Well hang our hat on some of this data well get in the meantime before the administration gets under way. But mark, well see you soon. Thank you. A few of the stocks on the move this morning that were watching, Dollar General missing the mark on the top and bottom lines. Results were hurt by slower customer traffic and a challenging retail environment. Stock is down close to 8 . A mixed quarter for the apparel retailer reporting a larger than expected quarterly loss. But revenue exceeded forecasts. Samestore sales dropping more than 14 . A result the Company Calls disappointing but still that stock up 7 . The ft reporting that a joint bid by chinas stateowned Investment Firm and u. S. Private equity firm carlyle is now in the lead to buy mcdonalds china operations. Thats a sale that analysts say could be worth as much as 3 billion. And Parker Hannifin is buying clarcor for cash and assumed debt. The deal valued at about 83 per share. When we last shoed you the stocks, they were unchanged but currently youre seeing up about 16 . Walt disney raising its semiannual dividend by 10 to 78 cents per share. That brings the total dividend to 149 per share. Pure storage posting a smaller than expected loss. The data storage companys revenue beat forecasts benefitting from the addition of new customers. Joe . Coming up, we will be talking to this gentleman who president elect donald trump were talking about what he is going to do. And this man is senator james lankford. Youre watching squawk box on cnbc. Make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growunities for our clients to advance the future of medicine with digital, and improve the quality of lives. Were plotting back here. Welcome back to squawk box. Were also counting down to the november jobs report due in a little more than 24 hours. Thatll be tomorrow morning. Yesterday on squawk box, president elect trumps pick for commerce secretary wilbur ross flagged one of the biggest problems with jobs in america. Its also not true that all jobs are created equal. A guy who used to work in a steel mill now flipping hamburgers, he knows its not the same. So its the quality of jobs as well as the quantity. And one of the problems with the recovery is when the newly created jobs are not nearly as remunerative as were the jobs that were lost. Thats a big structural problem. Our next guest says that one of president elect trumps biggest priorities should be tackling government waste. Joining us now senator james lankford. He released his second report on government waste this week. So many ways and viewpoints on how to deal with debt. Senator, is it possible to get growth going and not be quite as concerned near term with austerity . Maybe get growth going and see how that works and then maybe start addressing it more stridently . We really have to do both. That sounds like that may be odd, but if we dont have it and well never get on top of the debt and deficit issues. Just half a trillion dollars just this year in over spending. Obviously thats not sustainable. When the debt has doubled in the last eight years, it cant keep going like that. When Interest Rates pick up and you and i both know that Interest Rates will tick up in the next eight years forecast to spend more interest than on national defense. That is not longterm sustainable. We have to Pay Attention to both. I guess with the way that were able with the strength of the dollar, the way that were able to sort of basically do what we want hopefully what we always can, but king dollar does allow us a lot of leeway with doing things like this. And maybe the dollar comes down a little. But do you think weve already hit the Tipping Point on from the point of no return . Because other countries have come back from much worse than this, i guess, but not without some pain. That is correct. Not without some pain. If we were to balance the budget in the next ten years, it would take a focused effort not to have overspending in any one year. If we were to balance our budget and have a 50 billion surplus the next year. If we had a 50 billion surplus a year, we would pay off our debt in years. Were not adding more to the debt every year and get to a point where we can manage our debt as a ratio of debt to gdp. But to deal with just the sheer size of our debt approaching the total economy, that is the part i think Everyone Needs to be able to Pay Attention to. Especially when Interest Rates go up and those Interest Rates take up much of our discretionary spending. What if you include entitlements . We might as well kill ourselves, right . What does that come out to . No, were at the same spot. If we look at about 3. 