Transcripts For CNBC Squawk Box 20161215

Finally a look at european equities at this moment. Green pretty much across the board except for the ftse 100. Joseph, nice to see you back. About to be here. Couldnt be you know, it if you could do that, monday, tuesday, thursday friday. You like that schedule . A little recess . Yeah. Hump day . Slept until 7 00. Wow. 7 00 a. M. Was up until 9 30 the night before. Whoa. Living dangerously. Threw caution to the wind. Didnt think about going up until 9 00. They say nothing good happens after 8 00 p. M. Theres a song on alt nation, nothing good happens past 2 00 a. M. Little different. Bare hands. You dont know that one . No. You millennials dont listen to the new music. I thought nothing good happens until 2 00 a. M. I know you. I know you. I know you, my man. Any way thats when he gets up to start prepping for squawk box. Thank you. Thank you. Column, tv show, deal book. Davos man. Broader markets. Treasury yields, 2. 6. When is the last time we were at 2. 6 . Two years ago. Did we get there . We did briefly. Gosh, that was crazy. Wasnt it . Wacky fed who would have thunk, two rate increases in two years . Theyre crazy. Nuts, insane. There is the tenyear. 2. 63. Look at the currencies this morning. I saw the yen really got my attention. 1. 18 now. In the euro, people worry at 1. 05. The world will end. Inching towards parity. Good time. Good time to go to paris. Some strike around the eiffel tower, isnt there . Isnt that do i got that right . By the time you book your ticket and go, hopefully youre such a local at this point. I do. I do know i do know that place pretty well. Love it there. Price of crude. Hovering around 50 or so. Up a bit. 51. 29. Other big stories. Big story we would like kayla to do those. Im supposed to be watching some big stories today. Yahoo disclosing another breach, this time affecting 1 billion accounts. The hack attack exposed private information of those users such as names, phone numbers and passwords. Its believed to be the largest theft of personal data topping only the previous breach by yahoo of 500 million users. This breach took place in august of 2013. Its believe to be separate from the breach in september. It calls into questions verizons planned 4. 8 billion acquisition of yahoo which chis expected to close early next year. After the first breach verizon said they may renegotiate some terms of the deal because of the hacking. Yahoo shares down 4 . Well see if we get comment out of verizon or executives about what this means. Other deal news, shares of mondelez on the move after a report surfaced in a swiss magazine that kraftheinz is supposed to acquire or should we say reacquire . Thats what it would be. The stock rose as much as 12 . Thats the stock of mondelez. Cooling off after the potential target said it has not heard from kraftheinz about potential takeover. The stock up about 3 in trading. Mondelez said there is no reason to believe theres truth in the report. Officially Neither Company offering a comment. Hours after uber began picking up riders in San Francisco in selfdriving cars, california regulators ordered the pane to shut dont pilot program. The state department of Motor Vehicles says uber must get a permit to test Autonomous Cars on public roads or face legal action. The dmv issued permits to 20 companies, uber is not one of those companies. Uber says it cars are not truly self driving because they need a driver to take control of the wheel if needed. It is familiar with legal action. In pittsburgh, they got permission. This is different. Always question whether technology or government, who is chicken or egg. Whether the government can actually catch up to the technology. They ask forgiveness rather than permission as a rule generally. We have a jobless claims, Consumer Price index and philly fed surveys at 8 30 a. M. That always excites steve liesman. Followed by the home Builder Sentiment survey at 10 00 a. M. A pair of tech names reporting after the bell, oracle and adobe systems. The fed hiking Interest Rates for the second time in a decade increasing the expected rate hikes in 2017 from two to three. The Central Banks language took a toll on the markets yesterday. Steve liesman has more on the feds message to the market which is still pricing in two rate hikes for next year. Well, if you look at the twoyear this morning. Its up near 1. 20, almost 1. 30. As soon as joe said 2. 60, it was old, because it was 2. 62, 2. 64. The spread between the two is on the rise. Its interesting to me. I thought the market was on board with higher stocks and higher rates. Yesterday got a little spooked. This morning its like im in for a dime, in for a dollar on the idea. The fed was tilted a bit hawkish. We came in the fed survey showed there was a split in the market about whether or not they were going to do two or three next year. We had an average of 2 1 2. Half the market was not priced in for the third hike. Three hikes in 2017, only a slight increase in growth with a somewhat rate inconcrerease in outlook. I want to show you lets listen so what she said when i asked her about do tax cuts increase productivity . Are they the sort of thing youre looking for when it comes to fiscal policy . Tax policies can have that effect. It really depends on the specifics. I dont think theres anything that i could say in general about what tax policy would do. I really cant tell you what the feds response would be to any policy change, is that are put into effect. That was the first of nine, ten, 11 attempts to get the fed chair to comment on the incoming president s policies. She was not really taking the bait. One more thing i want to show you, how did we get to three hikes from two . Didnt take much. You had a decline in those who were in the twohike camp, a decline in those who were in the fourhike plus camp. They met in the middle. We were already close. Its not that big of a change. It only took going in two guys to raise the forecast for 2017 to get there. It strikes me if thats the new news to the market, its over reacting to it. What was dan rathers thing . He said courage. Thats the word i come up with on this. 4. 6 unemployment. The second rate hike in ten year years. Taking the punch bowl away, saying no to people. No, we cant stay at zero. Courage. At 72 no62 now better than z. I have schlossberg here, Boris Schlossberg and david bianco. You speak some russian, dont you . I do speak some russian. We all will speak russian it will become very popular since were being taken over. Exactly. I forgot. I have a russian here. Now its cool. I hope kraft does it, if they buy mondelez, will that name go away . Do you know . Will that name go away . Mondelez . Will it come back to kraft whatever . Can only hope. You know where that word comes from . They had a contest with 1700 entries with employees. They came up with a match up of latin mushing together world and delicious. In russia, it is as profane as you can get. Its some type of oral sex, is it not . If you say that to a russian, theyll slap you or fine you or can you tell us what it means . Are you afraid to do that . I think ill refrain myself from saying what it means. Did you know that . I did not know that. Family programming. 6 10 a. M. I think were okay with saying mondelez, unless theyre watching in russia. As long as you say it with that southern twang. Dont you think of seinfeld when you hear of that . Mandoley industries. How about the fed increase . People dont know that. I have two russians here. Two communists, but any way i thought the feds tone and what happened in the dots is just about perfect. I think theyre signaling they do expect some fiscal stimulus. Theyre awake at the switch but not doing anything or changing the course in a definitive way until they see the fiscal policy. Isnt once again the Global Situation masking how behind the curve they are here . Probably giving them cover to be behind the curve and now, with rates at 2. 6 and people expecting gdp higher, theyre allowed to raise. They may extricate themselves despite their best intentions. They may get out of this. Were all expecting a faster pace of hikes. They may be able to without repercussion. Thats welcome. Growth might pay for the higher Interest Rates. I dont think theyre behind the curve at all. It was surprising to see her rhetoric, which was much more hawkish than the reality on the street. The only factor that matters is wage growth. Wage growth is still not there. Retail spending is still not there. Those two things start to go up, yes, were all on board for further rate hikes if we dont see that improving were dead and done. Heres what i saw yesterday. Fake news is all the rate. Hearing were at full employment, someone on the right of things said fake news with 95 Million People not in the work force and cant get a number. Its a fake number. Say 95 out of context is a bit out of context. You know what the number was before the financial crisis . 85, i believe. Still at 40year lows. Half of that is probably retiry retirees. If were that tight on unemployment what janet yellen did, hey, if we can bring some of these folks back into the work force, we dont have an immediate inflation problem, why not try . The reason is a sophisticated reason, the notion called historesis . Thats the process of when you sit down on a couch, you get up, the pillow doesnt bounce back. The fear at the fed, beginning with bernanke to janet yellen is do we get into an unemployment problem that does not snap back with the economy . Their notion is run hotter. I think now that theres some help coming from the fiscal side, theyll run more neutral to a touch hotter. Only if they get support on the wages. If wage growth is not there, the fed stays still. Mark my words. Theres a new show in town, fiscal still plmulustimulus, the rates pivot on. They want to see the Corporate Tax cut as soon as possible. Thats what the fed wants to see as well. Theres a question do we absolutely get that . Goldman sachs says we wont get that until 2018. It will be talked about for a long time, but we wont get it until 2018. If they want to keep it simple, get it moving quickly, drop the Corporate Tax rate, dont get embedded in complicated thats the question. Is that enough . A simple rate drop as opposed to how do we manage the territorial tax system . Its extremely confusing. If they want effective stimulus do that another day, drop the Corporate Tax rate as soon as you can. Do more later. You may not get the shot the second time. I dont see any good outcome from the border, so i would focus on make the u. S. Corporate tax competitive and not introduce protectionism into the policy. In the meantime the clear benefit here is to the japanese, the biggest winners yesterday were the japanese. In six weeks donald trump made more roads into the japanese economy. And the nikkei economy skyrocketing lower. It went up. I know, but the Dollar Strengthening against the yen, right . The Dollar Strengthening against the yen makes the japanesecorporates the yen is not rocketing, its plummeting. A piece caught my eye, it says why china is so afraid of the u. S. Feds rate increase, because of what happened in january and february of this past year. It creates turbulence in the yuan. Theres bad debt in china. A lot of it is tied to the dollar. Theres fear on the other side. China is the other interesting point. If we have more tensions with china, they warned they will investigate starbucks and gm. If they clamp down on u. S. Corporates in china, the japanese corporates are winners by benefit. Theres no love lost between japan and china but they will benefit by default if theres tension between the u. S. And china. Rick santelli yesterday thought it mattered to the market that janet yellen did not in any way bless the policies of the incoming president. I wonder if thats a good thing by giving the market a wakeup call about the uncertainty surrounding the president elects policies. That we dont know how much is coming, when its coming. Its very hard which was essentially her point, very hard to game the potential Economic Impact because we dont really have a plan. Its normal for a fed chair to not be overly opinionated on fiscal policy. Clearly i think what you have happen is a fed that welcomes fisc fiscal stimulus, one of the best ways to spend that wallet is that Corporate Tax cut. When we see the exact package from the tax cut corporate to personal, then the fed can right size their policy against that. For 2017, are you balls to the wall . Are you what do you think . I think the s p its okay to say that. You know what that means . I follow you, joe. What does that mean . Thats a pilot of a jet, the throttle has balls in his hand. Pushing it all the way to the wall. Nothing dirty. I would think he would have his hand on the throttle. That is the throttle. Never mind. You have a target for 2017 . Yeah, 2400. Not much of a gain. Like kissing your sister. We like it. Thats like 4 . Thats not balls to the wall. Thats, okay, well land. Theres financials, healthcare, tech how about 2800 . Take a stand. 2400 . Well take a stand one step t at a time. All were saying is it doesnt go down. Thats as manly as youll be . We think the markets rallied which is expected and appropriate. The markets should be in the 2200 range. I feel like im on the simpsons and santas little helper, woof woof woof, food. That is not balls to the wall. Why is there any surprise every time hong kong follows the u. S. , as if we didnt know that will happen . Its natural. You make easy money on that. Thats why youre smiling. You sound angry. Emotional. Im not angry. The market knows whats happening, and schlossberg makes money. You flinched again when i said balls to the wall. Its tough. Why did you flinch again . Its fine. Its a throttle. Discussing jobs, immigration with president elect trump yesterday, jeff bay soezos sayi was a productive meeting. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back. Tech ceos representing more than 3 trillion in market value meeting with president elect trump yesterday afternoon. Want to get over to john harwood with more on this story live from outside the trump tower. Good morning to you. Reporter good morning. You had the potential for conflict in this meeting given the fact that some of the people in attendance, including tim cook of apple, jeff bezos of amazon among many others had tangled with donald trump during the campaign, but that was not the donald trump who showed up. Campaign is over, he moderated some of his rhetoric on some issues, and donald trump praised the tech executives gathered around that table as the best in the world and promised to have open lines of communication with them. Heres donald trump. Theyre all talking about the bounce. Right now everybody has to like me at least a little bit. Well try and have that bounce continue. And perhaps even more importantly we want you to keep going with the incredible innovation. Theres nobody like you in the world. In the world. Nobody like the people in this room. And anything we can do to help this go along and well be there for you. You call my people, call me. It denoesnt make any differenc. We have no formal chain of command around here. Interesting phrasing in a meeting where his Vice President was there, saying theres no formal chain of command. Three of his children were there along with jared kushner, that wi will fuel concerns about his businesses and the presidency. The flip side of his message using tariffs against countries and other countries if theyre not competing fairly with the United States. The rubber hasnt hit the road. The policy choices have not come. One thing to watch is the issue of immigration, especially since the incoming attorney general, jeff sessions, has talked about restrict i restricting h1b visas, important to the people in the valley. Well see what happens in january. I think what he meant, about no formal chain of command, that you can call me. Yes. Youll probably make the headline trump admits Management Structure is in disarray. That could be a good headline for you on that. I dont think he meant that. I think you can reach right up to me. You could look at that in a half empty way . Yes, i think thats exactly what he meant. Okay. Thats a good thing. A couple things. I talked to a couple people after the meeting, there was a suggestion, even though i know jeff bezos said it was productive, but they felt like props in terms of the images and what took place there, that the meeting necessarily was not necessarily substantive and didnt have to happen the way it did. It was more theater than, you know, a true meeting of sorts. Well, no doubt about it. This was a principally a symbolic gesture by the president elect to an industry thats extremely important to the american economy. As we discussed before, donald trump said in a rally the other day when some people in the crowd started saying lock her up about Hillary Clinton, he said, well, that was good for its in the campaign, but we dont care about that so much now. I think Donald Trumps attitude for the moment, hes said hes a counterpuncher. You notice these companies did not say much coming out of that meeting. I think theres a reason. Theyre trying to keep their head down, even as they believe john, we have to run. Unless theres questions on how to fix itunes syncing problems, i dont understand why trumps kids were in the room. That was a tweet yesterday. I dont understand that. You dont want his kids there . I dont. Not if theyre planning on running the business. Coming up, full analysis of the rate hike plan and a look at how things could change under the Trump Administration. When whirlpool builds an appliance, they put everything they know into it. But once its sold, there usually isnt a way to keep improving that product. Today, whirlpool can analyze iot sensor data from connected appliances on the ibm cloud. So they can continuously learn how customers are using their products. And how the machines respond. Harnessing data to make great products better thats what the ibm cloud is built for. Its been over 100 years since harnessing data to make great products better 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 . Is that they contour to your body. Rpedic mattresses. 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 have when you come in in the morning and you dont see the fair value. I saw 50 points, now if you add in the minus 30 on the fair value, up almost 80 points. That would almost get back what the markets lost yesterday. Not quite. A little over 100. Nasdaq indicated up 14. S p up 9. The cdc issued a new warning declaring brownsville, texas a yellow zika virus zone. Pregnant women should avoid the city. Those who live or work in the area should make every effort to prevent mosquito bites. The local spread of zika has been reported in at least five cases there. There are more reports across the border in mexico. Some stocks to watch, swiss drug maker lonza group buying capsogel for 5. 5 billion in cash. Capsogel makes delivery systems. The stock is down about 7 . Pier 1 imports Third Quarter results beat forecasts, and theyre raising Fourth Quarter earnings guidance, however sales continue to be hurt by soft store traffic and a heavily promotional environment. Still better than the street and the stock is up about 20 . Apogees Third Quarter profit rose 20 on strong sales. The maker of commercial and industrial glass is raising its fullyear outlook as it benefits from a surge in commercial construction. And shays of eli lilly, reconfirming guidance for 2016 and 17. Saying they have the potential to launch 20 new products from 2014 through 2023. Fed policymakers decided to raise rates by a quarter point. The second rate hike in a decade. The central bank indicating there could be three hikes next year instead of two the fed will wait and see if president elect trumps plans for tax cuts and deregulation will boost growth. Joining us with that and more for what it all means for investors, American Enterprise director of research policy, Kevin Hassett and brooksings institution fellow aaron klein. I should not say good friend for one and not the other. Good to see both of you. Help us understand what kind of growth rate you think given the fiscal measures that may be on the table we could see over the next 12 to 18 months and how that will impact the way janet yellen and company will think about things. You hit exactly the right point. The thing that was surprising to me yesterday about the fed is that they didnt change their growth outlook, even though the whole world is changing since President Trump has been elected. The oecd staff jacked up the forecast for next year because they see a big tax cut coming and a infrastructure bill. The fed didnt do anything. They lowered their forecast a bit. The truth is you should ratchet up growth forecasts by a half percent next year if youre cautious and a percent after that. Theres a really big tax cut coming and a big infrastructure plan coming, the fed didnt do that. They didnt do that because they really believe that stuff. They just sort of sat there. What that finally means, ill let you go to aaron, next year the fed will be as behind the curve as the folks at the indianapolis 500. Theyll watch all this stuff come. The economy will start booming. Theyll not really change rates. Theyll not believe it works. Aaron, do you believe that kevins right . What growth rate would you ascribs ascribe to whats happening here . I believe the tax cuts were likely to see happen. What i do think is going on, president obama is leaving a strong economy. Economic growth is over 3 for this last quarter. The last Unemployment Rate is low. The reality is we had this trade off before, when president clinton left and handed the x economy to president bush. I think the fed is lifting off. For years the fed was playing lucy and the football with Charlie Brown and the markets. This is rather than one and done this will be a sustained liftoff period. I think the fed will be at about 1 by the summer. Let me ask both of you, what is realistic in terms of the fiscal measures . We just had a conversation before this segment about a tax change. Theres a question mark whether that really does happen in 2017 or in 2018. Is it a one and done . Does it capture the territorial issue . Are protectionist measures involved in that . Do we see the infrastructure component of that . Bob corker was on the show yesterday, he wanted everything paid for. That makes things complicated. Kevin . They have two chances with reconciliation, the thing that protects you from a philly bust tore pass a bill next year. The odds of a big tax cut next year are north of 70 . Its really going to happen. The big aspect of it that aaron must concede f we cut the Corporate Tax rate from 35 to 20, make it a border adjusted cash flow tax that will have a big effect on the economy. Theyll do that. They can do it in reconciliation. Theyll do it eventually. I agree if we have a logical improvement in the Corporate Tax structure, get rid of some of these loopholes, lower the top marginal rate and use that money wisely to invest, that would have a positive impact. I think youll see large cuts in capital, you see a gunning after the estate tax. So that, you know, trumps children can be even wealthier at the expense of our children paying that debt. The question is whether or not the tax cuts are done effectively, efficiently or go after things like the estate tax. If they do the corporate and the estate tax, the estate tax is not a negative. Its a total negative. Theres no way you can come i with a way that shows the estate tax a negative. Absolutely. Aaron, explain yourself. Terms of one year, but in terms of the future, youre blowing up the dedeficit. Whats the big change in the markets, everybody is focused on equity, focus on debt. Theres a huge run up in the bond markets of Interest Rates, people see inflation coming, huge deficits in the fiscal discipline we have at this point. The deficit under control, that will explode again in a series of cutting taxes so the yankees can be passed on from one steinbrenner to another taxfree. Thats the impact the last time we got rid of the estate tax. Did you know the u. S. Economy was now a 3. 2 economy. I like the way youre doing that, aaron. Yeah. What was the Second Quarter . 1. 5. 1. 2. I thought it was 1. 2. The year was around 2. Youre saying its okay to say were growing at 3 . Thats where the fake news comes from. Doesnt help your case. No, no, no. Youre looking at an economy where you have unemployment at 4 , 5 , the last quarter was stronger than the last few. Just be better, we wouldnt need to have this conversation, if you just kept it in the real world, dont i think . I think also theres been higher taxes, lots of regulation, as that stuff gets relaxed, the oecd staff says that growth will go up. The fed is not saying it. The fed has a bunch of democratic appointees on, they dont believe this stuff. Lets sit back and watch. I think growth will be closer to 3 next year. If it is closer to 3, aaron will say thats because we gave you 3. It will go from 2 to 3 over the next few years. The facts are the facts. I know youre not a market prognosticator. A lot of people compare this moment in time to reagan coming into office. I just want to ask the question whether thats a fair comparison given the debt ratio today is so materially higher than what it was then. Pe ratios in the stock market back then were nine times, now about 22 times. People think this market is supposed to double. Is that possibility given where we stand . Its hard to see how, especially with Interest Rates so low, which also drives up the multiples. Justin wolfer had this great paper on the stock market response to president ial elections. The first reagan election drove equity markets up. The reagan effect was north of 7 . So youre seeing for trump which is interesting, almost precisely the same mathematical change in markets. So they are looking right now the markets are looking ahead to reaganomics or a second try at Something Like reaganomics, but the ned is not. The fed did not change their outlook. We have to go. Kevin, you are looking at the same paper that said the markets would fall 8 if trump was elected . He did a great job with that, didnt he . Thats my point. You cant selectively quote there. The reality is this handoff is like clinton to bush in 200016789. I didnt selectively quote. 2001, you had an economy booming, deficit under control and really low unemployment. Lets hope we dont squander that. Gentlemen, ill buy both of you lunch next time youre in the city. Thank you. Great to see you both. I have a problem with your 22, where did you get 22 from . Isnt that forward looking . No. 2017 . What is it . 