Transcripts For CNBC Squawk On The Street 20180102

Those markets are doing today. Its a red day for the most part, spain is in the green. 10year note yield were always watching that and that is at 2. 42 boy, its a big start to the year for crude well talk a lot about that. Crude over 60 bucks even though its ticking slightly lower today along with brent and wti and brent at the bottom of the screen the roadmap starts with the new year and new rally futures rising as we said as wall street shrugs over geopolitical concerns and the tax effect bp taking a major q2 earnings set but bullish on the tax laws long term impact apples mea culpa, looking to quickly make amends with angry customers. Stocks coming off the best yearly performance since 2013, including 71 record closes for the dow, 72 for the nasdaq and 62 for the s p the dow posting a 25 gain for 2017 and s p up 19 . The nasdaq leading the three major indexes up 28 jim, happy new year to you. Happy new year. Thank you very much. It would certainly seem as though we entered a new year with the wind at the back of stocks. We certainly do but i also want to caution on monday opening historically we had profit taking come in. It wouldnt surprise me. Europe is not up and asia was up very strongly. The pmi in europe is incredibly strong and at the same time its going down thats because the dollar is weak and i think were misinterpreting, europe is bad no, its all about the euro. January is a 50 50 month if you look back over the last 50 years, s p is up 50 of the time who knows how the month will shake out. Things certainly seem to be in line for the market continuing to go up. Yes and the banks start the earnings season and ive got to tell you, they are ones that are beneficiaries of the tax code, none of them has taken anything up they havent they may have called analysts and say numbers are going to be better it will still come as a surprise lets understand each other. When we get the surprise some people will say, well, you know, no kidding, i calculated that but there are other people who say, you know what, wow, and these break out and go from a 14 multiple to maybe a 17 multiple given the fact that the multiple is higher. Obviously i think that the big tax increase, big tax decrease is not in the market for a lot of companies because youve got to calculate it. And the companies calculate it for you. In a lot of cases pretty good. Im glad we showed jp morgan which your trust added. Jp morgan will tell the best story, they have a good tax situation. When you read articles about how the government is no longer stepping in the way of business, there was a New York Times piece that could it was real news im waiting for trump to tweet real news in New York Times, were starting to grow again i know hell do that because he eventually gets to the times, dont you think, gets there somewhat he is tweeting this morning well see if it does get there is this going to be the year were talking about the banks often and forea good reason. Yes, because geez, they are at the center of what most people dont realize, which is they had huge Compliance Costs but they also were afraid to lend to a second home. Anybody who is wealthy and anyone who is medium, boom, they could not get a loan a lot of Construction Loans not working. Obviously we do have some state and local tax problems in a couple of states but the boom in the southeast is what i think people will not talk about its incredible to me how strong the southeast is. Are you at all worried about u for ya, you have targets on wall street, 3,000, 3,000 clubs growing by the day, josh brown from halftime writes, we show every sign of wanting to go back to that place and bank of america, Merrill Lynch talking about the same thing. Great piece by ken fisher, one of my faf rit Money Managers saying were about to have the end the blowoff, meaning this would be blow off top. He prefers europe but thats been something hes been laying out for a while. But he did say look, we really eent had the blowup. There are tons of times we saw stalts, got on twitter, thanks to bob lang. When the dow is up 25 , thats been ten times, its been higher eight times with six of those in double digits. Dont feel it ends yet but also, look and that could even be better with the tax cuts i really think this deregulation story will could into play in the first quarter. Were going to hear companies say, you know what, weve got freedom. They dont want to speak too loudly about freedom because there will be a backlash, but youre a pipeline company, building pipelines everywhere. I like the fight of worries over u for ya and not being bullish enough, thinking that the tax package could prolong the bull market for years. Look, look at these banks, this is a major group so far behind the market. The oils are so far beyond the market theres a lot of Health Care Stocks doing better. I can look at sectors and spot Companies Like unh, big dow stock, its going to do better even some of the losers i think could do better, although its hard to imagine exxon up a lot. Look what oil is doing this morning. I think some people are misinterpreting twoyear high for crude. They are saying iran could become offline the north sea is back online i think its demand, demand, demand when you see pmi in europe at 60 and asia coming back and United States exporting a lot of oil but still kind of running short in oil and certain places of the country, its weird because were exporting and importing, i know that. I see a lot of groups that just havent had their move. If you have a sin kronized Global Recovery that were in, maybe the dollar ends up weaker than people think. Maybe its the year commodities come back. Freeport, which is down had a huge run if i were freeport, i would offer 100 million shares and clean up the Balance Sheet i think there are companies that should clean up the Balance Sheet that made acquisitions, we have very few secondaries last year a lot of the companies can really get liquid. Again, thats they have a lot more cash flow less cash flow will go to the government, more going to the companies, i know that buybacks are like a sin are you kidding me they are a sin for the 47 of the people who dont own stock but the 53 they dont sit there and say, wow, i cant believe they are wasting the money on thestocks that i own. I mean, the shareholders kind of they want some growth but what they really want is higher stock prices, this whole like welcome home i think thats fantastic and they are giving bonus to workers, remember our job, to think about stocks stocks benefit, period and i think this whole idea that what a waste of money if they buy back, it doesnt take into account what it means for jp morgan and what it means for chevron. Chevron actually has money, they can bring it back and what it means for all health care and insurance and industrials. Its just not in not in the market. No. And youve been making the argument for weeks the numbers are too low. They are because they havent been raised yet. A lot of these companies a lot of analysts are either not clued into the companies or are about to Start Talking about the idea that the retailers have real earnings and those earnings will flow more we see great jp morgan upgraded nordstrom from sell to hold jp morgan gets back on the bandwagon of coming private. Theres a bunch of notes how kohls did well, j. C. Penney, elle brands i mean, victorias secret doing better i met someone who went to victorias secret, someone i hiked with this weekend. Are you kidding me everyone is back to victorias secret we didnt exactly discuss bras, that would have been inappropriate but there are badge and body works doing better satellite work that hes been on your show showing a huge improvement in traffic i think you want to get in front of retailers and want to get in front of amazon. Dont forget, weve got notes positive i want to get one more thing in there. Do you want to get out of lulu citi said maybe you should. Citi is too negative. Citi doesnt realize that we are that they won the athleisure battle. I wish sara eisen was here, on the cover of athleisure magazine i subscribe to everything. Maybe not that one sara with her infant i do think where we are is one of the things most amazing get this, four years ago was soshixts, the top in europe, if you remember then the ukraine sanctions and then europe is coming back and coming back fast i think people are underestimating the fact that there is a lot of business thats done by International Companies in europe. The fact that the dollar is lower is great im very optimistic on these manufacturers still. Im not bored by them. A lot of people were bored