7 trillion in total spending. Everything from entitlements but whats the unfunded obligations we have . Its over 100 trillion, thats correct. Whats a hundred trillion . That does sound like real money, paul. It does sound like real money and its part of my concern that during the debates it didnt seem to be a lot of the conversation. Wants to blow out the debt like you cant believe. And is this guy off base . I have a simple question. You are looking at the government sector. We the people as if it was a household sector. Why do you not look at the government as different than a household sector that the government is perpetual. Why do we have to contemplate paying off the debt . Why cant we roll it forever . We can roll it forever, but the interest would take the spending. The first payment is always to our interest and our interest right now is about 225 billion. Almost exactly the same as what it was ten years ago. But we have twice as much debt. When Interest Payments go up and were at 800 billion a year in Interest Payments alone, then we literally dont have money to be able to do on so many other areas of investments we need to do. Then we are in the perpetual cycle. The its as if im paying my grandparents minimum payments on their credit cards and my parents and mine. You dont have enough Discretionary Income to do anything else. Why are you so bearish on Interest Rates . What is your forecast on Interest Rates for the next five to ten years . I look at the cbo scoring to not try to guess on what that would be. I dont have any anticipation that rates stay at the same level for the next ten years. I havent seen anyone else step in and say were going to have historically low rates into the foreseeable future. Hey, senator, its sort of water cooler topic, do you have any companies in oklahoma eyeing a factory move to mexico . And are they rethinking it . What do you think of that . So far weve not seen companies in oklahoma eyeing a move to mexico. A lot of them do have production around the world and they should be able to participate around the world. Thats a good thing for us as a Global Economy to participate everywhere. But so far we dont have a big move to be able to relocate out of oklahoma. Who would ever want to leave oklahoma . Oklahoma is okay. But what about are you saying then that the government shouldnt be in the business of threatening or cajoling companies to stay here and keeping jobs here . What are you saying . I say every state including indiana and every other state always competes for business and always competes to be able to bring jobs to their state. Thats the right thing to do. Oklahoma competes and we have jobs that have come to oklahoma from other places because we competed and won those jobs based on a really great process on our workers comp. We should engage as a nation to take care of our tax policy. We punish them with a Corporate Tax rate. We tried for the last couple years the stick approach to say if you leave, were going to whack you. We need to move to the approach to say were going to fix some of the Corporate Tax code to encourage people to go. I dont see a lot of companies that want to leave and go international. I see shareholders and others saying they require to because its better for the bottom line. We need to fix that part of it. Thats a large scale tax reform proposal. I want you to come back to trump tower and get on that. Youve got some good ideas here. Have you been back yet . You want to go up there . I have not been to trump tower. Im going to keep my day job the oklahomans gave me. All right. Just thinking youre an impressive young man. Whats wrong . You dont think i should be offering out cabinet jobs . Have you been to trump tower . No, i havent. But i definitely need to keep my day job. Anyway, senator, thank you. Appreciate it. Thank you. Coming up, breaking economic news. A key read on jobs ahead of tomorrows employment data. Plus sweet news for chocolate lovers. Nestle is trying to make you feel a little less guilty about indulging in your favorite treat. Squawk box will be right back. This is where i trade and manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. There goes my sensitive bladder. Sound familiar . Then youll love this. Incredible protection in a pad this thin. I didnt think it would work, but it does. Its called always discreet watch this. This super absorbent core turns liquid to gel, for incredible protection thats surprisingly thin. So i know im wearing it, but no one else will. Always discreet for bladder leaks we are just seconds away from weekly jobless claims. Look where futures are. Theyre giving up a little steam following through on some selling into the close yesterday. The s p 500 has just turned positive. It would have an implied open of less than one point. The dow gaining a little bit of strength. Can take a look at where the 10year note is because the yield currently sitting at 2. 41 . Seeing some sharp strength. Some reports say 1. 7 trillion came out of the bond market in november. Well see what flows look like. Take a look at gold priceoil pr. Wti could rise through 60 a barrel. Steve leisman is here now with some breaking news. And well dive through those numbers first with Rick Santelli standing by in chicago. Rick . Well, up 17,000 from 251,000 which was not changed from its original release last week to 268,000. Continuing claims, they moved higher from a little over 2. 04 million to just a whisker over 2. 08 million. Kayla, youre right. 2. 4 is the yield on the 10. So were up over a hundred base points since that second of the double bottom. And indeed many out there. They may point to higher rates. But it is really the speed at which they move higher. And the continued notion that we havent had many setbacks even in the equity markets. You want to Pay Attention to that. This area is very technically significant. Steve leisman is also here. A bit of an increase in claims. Yeah. Not good. The market has generally thought that 275,000 is a number you still worry about it. 268,000 seems to be consistent with the jobs number that could be around the 170,000 range. Its been unusually low. Employment rate the percentage of those who are unemployed who are covered but Unemployment Insurance has reached multidecade lows. Some people have rolled off. That doesnt come into that number. Still could be unemployed. But in general the job market looks healthy of the big adp number. I want to turn my attention. You guys have the 2year up. That 1. 