Overnight in asia, the nikkei was closed for a bank holiday. If you look at the hang seng and shanghai, both with green arrows shanghai was up by 0. 2 . The hang seng up by 0. 10 looking at europe this morning, a bit of a mixed picture ftse slightly negative you can see both the cac and the dax are trading higher up by onethird of a percentage point each finally look at treasury yields. And yield weve been watching so closely on the tenyear, this morning sitting at 2. 451 . A couple things we are watching watching a lot of things airlines are celebrating the gop tax plan southwest and American Airlines both announcing they will give 1,000 bonuses to employees following that tax overhaul. Southwest specifically announced it will use the tax savings to buy new planes the company saying it intends to reinvest in the business, reward Share Holders and increase its investment with boeing to support future Growth Opportunities. The two Major Airlines are the latest businesses to pay bonuses and pay hikes along with comcast, wells fargo and Fifth Third Bank antigovernment protests continued in iran overnight. Today Iranian State tv aired footage of pro government demonstrators across the country. The rallies come after the ayatollah blamed protests on meddling by foreign countries. Wiare we not doing it now . North korean tweet i would have put that on my list i did it at the top. I know. Thats why i didnt know if we were going to do the whole thing. You can you remember the last guy, his name was khomeini. This is close enough you can do that. The sweater doesnt help with the prompter youre not in the mood to be nice i am. But its the ayatollah comekhomi ant financial, which does not translate well to a small, tiny its not an elephant financial. Its a tiny firm that doesnt control a lot of money yeah. Moneygram remember vega . No go vega in japanese was piece of crap it was the nova nerve i ha chevy nova in spanish meant no go doesnt go this is i dont think it was named after the tiny insect. Moneygram says its proposed 2 1. 2 billion acquisition by ant financial has been called off after the deal was rejected by Regulatory Panel they failed to get the approval of the committee for Foreign Investment in the u. S. , which reviews foreign purchases of u. S. Firms for National Security concerns and financial is an affiliate of abrams alibaba and is i thought jack ma was personally involved. Its a spinoff. Hes in control of it yes alibaba is the controlling shareholder. I thought he was. I dont know if he is personally Alexion Pharmaceuticals say it will work with Elliott Management to fill an open board seat last month the New York Times said elliott built a stake in alexion. Novartis says the fda granted break through status to treat Breast Cancer in premenopausal women. Break through status means the fda will expedite the development and review of a drug when i say elliott, et, that reminded me, i have gotten through the first season of stranger things. It we minds me of et as you get into it. I watched the First Episode of the Second Season did you watch the whole i havent but if youre an et fan, and you you subscribe to hbo, watch the documentary about Steven Spielberg i dont like docs you wanted me to watch there was another one you wanted me to watch. Its two hours, its about Steven Spielberg, but the creation of et in it, and how that happened, why it happened, totally different than i ever expected you told me to watch another its a totally different story. Do you know the marketing side of the story . You told me to watch some other documentary. About the russian doping scandal. Thats outrageously good we got a lot of nice viewers i love documentaries. About the russian doping scheme just in time for the olympics go watch it can i go back to the marketing story . You need this research, because you are going to the olympics and the russians are not going. And the North Koreans may be. Speaking of becky wants to get in on et i got in trouble last time i said this because i messed up what i was saying. The story is for et, they wanted to ms. Right and they couldnt, so they used reeses thats when you said reeses penis. I did it was an accident i was trying to say pieces peanut buttercups. Wont let it go we still play it. I still say that. Talking about north korea, we have a lot of news from there this morning n north korea reopened a border hotline with south korea that had been closed since last february the move comes a day after south korea proposed highlevel discussions and hours after a tweet from President Trump eamon javers joins us with the latest good morning. Heres the tweet from the president that came late yesterday on north korea the president issuing this saying that north Korean Leader kim jongun just stated that the Nuclear Button is on his desk at all times. Will someone from his depleted and foodstarved regime please inform him that i, too, have a Nuclear Button but its much bigger and a more powerful one than his and my button works. That tweet from the president attracting a lot of criticism as being too childish and needlessly risky in terms of provoking the ridictatodictator defenders say hes taking a hard rhetorical line against north korea and that might provoke change against the nxz enorth kn regime the president is seeing some action against companies American Airlines handing out 1,000 bonuses because of some excess cash from the tax reform and that they will reinvest into their own businesses its not clear with the Trump Organization itself will do the same thing i asked Sarah Huckabee sanders about that, she said she couldnt answer that question from the white house podium. That had to be for the Trump Organization i also asked her whether the president thinks companies in general should be paying bonuses