with the upside and bored and yawning at stocks. Who are they im going to wake them up. The rip van winkles, yeah, numbers raised no, no what happened . Some of it is, did you ever look at the etf list . The etf list from wall street journ journal, they published it, its an endless number. They matter, 483 billion coming in the market look at these, these are etfs i remember when you used to lock at the stock trade they would be look at this this is where the money is going. This is a creation of wealth and one of the reasons why the market doesnt come in is the money keeps flowing in to these index funds. Its every time you think its going to go down the index funds get more money in. The money the money is flowing into stocks. I hate to disappoint people. That was a pretty good been a while since youve been tv. I came back fresh, went out to san diego, that was fabulous. I had to try to you know, when you cant keep up with your daughter anymore and its not you hope its just because shes ripped i wasnt going to try to get in the way of that. You were skiing with the kids, not easy. Definitely not. And last nights game was great then the second game was bad and eagles okay and there we covered sports i want to talk about the fact that this market, you look at the stock like netflix someone comes out and says netflix is doing well and the stock goes up three. Did you not know netflix is doing well up 50 last year and now gets upgraded to youtperform along with disney. Analysts are waking up. Two upgrades of abbott labs, my trust owns it. I was thinking of selling the darn thing, whatever youre allowed to say and boom, i mean, two analysts up. Where have they been theres a lot of analysts completely asleep on the switch, asleep and im waking them up right now. You know they took take take this off mute when you see theres a demonstration and somebody alive alive. The president is hes awake yeah, hes back on tweeting and stuff. And hes kicking off the new year with take busy agenda eamon javers from outside the white house with more. Reporter good morning, scott to you as well the president returning from sunny march ra lag go to a chilly white house in washington, d. C. This morning. A couple of Foreign Policy issues, yesterday tweeting out about iran and pakistan yesterday. On ran the president tweeting iran is failing at every level, despite the terrible deal made with them by the Obama Administration the great iranian people have been repressed for many yeersz and hungry for food and freedom along with human rights. The wealth of iran is being looted time for a change. The president also tweeting about pakistan, prompting some diplomatic response from that government saying that the United States has foolishly given pakistan 33 billion in aid in the last 15 years and they have given us nothing but lies and deceit, they give safe haven to the trust terrorists wt in afghanistan with little help. The president calling for the jailing of humaxts abedin, a high ranking aide to Hillary Clinton last year. The president also tweeting about iran and other subjects this morning as well it should be a lively day at the white house. Well see a briefing from Sara Huckabee sanders later this afternoon and ask her about issues that perk lated over the week also, important to bear in mind here at the white house, infrastructure, they would like to do a plan on that and talking here about well fare reform. So some domestic policy matters on the president s agenda here at the white house today as well. Thanks, happy new year to you as well. Raising numbers inf infrastructure plays. We didnt talk infrastructure, another reason to be positive. I dont know where the money will come from unless they do the 50year make America Great bond that i keep insisting that gary cohn listen to. Theyll probably do that because its real news theres a lot of real news coming out today. In fact, still to come, real news regarding apple and the picture for fang stocks as we enter the first trading day of 2018 lets look at futures, its going to be a positive open, first trading day of the new year, dow would open positive by 130 points s p by 11. More squawk on the street when we return. [hawaiian music playing] apple is making 29 replacement batteries for the iphone 6 and later Devices Available immediately, a month sooner than originally planned they were offered following news that the ios software was slowing down older i phones, they apologized to customers and said the move was an attempt to prevent shutdowns due to battery wear an embarrassing episode for apple. Now they come out 29 and you can do it immediately. Look, they made mistakes periodically, there was an antenna issue, dont worry about the super long cycle apple also got the commentary when i was away, reached me in san diego about a survey, a survey showed that people dont like the phones. We dont know. The surveys have gotten people out at 90, 100, i can go through what the surveys do. The fact is there is not not a way to gauge how these phones are doing based on the few weeks theyve been out. You have to wait until the earnings report. The battery life issue, how many people really people who are getting the vehicctor, putt a man on the moon, elon musk versus boeing. I remember 94, intel had a problem and only showed up when you were doing ten digits times ten digits times ten digits, like california license plates 50 times everyone just broke the stock broke down and amd went up and who remembers . I mean, this battery life issue is a conard, i think it doesnt matter drove the stock down, changed the chart. I hear you i hear you sorry, i mean, i think if youre going to base your selling on battery gate, i mean, batterygate battery no. 200 bucks in the near future for apple . I dont know. I think its going to mark time. It marks time as people realize that there are buyers of the 10 and 8. Im tired of this. Im tired of these im tired of people who gotten out of apple repeatedly it seems like their goal is to make it so you buy high and sell low. That is not a time honored prospect. Youve never ever suggested anything but buy apple and hold apple. I think it should be owned not traded my view is in the minority there are people itching to sell go sell. Go sell. Remember when carl icon, said on your show, on your show, carl icon said china is the problem i think china is the answer. I like india india doesnt really have india is just wide open. My wife is in india, what the hell is she doing there . She never comes back listen, we need phone towers shes there now yes, very spotty coverage a lot of fog today. Tired of her being get back come back, already. Up next, its cramers mad dash as we count down to the first opening bell of 2018 looking at futures, a good open on wall street across the board. More squawk on the street straight ahead king a hundred mid to their breeding grounds. Except for these two fellows. This time next year, were gonna be sitting on an egg. I think were getting close make a uturn. Uturn . Recalculating. Man, we are never gonna breed. Just give it a second. You will arrive in 92 days. Nah, nuhuh. Nope, nope, nope. You know who im gonna follow . My instincts. As long as gps can still get you lost, you can count on geico saving folks money. Im breeding, man. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back, time for jim cramers mad dash ahead of the market open. I want to get this point across, california, Recreational Marijuana, its in california about fifth of the country, scotts miracle grow, hydroponic allows you to grow pot inside. Rightnow it is only 11 of corporate of the revenue. Most of their stuff has to do with home depot and walmart sales but Recreational Marijuana is really a boom and there are not many ways to play it. By the way we have a show marcus is doing a show tonight. Thats right, hes back. Doing a show on marijuana 10 00. We have to watch that show we will. Look at this from this move here down low and its been a nice steady the profit. T the profit. Hes in california, going to be very big. The opening bell is just minutes away well be right back from the New York Stock Exchange. Woman so, greg, its a lot to take in. Woman 2 and i know thats hard to hear, but the doctors caught it early. Hi, blake my dad has cancer. Woman and i know how hard that is to hear. But youre in the right place. Man and dr. Pascal and her team, they know what to do. They know what to do. The doctors know what to do. So heres the plan. First off, were going to give you all. voice fading away your bbut as you get older,ing. 