Estimates. Road map begins with eli lily abandoning an important Alzheimer Drug, stocks down more than 13 in the premarket. Well have an exclusive interview with meg whitman, corporate americas relationship with president elect trump on the agenda. And the countdown to black friday and a cheerier Holiday Outlook for retailers. The winners straight ahead. First though to some news this morning on the continued search in the transition for the next treasury secretary of the United States. That list does appear to be shrinking. We can tell you this morning that jon gray, the man who runs the real estate business at blackstone, one of the more senior members of course of that firm, is no longer being considered for treasury. It had been reported earlier this week after meetings over the weekend that mr. Gray along with of course Steve Mnuchin who was the Campaign Finance manager for the Trump Campaign were perhaps two of the few candidates left for that post. But this morning i can tell you that mr. Gray no longer in the running. Do have a statement from jon gray who said, quote, i had a terrific meeting and robust policy discussion with the president elect. It was an honor to be considered for treasury secretary, but i still have much work to do at blackstone. So, guys, unclear when we will see that appointment. One would have to believe given mr. Gray no longer being considered that Steve Mnuchins certainly a front runner. Jeb hensarling. Havent heard as much in the reporting, not by me others that follow closely but he was one of the names as sglel gray is also speculated to be the next chief of blackstone. One of many widely considered to be if and when Steve Schwartzman decides to no longer be ceo of blackstone. Gray whos had Great Success running the real estate business which is the single largest portion of blackstone at this point, considered to be the future ceo of that company. And given his age, you know, there could be a role in Public Service for him, many years from now because he is a young man. How old is he . I dont think jons even in his 50s, i think hes in his late 40s. Yes, in the times language pulling back on some of the more strident policy like torture, Climate Change, tom friedman with an article saying pay close attention to how much hes willing to bend here as he gets the ear of a wider spectrum of advisors. Thats going to be fun to watch. Meantime, the watch is on to the stock market a day after the dow closed above 19k for the first time ever, all three major indices and the russell record closing highs. But its a rough morning for lily. Shares tumbling after its experimental Alzheimer Drug failed to meet goals in a phase 3 study. This is what the current and incoming ceo told our meg tirrell earlier this morning on squawk box. You should expect were going to look carefully at these results. That will take weeks or months to fai far ret out all of the information. Learn everything we can from this trial and go back and apply that to the Development Programs we have. Weve been planning for our future with or without solar for some time. We knew it was a high risk and high reward program. Were disappointed with the result, but we have a lot going on beyond alzheimers. So it will be a rough morning for lilly. 12 gain for november. Industrials are a distant second. And the dow now with this postelection rally is up 9. 2 for the yeartodate. Hasnt had a double digit percentage gain since 2013. It really has been a relentless rally to record highs after the election. About 3. 5 of that 9 gain for the year came after the election, which actually pails in comparison to the banks. Rocket like performance. If you look at the kbw bank index, you see nearly every member of that group at 52week highs. The other group i would point out in terms of the stock Market Performance is the russell 2000. The small caps really making a move higher here beating the megastocks in terms of performance. We have seen small caps on a 13 run higher. So its this breakout in the bank, david. Yep. Breakout in the small caps as the domestic agenda economically looks brighter. And the question is how much steam does this rally have . I did notice, and carl i think you found this, that the rally has made its way to the front pages. 19,000, dow on the cover of usa today, on the cover of new york post. We always look at these things to see there it is. Sentiment is getting bullish. The Investor Intelligence report which a lot of people look at for sentiment, Peter Boockvar points out is at a threemonth high. Were not above 60 yet, which is considered uber bullish and could be a turning point, but the fact that weve made it to the front page says something. Interestingly, you know, they quote some people, seth masters, who called remember when dow 20k kind of sounded ridiculous in 2012 when we were at 13k. So usa today giving some of those folks an early victory lap. Actually, its only a 5 move from 19 to 20. I know. It is worth pointing out the simple math here. That percentages become a lot smaller. Did you know we were below 18,000 in early november . I mean, we rallied over 1,000 points. We have. Even the s p as well, which i tend to focus on rather than the dow. Although the dow is outperforming. The dow has significant outperformance which we dont typically see but as a result of a few components theyre not tracking as closely as they have in the past the s p and dow. Big part of that is going to be best dow component for the year, any guesses . It is cat. Number one yeartodate gainer certainly not the story in 2015. Although more people trying to argue the market is ignoring a 10year now at 2. 