to their employees now that tax reform has passed. Heres what she said he hopes that companies will either give bonuses to their employees or somehow reinvest and bring business back into this country that was a big purpose and goal of the tax cut bill which weve seen play out over the last couple weeks expect to see more good news come from that we emailed folks over at the Trump Organization for comment about that companys plans in terms of tax reform and whether they will be paying bonuses to their employees. Well let you know when we have response nothing yet. Eamon, appreciate that. The whole thing was fascinating yesterday. On all ends of it. Huge story for the olympics if that happens. Huge story for the olympics, yes. But the tweet is also a huge story. Its just do you know whether his button works i dont know i know ours works. Ill tell you that much. I know that its its patently crazy to be tweeteding like that. Im sorry. Kim jongun jongun saunonga button ready to go but some sense of civility, some sense of how you operate in a global world as a model to other even to children. The whole thing is so i dont know you think i thought it was fine i liked it i did. You liked it. I did i think its difficult to think it doesnt concern people. With the hyperbole that comes out of north korea we tried for 25 years the other strategy we have gotten nowhere i apologize andrew, every tweet you have a tweet every day to roll your eyes at but this tweet is so particularly indefensible. No the last one was so youre offended by every tweet that comes across from this guy. You know what you dont even like 1,000 bonuses because its permanent i like the 1,000 bonuses you said i want wage increases, not bonuses you were sitting next to steve liesman, thats who said it you, too. I nodded. This is at a level its like me and obama. We are talking about possible nuclear war, and this guy is basically saying mine is bigger than yours thats what this is about. You think thats a defensible position we have a lot more capability in terms of Nuclear Weaponry and the and knowing that ours will work. Im not convinced i dont think its a debatable point. You have another side of it. Theres nothing defensible that trump has done in 13 months in your view im concerned when you start joking around about nuclear war. Its not joking around. Saying you have a button you dont think the United States its brinksmanship. Its not brinksmanship either what do you think it does to the position of this country on the world stage . What did how was our position you think other people look at this and say, my goodness, this is the guy running the country . Im sorry. What about the appeasement of Foreign Policy for eight years do didnt help did nothing there were apology fourstor eight years. But theres a way to do it without being quite as this is who this guy is get used to it its going to be a couple more years, maybe a couple more after that if he gets impeached, then youll be okay then you have mike pence who may be worse just this particular situation, its highly indefensible its shocking that anybody could sit here and say that every tweet he made, you said it from fine. But this youre not getting used to him yet . Thats the worst part about it youre so outraged everybody time we have to sit here and watch it this has become normalized . I guess so. Not to you im glad. Im so happy im so glad its not normalized for me okay i hope it never becomes normalized apparently not. Your feigned outrage every morning, we can sit through it. The good news, its genuine, not feigned. It will be for a while. It might be fine. Senator orrin hatch the tweets will keep coming. They will when he cant get fair coverage anywhere else, thats how he will approach it. I know it. Are you looking forward to the monday awards ceremony the fake news awards on monday maybe well be on it, or ill be on it i wish we would be on it. Were a dot on the radar screen. Unless youre fox, fox and friends or cnn but New York Times. Probably not you ill take what i can get. Orrin hatch announcing yesterday he will not seek reelection in november. Hatch is the longest running republican in senate history, first elected in 1976. 83 years old he said every good fighter knows when to hang up his gloves his retirement opens up a potential bid by mitt romney one of the harshest critics of the party of trump he did not comment on a potential bid but yesterday he changed the location of his twitter account from massachusetts to holiday, utah back to the Broader Markets. Joining us is Karen Cavanaugh from voivoya investment managemt we have kevin mcbride, and we have bob habbercort. Welcome. Karen, we have to talk about the equities market. What we saw yesterday, just one day of trading the first day of the new year, things got off to a strong start with new records across the board. With the naz dosdaq crossing 7, for the first time ever. Was this the right time to get in what do you expect for the rest of this year i think it was the right time to get in. Well see more of that the pro growth policies unleashed Economic Growth. Tax cuts, deregulation, and well see more of that well see businesses being spending Capital Investment thats been missingin gdp. Thats why we have not seen productivi productivity, weve seen low growth i think well see more of that its not just here in the United States, but game on to the rest of the world well see pro business policies there, too in order to keep up with the u. S the u. S. Will flow all boats, theyre the biggest economy. We also have china and the eurozone doing well. So good things are in store and i think investors are just being too skeptical. We heard briefly a few Companies Giving us guidance saying based on the new tax law that they think things will be stronger do you think well hear a lot to of that . Yes, i think well hear more of that and earnings estimates will ratchet up. We see Forward Guidance that will be positive thats good for the markets. The markets will move ahead because the economy is moving ahead, earnings is moving ahead. This is a year where the economy is keeping up with the market. This will be a change. I think investors are not used to that. We almost have stockholm syndrome, its low growth. Oh, its 2 . Thats not okay. In fact, we missed out on a lot of Economic Growth we talk about the deficit and say this 1. 