Of course spain and italy, we always like to have them when im doing this part of the show. But we dont this morning. Italy a couple percent. Thank you, sara. As for the tenyear note yield still hovering around that 2. 5 yeah, there we are, 2. 54 we call it this morning and crude down about 1 . Lets get to the roadmap on this friday before christmas, and it starts with the Trump Twitter bomb. Defense stocks on the move after the president elect pits boeing super hornet jet against lockheeds f35. Investors are taking notice. Going nuclear, russian president Vladimir Putin responding to president elect Donald Trumps call for a nuclear arms race. And wheres the santa claus rally . Come on, its that time of year. Futures are plunging to a lower open as we see from dow 20,000. But the dow does remain on track to match its longest weekly win streak in two years. Well, Lockheed Martin shares are falling as you see right there in the premarket. This after president elect trumps latest tweet on the cost of the f35. It says, based on the tremendous cost and cost overruns of the Lockheed Martin f35, i have asked boeing to price out comparable f18 super hornet, ending with his often typical exclamation point. Lockheed has not issued a comment to cnbc about this tweet, but boeing has issued a response saying, it has committed, quote, to working with the president elect and his administration to provide the best capability, deliverability and affordability across all boeing products and services to meet our National Security needs. In the last few weeks it has been rarely a day that we havent had at least some, it seems, market moving tweet from the president elect. He is very much focused on the f35 program, which certainly is one of the most expensive ever in terms of procurement for the d. O. D. , and has been riddled with problems in terms of delivery and cost. But getting stuff done in 140 characters is a weird way of doing it. It was interesting the dimpx when the boeings ceo went and met with him, came out, made remarks to the public after being down there as maralago and then then put out a statement later. How much did he raise with mar linn, race e raised with boeing itself. I know its easy for criticizing it happening via tweet, but appears theres a lot happening behind the scenes as well. By all accounts if you read up on these two programs, the f35 is considered way more technologically advanced than the f15. You mention the cost, about 400 billion for 24 planes for the air force, marines and navy. Which is cheaper. Not 400 billion for 24 planes. 2,400. Yeah, 2,400. Initially the early planes because they did not size up in terms of delivery, were running at enormous cost and obviously that comes down as they deliver more of them. You do that and get to a per plane number. This is typical what we know from trump in terms of a businessman. I made this point yesterday. Very tractional in nature. Knows what he knows how to do is hammer down on contractors the best he can and try to work them against each other and get the best deal he can. But this is complicated stuff as well. And he doesnt have his full defense team in place certainly not yet. He hasnt even taken office of course. I think thats going to be the question is broadly for the Defense Sector as weve been discussing what is it going to mean for these stocks if hes going to go after individual companies . Lockheed was down about 2 in the afterhours on this news. Boeings shares were up a bit. Do you buy we were discussing this this morning, do you buy the Trump Twitter dip as an investor, which actually has proven to work over the last few weeks. Though it is early and this is a completely different playbook. And phil is also making a point, if im quoting him right on this about how the cost overruns might be settled by the companies themselves at this point instead of pushing on to the taxpayers. If that happens too and youre a shareholder, you wonder how that changes what otherwise is one of your greatest clients out there. Suddenly if you have to deal with a cost overruns yourself. Yeah. Although there are significant provisions in all of these contrac contracts. Also had to do with the capability of the plane itself, i think, not that i have many sources in the military but i have one in particular whos helped me at least try to understand this. Another issue that is interesting and will be for Corporate America overall as we move into a Trump Administration is simply how you respond to what may be this onslaught of tweets dealing with corporations on a particular basis and individually calling them out. You know, from a communications standpoint, if youre the head of corp. Comm at these large companies, it will be very interesting to see how they deal with it. Do you respond . Do you not respond . What do you do when your stock is down 2 , 3 , 4 in a given morning . Its going to have to be an evolving strategy. Lockheed has not responded to cnbc on the very latest twitter comments. Yeah. The other question is specific callouts for china. Weve been monitoring this of course from the new administration reading the tea leaves from picks like Peter Navarro, the economist who wrote death by china. Well, now china responded in an oped, an editorial piece by one of the staterun media companies, china daily. That individual such as navarro who have a bias against china are being picked to work against leading positions in the next administration is no laughing matter, according to the piece. Any move to damage the winwin relationship will only result in a loss for both sides. Guys, investors are watching the reactions from beijing. What kind of collision course are we setting up between the u. S. And china with the picks from the president elect, with the tweets from