3, 2. 35 after we got this durables number at a 30. And the dollar index 1. 01 and change, up 10 of 11, when does that correct, sara . 13year high for the dollar if you look at the dollar index against some of the big trading partners like the euro, will the dollars rise and stand in the way of this yield rally, well see what happens to the Economic Data, by the way this durables number was before the election. So as mike was pointing out upstairs it was already recovery and Business Sentiment and activity. The dollar is certainly one of many things hpe has to think about. Shares of that company by the way slipping a bit on its Quarterly Earnings report which we got after the bell yesterday. Revenue down 2 year over year a bit short of analyst estimates. Hewlett packard ceo jomeg whitm joins us, like she always does, after each quarter. Nice to see you. Nice to see you. Lets focus on the quarter, it can get confusing, you have two mergers, Software Business into microfocus. Next year youre going to be largely an Enterprise Business company. Lets start with servers where i know there was some weakness that at least some people on the call were focused on. What can you tell us about that market . Are you expecting to see any sort of a rebound given revenues were down 6 on an adjusted basis . Sure. Well, i think the first thing to focus on is the full year of 2016 was a very good year for the company. Actually, Enterprise Group, which youre focused on appropriately, grew 3 on a full year basis. The first part of the year was very rapid growth with slight with margin pressure. The second half was more margin but a little bit less growth. So weve got to in 2017 do both. Weve got to grow the Enterprise Group business and weve got to improve margins and a core part of that is servers. So, listen, weve got to shore up the Industry Standard servers, the core rack servers. And thats really about focusing on the channel, making sure weve got the right programs, right ability to respond quickly. And then make sure weve got the right alliances in place with Companies Like pwc and deloitte and the Indian Outsourcers because those companies interestingly enough thought of us as competitors when we still owned ds. Now theyre fully embracing us because we are completely complimentary to what they do. And then of course accelerate growth in the other parts of servers, High Performance compute, synergy, which is our new composable infrastructure offering as well as our conversion hyperconverged offerings. So i think weve got a plan to grow servers and all of eg in 2016. Right. But what about the performance of this quarter then, meg, gives you the confidence you can execute on the plan you just outlined . Yeah. Well, first of all, we did have very good growth in as i said High Performance compute mission servers and weve got to shore up the Industry Standard servers and migrate from when we do our big scaleout servers for Tier One Service providers, we need to compliment that with tier two and Tier Three Service providers. But listen, weve got a plan. Pretty sure we can do it. I think, listen, there are a lot of changes in our industry and we are a big believer that hybrid i. T. Is going to be the strategy going forward. So, you know, companies will decide what applications and workloads they want in their data center, what they want on prim, what they want in a managed service and public cloud. And weve got to be able to do on prim private cloud at public cloud like economics and were getting very close to that. Sara of course was talking about the strong dollar. Yep. You and i talked a lot about it when Hewlett Packard now includes hp inc. , in Japanese Companies but in terms of your business now how is the dollar going to impact you if it continues to be as strong as it has over the last few day sns. Well, a strong dollar creates currency headwinds for us as it has for much of the last three to four years. I was interested to hear earlier in your program that the dollar hit a 13year high, thats the way it feels running Hewlett Packard every year, the currency headwinds are very real. When goods are strong, our goods are more expensive overseas. Say someone in europe going to buy 1,000 servers, now maybe only buy 800 because the dollar is so strong. So, listen, weve got to manage that. Thats part of our new reality. Weve got to get our cost structure in line to continue to make sure we can handle a strong dollar because my view is its going to be strong for another couple of years at least. So, you know, its part of the landscape and thats what we do as Business People is manage around things that are likely not going to change. You mention the cost structure. Of course over your tenure youve cut a lot of costs, shaved a lot of businesses off, now obviously slimming down a great deal from there, is there more to be done in terms of cost at this point . Are there going to be even more cuts in employment. Well, youre never done in terms of making your company efficient. I think we are largely done with, you know, reducing the number of employees because so many employees go with Enterprise Services and software. But we can always be more efficient. We can make investments and systems. We can continue to redefine our business proscesses and we can o that. But really the reason for all these separations is focus. My view is our industry is changing so fast that the futures going to belong to the