2016. Our road map begins with a trump rally set to continue. News of white house appointments, his 60 minutes interview, takeaway for business and markets. Plus, we have a big deal in technology. Samsung is buying harmon for 8 billion in cash. It makes the south korean giant a major player in the connected car. And apple caught up in some geopolitical rhetoric. China said to warn the United States about a potential trade war. And why that would affect iphone prices. But first, the election in effect, the focus, dow poised to open higher as it continues its march towards 19k after coming off the best week since 2011 gaining more than 5 . Bond yields continue to jump as the prospects of Infrastructure Spending during a Trump Presidency increase Inflation Expectations. And that 10year yield, jim, is pretty much all people can talk about. Im looking at that now and its why. You see a bank of america go up in tape early morning, that makes sense. Remember, theyve got this gigantic deposit base. When you have the banks move people say why ever own a bank and the answer is theyll be a period, usually a 72hour period where they will put on a level of valuation that has to do with rate hike or Interest Rates that will be so much bigger than what you get from a fang that itd take your breath away. These stocks have so underperformed, bank of america is now premium to book value. There was a very nice upgrade today of citi, morgan stanley, they got a 64 book value. The stock is low 50s. So these have a lot of room to run. The more you see that Interest Rate go up, the more you can justify paying more for the banks. Its not multiple expansion, its actual raising the earnings per share. 20 of the banks, 20 above the 200day move average does not happen a lot. No. So to what extent are they overextended . And are bonds due for a tradeable bound this week . Overextended i will tell you, no, i dont think if you get some more appointments, if you continue to get momentum out of the white house, then i think youll just say, listen, weve got the rates going to go back to where they should have been especially if we find ourselves in a situation where every day he comes out and says, look, were going to get rid of this regulation and that regulation. Now, you did walk back some things already because it looks like hes more center oriented on immigration issue or Affordable Care act from last nights 60 minutes. But the banks have this gigantic overhead that has to do with the fact everybody monitors everything. And they have giant legal bills. Those numbers go to the bottom line. Youll get tremendous Net Interest Margin expansion and the next thing you know you have banks earning say x and theyre earning x and a half or 2x. So you get the situation where j. P. Morgan is up to where it should have been a long time ago. If we thought the rates were going to go up. Right. And rates are also expected to go up in december when the fed actually moves. Right. Now you want fed speak and you want them to say, yes, were moving. I was looking at how many fed speakers oh, my gosh, i have a tally. Everyone speaking unison so j. P. Morgan takes out right. Perhaps one of the more surprising things that occurred as a result of the election was this incredible move. Right. Which no one saw coming. Which no one saw coming, to your point. It has had some dislocating effects though in terms of equities, i think, where there are some companies or there are some Industries Even that are impacted differently than the banks. In the opposite way youve had hedge funds lightening up, taking risk off, some saying last weeks losses in some of the Big Technology names were a result of responses to that higher rate picture and then riskoff trades because they werent appropriately hedged at a number of funds. Yes, i mean, look, if you have inflation, all those really high growth tech stocks are really valued on an inflation list world. Now, everyone got thrown off by nvidia because nvidias quarter was so unbelievable and it was Machine Learning and it was gaming, it was artificial intelligence. And the stock got crushed. No, nvidia sorry, right. But that didnt have any legs. Right. That was incredible. I would have thought that moved up all it did was just stop the decline. And a lot of it was because nvidia is what intel was like in 92, 94 where every 86 would come out and you would say who needs that, puts a man on the moon. The answer is you just upgrade it. You upgrade it every time. Oh, what do you have . I have a 386, then pent yium oh, better get a pentium. I would tell you that nvidia is the company that thought the most about artificial intelligence, Machine Learning, has the right chips for it. Very smart company. But were talking with last week google, you know, was 7. 85 headed down 754. And yet they get the big repatriation gain. They do. Facebook didnt have a particularly great time of it. Apple there were two sides to that story. Yeah. One being what will happen to iphone manufacturing, is there any chance that the trade war with china potential. Right. Offset by 237 billion, some of which could come back. 35 per share on the right taxable base. You know, i had three i talked to three major restaurants ceos just last week and they said people were back. They were back wednesday, thursday, friday. I think its hilarious because netflix should be down. You know what i mean . The stay at home economy. Watch kroger to see if that gets hit. The stay at home economy had gotten deeply rooted because people were feeling badly or staying home watching, and a lot of the i mean, i had sheryl excellent executive for popeyes, boy, business picked up here. Sort of flies in the face of the divisions were seeing in the streets. Big topic with trump last night on 60 minutes, does that count for nothing . True. I think theres a sense of unfortunately two americas again. I think part