Good morning and welcome to squawk alley. Carl and kayla l. A. Are off today but we have a secret weapon, an anchor you know and love who es unafraid to step in, kelly evans joining me at post 9. Thanks for having me. Donald trump lighting up twitter in the last 24 hours sparking debate from everything from china and a possible Nuclear Arms Race with russia to the militarys overruns. Eamon javers is in our Nations Capital with all the details. Good morning, john. An astonishing 24 hours, starting with that tweet donald trump put out about expanding u. S. Nuclear capability. That provoked a flurry of reactions including this morning on morning joe on msnbc in which mika brzezinski, the host there, said she had a chance to speak to donald trump off camera on the phone and he told her what he meant in his tweet. Heres the way she framed it this morning. Its getting a lot of attention. Mika asked the president elect while we had the opportunity, what his position was on trying to clarify the tweet yesterday regarding the Nuclear Arsenal and the president elect told you what . Let it be an arms race. We will outmatch them at every pass. And outlast them all. And outlast them all. So that comment from the president elect, let it be an arms race, getting a lot of attention around social media, around the rest of the media as well. Sean speiser, who will be the press secretary in the Trump White House we learned yesterday, was on the today show with matt lauer. He talked about what exactly was meant by that comment. Heres what he said. But if theres going to be an arms race theres not going to be. Heres he said we will match them at every turn. Theres not going to be because hes going to ensure that other countries get the message he wont sit back and allow that. What will happen is they will come to their senses and we will all be just fine. Now, also talking about this today is Vladimir Putin in russia at a News Conference discussing the Russian Nuclear capabilities saying theyve modernized their forces and also saying that if anybody is starting an arms race here its not the russians. Heres how putin himself put it earlier today. Translator definitely we have advanced in proving our nuclear and we are now capable to a Missile Defense system and our systems are much more efficient than wmd itself. That may cause the United States to step up their Nuclear Capabilities, and theyve been doing so. So, guys, well spend the rest of the day probably and the next several weeks figuring out just what exactly donald trump is doing here. Is this a shift in u. S. Policy on nuclear armaments, is this a brushback pitch to Vladimir Putin, or is this Something Else entirely. All of that being worked through by his aides and by Foreign Policy experts today, guys. All right. Thank you, eamon javers. Now lets send it over to our bob pisani on the floor with a special holiday trader tradition. Bob . Thanks very much, jon. For 140 years, its ban tradition of singing and partying on the floor of the New York Stock Exchange on Christmas Eve. That tradition got a lot more sedate after the great depression, but one thing never changed. Barbershop quartet singing and community singing. Heres art cashin leading the annual rendition of wait to the sun shines nellie. Wait till the sun shines nellie and the clouds go drifting by we will be happy, nellie by and by down will the train wander sweethearts you and i wait till the sun shines nellie by and by whooo merry christmas, everyone. Merry christmas, david. Merry christmas. Merry christmas. Merry christmas. Merry chas. Art cashin, old friend, merry christmas. It talks about sun coming out, clouds parting. You think a hot of the traders feel the u. S. Economy, the clouds are going to part perhaps in 2017 . Whats the mood . I think thats what the markets been looking for and thats why weve had this postelection rally thats taken it so far. Tax reform and Regulatory Reform, the sun to s going to be shining. We stalled a little bit here. Well go over it in the next week or so. This is a seasonally strong part of the year. I think hopefully before na inaugurati inauguration. Day. Well be back for the second rendition on Christmas Eve as well. The guys will go across the street from here. Imagine what will happen at that point. Ill be here for the rest of the day of course with you guys. Back to you. We all will, bob. No early close today but we still got wait till the sun shines nellie the unofficial anthem of the New York Stock Exchange. Thanks to cash aart cashin and everybody. Back to Donald TrumpsPublic Comments on the u. S. Nuclear capabilities and future trade deals with china. Were joined by mike holland, Holland Company chair, along with steve ott, chief investment officer. Steve, what do you make of these markets . Broadly speaking, we had so much excitement going up to 20 k, excitement about the tu nu Trump Administration and now all these geopolitical concerns and the fact weve stalled out. Weve been talking about a wall of hope. Mostly markets climb a wall of worry. Now were climbing a wall of hope. We think that will be the theme next year. Weve had a sharp bump off the lows really with the trump rally. And it kind of makes a certain amount of sense. I think you got ten years of the economy in slow growth mode, repressive Interest Rates, high regulations, strangling the economy, and now we look to the