13 i have as a high since 2010. Almost a sixyear high. I want to talk about what a recent dilemma the market move. Let me go through the whole list here of the trump effect. Here we go. Stocks, rates, and the dollar are all higher. But nothing has actually happened yet. Perhaps to underlie that. In terms of actual policy changes. It may not for months, and what actually happens could be dramatically different from what the market expects. The fed has to make a choice. All of those things in the first line add up to tighter or looser financial conditions than they expected . Raising the fourth question here, does the fed in the december meeting, does it raise its Growth Outlook . Does it raise its rate outlook . Inflation outlook . Based on line two where nothing has happened yet. So that suddenly makes this december meeting which was going to be were going to raise a quarter, no big deal, very interesting. Because we get these forecasts from the Federal Reserve and those forecasts help set the market outlook. What i see right now in the feds rate outlook in the market is i see a june hike. And theyre kind of starting to flirt with in the market. And then a december hike. So it looks like two are priced in. Should you start to price in three or four and to the skepticism on joes face right now doesnt matter. Doesnt matter. Because the markets already there. No. My look is that for you to say the fed might have a problem with orchestrating higher asset prices without anything fundamentally changing in the economy, thats their whole m. O. For the last five years for qe. Through low rate. They were trying to instill animal spirits and they were. And now it now they have a problem with animal i didnt say negative. I said dilemma. It could be good or bad. You could meet a beautiful woman and decide should i marry that person. Its a dilemma. Dilemma if youre married. If youre not married, its another question. If youre having a good time as a single person. But can i just ask Paul Mcculley who is a person who has been mentioned as a possible fed governor in many places, what would you do in this situation . Would you let it go . Would you say its not real yet until its real . I think the first thing you do is go ahead and hike because the market is slowly prepared for that and all the rhetoric yeah, we got ta. And actually i wouldnt change up all that much at all the growth forecast. Because you dont need to do that to justify hiking in december. So essentially maintain basically where you were with respect to the forecast and the plot. And that itself is a big change. Because, remember, the dot plot has been coming down every quarter. So actually you have the option of not taking it down any more, leaving it where it is. Hiking rates and saying ill be back to you in three months. That seems to me the obvious choice. With the message being that this pattern of bringing down particularly that longterm dot from four down to three. To effectively stabilize the dot plot not keep bringing it down. Hike and try to say nothing eloquently at the press conference. Theres no press conference in january though. You have Congress Getting sworn in january 3rd. Inauguration january 20th. The fed meets through february 1st. Not then. A window then. Let me point out the market has done a much better job of predicting where the fed would go than the fed has done. No kidding. We chronicled the fed funds rate predicted by the market was lower than the fed. It came down to the market. Now the market has shifted and gone up. Well see if the fed now shifts to the market. You gd get a hair cut to ben the fed. Why . I could do that. You have a better chance probably. I have no idea, joe. All right. Coming up, were going to talk to kroger cfo about the companys latest quarter. Plus you might call the supermarket a trump bump is whats happening with kroger. Were going to explain when squawk box comes right back. Results matching estimates with quarterly profit of 41 cents a share. Revenue was above street forecast. Kroger, whole foods, supervalue also all getting what were calling a trump bump after the election. Joining us now Michael Schlotman cfo of kroger. Hes also a member of cnbcs global cfo counsel. I dont understand the trump bump. Do you sell crow to all the people that were coming on cnbc saying that the market would go down 5,000 and trump couldnt possibly get elected . So your crow sales are up . Well, our job is just to feed people regardless of their political affiliation. Thats what we try to do a better job of every day. Why is there a trump why are we saying theres a trump bump . Well, i dont think its just our stock. If you look at the stock overall, its been there. I think some of it is certainly the sentiment out there that policy changes could be favorable for businesses. Theres been a lot of of a report for instance if theres a lower Corporate Tax rate. Were 100 domestic. Would stand to have more Free Cash Flow if there is a lower Corporate Tax rate which would help us build more stores. So we actually in the results that youre reporting you cant attribute anything to probably negative. I dont know. Ive heard that people didnt go to restaurants because of the