2017. What are we up to . I dont know. Ill figure it out for you. I think didnt we earn 2,200 we have a commercial break to do that. Coming up, one Las Vegas Hotel is adding Voice Control to your low tell room, but there will be a device listening to everything that happens. Im miked, joe. In a hotel room. You got alexa. Not me. She hears everything. She hears everything. Turn that thing off. Not only turn it off, smash it. Story up next. As we head to break, a quick check of whats happening in europe. Market had been mixed. Ftse turned positive ahead of a decision by the bank of england. Coming up, the dow within striking distance of 20,000. Will the trump rally power through the milestone or will bears take control and spoil the party . You stink. I think youll have a good christmas. You spell like beef and cheese, you dont smell like santa. Okay. Oh ah well talk strategy after the break. Welcome back to squawk box. Time for the executive edge. Starting with the markets. The march to dow 20,000 is still on despite stocks falling yesterday after the fed meeting. Look at where futures are at this hour. The dow would open up by 73. The nasdaq opens up by 12. The s p 500 would open up by 8. Getting us close to canceling out the losses from yesterday. Well still have a bit of a ways to go if we want to get near 20,000. We have a segment, we might as well call it the hot mike segment. Wynn las vegas announcing they will be putting the amazon echo in all of its hotel rooms by 2017. Not in vegas. Alexa will let guests control room, lights, television by voice command. Steve wynn saying i have never seen anything more intuitively dead on making it more convenient to talk to your room. Talk about a hot mike in vegas. In vegas. Talk about what happens after 2 00 a. M. Put it in Salt Lake City or something. People thought chinese intercepting what was happening in the waldorf was bad. Think about hacking those. Put it in the highend suites there. What goes on there, you it will be like the hangover. Thats scary what do we know about the security of that . What we do know is this, that technically it actually is not recording all day long. It just isnt. Its not doesnt work that way. Do you have to say the word. Show me that. Dont tell me that. I dont believe that. By the way, i imagine someone could figure out a way to hack it so it could record. The company could too, or putin now that hes everywhere. Coming up, the ceo of Melco International will join us. Owner of several international properties. Well ask him about the health of casinos, preparing to do business under the Trump Administration and whether he wants to put a hot mike or echo in everybodys hotel room. 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. 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. 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. Macau seeing a recovery recently. Scored four straight months of Revenue Growth following a twoyear slide. At the same time increased hopes for growth under a Trump Administration could spell good news for the region. To talk about gaining in macau and what one could bring to his job in the oval office, the ceo of melko crown entertainment. Welcome. Morning. I want to ask about a transaction we got news of overnight where you guys are a joint venture. There are two companies that have holdings in the company. And one Crown Resorts is basically selling out. How will that proceed and how does that change the way you operate . Well, i dont think it will change at all. Because, you know, after all melco crown was an independently listed company on nasdaq for ten years. We have a great infrastructure and great team. So the transaction with crown is very excited for melco. Now melco is the significant shareholder. Theres an idea crown will be seeking a quicker exit. Will melco be buying those back . Well look at it. Ultimately well look at price we own about 51 now. You know, james is a very good frnd of mine and weve done many great things together. And im glad that this has worked out well for both of us. Talk a little bit about macau specifically. We just mentioned gaming is up four months in a row. Part of the slide is a crackdown from china and stiffer regulations. Is that because those are easing or is the relationship strengthening . Whats behind that . I think after 26 years of year on year declining, macau has had four straight months. And i think december is tracking very well. And ultimately in the environment that were in, china policies and chinese economy are the two biggest factors. Whether we were in positive or negative territory. And i think the theres loosening in policy and at the same time the chinese economy seems like it has, you know, in terms of some of the it is doing quite well now. All in all were positive on macau going forward. The chinese economy has been growing for years. The middle class has been growing for years. People have more disposal income to spend on things. Will that continue . At what point would you be prepared for a slowdown in china . Well, i think the slowdown in china, if you look at statistics, china is probably going to be the biggest exporter of tourists by 2020. And, you know, the growing middle class is really what drives our business. When you look at the Gaming Business and the resort business, there are various segments and our company has always been primed on the growing middle class. Wed like to think of ourselves as creators of entertainment and excitement. So what we are really trying to develop is a new lifestyle, aspirational lifestyle. And henceforth the growing traveling of the middle class is really whats going to drive our business. Would you ever come to the u. S. . We have looked at the u. S. In the past, but its such a mature market and theres so much you know, theres so much gaming and resorts already. How much whats the mix of your business . One of the things thats interesting in vegas how over the last decade it went from being majority gaming to everything else. Right to the rooms to the entertainment to all those other components. Whats it like in macau . Well, macau is usually over 90 gaming versus less than 10 and do you want that to shift . We dont really want that to shift. Because as a company melco crown we really pride ourselves on creating the first attractions and entertainment. We have the most michelin stars in macau, most five stars. But really the attractions there are as a differentiator so people pick us over our competitors. Naturally the thing that still drives our business is always going to be the Gaming Business. And so you always want that to be because the premium on that is so much higher . Its higher and better. You know, macau as tough as it has been the last years is still over four times of las vegas. In terms of gaming revenue. How does the trump card affect you . I think it will affect us positively. You know, i think having the president elect said many things about, you know, china, et cetera, but ultimately not all positive. Not all positive. Very little, actually. Whats the prevailing view of donald trump in china . I think they like donald trump. We hear that again and again. Deal maker, businessman. You know, hes had casinos in the past. So i cant imagine him having some sort of antigaming policy. Capitalists. Unlike where weve been the last couple of years, i think they appreciate capitalists. Yes but then theres the issue with taiwan and how hes handling that. Youve been sitting right there when many, many people that you he took a call from taiwan. He met up with kanye west. So yeah. Thank you, lawrence. Good conversation. Appreciate it. Coming up, the fed raises rates for the second time in ten years. Well talk doug da vn chille. They say the world does not revolve around you. But today, maybe it can. I am helping 1800flowers find the perfect gift out of trillions of combinations. And working with the new York Genome Center to find treatments as personal as dna. And i am helping sesame street make education unique to every child. Hello, my name is watson. Working together, we can outthink anything. Hello, my name is watson. [engine revving] 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. What it means for investors as we watch march dow 20,000. Analysis is straight ahead. The biggest hack in history. Yahoo users hit again. What it means for the stock and the companys pending deal with verizon. Plus how satisfied are you with your airport . A lot faster, you get a free meal. If i wanted a joke, id follow you into the john and watch you take a leak. A breakdown of which airport should be on the list for infrastructure cash when donald trump takes office. As the second hour of squawk box begins right now. This is squawk box. Welcome back to squawk box right here on cnbc. Im Andrew Ross Sorkin along with joe kernen and kayla tausche. The futures are selling off a little bit from where they were. Still up about 50 points higher. Nasdaq looking to open up six points higher. S p six points higher. Take a look at currencies. Youre watching the euro drop about 2 this morning. So thats going to be something to keep an eye on. Also check out oil at this hour. Were looking at wti crude hovering right now at about 51. 51. 18. And finally the 10year note. Also should say the bank of england leaving rates unchanged. That happened literally moments ago. Kayla . All right. Heres whats making headlines at this hour. It finally happened after a year of talking about it. The fed raised shortterm Interest Rates for the second time in nearly a decade. What investors were really focused on, though, was what janet yellen had to say about the future and her outlook was cautious. The fomc participants recognized that there is considerable uncertainty about how economic policies may change and what effect they will have on the economy. And in so far is that will affect monetary policy. Of course we will have to factor those policies along with many other things. Were operating under a cloud of uncertainty at the moment. More on the fed decision and what you should be doing with your money in just a minute. In corporate news, yahoo disclosing another major and bigger breach. This time affecting 1 billion accounts. The hack attack exposed private information of users such as names, phone numbers, and passwords. Its believed to be the largestever theft of personal data. The breach taking place in august of 2013 and is believed to be separate from the next biggest public breach in history. That also of yahoo that the company disclosed in september. The latest hack on yahoo may call in the pending deal to be bought by verizon. After the first breach verizon said it may seek to negotiate the terms of that deal. Russians . Russians . Im not sure. Russians . Right . Orchestrated by putin. Thats what i think. Dont you think . The agencies havent weighed in. Thats why yahoo stock was way down. It was a conspiracy. It was. Putin. And selfdriving car fleet rolled out for uber yesterday. That despite backlash from regulators saying the Company Needs a permit to keep the vehicles on the road. Sent a letter to uber ordering the company to cease the operations of the Autonomous Cars until the Company Applies for and receives the permit. Uber responded say didnt need the permit because they require a person to monitor and take control of the wheel. Which doesnt meet the deal of autonomous. To be continued. And we were waiting a year, i guess, if you take the first rate hike. But if you just take waiting for rate hikes in general, its been i heard year and it was like year . The weve been waiting for these clowns like the last was in december. Weve been waiting for another rate hike for a year. But waiting for them to get off the snide for like six years or so right . Anyway. If you think about it. It sounds better when you say it. Is snide okay . Who knows. Schnide. I think its a baseball term. I believe. I said this is my stick and people laugh at my because its shtick. But in baseball i think it was a guy. All right. That makes sense. Unanimous and widely expected decision, policy makers decided theyre wacky, crazy, nuts, brave. They went up 0. 25 . Joining nous is rick rieder from blackrock. He looks fine, but he manages so much money that im surprised youre not your shoulders arent hunched. Do you sleep at all . So, you know what . This is a more fun environment. I think youre point is right. I think the fed could have gone june 14 is when we think they could have started going. Hold that thought. Im going to introduce jason trenert as well. Rick, i dont know if you agree with this. Lead editorial, the center of the wall street journal, seems to think new policies none of these things are going to work unless its a big infrastructure. They say the current fed governors and staff are so steeped in keynesian models they dont see it. So their forecasts have been why would we care what they say. Do they have this wrong . Do they just want i think there are multipliers from taxes. If you take personal tax, Corporate Tax, repatriation, you merge them all together, weve run the numbers. If you got 100 basis increase in the Mortgage Rate but cut in personal tax, you end up doing significantly more than you do because of the rate hike. I think the way you described it is right. So much focus on the front end of the yield curve, it doesnt really matter. In fact, i would argue you are creating more equilibrium today. Which gives people a sense were not distorting Interest Rates and asset valuations. This is where you see capex growth and Companies Instead of lever buyback stock. Now ive got to grow my business. So they actually since its not see, there are people that would argue that orchestrated rates really werent foe becauaux because thd have been there. They wouldnt have gone up that much anyway. I dont know whether theres any truth to that either. But if people actually watch a market clearing operation, maybe they have the confidence to invest. Thats right. Japans going to be very slow. I mean, the buying that comes in from japan is slow. The demand for u. S. Assets because of where our rates are relative to the rest of the world will keep rates from moving that much higher. That being said, the fed can keep moving and can do this. The short end of the yield curve, we talked about on this show. Its not the short end of the yield curve that drives where funding takes place. Its the back end. Capex, Mortgage Funding moves. You know, the irony is i would say donald trump could be the best friend for the fed. To the extent fiscal stimulus actually gives them cover to normalize Interest Rates. You have enough growth that you can actually get back to some sort of normal or neutral fed funds rate. This is what weve been wanting the whole time. But you needed the fiscal side of things. This is what theyve been begging thats what the front page of the journal says. Yellen trump on the same page for now. Bernanke was calling for a long time. Yellen was begging for this. I would argue the Obama Administration was begging for some kind of they were begging for tax cuts and regulation. They were begging for spending and infrastructure. I think it was a combination. They wanted to fix Corporate Tax rates at the time too. By the way, as well as spending, as well as tax, financial transmission is incredibly important. You start to get velocity has been in the system has been dulled globally. You cant be for deregulation as youre writing all the new regulations on a daily basis. You cant have it both ways. It depends if youre putting regulation in the same camp as taxes. It might be worse. No, no. So thats what we have for everything. Thats a question. Look at the secretary of the treasury now whose main focus it seems to me wld impede commerce. Largely in academic. As opposed to having a cabinet that is basically focused on throwing commerce. So the backup in rates will be more than offset by the other stuff thats happening in your view . Correct. You have to think about the starting place. 