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Boy, 90 seconds or so as we said, jim, people have High Expectations for this year. Yes. Right out of the gates. But look at this note that wells fargo, lenar upgraded. Did you know horton and polte were among the top ten performers when rates rise youve got to sell these stocks. How wrong has that been. A lot of people are short them because theyve the textbook says to short them there is no textbook but its what the ethos, whats supposed to happen whats happening is getting there. Youve got a shortage of land and Home Builders making money and getting a better tax rate. Lenar is a very good company it is amazing to me that people werent upgrading it before. Its up 50 last year. This is johnny come lately, i dont know if i want to buy right now. If you upgrade after the year we had and upgrade so many different stocks, theyve been up so much, netflix call. Well, netflix is a beast but they have a big upside, youre not johnny come lately. Im not going to disagree with that. The netflix call, which is an odd call, i love what they say, which is that its basically it hasnt really a lot of catalysts are they really catalysts, they say they like the not the add line. Shocker . Really you are watching the opening bells at the s p 500 and the cnbc real time change here at the big board. Pvh corp highlighting the speedo brand and uptown at the nasdaq, playworks, a nonprofit helping children integrate physical activity and emotional health. Pvh has been on fire. Theyll continue to be great the Heritage Brands have been a disappointment your guy, right manny came on and said this was the best Christmas Season in four years i think it turns out to be better than that when you use the satellite traffic. Same old will go up, costco, walmart. Walmart is in shape to go to 120 this year. I think this is the year you see jet. Com and it will be ferocious and going to be a dogfight. Since you bought up walmart, you have gene munster talking about amazon buying targt . Paypal was one of the best performers because munster retired, he hated paypal im not kidding happy new year, gene. I love gene, mean it a lot. Sure you do. Obviously but i do think that i dont know, i like the other piper note, not piper anymore, which stop worrying about apple. You know, geno best steak sandwich place, thats the geno i like and may continue to go there the bye week is there any im going to move on. I dont want gooene to get insulted anymore. I love him. Made that point very clear. You did thats like bronx cheer. Baxter, how about did you look baxter, striker you mentioned abbott is baxter and striker they are long too and downgrade j and j. Are you kidding me you do that at your own peril. Youre going to get against gorski, army owon, west point. You go against gorski, im talking Balance Sheet. All right . You brought us back to large cap, dow stocks where i wanted to go. Do you think target will get a bid from amazon, do you think thats going to happen if you own target today, i mean, maybe you want to sell a little. Amazon i think is unlikely to buy target, unlikely but amazon is a threat to these automobile parts stocks. Im starting to see a lot about that the do it yourself guys will be under pressure but oreillies zsh. Auto zones. And not where you want to be. Auto zone had a nice move at the end of the year buying back stock. I still like amazon. Nothing has changed for me i like amazon. I think were going to get big, big numbers from amazon. Its my favorite fang. Do you think Diamondback Energy had a giant year. Thats the original fang did you see that stock i like that fang more than i like the fangs get your right fang. Stay focused. Youre being facetious. You dont like the fangs this year as much as i like munster, i really love him. They had big moves and you have to break them down the netflix piece in a submodel, amazon, the numbers can be good. What about facebook my Charitable Trust owns facebook but this market belongs to have the best time. No one is focused on it. Neutral to buy at bank of america. Thats the kind of think, frank mitch came out with wells fargo. West lake, no one knows westlake they think its a novelist by the way his books are great thats a pseudonim lets expand on the industrials for a moment. Okay. Is there any reason to believe that the boeings and cats of the world will not have similar years to what they just put in the books youre talking about 80 and almost 70 . And i think boeing boeing is no longer a sick lickal play. 10,000 orders. Thats been my price target out 18 months. Thats only thats not even up that much caterpillar, i think when we see the numbers well recognize that heavy machinery is doing well and its no longer just a china play that 2010 spike was china. China is just part of the equation have you noticed how china is no longer the be all and end all . Its incredible how important china was. But our country is important were doing well now, i know people will immediately say well maga maga not mana it is up 50 . Im waiting for the president to koum come out and say i would use any weakness to buy. All of this talk whats the next step for the administration and congress, if its infrastructure these are all positive for the stock Market Infrastructure is out there, no one wants to sell the steel stocks because of infrastructure just find one of the things has happened, he is continually he, the president is continually helping sector after sector youve got to look at the pipeline companies, in the old days, ferc used to hold everything up. Now ferc is like, they should just rename is greenlight corp. Theres already one of those. Einhorn. Hows he doing . Probably looking for a big year. The hedge funds, big year. I just find that there are so Many Companies that benefit from what they are doing and its a Republican Controlled Congress and i think that we are not we are certainly not in any position to be negative what so far. I took you to the high of the mountain i look westlakes books. Took you to the high of the mountain with boeing and cat. Going to give me ibm . Ge. Too early my Charitable Trust owns it, keep it on a short leash it has strangled me. Baker hughes, the ge baker hughes, ge company, impentrabl financials, but that looks like its for sale because that things has gone down, down, down that may be something that ceo flannery is in the works for selling. They need cash there are a lot of people who feel they didnt cut the dividend deep enough. Not the year the ge turnaround not yet they have to raise a lot of cash, one of the things thats incredible i have my forensic accountant go over ges financials and his conclusion was they dont use anything that no gap accounting whatsoever. Its really incredible what they do now that they have to use gap accounting, we see they are not making as much money they should do 100 million Share Offering at 15 and my Charitable Trust owns this, like the kiss of death i do think ge, not yet they are not bringing anything to light including their financials they would whats the matter with using gps, it works for 499 other companies. It should work for them. Not like adjusted that get o out of that adjusted game. I dont want to see adjusted in financials, no adjusted. All right . You want to wish flannery a happy new year i love him too. This is the year of love for me. Its the year of love, 2018. Love, southwest air, luv, had too big a move with ge, you dont think not yet. When you say not yet, are you saying short term or no, i think 2018 not going to be able not going to have the cash flow i think their cash flow is lower than they think. But ge is incredibly optimistic. I dont like the 2 number jeff immelt used, that proved to be i guess that was over what do you think thats over that was exuberrant no im hopeful. Im hopeful. Im hopeful about cousins with three interceptions, were always hopeful. Why dont you worry about your own quarterback. Im hopeful im hopeful. He didnt look that sharp. Shut up when i want your opinion, ill give it to you. You insult my guy, ill come back at you. Why not he dropped his value big. Hes laughing all the way to the bank. He could. I dont know what bank, maybe bank of america, i like that stock. J. P. Morgan. Will break out to 110, pretty good. Bob pisani, good to see you not there yet. Lets talk about sirius xm, hold the sell on a copyright problem. Jp. Morgan, im not going with that Raymond James downgrades capital owned gas, that makes one of the worst performers in the s p and way, way too high. Natural gas, i dont know what it takes for natural gas to budge. I guess we have to go to minus 40. We might be going there by the end of the week. Minus 40, your spit freezes before it hits the ground. Keep that in mind. All right . It was minus 60 at the top of the mountain where i was. Something else freezes when i wont go into it i hope you didnt have to. Thats all i can say how about the j. C. Penney and sears cutting out of advertising . Of course they are saying sears and ge are as optimistic as you can get right . Everything is always right whatever they do. Youre putting them in the same bucket . No. No, sears is in a sears is in theres a hole in the bucket, remember that song you probably actually still sing it to your kids. Theres a hole in the bucket but i i dont know. I dont know i dont want to go there. You dont know that song . Its a disney song . How about the disney upgrade stock has been stuck at 107. I have not seen star wars yet, maybe ill be blasted by the president. 