the president elect and now with china, for instance, announcing this move against a joint venture with general motors. People say that was in the works before, but were looking out for any potential retaliatory action. Not just potential, they seized a drone. They seized a drone from South China Sea from a naval ship. Thats a pretty provocative act. So whether its through their words or through some actions like this its clearly meant to show chinas going to take a muscular stance right back against the u. S. As you quoted, sara, from some of the ways theyve described it as kinds of an immediate threat to the current state of affairs. Its going to be a reset with china, its no doubt, sara. A reset . Yeah. But some are worried it could be a trade war. Right. I dont think you get to that immediately. One would hope that you actually work your way towards that or away from it. But theyre certainly taking a more confrontational negotiating stance from the incoming administration. Remember ambassador to china is going to be the Iowa Governor who knows president xi personally. He does, right. Its going to be interesting to see how it is that personal relationship kind of the Situation Congress coming up in china next year as well, i believe, right . Isnt it . Is it 17 . Whos been asserting a great deal more power and taking a lot more power over the last four years. Xi you mean . Yes. We have not heard from president elect trump who was on the wires overnight talking about achieving their growth target, chinese Economic Growth target of 6. 5 . But watch china come january. Theyve reset the 50,000 each individual is allowed to take out of the country. And you have to wonder what the risks are to a system which is already down from about 4 trillion in foreign reserves to just over 3 trillion. And a lot of questions about the Banking System weve heard in the past in terms of it really having some significant capital holes to fill if they actually took the losses that are there. Not to mention the bond market in china, which has been in something of a timult lately. Yeah, weve seen that. Epr putting out new numbers for this past week through wednesday reporting net redemptions from emerging market equity funds hit a fiveweek high of 3. 7 billion and a lot of that is money coming out of chinese equity funds. The china market by the way closing down almost 1 here ahead of the holiday weekend. All right. Well, were not done with the president elects tweets. Theres a lot of buzz surrounding his tweets on nuclear power. And that meaning power in terms of actual military power. Russian president putin also responding. Eamon javers in washington with more on that story. Eamon. Yeah, hi, david. Markets may be watching this and feeling like this Nuclear Discussion comes out of nowhere. So let me walk you through the chronology between yesterday and today to how we got to this point where we are this morning. Starting with Vladimir Putin, he was speaking in russia to a group of military officials. Its an annual address he gives on military issues. Heres what Vladimir Putin said in that speech. He said we need to enhance the combat capability of Strategic Nuclear forces primarily by strengthening missile complexes that will be guaranteed to penetrate existing and future Missile Defense systems. Donald trump responding perhaps to that a few hours later in any case he tweeted this, the United States must greatly strengthen and expand its Nuclear Capability until such time as the world comes to its senses regarding nukes. Note there that both putin and trump are using that word capability in terms of what each respective government is able to do. Now, this morning on morning joe on msnbc, the host there, said she had been on the phone this morning with donald trump asking him to clarify just what exactly all of this means and this question of whether or not we are headed for a new nuclear arms race. And heres the way she described that phone call on morning joe this morning. Take a listen. Mika asked the president elect while we had the opportunity what his position was on trying to clarify the tweet yesterday regarding the Nuclear Arsenal and the president elect told you what . Let it be an arms race. We will outmatch them at every pass. And outlast them all. And outlast them all. So let it be an arms race. That comment getting a lot of attention this morning on twitter and throughout the media. Sean spicer, the president elects new pick to be press secretary in the trump white house, was on the today show this morning where he seemingly walked back some of those comments. Heres what spicer said this morning. Well, the tweet continued unless other countries come to their senses. And i think the point hes making is were not going to sit back as a country and allow other countries to expand their Nuclear Capability with the u. S. Just sitting idly by. This president is going to take action. Sean spicer also saying theres not going to be an arms race here. He said whats going to happen is that other countries will come to their senses and well all be just fine, kelly. So a lot of Nuclear Saber rattling this morning both in russia and here in the United States. So well have to see how all this plays out, but some real uncertainty as to what direction u. S. Nuclear policys going to go now under the donald trump add amex. You know, eamon, its interesting of course a 600 billion Defense Budget roughly right now, i think thats not including the cost still of the wars in afghanistan at least. Right. Youve got him hammering on the f35 program, but at the same time talking about what might be a huge buildup, sort of hard to figure out exactly where all of that is going, isnt it . If youre a defense contractor, you look at this and say, maybe this is a