10year when we got to 1. 55 people thought what would happen. Rates were distorted by 80 basis point. These are not restrictive Interest Rates. These are closer to equilibrium. So youre not in a dangerous position where rates are. And youll get particularly because youve got so many other things and confidence has grown that youll get an economy all you guys on the same we have a different blackrock guy on every week. Rosenberg and i are on the same page. What about larry . Yes. Absolutely. Oh, my god, yeah. Larrys one of the wanted the rates to go up for awhile. Occur rfed talked about lett inflation run hot or let the economy run hotter. When you let the yield curve steepen out, let create that interest margin, capital build in the system. September 21st, most important. November 2nd the second most important day . I think the regime shifted and you think about where rates started to go. We were on this show and other shows talking about the regime has shifted. And i think you just kick that into another gear. By the way i think what the fed did yesterday continues to ax sen accentuate this trend. Do wage increases come immediately . Wages tend to lag. Year on year its time, isnt it . It is time. And year on year youre at 2. 5 . Its not bad. Now as we press into the low 4s youll see we dont need to work that off before the wage increase . No. By the way, youre seeing lower and middle income wages pick up faster year and year. Thats about 4. 5 . Thats pretty good stuff. And if the president elect is as he says jobs, jobs, jobs, youre going to see pressure particularly if we bring jobs back into this country. Which i would argue is a good thing in terms of creating a better economy. So we have no we dont have any were allowed to have as many blackrock people on in davos as youre willing to offer. So larry, will you come on too . Do you need an invite from davos himself . Im happy to do it. Will you invite larry . Ive got to think about it. All right. Rick, thank you. Jason, you dont go there do you . No. I dont rate. I dont have enough dough. Its expensive. I saw that same one in times square. That big, like, open up the exactly. Coming up, the ceo of provider centene joining us. And later the fed could speed up hikes next year. Doug dachille is going to join us with his outlook for the economy and why he says tax policy should be front and center for president elect trump when he takes office. Squawk returns with that and a lot more in just a moment. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to eate, not just wealth, but things that matter. Morgan stanley tadirectv now. Stream all your entertainment anywhere anytime can we lose the all. Theres no cbs and we dont have a ton of sports. Anywhere, any. Lets lose the anywhere, anytime too. You cant download onthego, theres no dvr, yada yada yada. Stream some stuff somewhere sometimes you totally nailed that buddy. Simple. Dont let directv now limit your entertainment. Only xfinity gives you more to stream to any screen. Welcome back to squawk box. Donald trumps plan for obamacare looming over health care stocks. We spoke to peter orszag yesterday who played a key role in constructing the Affordable Care act. Theres going to be a lot of noise in the system as the replace piece comes into being. If youre in the payer space, thats going to be, you know, particularly. But in the rest of the health sector, what matters is continued evolution away from fee for service towards value based payment and whats happening there. The other piece, of course, is the tax piece we were talking about before. Many of these firms do also have significant overseas profits. All right. Joining us now to talk about business in a postobamacare world is michael nooe door neidorf. Shares of centene down since the election. Help us to where this all goes and how its going to impact your business. I think short end its not going to impact the business. Theres been a lot of misunderstandings of whats really going to happen. Thats becoming much clearer. And it is what . I think some people thought that on january 21st the day after hes inaugurated that everything would fall off a cliff. This is going to be a two, threeyear process to correct it. And when all done, theyre going to construct the structural problems i talked about on this show previously. And so well see a stronger, Better Exchange type program. Different names, different approaches. But it would be structurally sound. And theyll continue to ensure not just the 20 million but more than 20 million. And how much of your business relies on the exchanges . In 16 its about 5 . Relatively small part thats profitable. We are one of the few that have done well with it. What are they asking . Theyre concerned that subsidies are going to go away. Theyre concerned that the whole exchange is going to go away and the margins are going to be squeezed. The bears are looking for story. Why are you so convinced thats not the case given that if you take obamacare off the table, if you think about the jawboning that whether its policy or jawboning unto itself, the kund of pressure that hes going to put on margins across the entire industry. Im looking at the population thats coming in. And its the same population weve always had. And so its a growing business where im not going to front investor data, thats tomorrow. But its growing dramatically in 17. So were going to see more overhead absorption. Can i ask what impact you think all that might have on the private sector insurance . I mean as a Small Business person . Youve seen plans for employer sponsored insurance programs. It just seems its hard to square the circle. If youre going to have more people getting government sponsored health care, it seems like the price is obviously for everyone else going to have to go up. I think as the commercial side, its going to come down. Do you really . Yes. Im seeing it in our own business. We have 29,000 employees. And theyre and we have insurance for them. Now, when a hospital is not being paid and theyre going to insure people showing up in an emergency room, that gets transferred, the cost of that is transferred and shifted to us. So as we start to cover more and more people, therell be less Cost Shifting to us. Okay. So walk us through. Take us out of your own company for a second. And wuk us through in your mind who are the winners and losers under a Trump Administration in your sector . Meaning, is it the drug companies, bioTech Companies, where are the hospitals going to land in all of this . Where are the insurers are going to land . Insurers, i think were going to be fine. Not just centene but the industry in total. I think its going to be fine. I think the hospitals will do a little less well, but theyre be okay too. Pharma is going to be under incredible pressure just because of their pricing and how they did that. And in my career, ive been in pharma and so i can see why. And thats going to suffer. Biotech, therell be some pressure but i think the advance in the products they have will help protect them and insulate them. Device makers . Device makers will have some issues only to the extent theyre not uniquely different and provide a real value. In the policy that ultimately replaces the Affordable Care act, what tenets do you think the insurers will push for and when to get them on board . Because they were on board with the Affordable Care act at first and theyve slowly over the course of several years backed away. We are deeply involved in trying to help improve the Affordable Care act. Youre going to have more tiers of individuals. Youre going to have tax structures removed from it. The insurance tax, the insurance piece of things that have elevated the rates. So youre going to see some of these structural things be reduced to where it will be much more successful. Is it that easy though . Oh, its much easier. The problem with the original act is how it was passed. Because you ended up with a bill that never got into a Reconciliation Committee where they clean up the junk that costs so much money. I think youre going to find something thats structured well, going to find per diems, per capita, block grants. I think we favor per capita grants because it helps the fastgrowing states. Just broad policy political question which is, when all is said and done, are more or less people in america going to be insured . I believe when you get to 2019, 2020, there are going to be more people in this country insured. Isnt that the first thing you said . Yeah. Very first answer. Youre going to see more people insured and i thought you said that right at the first answer. Youll see the system work for us. All right, michael neidorff, thank you for coming in. Thank you. Appreciate it. You know, squaring the circle by definition is impossible, right . You cannot square a circle with a compass. You know who wrote about that . Plutar. When somebody asks you to, you cant. Its impossible to get the same area. Did you know that sorkin . You want to square a lot of circles. Youre not listening. What else is new. Still to come this morning, yahoo suffering the biggest cyber attack in history. Over a billion accounts compromised. And a check on the stock and what it could mean for its deal with verizon is straight ahead. Squawk box will be right back. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. How else do you think he gets around so fast . Take the reins this holiday and get the mercedesbenz youve always wanted during the winter event. Now lease the 2017 gle350 for 579 a month at your local mercedesbenz dealer. 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. The market. Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Welcome back to squawk box. Todays agenda full of Economic Data. Look for jobless claims, the Producer Price index and philly fed survey. Well bring all of that at 8 30 eastern time. That will be followed by the home Builder Sentiment survey at 10 00 a. M. Then a pair of big tech names reporting after the closing bell. Oracle and adobe systems. And were watching shares of eli lilly. The company says it has the potential to launch 20 more products in the tenyear span from 2014 through 2023. Stock is now up 3. 5 . Still to come this hour on squawk box, reaction to the fed from aig Investment Officer doug dachille. Then an air report. We find out which one should be opening their doors for infrastructure dollars. And then stocks to watch at the opening this morning including reaction to that big new breach at yahoo. As we take a quick break, look at equity futures at this hour. Still poised to open in the green. Although off of earlier highs in the morning. 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. 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. Among the stories front and center this morning, were watching shares of yahoo today. The company disclosing a new major breach. This time affecting 1 billion accounts. The newly discovered hack attack exposed names, phone numbers, and passwords and just reported this morning, a lot of those were government employees. This new breach took place in august of 2013. And is believed to be separate from a breach the company disclosed in september. The latest attack may call into question the companys pending deal with verizon. After that first breach verizon signalled it would try to renegotiate terms of the deal to acquire the company. Well speak to an analyst in a bit about this and whether it would be material to a 4. 8 billion deal if the last one wasnt. But this one is twice as big. What does that make for that deal now . Were you surprised it had a billion users . You were. Thats right. I was. We do some business with them . There were some jokes that the hack prompted people to remember that they had a yahoo account to go and log in. I think we, like, have some type of arrangement with them. We need to be nice. Right . Dont we, andrew . We used to. I dont know if we do. We have a video sharing. Well probably get an email about it. What type of sharing . Video. Video. Were looking at the jumble. That was the it would be devoid if there were two ds. For readers of the daily news. Jumbles everywhere. They have the same one. In all the newspapers around the country. Just almost gave away the first word. Just ruin it for you. Deals of mondelez on the move after reports surface in a magazine that kraft heinz is looking to acquire the giant. Please acquire it and get rid of the name, please. Cooled off after mondelez said it had not heard from kraft heinz about any potential takeover. Its not a real word, steve. Its they made it up. And its a terrible thing in russia, apparently. Exactly. I have stories about that. You do . Well, not wait until we go to break. Mondelez says it doesnt believe is proof in the firm. What is it again . I dont know russian. No. The way they came up with it. Delicious world, yeah. The world of delicious things is what it meant. Im lost. But they mishmashed a bunch of latin words to get it, supposedly. Dont you think it would be great to watch on tv people doing the jumble. Yeah. That i mean, i havent gotten the answer. Okay. Lets talk about the fed hikes today, guys. Get to mr. Leisman. The fed hike rate the fed hiked rates theyd rather watch this. But also indicated it could raise rates three more times next year instead of two next year. There was a company in russia that sold jam without condoms. Because the word without preservative. And the western company was selling jam. Theres a whole history of these things. Like nova. Doesnt go. Doesnt go in spanish. Theres a great history. What about the word euro when the currency was introduced and that means to urinate in italian. You cant please everybody. You have to be careful when you go overseas. You also have to be careful when you trade treasuries. As fixed income traders scrambled to get caught up with a somewhat more aggressive fed. The 2year yield rising. 