108 is where disney is. How about nomura, mcdona mcdonalds number one restaurant stock. But the dollar menu, i was right there for that have you taken advantage of the dollar menu . I have not. What are you doing . They are going to have a vegetarian burger soon i think they have it i dont eat that. My daughter is vegetarian heres one i just absolutely love, win week on macao data, one month. Are you kidding me thats what you sell it for. Steve wynn how have you done betting against steve wynn poorly. Thank you very much. Stock was only up 90 in a year. And whether you bought so much stock in the 50s and 60s, why did he buy it . Tremendous insight, to make money. Thats something thats often lost on wall street. They want to make fees and Exchange Traded fees, traded f. Citi downgrading lululemon. Its been fabulous and will stay fabulous. We have to go to chicago. Thats fine with me, its minus one there. Where Rick Santelli is at the cme group. Good morning, happy new year, everybody. If you want to look at Interest Rates and dollar index, today is no different than a lot of days weve witnessed or traded in 2017 take a look at a november start to the following charts, lets look at our twoyear, it continues to rise, all maturities are up a bit. 10year, 240ish, you can see left and right it slices right through. It will be and remain a key level, just several basis points below where we settled 2016 and of course 2017 settled right about here, 41 ht 42. If you look overseas, interesting chart the shots and twoyear in europe we all know its negative and negative down the curve aways, but it was in the negative 75 to 77 camp and now were toying with minus 62. Indeed were seeing yields rise in europe on the shortened bunds are a little bit lazy, they are 2. 40 pivot is probably 38 basis points. Finally the dollar index, if youre a fundamental trader, its a real head scratcher its been a real head scratcher. Didnt have a have good 2017 and not off to a terrific start toying with the 92 handles you see on the chart finally a currency we dont often show but always have just right off to the side but have to put it front and center now, dollar versus yuan, darn close to being the weakest in several years. Scott, jim, back to you. All right, rick bob pisani. Glreat story on the dollar index. Stay on that. I didnt mean to cut you off gunnedlock, i got you, work with me here gund unbelievable gundlock, double line, you know who he is . Absolutely. He thinks youre going to have after a little move in the dollar up its going to have this move down for a prolonged period of time this year. Thats why he likes commodities, at least one reason. It sounds like you agree with him, you think the dollar will go lower the dollar is going to go lower and like kmcommodities. Thats why i like cat and freeport, arent a lot of commodities plays, thats the problem. Want to go to pisani want to sure, hes here. Happy new year, everybody happy new year to you jim as well buying right across the board. Let me show you the sectors, looks a lot like 2017. Retailers doing well and semidoing well they stabilize, big story stabilizing and materials up and utilities taking up the rear this looks a lot like middle of december right here. Remember where the markets are right now. We have the most important thing were sitting on record earnings and Global Economic expansion. The fed is stilg accommodative and theres a lot of debate how factored in the tax cuts are and all of the issues around regulatory reform. But a lot of dispute about that. The technicals are still strong. Weve got the weakness around major tops are not there the advance decline long is strong all of the numbers still look good internally. You can talkabout potential political paralysis coming with the government funding deadline january 19th but thats the Biggest Issue political issues on the whorizon. The year starting out like it ended last year, look at the semiconductors, micron, remember the slump in the middle of december that went away towards the end of the month starting strong and fang stocks same thing, tough month. Some of them for december here but all of them starting on the upside, virtually everything netflix up more than 3 . Same thing with the retailers, surprised everybody in december, normally they are down in december all of them rallied. Rallying here for the first day of the year. Asia is doing well too we had a lot of these pmi numbers and manufacturing numbers better than expected china was in line with expectations but hang seng, the highest level since 2007, 30,000 vietnam, we talked about the small emerging markets, had amazing years last year. Vietnam, best year 2007. Korea, back in november, not historic high but near it. Taiwan near historic highs in november shanghai had a decent year last year not amazing but you can see these numbers overall pretty good europe is mixed and i think the problem is weve got a very strong euro. The euro is almost at a threeyear high against the dollar and thats getting a bit of an issue over there the macao gaming stocks, wynn, las vegas, mgm, the numbers were quite amazing last year. Were in front of a lot of big round numbers right now. The nasdaq was knocking on the door of 7,000 prior to the open. Weve advanced since then. Dow 25,000 were at 200 points away from that and the s p, the big number is s p 3,000, remember scottie, a lot of guys have 3,000 as middle year or even year end target numbers thats about an 8 move right now. So right now dow is up 77 points off the highs. Back to you. Been taking numbers up as well in recent weeks thanks so much as we head to break, take a look at the major indexes bob said it is higher across the board and dow is up by 75. Was up triple digits. Sucker opening. Jim told you to watch out for that nasdaq is up 54, strongest of the three. Squawk on the street will be right back you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Star wars the last jeddy is the Box Office Champ for 2017. Pulling in 533 million in north america and grossing more than 1 billionworldwide. The disney film also coming in first place during the fourday holiday weekend. Collecting 68. 4 million and edging out sonys jumanji, welcome to the junkal. We mentioned the upgrade a couple times i like the upgrade. What happens to fox, international. I think this upgrade, if you sense it, is really about the movies not getting enough credit look at this jedi. What is coming up this year, according to this . Infinity, a star wars story. Mary poppins returns youll talk your kids to that. Saw radio city musical and toy story 4, holy cow. A lot of interesting stuff the parks are good listen, stop worrying about espn stop worrying about it okay, i wasnt that worried about it by the way, the president didnt look at the story. Hes still calling the New York Times failing he should read please read the story on the lefthand side. You wrote it i dont know what the hell, why not do you seriously think, though, that we turn the page from all of the worries about espn and we start focusing on bread and butter movies, parks i think iger is going to make you do that. I think the narrative is going to be im not remember, he did it a couple quarters ago im not worried about espn moved the stock from 93 to about 110. Now you have the fox overhang. I like the idea were doing this one thing we should point out, nasdaq is doing better, but dont get sucked in. Let it come in a little. We gotta go. We do someone in my ear you understand that. I dont have anyone in my ear for mad money. Up next, stop trading with jim. Squawk on the street will be right back i dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Well, thomas, youve got prediabetes. But with more exercise and a change in diet, it can be reversed. But ive tried exercising, and it just makes me hungry for bacon. I love bacon, too. And who really likes to exercise . Not me. Me neither. Nobody [both laughing] mmm so were good . What . Oh, you still have prediabetes. Big time. Were back time for stop trading and jim. I want everyone to keep an eye on micron. They crushed the numbers one of the greatest beats. It now sells at four times earnings why . Because people feel that theyre peaking and flash has already peaked those are the two parts of it. This is where the stock was. Look at that chart its saying if you dont take out, if you dont take out the 48 level, then once again, we have to worry about lamb research, supply materials and youre going to hear people starting to worry about the data Center People have been worrying about the dram issues for the last however many months, years. But flash is weaker micron is a double over the last year. Its been one of the best performing stocks. Im just pointing out that maybe thats the one to watch. Im not making any predictions im just saying watch it the fact its up is leading all of nasdaq, and its not even it is. Mu what do you have today on your show we have a lot of good stuff today. I want to know what you have on mad today. Good stuff. Geez, normally you have bad stuff . Why is today different come on. You probably have a great show what are we doing why not still a few months away im analyzing all the stocks that are winners which is why i knew about the micron, all of these, and also the losers im talking about range resources, the bottom of the s p 500. Not ge do you know how hard it was to best ge in the go down i mean, thats remarkable. Planet fitness on tonight yeah. I got to lose some weight. I gained a lot of weight you know, and again, im done with this. I dont have one in my other show you know why i dont need it here i got to listen to him. Be my guest i got things to say the new tax law and whats at stake for businesses and you in 2018 larry kudlow isgoing to join u on set here. Squawk on the street will be right back good morning and welcome back to squawk on the street. Im kelly evans this morning along with scott and mike santo santoli. Good morning to you, live here at post 9 at the New York Stock Exchange carl, david, and sara are off todays. Lets look at the markets. We mentioned in the rally in futures. That turned into about a half percent gain on the dow. A little higher for the s p, up about. 6 . The nasdaq up 1 today 6970 crude a little lower but hanging on to the 60 level. And heres where our road map begins today making money in the new year stocks rallying on the first trading day of 2018. Well discuss where you should be putting your money to work next plus, the new year, new agenda the president getting back to work in Washington Well bake down the year ahead in politics plus how you should be preparing for the new taxes and crisis in iran as antigovernment protests turn deadly the latest on this developing story straight ahead kicking off 2018, the major averages off to a strong start following a recordbreaking 2017 this despite several domestic and international headwinds. Namely a pending Government Shutdown and unrest in the middle east. Lets bring in david kelly and chief investment strategist jim paulson. Jim, ill begin with you headwinds abound we have been mentioning month after month, heres a headwind here, a headwind here. Market doesnt seem to care. Is there any reason this year is going to be different . Theres certainly a lot of positive momentum, scott i think if thats going to continue to the upside, i think productivity is going to have to show in a big way. In a bigger way that its shown it so far in this recovery if that happens, then i think this certainly this rally could continue this time this year. David, is that how you see it yeah, its reasonable to expect a correction. The average correction in any year is 14 . But i think it will get more interesting as the year goes on. I think we start with a lot of momentum i think we do 3 growth for the year whats really interesting is jim was talking about productivity thats really the key because were out of workers we think this will push the Unemployment Rate down to its lowest level since 1969. 3. 4 by the end of the year. If we get there, thats as low as its going to go, so growth will have to taper down to about 2 next year in other words, we can get 3 growth, but one year of 3 and 2s for as far as the eye can see after that the whole question is how does the market adjust to that, to the reality of slowing growth in the United States from 2019 on jim, a lot of what were talking about here, what youre citing is late cycle factors that seem like maybe the market is going to Pay Attention to this year. I wonder how the Corporate Tax cuts filter into that as the market absorbs both the positive effect and how that creates a new storyline for the bull market, but also, is the market going to pay up for those earnings based on lower tax rates and what does it mean for a low unemployment economy right now. In many ways i think the market has paid up for that. I think in 2017, this tax cut was well vetted by the financial markets. And we begin this year with earnings numbers, you know, 140, 145, in that vicinity. We already have a fairly high valuation on those kind of numbers. And if you can manage that without having to lift the tenyear yield beyond 2. 40, 2. 45, then we have more upside to go. If you start to lift that yield as all, as david suggests we might have to at some point, i dont really see the earnings estimates going up much higher i think its already the tax cut is in there. You sound, and david, maybe in some respects, you do as well, you sound like a glass half empty guy you just got a tax cut people suggest earnings estimates are too low. The numbers you give, they suggest, are too low now were talking about Infrastructure Companies are giving their employees raises theyre going to be reinvesting their money. Why not half full . Well, scott, you know, i think that one way to answer that is think about what is probably the primary driver of this entire bull market over the last nine years . Its been a perpetual wall of worry. This market roared and persistently rose when almost everyone thought it was going to end at any moment. Every leader told us were this close to the Second Coming of the Great Depression and the market kept climbing i think its very bad in a sense that for the first time going into 2018, everything looks fantastic. Earnings are growing, the u. S. Economy is posting back to back to back 3 growth. The Global Economy recovery is synchronized theres no inflation and no Interest Rate pressure confidence measures among consumers and businesses are close to postwar highs. Not only here but globally i just think that im concerned about the mindset of the investor, even if things are really good on main street, i think they might get more difficult for wall street. All right, gentlemen, thank you very much. David, jim, talk to you soon as the dow hangs on to more than a 100point gain, its a year of good and bad stocks. For more on what to expect from ge this year, were joined by dean dray. Welcome to you 2018 is a reset year for ge, as the company said how much more resetting do you expect them to do . We only think a couple of the shoes fell when John Flannery presented back in november 13 in terms of their earnings reset for ge well still waiting for a big restructuring charge, a reserve of ge capital. They also startled the market saying there would be no dividend paid from ge capital for all of 2018. There are still a lot of unknowns here, and the expectation is that theres still some new data thats going to come out that investors will need to digest looking at ge, just under 18 a share right now. What do you think its value is today . We have ge now, the tendency of investors is hey, you just highlighted, kelly, that ge was the worst stock in the dow last year theres a bias for dogs of the dow or mean reversion. Ge is a separate story so much still has to come through in terms of the strategic plan, the portfolio revision, the size of the board, all this still has to come through. Were looking at a 20 price target for ge. And theres still well be waiting to see how this plays out in the first half of 2018. You sound like you are absolutely echoing jim cramer within the last hour, who emphatically as he has said about any stock i can remember, not yet. Not yet on this name when asked if this is the year of the comeback for ge, whether its the cash flow problems, issues around accounting and lack of transparency he cites as well. I agree completely. Too many unknowns and investors should be resisting this mean reversion. The picture youre painting is ge has earned this conglomerate discount. Theres a lot of dysfunction however, the underlying business how is it that we have an aerospace boom, and ge aerospace is not having more value shine through. Health care shouldnt be a major problem. We know about power. Is there anything to be done in terms of the market looking to the value of the underlying businesses that maybe creates an upside scenario . You highlighted two of the best businesses within ge. Aviation is a jewel. It executed well in this environment. The Health Care Business is chugging along just fine, holding market share the biggest structural problems are in the power business. 