carrot and stick approach saying weve got to lower costs on some of these overruns weve had on other programs, but there might be more opportunities for us in terms of government contracts in the Nuclear Space going forward. And maybe some other areas where donald trump wants to buildup. So theyre going to have to take some time, the defense industry, and figure out what exactly the Trump Administration is planning here. A lot of this is catching a lot of those folks by surprise. They were not prepared for this necessarily. And theyre trying to digest it all and figure out exactly where the president elect is going. My sense is thats where donald trump wants them. He wants them to be uncertain a little bit about where hes going. Yeah. He wants to push them back on their heels and get them to respond in his timeline and not on their timeline. Eamon, thank you. By the way, david, to your point about, you know, there are some people i know in the nuclear industry, lets say, just if youre working it all in that capacity, youre probably a couple generations out of college, there hasnt been a lot of new talent or a lot of people going into that industry for a long time because its been perceived as its not growing. Its not growing geopolitically, in terms of the energy supply, and yet here we are on the precipice of what could potentially be the need for a lot of brains and a lot of manpower could be a huge catalyst for the industry but takes awhile to develop the expertise and work in it in the first place. If hes serious about this, theres a lot if you want to talk about labor shortages, this is one area where theres actually quite a bit of one. All right. Lets focus on the markets right now. Of course we are in a full trading day ahead of a long holiday weekend. And that dow 20,000 level looks farther and farther away. Lets bring in Global Market strategist at j. P. Morgan. Jeff kravits, regional investment director. Okay. Farther away, whether we get there or not, i wonder, david, how much of this big rally weve seen since the election still heading for the best december since 2010 has been borrowed from next year in terms of looking forward to some of the trump policies . So i definitely think weve pulled some returns forward from 2017. You know, its our view that the u. S. Economy was picking up before the election the second half of the year was looking much better than the first half of the year. But what the president ial election really did is unleash animal spirits in the market. And weve seen things move very far very fast really on promises at this point were not sure whether or not theyre actually going to come to pass as policy. So i think theres a bit of a wait and see here. But weve definitely pulled some returns forward from 2017. Jeff, is that your view . I mean, reading some of the wall Street Research notes, the look aheads to 2017 right now, the general feeling is optimism sdp strategists like this market but thing potentially in the shortterm were due for a bit of a pullback just because weve run up so far so fast. We would share that view. And the reason for that is dow 20,000 is a major hurdle, a major psychological hurdle for investors. And to move through that barrier, we need to move from optimism to reality on fiscal stimulus, inflation and earnings. So were going to get there, but we need a catalyst. And that catalyst is likely to be Fourth Quarter earnings, positive Fourth Quarter earnings and better clarity on trumps first 100 days. Are we going to get that, david . You know, i think that earnings are definitely improving from where they were a couple of years ago. The Third Quarter saw the first positive year over year operating Earnings Growth in over a year and a half. And our view is that the Fourth Quarter should be positive as well. But i would say that the risk next year is what happens with the dollar. You know, 2015 we saw s p 500 earnings hammered by a very strong u. S. Dollar. And while our expectation is that Dollar Strength will be a bit more tame than it was a year ago. You know, i think thats still a risk. You get about 50 of s p 500 revenues from outside of the u. S. And if the dollar starts to go up, that weighs on revenues and weighs on earnings. Yeah, david, jeff mentioned the first 100 days. And we talked a lot this morning about the Defense Department and nuclear weapons, but its my understanding at least that the first 100 days is still going to be very much focused on tax policy. Have you guys sort of done the deep dive yet as i know many of your competitors and everybody else is trying to figure out here. What is it really going to mean industry by industry if we do get meaningful tax reform as really does seem to be likely, only question is sort of timing. Exactly. You know, i think that you need to think about the tax question in terms of, one, Corporate Taxes, but also in terms of individual income taxes. You know, lower individual income taxes will obviously be good for things like Consumer Discretionary, and lower Corporate Tax rates in the u. S. Frankly will just make the u. S. A more competitive place to be domicile. If you look over the past decade, were one of the only Major Economies that is left their Corporate Tax rate unchanged. It sits right around 40 when you include state and local taxes. So i think theres a huge tailwind here from potential tax reform. But like weve all been saying, even if donald trump starts to engage with that in his first 100 days when it actually takes hold is probably some time in the second half of 2017. So, again, we need to see which policies really come into being. We need to see reality meet expectations. Jeff, can you telt us a little bit about how that might affect various sectors and which one you like and dont like based on t