election or something. Would that mean they were staying at home cooking their own meals. Could you tie anything in your results to this unbelievable year weve all been through in this highly partisan age . Yeah, the Quarter Ended almost right before the election. So theres not a lot of the election in there. If theres any effect from what happened those couple three weeks that a lot of retailers are talking about, it would have been early in our fourth quarter, not Third Quarter results. There continues to be consistent deflation in categories. In fact in the Third Quarter got about 20 basis points worse without pharmacy. Which certainly has a bit of a headwind to the top line. But then i guess arent margins a little better its a good and bad for a supermarket . Or is deflation always bad . It depends where it is and how persistent it is. And the toughest time of inflation and deflation is the transitional period when youre going from inflation to deflation. Then a lot of the three big commodities for us. Everything but eggs starting to firm up a little bit. It like walmart or pea pod whatever . Direct. What is it you need to worry about in terms of the future . Whos your biggest threat . We look at our market share in our traditional industry but also more broadly. Its a market that we operate in. Were over a hundred billion dollars. So the opportunity there is huge. We try to make sure through that analytics relationship that we understand where its going. Its interesting a couple bit ago came out with an article on the rust belt cities. A lot of that was cultural and food activity thats going on that we try to stay aware of and offer that in our stores. Markets we have stores in. Its important. We stay in touch with whats happening with food away from home so we can offer those in the stores as well. You going over to the rally today . The thank you rally . I am not going over to the rally today. Its a busy day today with earnings. We have our Conference Call at 10 00 then i have oneonone calls with the analysts the afternoon. So youre busy. You cant really you dont have time. Im sure youd be there. Anyway, Michael Schlotman, thank you. We appreciate it. Right from gods country, cincinnati. Salt of the earth. Absolutely. And someone else we know. Coming up, an entrepreneurs success story. Well speak to joe malone about doing business in america and what it takes to go from the kitchen to the department store. Stay tuned. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. May not always be clear. But at t. Rowe price, we can help guide your retirement savings. So wherever your Retirement Journey takes you, we can help you reach your goals. Call us or your advisor t. Rowe price. Invest with confidence. They are the natural borns enemy of the way things are. Yes, ideas are scary, and messy and fragile. But under the proper care, they become something beautiful. We are bringing you the story of an entrepreneur today. Our next zbes a fragrance industry icon who honed her scent making skills in her home kitchen. Jo malone is author of the new book jo malone my story. It is such a treat to have you here in studio. Thank you for having us. Tell us in a couple sentences how you got your start, how you knew that your business would be successful. I didnt. I dont think anybody any entrepreneur starts out thinking im going to be successful. You just put one step in front of the other and you do the best you can. But i started out i mean, my family background was tough to say the least. I was the sole breadwinner from about the age of 11 years old. I found out my nose was something special. It was like a blood hound. I would smell anything. And i could create cosmetics. It was those cosmetics that suddenly went out and everyone wanted to buy them. And hence a business was born. Why not be a truffle hunter or Something Else with that nose . What drew you to fragrance . I love wine, so i could do that. Talk about your first business. And transitioning from starting one business that carries your name even to this day, moving over and finding a new identity. Well, ive never had a problem with my identity. Ive always known who i am. And ive known what the ability of and the creativity of the things that i can do. So starting out for the first time was great. But this little business grew so rapidly that it started to backfire on us as my husband and i owned 100 . We knew wed need a partner. In growing the business and selling it to estee lauder, they had deep pockets and a huge heart for entrepreneurs. So it was a great marriage. What lessons would you draw from that experience for people who might you know, we talk about this with a lot of the new companies in silicon valleys or entrepreneurs all the time. When do you sell . Should you sell . It depends on you. It depends what you want from your life. It depends if youre happy. Great collaborations and great partnerships are definitely they can get you to your destination faster. But i think selling a business has all kind of implications that staying on your own as a business also has them. You have to weigh them out which is right for you. Its amazing to be so successful and to think back where you came from, you mentioned you were the sole breadwinner. But you dropped out of high school. You were severely dyslexic. I am. Tell people the red dot story. Im very dyslexic so i couldnt read a graph. But im very i can see color and understand the direction. And when