14 basis points now from when the fed going in, 1. 29 right now. The forecaster says three hikes next year instead of two. They moved from e the left part of the screen to the middle. A couple on the right moved to the left. Thats how you ended up with the median there at three hikes because six members are there. They got a bit more hawkish. Couple hawks as i said got a bit more dovish. And here are some implied probabilities. As you go from meeting to meeting, the data gets less reliable. These are the reuters probabilities. March, 32 . May, 44 . June is where you get above 60 which seems about right. And when i try to price in the second hike, i get it around september. So thats a little bit on the aggressive side right now. But the 2year is not that much different from where the from the second hiem being september. We went into 16, they planned four. Nobody is worse than the fed at telling at forecasting where theyre going to be. Nobody is better than the market. Now by the way theyre on top of each other. I shouldnt take any more time because of the brilliance thats on this thing here. Yeah. Stick around. Doug dachille is joining us now. Aig executive president and chief Investment Officer. We had rick rieder on earlier from blackrock saying were closer to where rates would be if they were just on their own and that should be good for a lot of different reasons. Which wasnt paying off dividends anyway. Right. And i said this a number of times. I think the wild card i hear a lot of people talking about fiscal stimulus and the impact of rates. And tax cuts on the impact of rates. What i dont hear a lot about is the consequence to relaxing the regulatory timeout that the Financial Sector has been the past eight years. One of the big drivers of facilitating has been the Banking System. But it was in a timeout the last eight years. The fed had to do all the heavy lifting by doing the lending. And qe was them directly lending and they had to do overshoot in terms of their rate policy. Had the Banking System been willing to do what they normally do. Provide credit and liquidity to the market. So i think you have to really rethink what the path of rate policy will be if you actually have banks willing to lend again. You take away the volcker rule and willing to take risks again. You have to think what rate path will be at. We needed you in the last hour when we were talking about this. And how it was positive that the Obama Administration wanted to do the same things but was unable to that the Trump Administration wanted to do in terms of deregulation. I said you cant be the regulating entity and say you want to do the deregulation. I mean, look. Look. The regulation of the Banking System was a natural response. When i think of regulation is like disciplining your children. And the financial crisis was like your children doing something really bad. You and your wife went away for the weekend houmd are the kids . 17. And you come home after the long weekend and your house is burned down. Its going to be natural that the response is going to be pretty severe. But putting your 17yearold in timeout for eight years, it gets weird that your 25yearold is sitting there and its inconvenient because you and your wife have to take out the garbage, mow the long, and clean the house. It would be convenient if the kid would do some of that. Now the house is rebuilt but you just learned, doug, that they were still messing around. You might have had under obama some relaxation of dodd frank if the wells fargo thing hadnt come along. And theres been one revelation after another, doug, that i would point out. Look, im in favor of easing up on some of the dodd frank, but the banks havent made it easy to be nice to them. I would just say the great irony of these policies, right, where youre stepping on the gas and stepping on the brake at the same time is that it benefitted the wealthiest people. Right . So the feds Balance Sheet quintuples. If you have Financial Assets youre great. But if youre a little guy with a savings account, you suffer. I mean, so, you need the banks to its the transmission mechanism for the policy. You cant have it any other way. I mean, the question is to your point, i accept the point about bad incentives. Right . Thats an issue about incentives. But the question is who do you want making a decision about who to extend the loan to . Do you want the government to figure out how to deploy capital . If thats the case, you have a situation where inflation adjusted rates are going to be negative for a very long time. And, you know, the question is in this regime, does it really make sense to have the fed fund rates can i get one question out for jason which ive not understood. A lot of stuff coming from the Trump Administration and this idea of if we deregulate the banks and also hedge tax cuts, has anybody lacked for capital to invest . No. So why would there be a huge amount of investment . The thing is the Regulatory Regime i would argue is not just on the Financial Sector. Its on all sectors. So youve had a massive amount of Regulatory Overreach which makes it very difficult. Im a very Small Business man, so i dont know what Large Business guys do. But i do know if im not sure about what the future is going to hold and im given basically a free cost of capital, im going to issue debt and buy back stock all day long. Now its more expensive, im going to make investments . Yeah. Because you have some on what the rest of the regulatory structure looks like. Im missing that. Lets look at what the expansion the expansion of the banks Balance Sheet was done by the fed. The fed made the loans and put excess reserves on the im just saying, doug the problem is what was on the Balance Sheet of the Banking System was loans to the fed. Right. Loans to the fed. If there was demand opposed to the loan to a Small Business guy whos coming in who actually sees a positive net value present project and cant get it. So what was happening is the only parties that people banks were willing to loan were the people who didnt need the money. The people who needed the money were too risky to make the loan. But if i had a good idea and i saw the demand for my product, i could go out and get money for it. And now theyre going to if you were a great credit. And also if you had confidence. The hardest thing, of course, to quantify, you cant put it in a model. Its confidence. Business confidence, consumer confidence, investor confidence. You can have rates as low as you want, but if youre unsure about if youre suing jpmorgan for things that baer sterns did, is it a surprise that they wont be extending a lot of loans . Let me give you an example. I have a Mortgage Backed securities portfolio and i have a tale of two cities. Agency Mortgage Backed securities and i have nonagency Mortgage Backed securities which were the lowest quality. When you look at who got to take advantage of the refinancing capabilities of the lowest Mortgage Rates in the history of the United States, only the best credit borrowers got the ability to refie. And those who need to refie are still in 6 mortgages. Whereas the high quality were able to refinance their rates down to 3 . So that dichotomy is really what inhibited a number of the of spreading the wealth effectively. That the people got access to the capital but they didnt really need the loan. People would ask me if i needed to borrow money. I laughed at them. The people who needed money were turned down. Those who didnt need to take out debt, were fully afforded opportunities to borrow. Was there any part of that that kept unnecessary risk out of the system . Thats another interesting question. Because it didnt go out of the system, just out of the Banking System. What happened was we actually transferred a lot of risks to nonbank entities. So we made the Banking System safer. But was the Financial System safer . I make another analogy about that. Where do you want to have your kids have a party . Would you rather have your kids have a party in your house . Or would you rather have your kids have a party at your neighbors house . Well, if you have it at your neighbors house, its quiet and you dont get trashed. Personally i would have the kids have a party in my house so i can supervise it. What the regulation did was it forced all those risks to have parties in other peoples houses that you dont supervise . To rebuild your own house however you want. Thanks, aig. Can i break in here for one second . We have a bit of news separately not on mondelez. 21st century fox formalizing its bid for sky that it didnt already own. We knew this was coming. They announced something i think we have the wrong ticker right there . What are we showing there . Skyline. No. We need sky. But they are announcing that deal formalizing it today. Of course there has been a little bit of skepticism about independence of the committee thats going to have to do this given the closeness of the companies. But were going to continue to watch this. I think it would be wrong to let doug go without getting the forecast for where the fed is going next year. I think three is conservative. I think it should be 2 . Close to inflation where i think inflation is going to be. You shouldnt have a negative yield. So that means you think the 2year is still the yield is still too low. The most vulnerable part is 2s and 5s. So the 10 the 10s and 30s is getting closer. Inflation expectations of 2 , 2. 5 . Thats my view. What are you looking at for a spread there . So youd have tightening of the curve. You would have the 10year up 10 or 20 basis points and the i hate doing math on the fly here. But basically especially before 8 00, but okay. Yeah. I have a party tomorrow night in your house. Good move. And theres all kinds of things to consider. When theyre at a certain age, theyre not allowed to drink. You know some people are either coming or your personality looibiabilii may need an exclusion on that. You cant expect 17yearolds not to have a couple beers . Underage drinking i dont think we cover you. Joe, stop talking now. Please. Im trying to help you. Just stop talking. Im not going to provide it. Theres liability issues. I know. Im not providing any. How many of them are there . A lot. A lot. So youre playing zone defense. Stop talking. We may need outside help. Im not kidding. There will be no alcohol at joes party at all. No, no. Beforehand. Thats supposedly what beforehand. No. There wont be. No, no. But who knows. People smoke nowadays. Kids these days. Yeah. None of that when i was at university of colorado boulder. Not at all. Zero. Thank you, guys. Coming up when we return, its the holiday season. Many of us will be in an airport at some point over the next few weeks. Of course they are overcrowded, dirty, and falling apart. Where does your airport rank in terms of needing a facelift . Were going to find out right after the break. Take a look at Airline Stocks since donald trump won the election. Squawk box returns in a moment. President elect trump has highlighted Infrastructure Spending throughout his campaign today. Jd power is releasing its Airport Satisfaction study and phil lebeau is here to break down which airports should be opening their runways for that infrastructure cash. Phil, i bet its a long list. Reporter it is a long list, kayla. You and i fly a lot. I know andrew does as well. The latest report will surprise you to find the survey of 39,000 fliers says its better than ever out there. Im not making this up. Thats the report. Its at a record high. Here are the top airports. Portland, tampa, las vegas, orlando, miami. What do they have in common . Generally speaking people are pleased with what they are seeing in those airports. And for a lot of these people who are flying, the big question is whats bothering them at airports . Congestion is the big issue. You spend a lot of time in the airport generally over 90 minutes at most airports. If you dont have anything to do or look at, that leads to boredom. The longer people are in terminals, the dirtier it looks and more crowded it appears. The longer you spend in a space not being entertained, youre going to have more negatives come out. Reporter and if you are delayed in many airports with b its a rough experience. This comes at a time when president elect trump said, look, we are going to rebuild our airports. In fact, he wants to spend anywhere between 500 billion and even a trillion dollars rebuilding the infrastructure with a big chunk going to airports. Which airports need the most help . Not surprisingly, new york la guardia is at the top of the list. We know it is in the process of being rebuilt. I flew out of there earlier this week. Its knot an easy experience right now. Newark liberty is number two. Philadelphia in rough shape and my hometown airport chicago ohare listed as one of the worst experiences when you are flying. Guys, im going there in just a couple of minutes. So for those people flying this holiday season, we hear you. That its not a pleasant experience. But at the same time, the survey says people are happier than ever when they go to these airport zblps does it gauge how quickly luggage comes out . Reporter yes. It has to do with luggage, amenities, Security Check points. Some of this has improved. Security check points has gotten a little bit better. And for some airports, the experience is better in terms of the restaurants and amenities. And im thinking newark. Is it the airport its not the carrier that its the big system they have for the luggage that the airport has, right . That would be like the new Jersey Port Authority or something . It takes sometimes it takes over an hour. A lot of times youre in there talking to the person that is going to try to find your luggage by the time im already in there filling stuff out and i finally look out, its finally coming. It could be 90 minutes. And other places by the time you get to the baggage claim, its already there. Reporter joe, some of that has to do with size and congestion. Some of your smaller airports, you fly into portland, boom. Your luggage is going to be there quickly. But they dont have as many flights as in newark. Its terrible. Its like if you have an hour flight, youre going to wait long e for your luggage than the flight itself at newark. Reporter true. Coming up, stocks on the move this morning. The futures at this hour are indicated up now theyve moderated quite a bit. Up 34 points. They were up 80 earlier in terms of the implied open. Well be right back. 