promise of something much better and the markets are trying to discount that. The issue is no one real hi knows how much earnings go up on all this. They seem to have discounted a lot already. We think earnings for 18 can be somewhere around 140, a little higher than that. 2018 for the s p 500. Yeah. In a wall of hope environment the markets are willing to look to 18. Before that it was like everythings going to fall apart tomorrow. I cant look to 18. And on 18, you know, were trading about 15, 16 times where we could be. I dont think thats excessive. Its an appropriate discount given the uncertainties of how this plays out. Okay. We think its a kind of buy the dips environment. Not sell the rallies. Mike, would you agree with that characterization, broadly . Probably broadly, kelly, but i think cnbc yesterday put a piece of information out there that probably hasnt been well enough noticed and thats when scott wapner spoke with carl ica icahn, who talked about the possibility or probability of a trade war with china sooner rather than later. As steve just pointed out weve come a long way not just since trump won the election but since 2009. And as stocks are up so much, we could have a very big surprise and it wouldnt be a pleasant one. We have the sound bite youre referencing. Lets play it now. Carl icahn on the halftime report. Im not going to talk about the fact she should resign. Thats up to donald. Thats not up to me to discuss what you do about janet yellen, but i do believe it was ill thought out in my mind to keep these Interest Rates so low. Sooner or later you pay the price for the low Interest Rates and really thats one of your thoughts here, that these Interest Rates are moving up very quickly. And then as they move up, can you control inflation. I mean, you have so many variables so, many things to worry about. That wasnt the part he talked about it. What he said specifically was that a trade war is, you know, a probability, okay, and he said you might as well get rid of it sooner rather than later because the markets will take a deep dive. Now, hes got Donald Trumps ear. I presume theres some validity to listening to what he just said. And im not about to say that the bull markets over, which weve been enjoying since 20082009, on the one hand. On the other hand, i think that a very big surprise and a trade war with china would not be something the market would take very well. In fact, icahn himself said the market would take a big hit. And steve, i dont recall hearing this type of confrontational language out of a president elect in quite some time, whether theyre talking about china, whether youre talking about nuclear capability, whether youre talking about boeing, lockheed. The markets done quite well over the past seven, eight years. Youre talking about a wall of hope in the face of all this confrontation. What gives . Look, read the guys book. Hes a negotiator. So, you know, i would say i look at this as youre going into a negotiation with china, his view of the world would be you dont go in saying im prepared to give up on all points and play mr. Nice guy. So i just dont buy the idea that were heading into a giant trade war with china. I think he does sense that we dont have an even Playing Field with china. And thats probably right. So i think hell try to level the Playing Field and negotiate, same thing on nuclear. Well see. Thats why the markets not at 2,500 today where it probably should be if you had a firmer certainty about the outlook. I think its the wall of hope were now grinding up. Mike by the way, the clip on janet yellen is a good one because, you know, you played it at the wrong time but tralts going up off of repressive levels actually helps the economy. The banks suddenly start to make money. Joe sixpack, whos retired, can suddenly get some Interest Income on his lifetime of savings and take the wife out to dinner. Goldman up 50 in a quarter. Amazing stuff. Steve, mike, thanks for joining us. Thank you. When we come back, how everyone from amazon to walmart is getting ready for the lastminute Holiday Shopping rush. Former office depot ceo steve aglund will weigh in. And the governor of arizona. Uber prepares to move its selfdriving operations to that state. 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Then why settle for slow internet . Comcast business. Built for speed. Built for business. Retailers are looking to capitalize on the lastminute Holiday Shopping rush. Courtney reagan is live at Queen Center Mall in elmhurst, new york. Courtney. Hi, jon. Up until this point, millions of americans have been shopping online, pushing sales up 11 according to adobe. If thats your claim going forward, youre out of luck. Youll need to hit the store because were two days from christmas. Today is the day for Traditional Store retail. Shop attract predicts today will be the third busiest shopping day of the year, the 26th will be the second busiest day behind black friday. Our cnbc all America Economic survey, again this year says its the men the lastminute shoppers, we found a couple of them. Im looking for a charm for the wife. Lastminute thing i have to pick up. No, im actually quite done. I had to check one more thing for my little brother and thats it. All of it today or no, just the lastminute gifts, the Little Things that were left on the list that i didnt have time to get to before thanksgiving. Now, a slice intelligence scan of 1. 