of america that was hunkered down and feeling gloomy that this race never ended. And then theres part of america that is based on who won and lost, and theyre different. Theyre different. You might want to just go out because you feel relieved, just like there was a big relief rally on wall street. I think people got very beleaguered by the election. Doesnt matter who you were for. The election just went on too long. Now, theres some people i find when you go out some people are out because they say, boy, i feel good about things. Other people were out because they feel bad about things. But everybody went out. Yeah. What are things looking like at bar san miguel . Do you have a lot of people coming in brooklyn drowning sorrows . You know, its interesting to say about bar san miguel, you hear about people drinking beer more when things are like that is a neighborhood where the block next to them had a giant tv thats closed the street just to be able to watch the election results. And i dont think that they thought the results were since brooklyn was the headquarters of hillary clinton. Yeah. I dont think they stopped the street because they thought it was going to be a big trump victory. No. Although he outperformed romney in brooklyn by double digits. Yeah. Really . Maybe thats why we did good. A very large borough. A lot going on in brooklyn. How about the constellation theres a lot of other parts. People decide because they import beer from mexico constellation a big loser last week. I know they did. That stock got hit hard. Hard. And yet i think its very fun n they had an Analyst Meeting the day after the election and people thought they were the most vulnerable stock after trump. Guys, youre not going to slap a gigantic tax on beer, but maybe if nafta goes, how much would it cost for beer to come in . I know. But these are things people are starting to think about the same as they think about for example the 3g guys in brazil and the days they do, or abi, which is a brazili brazilian dutch controlled company, what is the likelihood these kinds of Companies Made a living off of buying u. S. Companies and cutting costs, ie also jobs, whats their future going to look like under trump administrati administration, trump antitrust administration . A samsungharmon where theyre keeping all the jobs. I got a lot on that in a minute. As do i. Shoot, youre the real reporter here im told. I dont know. Well see. Ill bring my stuff, you bring your stuff. Ive come to play. Ive been on it since 3 30. What time did you start . About 6 30. A threehour jump. As we said earlier president elect beginning to form his inner circle as he names senior staff and strategist, our washington correspondent john harwood is in d. C. With the latest. Hey, carl. Everybodys trying to figure out after all of the talk of the campaign what the Trump Administration is going to actually do. Is he going to be the deal making businessman with a hint of pragmatism that weve seen at some parts of his career, or is he going to be the guy who appealed to white voters in very provocative ways . Now, the apointdment of steve bannon and Reince Priebus didnt clear up that mystery. On one hand democrats took the comfort of appointment of priebus because hes tied to traditional politics, the rnc chair, close to paul ryan, and republicans took comfort because he is tied to ryan and the policies that paul ryan has favored. Lesser government, lower taxes, that sort of thing. Reince priebus said this morning on the today show the Trump Administration was going to be a partnership. Weve had a great partnership. And ive learned to get to know president elect trump and steve bannon and the whole team. And, you know, it has worked and it has been a great partnership. And he really wants everyone to understand out there that he wants to be a president for everyone. Right. No matter your background, your race, your gender, your faith. He wants to do well for every american across the board. Now, people in both parties were less comforted by the appointment of steve bannon as chief strategist. Yes, bannon has worked on wall street and in hollywood, but he has made his name as the leader of the Breitbart News organization website. Hes called for a worldwide populist revolution. He calls himself the champion of the socalled altright. Others use terms like White Nationalism or white supremacist. And you see the chief strategist for john kasich, the ohio governor, a rival of trumps in the primary tweeted out after that appointment that the racist, fascist extreme right is now steps from the oval office. This is a indication that the internal divisions within the Republican Party remain. And donald trump has got to figure out how to overcome them. Everybodys going to be watching similarly for the president elects appointments on National Security, state, defense, National Security advisor. And until he actually takes office and actions replace words, thats all we can do is try to parse the appointments, guys. John, the journal goes with the anecdote that the Trump Transition Team was unaware that the white house staff needed to be hired in the west wing. Does that seem believable to you . No, actually. There was a comment that jared c urve ushner made, i believe, used to illustrate that idea. As he was touring the white house how many of these people remain. Im pretty sure that donald trump and his team understand that all of the important strategic positions in the white house are filled by them. Yes, there are some people, stenographers and career Civil Servants who will remain in the white house, but i would be extremely surprised if they didnt realize that. John, well talk to you later this morning. A lot to cover today. Our john harwood in washington. When we come back, samsungs betting on cars by making its biggest acquisition ever. Were going to talk about that. Also ahead former fdic chair sheila bair. Take another look at the premarket. That move by the dow has propelled it into first place of the year now up 82 versus the s p up 59. More squawk on the street from post nine in a minute. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive Harmon International soaring in the premarket. Samsungs agreeing to buy the Automobile Technology company for 8 billion in cash making it the biggest ever overseas acquisition by a south Korean Company. Samsung says the deal will give it a significant presence in the rapidly growing market for electronic cars, a name youve been pushing for years, jim. I went through and did a Google Search of how many times i said they should buy harmon. It was embarrassing because every one of the listings was cramer to harmon, apple should buy and the ceo was i think tired of me saying that apple should by harmon. The idea was that car play is not powerful enough. You want to be the center of infotainment, yes, Cyber Security in Autonomous Cars, they spent a lot of money on that. And everyone thinks theyre good speakers, jbl, wood stock, and no this was a company that decided to use that as a way to break into the connected car to make it so and we have dinesh, he emailed me early. He will be continuing to run this company and the 30,000 employees that work for and under him as a unit of samsung. But if youre a harmon shareholder, youre just getting cash. So there are benefits so samsung but youre not going to take part in them. Youre getting your 112, which jim, is well below the alltime high in 2015. It is about ten times ebitda. Im told by the way by people close to the situation when you read the background of the transaction, when the proxy comes out youre going to see at least they were certainly aware of other potential deals that might be out there. That was just me. And chose to go but to your point, samsung is doing the biggest deal theyve ever done. And im told they were working on this or thinking about it, i should say, for as much as a year working on it at least in terms of talks since the summer. Yes. Apple has not been willing to go there. Still not that big for a company as large as samsung. But it is by far the largest deal theyve ever done because they see the evolution of the car similarly to the way they saw the evolution of smartphones over the last ten years. And were at the beginning of that. Think about whats happened the last ten years from where we were. Theyve got 1,500 worth of intelligence, internet of things in a car. Now, i went to theres a ring of i know im possessed by mexico and nafta, but theres a town adjacent to me which has a new airport filled with mostly germans and japanese coming in because theres a mercedes benz, lexus plants, a lot of all the high end. Every single german and japanese high end is made there. And whats in the center of all the plants in a ring, harman. So they are there. And one of the things dinesh taught me is you had to be original equipment manufacturer and they had to be right there and just in time so all the cars are made right there, put on Union Pacific. And you dont know whether you bought that car from the United States or from mexico. Right. And its been a huge windfall for harman. I should say the 30,000 harman employees are not in the u. S. No. But that figures with an income K Administration very focused of course as we know keeping jobs here and bringing them back. Youre going to have to look through that lens at any deal that involves a south Korean Company buying a u. S. Company. Yes. And ive asked the question, of course immediately the answer is samsung has 24,000 u. S. Employees. Will it require a review . Yes, is that significant . Probably not from a National Security standpoint. But these are interesting things were going to certainly have to start thinking about. Siemens buying graphics today, another deal today. Actually, weve now set a record for asia pac acquisitions of u. S. Companies. It is amazing. But ive got to tell you this, harman, people really misread it. People didnt understand dinesh had turned this company into the brain of a car. Oh, car plays great, put your apple in no, these guys are integrated into all of the electric, everything all of the things that, you know, by the way, collusion avoidance, and their last acquisition was to be able to block have Cyber Security make it so your Autonomous Car is not hacked. Lots of good reviews on that. Are they getting the company cheap . Harman missed a couple quarters. Harman had very big russian exposure and you know russia fell off a cliff. Thats an interesting story im working on that about the revival of russia if theres more normalized relations because it does seem if the germans want to school trump about how europe works, he will school them about russia and germany. Wasnt it faber who said russian assets are the most obvious trade here . Ive been working on that piece. Darn. I have like 72 researchers on that. No, actually, i have ben and molly so back to harman and the price. 112 too cheap . First remember they were going to go private, that deal fell apart. Way back before the financial crisis. Then harman was one of the best performers in the s p and it stayed right here. So youre getting back to where actually a little bit lower than where we traded, but it cratered on several quarters and it was dinesh spending. You know we always say you want to get your stock lower you invest . This man invested so much to make his company a car company, not a speaker company. I saw my jbls from when i went to college. I think its interesting. Hes still going to claim theyre delivering value and they are, without a doubt. But he keeps his job. And you think its done . You think that that 110 doesnt i dont know. Is apple going to jump it . Its a regular break fee im told 2 to 3 . I was on my knees asking them to even consider. You should see