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. Were watching the shares of yahoo this morning. The company disclosing another major breach. This time affecting 1 billion accounts. Joining us on the phone rob sanderson. What do we need to take away from this . Why are we finding out two, three years later . Sounds like the company is finding out two, three years later. The reports are theyve been notified by authorities only in november of this breach they were unaware of that even after the investigation on the 2014 breach, didnt surface until the authorities got involved. So why theyre unaware of such large scale attacks, unknown to us or to anyone from the outside. But the company themselves apparently is just finding out. Whats the worst Case Scenario . Anything to be concerned with if you have an account . And whats it mean for yahoo . You know, i think as a user, you know, this is an attack that was three years old. So your personal information, whatever was hacked or stolen has been out there for a significant amount of time. If there was, you know, personal damages or things to be concerned about, theyve probably cycled through in all honesty in terms of passwords and credit card information, et cetera. The damages would have been felt, i would think, you know, prior to now. For yahoo i think the question is what does this do to, you know, the business . Id say on the advertising side really no impact unless this is a catalyst for a significant acceleration in the user decline. And from the user perspective, lets face it. The yahoo brand is not pristine. The reports surrounding this is not going to comfort people. But you know its a sticky application here. People have been on yahoo email for a long time. Reasons they dont move is because its difficult to replace your identity with your whole community of people. Okay. Well, you know, people are still shopping at tj maxx and target after breaches. But well see if this happening to a tech company that should have known better is different. Rob, thank you. Coming up on squawk box, more on the march to dow 20,000, the fed, and where you should be putting your money to work. Plus tech titans meeting with trump yesterday to talk jobs and trade. Well hear from the ceo of Tusk Ventures about that meeting and yahoo as we just talked about. Hit with another breach. Admiral James Stavridis on that. Well be right back. The march to dow 20,000. Futures rising after yesterdays pullback and the dollars surging. We have data points on jobs and inflation that could move the market. Strategy Talk Straight ahead. Yahoo with a hack attack. Well talk to retired admiral James Stavridis. Plus tech summit could become a monthly meeting of the minds . Well speak to our own jon fortt and bradley tusk. The third 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 Andrew Ross Sorkin and kayla tausche. We are less than 90 minutes from the opening bell on wall street. The futures up 34 points. They were up as much as 75 earlier. They moderated a little bit. Take a look at the dollar. This is some deep stuff going on here in terms of the euro. 1. 04 now. Have we seen a 1. 03 recently . I dont remember. People have talked about support levels at 1. 05 or just beneath it being important. Mark grant will probably write. What is that word when it starts dancing . Thats from alice and wonderland some dance that goes on. It goes on when we get to a certain level where its going to start doing this johnny depp dance. We were supposed to get parity by the end of the year. Thats insane, though, isnt it . You going to dance for us . No. It was if you look it up. Look it up. Fudderwaccing. You got nervous again. Im nervous with the dancing. Nervous with the word. It comes up immediately. I think johnny depp does the its the jabberwockee. He does that dance. There will be some fudderwacking. It is close. Dont say it too many times. Dont you even try. But i got i think i was okay. Checking out the markets in europe at this hour, england left the key Interest Rate unchanged. And tiger woods has signed a multiyear deal with bridgestone golf. He will play and perform the High Performance balls. He will be featured in broadcast marketing as a bridgestone golf ambassador. Hes had i mean, i think of him as titleist. Titleist clubs, titleist balls, everything. So this is significant. And hes he doesnt have to do anything else and hes still going to be tiger woods. But recently hes shown some signs of maybe being yeah, hes had some and hes got more sponsors back. After a tough little that was years ago. It all happened. It all hit the fan when that 2 iron hit the back window of his car. It was a 9 iron. Was it . His wife just i thought she was further away. So she was able to use a 9 iron. Okay. So it was almost an approach shot rather than a yeah. I remember that morning. Here are the stories you werent there. No. But i remember reading about it. Very salacious phase. Okay. Yahoo disclosing a breach compromised the data of 1 billion accounts. The joke of course, didnt know they had 1 billion accounts. The hackers obtained private information of users such as names, phone numbers, and passwords. Its believed to be the largest ever theft of personal data. Breach took place in august of 2013. Believed to be separate from a breach the company disclosed in september which compromised half a billion users. One thing unclear is whether theres any overlap in those numbers. Id imagine there must be. This calls into question verizons 4. 8 billion acquisition of yahoo, of course, which is expected to close early next year. But this may well be reason again for them to try to renegotiate at least the price of that transaction. Shares of mondelez also on the move. This follows a report in a swiss magazine that kraft heinz planning to reacquire the snack giant. The stock rose 12 but cooled off after mondelez said it had not heard from kraft heinz about any potential takeover. Mondelez also reportedly said it has no reason to believe there is truth in the report. We are now less than 30 minutes away from Economic Data that could move the markets today. We have got Consumer Price index and the philly fed survey. All hitting the tape at 8 30 a. M. Eastern. Well bring it to you as it comes. Here are stocks were watching at this hour. Toyota expects to sell 10. 2 million cars and trucks worldwide nx next year. Up 1 from its estimated target for this year. The company also plans to set up a separate unit to sell compact cars for emerging markets. Nokia set to buy deepfield. The deal is an undisclosed sum but nokia says it will help customers gain a better and 21st century fox commencing its second takeover attempt of britain sky lblc. Owns a big stake of it, but makes that formal for the percentage it doesnt already own. Values the company at about 23 billion. Some shareholders had weighed in when the deal had first been reported that they werent happy with the reported price. So well see whether anyone else can get on board now that its formalized. Earlier this week, we talked to dom chu about we called it selling the rip. I think because it rhymes with dip. If its going up. Now were going to talk about buying the dip. Dom chu joins us now with the overlooked stocks live from cnbc headquarters. And you only have so much time. Im going to burn through half of it here. So can you believe tiger is not going to be playing a prov anymore . Did you see that . He signed with bridgestone. You remember, joe, he hasnt played a prov for years. He played a nike ball for the longest time. Youre right. What am i i wonder if he really did. We saw it. When it fell in the hole. Youre right. I forgot. I mean, its pretty impressive. Obviously a big deal because of it because its the first major equipment deal that tiger has signed since nike exited the golf business. Still nike clubs . Hes still using nike irons. But at last weeks hero world challenge, he was using tailor made woods. The next level of the story is what he does in terms of golf clubs. I got wind of that tailor made switch before. I think it was official but then i forgot. And thank you for saying remember like i knew, dom. Like i was just briefly forgetting. I know that you briefly forgot because i know you know all the equipment he plays. Thats the reason why i said that. Okay. Thanks, dom, we got to go. Yes. But by the way, joe, if you want to know more about that story we just wrote it up. Theres a whole kind of a whole detail of whats going to happen with bridgestone and what to expect for sales. Golf data says theyre the number three golf ball share in the u. S. Lets get back to the market story. We want to balance out the sell the rip story from earlier this week. We flipped around our criteria for the s p 500. We want to look at all the stocks below their longer term trading average. The 200day average of the stock. 20 stocks in the s p 500 are about 20, at least 15 below their 200day moving average. So lets take a look at this. Some of the stocks here included in those 20 names are names like reveal there we go. Generic perrigo 15 below that average price. Its not clear perrigo is part of that whole thing. But generic drugs a part of that story. Underarmour below their average price. Coty, 27 below. And first solar. And kayla because were short on time, i put the other 16 names up on twitter right now in case youre interested to see which ones make up that list. Over to you. And that would be thedomino. The 10year ticki i euro below 1. 04. Joe, talk about the move that we saw in the fx market after him . Yeah. Okay. Sorry. You said joe. I know. I thought no, no, no. Hes here to talk. But dollar spiked. Yen weakening dramatically. Just a oneday move or do you think this is a bigger trend were seeing . We continue to be dollar bulls. We think the dollar could go higher. This Time Next Year we could do it from the coast and save everybody a ton of money. Maybe not a bad option. Just putting that idea out there. Good idea. There we go. We do think the dollar is going to be strong. Especially against the euro and the yen. Emerging currencies a different question. Look at the two strongest growth stoer stories out there, weve seen a strong recovery in em as well. But in terms of the trajectory of europe and japan, i think they still have a lot of problems. At what point do you think Dollar Strength would make the fed worry . Its certainly counteracting a lot of what the fed wants. The fed wants inflation and stronger growth. You know, by and large theyre getting what they want. Here they are hiking in december 2016 and its a far cry from where they were when they hiked in december 2015. You know, a year ago when they hiked, it wasnt that welled a all. Because basically we were in the midst of oil prices cratering, risks of deflation, risks of recession. And a massive earnings recession. You know, the Fourth Quarter 2015 s p earnings were down 15. 5 for the quarter. So fast forward to today and with the fed hiking, theyre hiking in an environment where things are broadly reflating. Weve got earnings back on the move up. And so the dollar i think is a risk to that. Also a risk to a lot of the foreign revenues. I want to get to dennis as well. We did see the euro break 1. 05 which was a technical level to watch. But do you see parity in sight . I think parity is in sight. I thought it would be in sight for a long period of time. I think its only a matter of time. I think the economics here in the United States are stronger than are those of europe. I think the political circumstances here are demonstrably stronger than europe. 1. 10 was given. 1. 08 was given. Now weve given 1. 05. Now weve given 1. 04. Only a matter of time until we give par. Whats more important is the fact we were trading 1. 