28 of the company its in a secular challenges, the big cash flow problems they overbuilt, overcapacity theres a whole reset coming there. But if you want to focus on where the biggest problem is, its in the power business right now. Clear, but i also wonder what sense it makes for these remaining businesses to be together according to ges leaders, the future of ge will be to power the world, transport people safely, and save lives explain what the vision is for keeping those three businesses together or will there be pressure to further break them up or send them out . We were in the camp coming into november 13, there was going to be a big Business Model reset. That also included portfolio changes. Instead, the company cited 20 billion of portfolio exits, about 10 of the market cap. Thats far less than what the market was expecting we agree, we think the market is looking for a larger wholesale breakup in pieces at some point. But they werent ready to announce anything in november. Is the dividend still at risk they announced the price. They cut it enough . At this point, 50 cut, thats a 2. 8 yield. You have to have underlying confidence in the cash flow, and theres still some showme there right now. But for now, it seems reasonable didnt sound totally convinced about that thank you very much for joining us when we come back, a new year, a new tax code well break down how its impacting businesses and your money. Plus, were following a developing story out of iran where antigovernment protests have turned deadly we have the very latest. Squawk on the street will be right back cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Welcome back along with the new year comes the new tax code which will shape decisions made by everyone, including corporations and individual filers. Joining us is cnbc contributor larry kudlow good morning good morning. One thingi noticed that i had forgotten about, medical device tax is back 2. 3 not like thats a huge impact, but theres a lot of moving pieces for corporate america, not to mention just the individual filers we talked about. Who is it, bp came out and said they think theyre going to benefit from the law citi thinks theres a 40 chance apple buys netflix because of tax reform what do you think some of the early impacts are going to be . The tax cost of capital is coming way down. A lot of these breakevens and so forth look better now if youre talking about a 21 Corporate Tax rate and the 100 expensing, so that stuff looks much better. Look, i believe were on the front end of an investment boom. I have been saying that. I thought the thing would pass, although it came to the last strokes. I think tremendous burst well see capx, you will see m as, i think you will see people come home 700 some odd corporations in ireland. I love the irish, dont get me wrong, but i think theyre coming home. Make a lot of money on this. More to the point right now, as those tax cut eggs fertilize, youll see more in february when the withholding rates come down. Im going to say the agenda ahead is going to be very cluttered and contengsing. The mood and the tone seems to be washington bracing itself for having to deal with all the initiatives next this does not feel like a victory lap moment when arguably it could be. Youre exactly right, by the by the president meets with the leadership of both parties allegedly, democrats may boycott it again, well see, but they have to plow through daca, and trump doesnt want to export or deport these young people. But he wants tougher immigration laws for legal immigrants. You know, the merit system, not the family chain system. He wants his wall or his fence or so forth. Hes going to need money to get that done with drones. Hes not going to give up the daca thing and get nothing in return trust me on that thats a contention. Second, president has indicated a trillion dollar infrastructure plan okay but he doesnt want the uncle sam to pay for it and run it his vision is maybe 200 billion from uncle sam the other 800 billion comes from private companies, maybe some partnerships with local governments where you do these leaseback deals like indiana and texas. Is there capacity for even 200 billion from the federal government right now thats a very important point. I dont know the answer to that. See, the democratic position on this is they want a trillion dollars of spending. Good Old Fashioned fdr, 1930s, pump primer. They dont have a trillion in the federal government so they want thats going to be a bone of contention. And you know, you have to look at other things. Defense versus nondefense. The sequester on defense spending going to be removed thats part of trumps policy to beef up our military and so forth. Theyre going to have to hassle that out they may include small entitlements i dont expect major entitlements but food stamps and disability, the stuff thats exploded what does that all add up to . Does that add up to 200 billion . Probably not, but i would like to look at those numbers. We had a huge bulge, most of the eligibility requirements have been removed that has to be changed you could get bipartisan support on that, but im not hearing it yet. And finally, dont want to filibuster you im just saying trade. Trade. Trade is very big. Is your party in trouble in the midterms no. My party im a jfk democrat and a reagan conservative. Is the gop in trouble in the midterms much more generic no, no i think if supply siders are right, and the incentives work, particularly on the business side, as i believe they will i mean, it took pundits are going to be wrong about 2018 it took a long time for the reagan tax cuts to make a difference a long time. Well, hang on a second. Six months and everything is going to no, no. Sun is going to rise all over the place. Youre right but youre not quite right. A mistake on our part. The tax cut was signed in 1981 the first tax cut. 70 to 50 but heres the mistake they phased it in. Phaseins do not work. People wait to pull the trigger. In 83, jan 1, 83, the full bill was in, and the economy exploded so we dodged a bullet on that because, remember, they were going to wait a year on the corporate thing. Now thats off the table i dont want to minimize the need to be extremely careful for all of this on the trade stuff i mean, the president i have worked with him on this and that you know, he is going to be tough. Now, i dont think hes going to start a trade war. But i think hes looking very carefully at nafta nafta is an integral part of the American Economy we are north American Economy. If he were to walk out of nafta, i think that would have grave consequences he walks out of nafta, what happens the next day to carmakers . Youre right. Im not sure i heard it all, but youre right all these things, parts, agriculture, were so intertwined. The way youre setting it up, larry, i think from a markets perspective, they would like for this to be the victory lap youre talking about a crowded agenda its done. They have done a tax cut it has some kind of noisy potentially positive effect down the road, but its enough to take credit for a good economy in november. That might be it thats very kudlowian i like that, very, very much, the way you put that i dont want things to get so complicated and distractive that we will lose our focus on the tax taxes. I know it isnt a perfect bill we talked about this for months and months, but, but, but, going from 35 to 21 is good, immediate expensing is good. The repatriation may not be perfect, but its good youre changing that and we havent had any equipment buildup in almost 20 years. So as art laugher puts it, if you have a bumper crop of apples, what happens to apple prices they fall thank you, kelly. If we have a bumper crop in business investment, in business equipment, that is going to were going to leave it on and the fed neednt fret. They neednt fret. Thank you, larry. And watch the economy grow at 4 , and the gop is going to have so much Better Outcomes in 2018. Trust me on this good to see you this morning. Larry kudlow once in a row thank you very much all right, turning overseas now. A developing story were following out of iran. Political protests continuing for a sixth day as protesters attack several police stations overnight, leaving at least 20 dead Michelle Carusocabrera joins us with more on the demonstrations. The lack of Political Freedom in iran is well known. Less noted is the lack of economic freedom, which leads to an inefficient economy with high levels of inflation and unemployment initial reports indicated they started because of inflation, egg prices had gone up 9 in a week and are up nearly 54 from a year ago doubledigit inflation is a long running problem in iran. Its actually improved recently. Look at these numbers. Currently, inflation running between 10 and 12 . In 2015, 11. 