people who are nimble and agile and can jump on new trends faster. And our view was it was very hard to be as nimble and fast as we need to be running such an enormous company with such complications around the number of different business units. The new Hewlett Packard enterprise is going to be focused really on three things. First is make hybrid i. T. Simple for the cio and hybrid today is not simple. Were going to power the intelligent edge by capitalizing on growth and branch and edge as well as compute and storage at the edge and we have the services to make it all possible and cios need help today because the world is changing so fast they have to make sure theyre on the cutting edge and dont miss a thing but its hard to do on your own. Right. Obviously when people think of your tenure they think of slimming down, but you did by three com, three par, aruba, do acquisitions become more important part of your strategy once you complete the spin merges of Enterprise Services and software . Sure. Well, i didnt buy that was done under a prieevious administration. Right. But to your part they are the exact kinds of acquisitions we would make going forward. Its Complimentary Technology in growth areas that can leverage or go to market and can be integrated into some of our Systems Software products like one view. But when i think about growth, david, i think of four things chlgt first is organic innovation like the new synergy product that were going to be highlighting at discover next week, our big customer event. Then partnerships with Companies Like chef, doctor, turbo nomic that make our solutions more relevant to cios and third is organic m a. Again, thats the kind of thing well look for. Complimentary technology that leverages our distribution system. And well be very disciplined about that process. I think over the last five years weve demonstrated that wed take a returns based return on investment approach to m a and were going to continue to do that. But m a will be part of our future. Speaking of previous administrations, we have a new administration coming to town in washington, d. C. In our previous interviews, meg, we talked a lot about the president ial election. You as a longtime republican of course were outspoken in your opposition to donald trump. And actually embraced Hillary Clinton despite as i said being a republican yourself. How are you now viewing this Incoming Administration . And what are your expectations with the Trump Presidency . Well, first of all, now that the election is over and the debates have occurred, you know, what i said i sent a note to all of our employees saying, listen, the election did not turn out as i had hoped, but now weve got to come together and weve got to give the president elect the benefit of the doubt and encourage him to lead a very diverse nation. So i for one am supporting the president. Listen, were going to find out exactly what he is going to do. Some things hes talked about, i think, could be quite good for Hewlett Packard enterprise and business in general and some things i think wed have to manage and could be, you know, somewhat harmful to the company. So, listen, Corporate Tax rate reductions to make us more competitive on a world stage would be helpful. A tax holiday on all the cash that we have overseas, bringing that back at a 10 rate that would be helpful to us as well. Some of the trade issues around putting a big tariff on goods that are made outside the United States coming into the United States would be problematic. Wed have to completely change our supply chain. And then finally, immigration. You know, h1b visas are very important to the technology industry. If they were limited dramatically, wed have to rethink how we did r d. So of all of those do you have any sense at this point to a lot of people expect tax reform is going to happen. Your tax rate as a corporation may come down. Your ability to repay tratriati going to be there. Is that a positive for Hewlett Packard enterprise . It would be, for sure. Because it would make america more tax competitive place to be. And we like so Many Companies not just tech companies, we have a lot of cash offshore, which we would bring back. Which we would either use for investment or to Share Buyback or repurchase. So those two things would be very helpful to Hewlett Packard enterprise and i think business in general. And, meg, in the many years weve been doing interviews weve often talked about youre wanting to return Hewlett Packard, whether it was the huge company you inherited or the much smaller one you now run, to growth. As we enter a new year, given this quarter, can you promise that there is actually going to be top line growth at Hewlett Packard enterprises . Well, remember, in 2016 if you exclus collude divestitures in currency, we actually grew 2 . We did it in 2016 and we intend to do it again in 2017. I feel great about the portfolio that we have. The innovation engine is really now youre starting to see all the work weve done over the past three or four years starting to come to the fore. And were excited about some of the partnerships were doing. So, yes, we can grow this company in 2017 in Constant Currency id have to add, david. I mean, if this dollar continues to strengthen, that could be a challenge. But in Constant Currency we intend to grow the company in 2017. Of course you do face a lot of competition. Yes. I know theres fewer names but theyre pretty fierce whether its cisco, wau way not in this market but around the world, meg, theres a lot