18 on the yen. Ive only been at this for 40 years. But i remember as an Exchange Trader at 365 yen to the dollar. For me to imagine yen going to 150 is relatively simple. I think thats an easy thing to say. Par is coming in euro. And its going demonstrably over that over an extended period of time. And 125 is going to be taken over dollar yen. What about the china factor . Thats something we talked about earlier in the show. Theres a headline that beijing is nervous about the feds raising Interest Rate because it remembers the volatility of january and february of this year. I mean, are we should we be prepared for a global tantrum in a couple months once the effects of this settle in . Or was that a onetime phenomenon . First of all, chinas always worried about everything all the time. Its just the nature of beijing. Thats what they do. If theyre worried about rising Interest Rates here in the United States, they are properly worried. If ive learned anything again over the past 40 years, its that once the fed begins the process of tightening monetary policy, it shall take the overnight fed funds rate so much more than anyone can imagine. Can we see the fed funds rate at 3 . Very easily. Can we see two or three years from now, very likely. I remember trading spot on settlement winds trading the overnight fed funds rate above 20 . Are we going to get there any time in my lifetime . Likely not. But are we going to continue to see 25 and 50 basis points increases over the next several years . No question about it. Youve got a long memory, dennis. We appreciate it. Thanks to both of you. Jason, youre going to stick around. Coming up when we return, donald trump meeting with tech titans in a bid to mend fences and promote job creation. Were going to talk tech under trump when we return. And later, breaking data on jobs and inflation. And then admiral James Stavridis will join us. Plus wilfred frost on what yesterdays rate hike means for banks. Squawk returns in just a moment. Welcome back to squawk box. Tech ceos representing more than 3 trillion meeting with president elect trump yesterday afternoon. I want to get to jon fortt who was inside trump tower for the main event. Good to see you. Andrew, thank you. By inside trump tower you mean hanging out by the elevator waiting for people to come in, absolutely, i was. This was a meeting that was cordial. I think the tone of it was a lot more friendly than many people expected. Jeff bezos putting out a statement after the meeting describing the meeting as very productive and reiterating his goal of seeing more innovation become a hallmark of the Trump Administration. Major topics of discussion included jobs, immigration, and china. Peter thiel got praise from the president elect for his work during the campaign and his early insight into how well the Trump Campaign was going to do. Going forward, i would expect a couple of major topics to see how much this good feeling sticks around to be h1b immigration. A lot of companies would like to see the cap lifted. But the Trump Campaign rhetoric certainly made that look like it was going to be a difficult one. And encryption. Tech bumped heads with the Obama Administration over strong encryption in things like apples imessage and to end encryption in whats app. Next time we have perhaps some sort of a terrorism issue where the government wants access to devices and the Tech Industry does not want to give it. On the question of how often this might happen, there was a statement out that trump had suggested that they get together quarterly. I would be surprised if a large group of these executives get together quarterly. Jeff bezos doesnt even get on his call quarterly. Microsoft that have government contracts, i wouldnt be surprised to see them wanting to get close to trumpth here on out. Okay. Jon, stick around. Were going to continue this conversation. For more under on tuck for minute on tech under the Trump Administration, lets bring in bradley tusk. It looked like a productive meeting. I also heard from some people involved in this that some of them felt like props in a bit of theater yesterday. So this is a president that cares a lot about optics. Including a tweet this morning have to do with how people perceive him and talk about him. So if the president elect wants to meet, i feel like most people felt they should go and meet. If its mainly optics and meet and greet and you come out unscathed, if you ask everything going in and nothing bad happened would you take that as an outcome . They all would have said yes. What do you think is going to happen in the future with the relationship between tech and trump . Its one thing for the honeymoon to happen now, but theres so many issues both in terms of business policy but also issues in Silicon Valley where they are on a different side of the world. I think whats necessary for tech leaders in the valley is to separate a, their personal views from their business obligations. Two different things. And even within business there are going to be some policies they like and some they dont. For example, i think h1b could happen now. I can see how trump would let that happen. Encryption, it doesnt matter if its republican or democrat. If youre in government and your job is public safety, youre going to want all the access to all the data you can get. Apples never going to like that. Maybe they can work with this president better than obama or certainly clinton would have been for them. But i do think if they have an all or nothing attitude, policys not there. Whats your take on jack dorsey was not invited. And in part was not invited because of some kerfuffle earlier in the year during the campaign where they didnt allow a crooked hillary emoji to be made. And so therefore he didnt get the invitation. On one hand seems a little silly to me. Hard to see trump having the same outcome without twitter as a tool. So i think he probably owes quite a bit to twitter. At the same time, there are a lot of great Tech Companies that werent all there. Twitter as a social force of significance, twitter as a company has been struggling. Its possible they were making the list. Do i think he went about his day fine . Yeah. By far twitter would have been the but it is the one technology that donald trump uses. Sure. I mean, he might use a Dell Computer and dells not public. Theres lots of companies he could have had there. But to look at the emoji thing as the reason, the fact it would have been the Smallest Company by about 3x. Tesla has a 30plus billion dollar market cap. Theres a lot of reasons. Can i ask a question of you because youre a trump supporter. Let me ask you this. Do you have any problem with his children all three of them some of whom were supposedly going to continue running his businesses after excuse me . He has more than three. He has more than three. I apologize i said all three of them. Sitting in on these meet sngs. At this point probably not. Ip would have probably more of a problem with it when he actually becomes president. I think one of the hard parts for him and im not close to the Trump Campaign so im not speaking from any sort of experience. Im sure its hard to know whom to trust. And youre still kind of filling out the bench of people that you think can give you unvarnished advice. So at this point i dont see it as a particularly big conflict. You dont think its inappropriate in many of the executives are going to meet now ivanka who is going to be involved but perhaps the sons and try to reach out to him later in the presidency. You see whats happening here, right . Thats completely unlike like all other relationships that people have with companies and there are always some sorts of conflicts. I think theyre in such different businesses that i dont see it as a conflict. If youre meeting with a bunch of construction types and all sorts of things, yeah that could be a conflict of interest. Come on. Thats weird. We have not had him i did sles his business. Two blocks from the apple store which has a major real estate presence in new york and other places. There are already questions about trumps interest. Do you really think the trump sfaem doing this for money . Do you think at this point given their that doesnt really make much of a sense to me. As a journalist, im not paid to just sort of trust people, but the trump brand are they doing it for the money . I mean, theyve made a lot of it. Of course. But theyre coming into it with a lot of money. I would say as a listen, i dont have a dog in this fight. But it seems to me hes not even president yet and these are not these are largely symbolic meetings it seems to me. I think the issue is this. Given that a large part of this campaign and a large reason, by the way, i would argue that donald trump won is because so many people thought what Hillary Clinton and the clintons had done was so despicable and so corrupt and whether it was real or not, the perception was very clear that and given that you campaigned on that, its unclear to me thats a euphemism being unclear. Its unclear to me why you didnt put yourself in this position because its very similar andrew, theres a big difference between president saying i have family members whose opinions i respect. Bobby kennedy was the attorney general. And the kids are reaching out saying i need this and this from the private business and it depends on whether you do it or not is whether i put in a good word with my dad, thats a problem. Depends what he wants it for. If hes putting them in a position to make money from this, thats bad. If hes there because he values their opinion, less so. I will give him all the benefit of the doubt. Yeah. No, hold on. Ill give him the benefit of the doubt in reality saying he wants to be a great president and he wants the opinions and all these things. But later on, if and when somebodi somebody tries to take advantage of the kids or the kids that itself creates the appearance even if its not real. Their responsibility is to behave ethically just like everybody else is. Okay. Were going to leave it there. Thank you. All right. Coming up, breaking Economic Data. Were just minutes a i way from weekly jobless claims. Stay tuned. When a moment spontaneously turns romantic, why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back. We are just seconds quite a few seconds, though, this time around. Like 50 seconds. From weekly jobless claims and november cpi. Not quite a minute, but multiple seconds. But theyre becoming fewer seconds to go. 22 points is what were looking at now 25 on the dow. The s p indicated up a little over a point. The nasdaq up a half point. Lots of stuff, interesting, happening in the dollar. 30 seconds more of interesting stuff is happening. There is. And i did get something from mark grant that says the dollar euro is in serious fudderwacking mode. Thats the johnny depp something or other. Theres the euro. 1. 04. Thats interesting. We were above 118 on the yen for a little while. Then theres the 10year. 2. 61 . Rick santelli is standing by. The numbers, please. All right. For current account balance Third Quarter minus 113 billion. Thats the current account, the cousin of the deficit or the trade balance. And that is a little bit bigger deficit than we expected last month. They did shave it from 119 billion. For the month of november, cpi headline up 0. 2 . Exactly as expected. Strip out food and energy, also up 0. 2 as expected. Everything about this as expected. Year over year, 1. 7 . Core 2. 1 . That actually is arguably a tenth lighter than expected. Still has a two handle. And it follows 2. 1 in that instance its unchanged. So maybe for a december read, huh . Empire up 0. 2 . Also as expected. Boy, must have some assistance in that kitchen today. All coming out exactly as we thought they would. Now lets look at whats going on with claims, shall we . 258,000 last week. Youre now at this week 254,000. A slight increase in the weekly continuing claims to 2. 018 just shy of 2. 02 million. And philly, philly 21. 5 on philly. That is about 2. 5 times what we were expecting. Not a bad number. Its always volatile. You cant ever argue with the wizard mark grant. Its all about the dollar index. I remember the first day it closed above a hundred saying that all the rest of it should come easy. Well, easy in market terms isnt like easy peasy. But 262. Big resistance on a closing basis. Pay very close attention to that. And if the dollar index is doing well, we know what it isnt. Kwi you also mentioned the euro versus the dollar. Anybody who doesnt think technicals are important, look at the chart of euro versus dollar. This is the third time of testing now penetrating 1. 05 that is very technically significant. Joe, back to you. Steve wants to ask you a question. But i dont want anything to get out of hand here. No, rick. You why not . Its thursday. You made a point yesterday that i thought was so interested i repeated it twice and quoted you both times. And id like you to talk about it again if you dont mind. You said it was significant yesterday that janet yellen did not and used the word bless, i put that in quotations because thats your quote. Didnt bless the incoming president elect donald trump. Why do you think that was significant to the market . The only way to get that is to understand what everybody had been telling me for years from about 2011 until as recently as november before the first tightening last december. And that is one of the missing pieces to the market was that the fed by keeping rates so long, keeping policy, moving goal posts was a confidence reducer. If the fed didnt have confidence in the economy, how could investors . Donald trump and the house and senate are going to be going after the legislative low fruit. Youve heard it all. Taxes, regulations, health care. And the fact that investors are so enamored with the idea of getting some of these things done, streamlining government. Theyve put their money where their mouth is. And janet yellen almost didnt acknowledge that markets have been on a binge since november 8th. I agree with you, rick. Rick, im trying to understand why the market reacted the way it did. In part i think part of that third rate hike was baked in. Some guys were talking about it. It wasnt a complete surprise. I would say from a policy standpoint, it makes sense to me that the fed would wait to see. You know . And i kind of get what youre saying. But i dont think as a policy maker you can up your growth forecast until you have a proposal in hand which by the way is going to get filtered through congress, going to get filtered through all this other stuff out there. That you have to wait. Its going to happen, i suspect, and then maybe the fed has to go a little bit tighter on policy. But it has to wait until theres policy in hand. I get why. But i dont think investors were asking about a threeyear money back labor included guarantee. Even just a small amount to the head. Listen, we have to wait and see the whites of the eyes of the fundamentals. Investors seem to be trading on today when they occur down the road. But she could have tipped her hat just a little, say this is what we wanted. Some fiscal change. Nothing. So joe right now on his cell phone is showing me a chart of rising Small Business optimism. Not just optimism. Since the election, a 20 rise in sales expectations. 