3 2014, 14. 7 . 2013, 32 . Unemployment also high 12. 4 . For men specifically, only 10. 7 . For women, unemployment is a whopping 20. 7 youth unemployment is 29 . For young men, 25 for young women, 44 unemployment the economy did improve after some of the sanctions were removed by the Obama Administration, which allowed iran to sell oil again according to the imf, gdp growth from 2016 to 2017 was 7. 4 , however, growth in the nonoil sector, 0. 9 the iranian economy has many problems first, cronyism. Large swaths are controlled by the revolutionary guard. They fight for investment. There are still price controls in subsidies models most countries have abandoned. Lending is politicized by the government they decide where loans should go Banking System in a catastrophic state. Will these protests lead to any changes . Keep in mind, this is not the first time iran has faced widescale protests they occurred in 99, 2001, and 2009 the key question is, will this time be different, scott back to you. All right, michelle, thank you very much for that when we come back, winners and losers a look at which retailers came on top this Holiday Shopping season and how theyll hold up in 2018. Squawk on the street will be right back you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Investors rewarding retail for holiday sales. Outpacing the s p 500 over the last three months. Joining us now with his retail outlook for 2018, jan kniffen, good to see you. Happy new year happy new year. Thank you very much was this anything more than a seasonal bump or does it have some legs . Its got legs were going to see a good 2018 we may not see quite as good a 2018, but the economy looks like its going to be just as strong. The question is what about the retail calendar, what about weather . That was ideal this year probably cant be quite that perfect next year. If we see a stronger economy and everybody really gets more money in their paycheck in february, theyll spend it you think the tax law is a big benefit for retail what about Retail Stocks really a big benefit for retail both ways retailers pay about 35 . If theyre successful, theyll pay 21 . If we see a bump in 95 of peoples paychecks in february, theyll spend it it will be good for retail whether it will go online or someplace else or if theyre going to sales, it will be good for sales. Is it amazon world and everybody is chasing or what its an amazon and walmart world. Walmart proved that to us over the past three years and theyre winning. Thats not going to change and theyre going to go out and acquire more things. And so is amazon its going to be a twohorse race that doesnt mean other people cant play, but other people will have a hard time winning. What do you think about this talk that amazon is going to buy target i have been saying amazon is going to buy kohls, but i wouldnt be surprised if gene is right. Target would be a punch in the nose to walmart and say were going to compete heads up. We have the stores, we have online, just like you do i wouldnt find that shocking. I still think kohls is a bigger play because i dont think they need that big a store and i think they would like to play apparel first. They have already won books, electronics. Next, theyll win apparel. They can get to target anyplace along the way if they want to. If its still the chase of amazon and walmart, it would suggest the other retailers getting this nice tax cut, really what they got was more ammunition to throw at this war. Not necessarily falling to the bottom line, right i believe walmart will take all of the benefit out of the tax law and hand it back to the consumer over the next three years. Wow theyll do that because theyll want to use that difference to pound amazon over the head but in the process, they will stomp on a whole lot of other people, and so will amazon, because amazon has to fight back and they have a zero cost to capital and they really dont care if they get a tax break yes, it will be two titans dancing in the ring and everybody elses toes getting smashed. An economist we were talking to says he thinks the Corporate Tax cuts will lower prices for consumers. We talk about, is it going to go to shareholders, to wage workers at the company, and it does flow through to lower prices. I want to ask you about the other end of the spectrum. Whats going on in luxury . Its going crazy. I was in six Louis Vuitton stores before christmas. There was never a line less than six people deep to even talk to a sales clerk. Luxury is really strong. Arent we surprised . Asset prices are great why shouldnt luxury be good maybe the last time i remember seeing a Louis Vuitton store that had anybody in it, it feels like these things are often showpieces and ghost towns. Im shocked to hear what youre describing, but why do you think it is when people can order something online or do anything these days to access luxury are showing up in the malls and waiting in lines for goods i know why they did in this case everything was sold out online you went to the store or didnt get it from the view of the upper end, its not just in store, its online too, but upper end has always been better in store than online, and i dont think thats changing you dont get any discount anyway online on upper end stuff. What about the others, the jj pennies, the macys, the ones who have been hurting fairly significantly . Everybody had a better christmas than we thought they were going to have that includes kohls and macys. That doesnt mean i had positive storetostore comps, but they had better than people thought they were going to have. Everybody did well, everybody did better online than in store. Thats not a great thing because its hard to sell at a profit online from top to bottom, from dollar tree all the way up to nordstroms, people did better. One of your predictions is macys is finally going to unlock this tremendous value they have in real istate they have to get around to it what makes you think theyre going to do it jeff has been there long enough to start the process. Now we have a whole year to get this done before the next christmas selling season i think well see more monetization than they have done and it could be a big one. Thats a big benefit if youre really sitting on 16 billion worth of real estate and why now . Because lord and taylor sold 850 million worth of property that was only worth 650 million. So that tells you theres good value in some of this real estate good to see you thanks for being here, and happy new years. Jan kniffen. Lets send it over to sue herera with a cnbc news update happy new year, sue. Happy new year, everyone. Heres whats happening at this hour as we have been telling you, reports say that protesters in iran attacked police stations, as Security Forces struggle to can contain the challenge to that countrys clerical leadership demonstrations continued for a sixth day, leaving at least 20 people dead. Here at home, u. S. Customs computers are back online after an outage created delays at airports nationwide on one of the busiest travel days of the year that glitch resulted in long lines at immigration checkpoints and Customs Officials say National Security databases were accessible so passengers could still be screened safely Zions Bancorp is raising pay for 40 of its employees because of the tax cut bill. Theyll also play out bonuses to 88 of their employees this year and the Airlines Reported zero accident deaths in passenger jets last year that makes 2017 the safest year on record for air travel it does not include cargo planes and by comparison, there were 16 accidents and 303 deaths in 2016 so 2017 was a remarkable year that way thats the news update this hour mike, ill send it back downtown to you all right, everybody hopes that continues thank you. Absolutely. And when we come back, the big surprises ahead for tech this year. Rbcs mark mahaney is here with his predictions and an hour into the trading session. Lets look at where the markets are set up the dow up just about 100 points s p outperforming the basic major averages, regaining that friday air pocket loss that we had at the close nasdaq still the best, up 1. 