7 million online emailed receipt said amazon is dominating ecommerce sales so far this season through december 16th with a 37 market share. Best buy is a distant number two with 3. 9 market share and thats followed by target, walmart, and macys. Now, while point of sale data just through december 10th showed sales were down 4 compared to last year. Most consulting groups are confident that holiday sales will ultimately hit those forecasts for 3 to 4 growth. But an online sale remember does cost to retailer more than an instore sale. As ecommerce grows and instore sales slow, youre going to see some compression there in margin. Plus add in what Alex Partners consultant joel bynes says is deeper than planned discounting and thats going to take another leg down for profitability. So well have to see exactly what happens, but today is going to be a very big and important day for retail to finish out the season strong. Back to you. Thank you, courtney. And the president elects tough trade talk having quite the impact on retailer stock performance. For more on what retailers can expect in a Trump Administration were joined now by the president and ceo of the committee for Economic Development and former office depot ceo steve oglund. Good morning. Good morning. Coauthor of sustaining capitalism and a cnbc contributor. Trying to parse this talk about a 10 tariff on goods manufactured overseas, this is hitting retailers, but can you break down for us a little bit, i mean, its based on the value of goods not necessarily the selling price of goods. Whats the impact of Something Like this on, say, an i phone coming into the u. S. After being manufactured in china . Whats the impact on the likes of an office depot . Well, you know, look, all of retail in america is dependent on a Global Supply chain and much of that is manufactured in asia. So the talk of a tariff on any goods coming into the country of course would hit our retail sales, but it would hit the americans consumers because a tariff is essentially a tax and it would be incremental pricing, higher prices on the American Consumer, which would be bad for the economy because as we know gdp is dependent on the American Consumer for 70 . But i actually dont think that there are going to be tariffs. I think this is part of the negotiations that theyre throwing out, you know, these ideas, but i think ultimately its not in the best interest of the United States or china or any other country to get into a trade war. What were trying to cois reset and get to fair trade. Depending on what happens here with tariffs and trade and so forth, that could have a negative but it could be neutral. There are a lot of other policies that can be very positive. You know, you look at corporate taxes and american retailers as a sector pay the highest tax rate of any corporations in america, the highest effective tax rates so if the taxes are reset for corporations at a high 20 , it could be a 50 gain in earnings. So theres a big upside there. Theres a big upside also in personal income taxes if its cut, it will put more money in peoples pockets. Regulation is a big cost on american retailers today. That could be a big gain. So there are a lot of other things. Infrastructure is another one where lots of cost in delays and bottlenecks and so forth in getting goods through the country. So all the other policies that are being worked on by the Trump Administration would be net gains for retailers. I mean, yeah, im just trying to think through that a little bit, steve, especially because if the fist thing that hits meetly is this tax, you know, obviously thats an issue, but theyre also dealing with just this massive shift in the way people are shopping. So those are two pretty difficult forces to contend with. Oh, youre right, kelly. The whole shift is going. Were talking a minute ago about potential 4 gain in the holiday sales but its all coming through the ecommerce side and a lot of its mobile. And, you know, whats happening is bricks and mortar retailers are getting killed. The traffic year to date through december 17th is down 10 in bricks and mortar retailers, so its going to be a massive consolidation of retail. Steve, let me ask you, if youre advising, lets pick macys because its the big one out there, what would you tell them to do right now . Do they double down on the fact they do have are a footprint in a lot of markets so they can get close to consumers and get them goods on demand . Do they leverage their online components and have to do all those things at once . Do they have to come up with kaler mobile app, do door to door delivery, start selling their merchandise through amazon . What would you recommend . Yes. The to all of them. Youre right. This is the issue. Because, you know, theyre saddled with this great overhead, this great invested capital base in bricks and mortar. All of them are retrenching in that and all of them are making massive investments online. Look, some are doing a really good job. You know, walmart, for instance, with the acquisition of jet. Theyre doing much better. But 100 of the retail share shift has gone to amazon. They are so far ahead and its a killer app. You know, and remember, theres an unfair sales tax Playing Field here too, which is another issue that the Trump Administration is going to have to deal with. But all