23 expected rise in hiring plans. And a 38 rise in what is that . Expected business conditions. Right. Okay. But the trouble with that, joe, is that that is not but its animal spirits. Fast a measure of animal spiri spirits. These are not real data. The real data has come down for the quarter. Were running 2. 1 for the Fourth Quarter. That had been as high as 2. 6 from our rapid update. If it turns into real juice, its good. But right now just heard someone say its a 3. 5 gdp world. Its a 2. 1 gdp right now. Anyway. Thank you. Coming up, nba salaries set to rise after the players in the league agreed to a new collective bargaining agreement. So good. This number for the average player is so good. And its such a good thing. Well hear why its a bad thing, though, from certain sectors. Coming up, the dow within striking distance of 20,000. Will the trump rally power through the milestone . Or will bears take control and spoil the party . You stink. I think youre going to have a good christmas. You smell like beef and cheese. You dont smell like santa. Well talk strategy after the break. As a supervisor at pg e, its my job to protect public safety, keeping the power lines clear, while also protecting the environment. The Natural World is a beautiful thing, the work that we do helps us protect it. Public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. We want to keep the power on for our customers. We want to keep our community safe. This is our community, this is where we live. We need to make sure that we have a beautiful place for our children to live. Together, were building a better california. Welcome back to squawk box. Lets get a quick check on the markets. Well do this quick. Up a little bit. Up now they had been up 80, then 30 as far as implied open. Now 41 on the dow. And weve got up three now on the s p 500. Up a little on the nasdaq. Theres the currencies which are maybe the most interesting thing to look at today. 1. 04 now on the euro. 117 on the yen. The pound below 1. 25. Now to sports. The nba and players have struck a tentative deal on a new collective bargaining agreement. The league aunderstand noed the agreement late yesterday. It will help avoid a possible work stoppage for next season. The two sides faced a thursday deadline for opting out of their current deal and under terms of the new contract, the average player salary is expected to jump about 45 to nearly 9 million a year. Thats the average salary. 9 million a year. Maybe this is some of the wage growth that were hoping for. Youre taking my joke. Did you say . Yeah. At the beginning. The minimum salary will go up 45 . And the minimum salary is now 150 to 200 times the average workers salary which is what we always hear about being a bad thing with ceo pay and Senior Management pay and things like that. Thats great. I think its great. Look, if theres a market that supports it, then thats what they should be paid. If its not a crony board, they have appreciation. Theyll also get fewer backtoback schedules. So looks like a win for everybody. Its all good. Because you know what . People pay taxes on the 9 million. Then they go out and spend some of the 9 million. Its all its good. Coming up, yahoo reporting a new Security Breach that compromised data for more than a billion User Accounts. Retired admiral James Stavridis will join us next. He discussed Cyber Security with president elect trump last week. Alpha seems more elusive today. 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 come on why doesnt verizon offer unlimited data like tmobile . Is it because their lte network was built six years ago . Six years ago . Thats like a hundred. In phone years their lte network is older, slower and they limit you. Switch to tmobile, the newer, faster and unlimited network. We cover 99 of the americans verizon covers. Switch your family of four to tmobile and well give you 800 to spend anywhere you want. Hacking of 1 billion yahoo User Accounts has renewed concerns over Cyber Security. Our next guest discussed this issue with president elect trump last week in new york and believes Cyber Security should be elevated to a cabinet position in the new administration. Lets bring in retired u. S. Navy admiral James Stavridis. Stavridis is a former nato commander whos now a dean at Fletcher School and nbc news and msnbc analyst. Thanks for joining us. Maybe it should. Know anyone we might get that could be the secretary of this new cabinet level position . You ready . Well, heres just an idea and its not me. Heres an idea would be to take the position of dni, director of National Intelligence, which is supposed to bring together all the intelligence agencies and make that individual director of National Intelligence and Cyber Security. The functions are kind of similar. Theres a lot of overlap in the activity. And that idea of interagency cooperation is key to protecting us in the cyber realm. It keeps happening and for some reason i think we havent seen the real damage. And were still not havent been shaken out of the complacency. Something really serious whether its financial or the power grid, i dont think weve really seen as bad as this could be. If we dont address it now. I mean, writing should be on the wall. Absolutely. And if you look at the trajectory here, go back to the home depot and target hacks. About 60 million. Blue cross blue shield, 90 million. Then just recently as you know, we had 500 million. Whats that trajectory look like . Today we have a billion. My first reaction was yahoo has 500 million accounts, i cant believe it. And now another 1 billion. That trajectory is headed up. We are headed towards a cyber pearl harbor. So those were the two youre worried about. This is jason trenert. As a former nato commander, how well are allies . Only 3 of the 28 countries in nato actually meet the statutory requirement at 2 of their gdp on national security. One would imagine thats not just the material. Its also with regard to Cyber Security. How are our allies doing in this regard . They are worse than we are and were not very good in this particular area. The allies, its actually 5 of the 28 who meet the 2 . But yeah theyre below where they need to be in spending and it does translate to weakness. I always say about Cyber Security, it is the greatest mismatch between the level of threat very high and the level of preparation quite low. In other words, we worry about the Islamic State and north korea, russian aggression. Were worried about it, but were reasonably well prepared. In cyber, big threat. Very low preparation. Admiral, i dont know if youre going to take this as or were going to get into a political conversation, but when you think of the biggest Cyber Threats to our country in terms of foreigners, i imagine you think about russia and you think about china . Those are the top two, certainly. And they are in order of magnitude more dangerous than the next two which are north korea and iran. We got to remember north korea famously after this idiotic movie the interview came out, mocked the leader of north korea. They lashed out with a cyber hack against zonesony pictures. Did millions of dollars of damage to sony. Its not just big nations. Its also small nations going at big nations. Therefore where im going with this is, what kind of relationship are we supposed to have with russia . With putin . Theres been a lot to debate about that given some of trumps comments before and since he has won the presidency. Same thing with china. We need with russia is more transactional relationship. And that means confronting them where we must on things like syria and their support for assad, the invasion of ukraine, and above all the activity in the cyber zone. But we ought to try and find other areas where we can cooperate with them. Thats why i think Rex Tillerson is actually reasonably good pick. He will come at it transactionally with russia. I think that makes sense. Thats interesting. Thats what i was going to ask. Because you were youre in the running at least bantered about for Hillary Clintons cabinet. I know where you fall. But what have you you just said something positive about Rex Tillerson. What about all the other generals and appointments so far . Would you give a thumbs up to most of those . First of all, im a registered independent. I was vetted seriously for a Vice President with hillary and i had a discussion with the Trump Campaign about state and dni. I think the selection of the generals kelly and mattis are very good choices. Theyre very solid, steady. Theyre very experienced and i think will do a great deal of credit to the administration. Left out flynn. I think general flynn is taking some incoming fire right now as wed say in a combat sense. But hes solid. Hes smart. Im hopeful that he will do what the president wants him to do in that position. Hes obviously in a bit of controversy at the moment. Lets hope he works his way through that. Interesting what you said about tillerson though. He got some award of from friend of i dont know of putin but russia. The award was long before putin was there. It doesnt mean i dont know if hes a friend with a i dot know if hes a friend with putin or not. Youll see everything pulled out over the next several months for Rex Tillerson. Youre okay with it . I think i am. Im waiting for the congressional hearings. I think there will be a lot of examination of that relationship. My sense of Rex Tillerson is he has the ability to move around the field pretty well. He will bring a businessmans sensibility to the job at state. I think hell do a good job in that regard. Hes got to make clear to the congress, i think, that he can rise above this relationship with putin. Admiral, thanks for your time this morning. Appreciate it. All right, everybody. Great seeing you. Have a great holiday. You, too. When we return, the fed hikes rates for the second time in a decade. Which banks are ready to capitalize on the move . Wilfred frost will join us with some names when we return. As we do that, a quick check on futures. The dow looking like it would open up higher. S p 500 up about 4. 5 points. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. The fed finally hiking rates. How quickly does this lead to banks passing on higher rates to customers . Wilfred frost has perhaps the answer. The major banks wasted no time in hiking their lending rates. By this morning all of the major banks, including jpmorgan, bank of america, wells fargo and citi would have hiked their prime rate. The prime rate is what banks use to lend to the most credit wo h worthy customers. However the increase for savers is slower and less full. This is especially the case at the start of a rate increase cycle. This is in part why the change in direction of rates is so positive for banks. Of the large universal banks, bank of america was the best performer yesterday. And indeed has been since the election. I would . Its because its the most geared towards the Interest Rate increase because of high domestic exposure, High Percentage exposure to Retail Banking and within that a numerous deposit base relative to the size of the retail bank. Overall, relative to the recent run, bank stocks yesterday were muted or down. The reason being that janet yellen actually dampened hopes for growth from the Trump Administration relative to the last few weeks of positivity. Only increased the preelection gdp forecast from 2 to 2. 1 . Next up. Will we see dow 20,000 before the end of the year . What could push us over the top . Well discuss that next. 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. We are counting down to the opening bell on wall street. Our guest host, jason trennert. Thoughts for investing today. Most of our clients have been on the road since election day and tmost institutional investos are worried the market has gone up too far too fast. Youre discounting a lot of good news in a short period of time. I think some of it is justified. You will get regulatory and fiscal easing, which will lift economic growth. Do you think we are losing some steam . Seasonally, this is a difficult time to be short. I would just say in the next two weeks, you if youre really trying to play the game, maybe buy now, sell them on Inauguration Day or Something Like that where the market puts back a bit. A lot of People Holding on simply for taxes, thinking something great will happen in 2017. Do people sell early 17 without knowing theres a tax plan in force . The only thing youll probably see early on in terms of taxes is a tax cut or repatriated profits, that would be a holiday, and theyd try to extend that into structural tax refoo reform later in the year. The hard thing, theres no metric that can account for confidence, its fair but also real. Animal spirits. Thank you, sir. Always great to see you. Thank you. Thanks for having me. Squawk on the street begins now. Good morning. Welcome to squawk on the street. Im david faber along with sara eisen and wilfred frost. We are live from the new york stock exchange. Carl and jim have the morning off. One day after we got that raise from the fed,