i approve a product, i normally sort of red dot it so i take little stick it dots and pop a little red dot on them. My team know they can package it or market it or pr it. And when i was looking for my second identity in jo loves, i was thinking what can i do, whats my nike swoosh, whats my apple . And i was sitting there at my desk one day with a bottle of nail varnish and i was sitting there playing with some labels and i looked and i thought ive just spent 100,000 pounds with a company to try to find my nike swoosh and its right there in front of me. So the little red dot costs absolutely nothing but a bottle of nail varnish, but its authentic and real. The little red dot does signify ive created the product. Let that be a lesson nothing can ever hold people back. Never. Now the products in jo mal e malone, theyre upscale experiences for sure, what makes the cost worth it . A 70 candle, is there 24 karat gold or wings of an angel in there . A lot is the creativity, its what goes into something. I cant speak for jo malone anymore, but its the quality of those ingredients. Candles for instance are the most notoriously difficult thing to do. And if you dont get the right fragrance, it wont burn properly, the wick goes really strange, all kinds of complications. So i think candles are really worth it with the level of fragrance and the quality that goes into it. Well, it is a fascinating story. Your book, if you could hold it up. Thank you. Im really proud about it. Jo malone my story. Thank you for coming in, appreciate it. Thank you. Up next, were going to head down to the new york stock exchange. Jim cramer will join us live with his take on todays top stories. And as we head to break check out the s p bank etf, that super charged trump trade, well, how about 18 higher since the election, trading higher 13 out of the last 15 sessions. November now in the books as the best month ever for that etf. Well be right back. Is it a force of nature . Or a sales event . The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. bing mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Lets get down to the new york stock exchange. Jim cramer joins us now. Jimbo, lets see, weird end to the session yesterday. But i guess were still in an uptrend, arent we . Well, todays the day when a lot of people once again want to call the end of the rally. Kind of relentless. Some analysts want to downgrade banks again. We did have some weak retail numbers. I find everyones fighting this tide and yet its near the end of the year so mechanically a lot of reasons why money would come in. Even if you disagree you have to understand theres bids underneath. Is there enough money for oil, banks and the rest of the market to rally . I dont know, joe. We got to watch these Oil Companies cannot go up every day. That would be a bad sign. Yeah, not a zero sum game. Exactly. So youre hearing anecdotally what we always hear, you never know when a train leaves a station that fast, sometimes i think its Wishful Thinking people that arent on it that keep wanting to think its over. Usually its not and they end up buying 10 higher. Well, i dont like to come in up 8 to 10 . I have to say, look, they could do it again. But in the percentages ive seen in my career, it hasnt worked. This could be the time. This could be the time that comes in to buy up 10 you should go buy more. I shouldnt say never, but it has rarely paid off. So im saying wait for a pullback. Youre right. But we all heard its called a santa claus rally for a reason. Exactly right. Thank you. Jim, thanks, see you in a couple minutes. And coming up on squawk on the street, dont miss Continental Resources ceo harold hamm at 10 30 eastern. Stay tuned, squawk box will be right back. Can i have a 2017 lexus lx 570. Yeah wish big. At the lexus december to remember sales event. Get up to 2,500 customer cash on select 2016 and 2017 models for these terms. See your lexus dealer. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade welcome back. Our guest host this morning has been paul mccully, former chief economist at pimco. Listen, before we go, we just have to get you to tell us whats going to happen with the bond market and Interest Rates. We had a 4 down month, that was the worst performance bloomberg was saying theyve seen in like decades and decades. What should people be doing right now . I dont think youre going to have another repeat of last month. I think were in a bear market from bonds from a starting point of incredibly low Interest Rates. The fed is supposed to maintain moderate Interest Rates. Were not moderate. So i think theyll be moving up from an incredibly low base in the years ahead. As fiscal policies takes the lead role in stimulating the economy. So i dont look at it as a disaster at all going in the bond market. Im just glad im retired. Theres all these retirees who might be exposed to the bond were out of time. All right. Good to see you. Good to see you, man. Make sure you join us tomorrow. Thank you guys too. Squawk on the street is next. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. First day of the final month of the year. The dow within a hair of its first double digit gains since 2013. Futures are steady on some decent manufacturing pmis all around the world. Europes was the strongest in almost three years. Oil continues its run this morning after wednesdays opec cut. Our road map begins with that november rally. Could it extend into december