5 trillion hole in the deficit. What about the other trillions weve missed in lost growth. Opportunity costs. Nobody seems to worry about that it is an actual cost where does that get you for the end of the year expectations for the markets . I see the s p moving ahead. About 2900 or so i think we should see a bit more volatility, especially as the fed tries to become a little bit more normal. Were still not in a tightening cycle. Its more getting back to normal i see yields moving up, moving up to about 2. 7 for the end of the year overall, thats a good back drop for stocks i tell investors, always make sure you have your bonds, you never know when well see volatility lets talk about that, the fixed income market. Were looking at a year where you expect the central bank to raise rates, wonder what that means for the bond market and what youd be telling people to do now i do think its going to be another year with an active fed. I do see rates moving up across the yield spectrum but further flattening of the curve because of the active fed. I have the tenyear treasury ending the year at 2. 8 still not breaking through 3 with the fed hiking. No, we may touch 3 , but when the dust settles, the tenyear ends the year at 2. 8 . The oneyear at about 2. 5. And the twoyear nearly flat with the tens. We get some juice added to the economy. That adds an uptick on the Inflation Numbers. But with the fed thats active on the short end, i have them raising rates three times this year thats where you get the further flattening of the curve. Thats something that concerns people most of the time you dont sound concerned about it i dont think well be concerned about it through much of to 2018 as we sit here we may be concerned about a slowdown in growth we get some juice this year from the tax cuts 12 months down the road when were in a mode where the fed is activity tightening, pushing the fed funds rate above the rate of inflation, we may be more concerned about slowing growth in 2019 as opposed to the faster growth for 2018. Karen, you went out on a limb and said positive things about the taxes. But when it comes down to the s p gains, 7 . I guess 7 were at 2700. Im trying to be conservative would it shock you if it was 3500 no. As a sell side type, you might as go 7 , 8 but in your heart of hearts, it wouldnt surprise you to see another big year i think these pro business policies will unleash growth we have not seen that before i love the stockholm syndrome a lot of people that have the stockholm syndrome have avested interest in keeping the stock hostock stockholm syndrome i think we should grease the kids for Corporate America to compete globally eventually it could mean more jobs better jobs and productivity. Thats what weve been listing gold, bob, why do you think gold is the unknown story behind this gold now, the theme will be very similar to 2017 its a fed year. Fed will do three more rate hikes. What typically happens with gold and the fed, it trades lower into the fed with these rate hike announcements i think that will make this year similar. Right now for the year, gold started out strong this is seasonal now you buy gold middle of december, you sell it around the middle of january. You know, ahead of the fed the thing thats different this year is to keep an eye on the cpi data were starting to talk more about inflation now. Specifically in wage growth. Well see what comes out this friday if thats higher a few months back we saw higher wage growth, which ticked gold up cpi was 1. 7 in november. If we get a reading january 12th of 1. 8 or north that would add fuel to the fire for gold to the upside be mindful that higher inflation will warrant a more aggressive fed in 2018. I think its going to be a back and forth this year. I heard crazy predictions that gold, because of the way the year started, that well see it north of 1500, 1400. I think it will be a sideways market this year the way to play it is to buy it on the fed announcements, hold it for a week, two, three weeks, and then look to be shorter out of it if youre bullish a few weeks before the fed announcements. Be mindful of inflation. You know, there hasnt been much inflation in eight years but i feel like weve been talking about it more the last couple of weeks. Bob, greg, karen, thank you coming up it was a brutal year at the Box Office New numbers show where people are getting their entertainment. Those details are next an Alaska Airlines flight was canceled after a rat jumped from the jetway on to the plane. Passengers who boarded got off the plane. The airline took it out of service until an exterminator could certify it as rodent free. The aircraft will be inspected for damage most of the passengers were rewarded on a later flight just wanted to tell you about rats squirrels are not that different. And chipmunks chip mufrpg munks got into our e time rats get a bad rap. They have beaty e y eyes do you remember the movie over the hedge, they had a squirrel just those weird movements make me hyper i dont think i love dogs, too. But pigs are just as cute as dogs pigs are smart. Cows not so much. Rats are ugly theyre ugly. But they get a bad rap, except with willard. Talking about movies, can i segue . Ble