14 . Squawk on the street will be right back now for our etf spotlight this morning, as stocks hit new records all year, etfs are record inflows of 456 billion, you have a breakdown of the top performers i do. First of all, the themes that led in 2017, pretty stark. We all know technology was one of the best sectors in the s p, up close to 40 . The etfs reflected that too. Tech is the one everyone would have guested the other is aerospace and defense. Boeing was a very strong theme as well, also up close to 40 , and then housing a narrower sector, but the itb, theyre both etfs that track the Home Building sector and broader housing sectors, all did well. Lets look within tech and see what worked. The short story is almost everything worked within tech. Hard to find a negative area, but the igv, the north America Tech Software etf, heavily rated in some of the broader names like microsoft, like adobe, we have talked about adobe many times, and sales force as well these are the big Software Platform stocks everybody loves. Also semiconductors the Philadelphia Semiconductor etf, soxx, driven by almost all the names there. Naturally, heavily weighted in intel. Texas instruments was a great performance among the old legacy techs, and nvidia had an outsized impact as it soared in market cap this etf did very well despite the tact that qualcomm, which was flat last year, is a heavy weight it shows you how strong things were elsewhere and First Trust Dow jones internet this is first exposure to the internet sector, and amazon was the domnntd factor there as well as facebook. It was a faang plus other of the big internet names i think the big question going into this year, guys, is is tech possibly going to pitch a shutout against the rest of the market again really, as i said, there was not a weak part of tech. Even hardware, hewlettpackard was up more than 40 tech, i think most people think, can still do well, whether it posts the same numbers we just saw, that may be a bit of a stretch tech is kind of eating the rest of the market in a way. Paypal, in the tech etf. Thats amazing about how well housing did. In a year when we were consumed by tech, and the Home Builders were almost as strong as tech. Thats interesting to watch this year perhaps a more interesting story from an economy base is housing. Diana olick has hit on this issue a bunch. They havecost pressures theyr facing too what i also love, you could play anything in tech with a blink or you could go the north american software, the internet, or the we have talked about the chips and semis. I dont know how specific you want to get. You can express any view, nuanced or broad, through efts lets talk more about tech and what to expect in 2018 we have mark mahaney with us from rbc mark, talk a little bit about some of the themes you think are going to be relevant for investors in your space this year and really whether in fact you think it can be such a broad lift or if you have to focus in on specific areas. You definitely have to focus on specific areas. Theres a couple high quality assets we like to refer to them as the pe faangs. Its pretty concentrated there are clearly companies in the large cap, midlarge cap space that have had spotty performances with stocks snap comes to mind, twitter, maybe ebay the good gains will consolidate just to a few. We look forward, the fundamental trends have been almost insanely consistent for some of these names. 31 straight quarters of growth for google i dont think the growth rates change and the multiples havent changed much in the last two years. I think the stocks can still outperform thats not one of our top surprises for the year there are other surprises out there. I confess, i hadnt heard pe faang references priceline and expedia. Does that say you see them doing as well this year . Yeah, i think so. Those have been two phenomenally good stocks over the last three, five, and ten years. Priceline would probably be one of the best performing, one of the top three s p 500 stocks in the last ten years you have good performance due to nice secular growth. You had years and years of20 plus bookings growth but if i get back to the broader sector, the one big change were really focused on to the negative is regulatory risk. That was our top negative surprise for the year, some sort of regulatory action will be taken against either a google, facebook, or amazon, and i think of those three, the first two are probably the most susceptible to that risk what about the chips . Because we talked about the Strong Performance last year, but there are concerns about nvidia and the growth we have seen there among some of the other names. We have the chips, some of the memory names were incredible last year, but what about more of the hardware space . So kelly, im going to be im going to punt on that one. I dont focus on the chips the one hardware area we do focus on is the alexa devices or what we call the voiceactivated internet, google home devices and apple is going to have a home pod out i think that this is a pretty material consumer shift that youll see over the next couple years. I mean, were seeing about 17 of u. S. Households, close to 20 , already have one of these devices in their homes i think this is going to go to 50 within two years i dont know who the winner is right now, poll position goes to amazon with its alexa, but thats the space to watch. Is twitter what do you make of the recent run in the stock . Is it for real well, you called out the stock thats run that we had to sell on, so we have obviously gotten this wrong recently well see. Things are getting less worse at twitter. I think thats true. Valuation implies they do a lot more, a lot better than get less worse. They can recover to doubledigit Revenue Growth thats very hard to do in an ecosystem where most of the ad dollars are going to two names google and facebook. What i hear is advertisers want diversification away from the two names. I dont think thats true. Advertisers want roi if they can get it at snapchat or twitter, great, but they havent been able to prove that. They will continue to accrue to facebook and google, which makes it hard for twitter to sustain a recovery twitter is up 40 in three months and the narrative has been that its actually been on fundamental improvement rather than people piling in for expectations of a transaction. Youre right. Last year, we went through the sale, the sale process that ended up not succeeding. This year, youre right. I think the recent rally in the stock is based on fundamentals and that theyre going to improve and youre going to go from year over year declines in ad revenue youll start eking out growth next year. I think at some point, theres going to be a krecorrection in t stock if the recovery doesnt get to strong double digits. I dont think its going to get there. The path may be up, but sooner or later, if they dont get to the double digit recovery which is what i think the valuation implies, youll see another material correction in the stock. Thats our call. Mark, a lot to watch this year thanks for getting us started on that mark mahaney hanks i want to ask about the chips again. As we go to break, take a look at the dow gains cut in half this morning apple shares still higher by about 1 after the company is offering 29 battery replacements immediately its a month earlier than originally planned and it comes after the admission that ios software may slow down older phones when we come back, is 60 oil here to stay quk t see rt. Ind ou sawonhetrtight after this usaa to me means peace of mind. We had a power outage for five days total. We lost a lot of food. We actually filed a claim with usaa to replace that spoiled food. And we really appreciated that. Were the webber family and we are usaa members for life. But prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. What is one wall street bull calling the biggest risk to the nation this arye find out on tradingnation. Cnbc. Com more squawk on the street coming up. Now lets get up to the cme group in chicago and Rick Santelli with the Santelli Exchange thanks, scott like to welcome my first of the year, happy new year, charles. Aloha how are you . Very good listen, charles, you know, you were one of the first to really beat the drum about supply and demand for stocks with regard to things like buybacks we also have been beating the drums here in chicago about how much influence Central Banks Balance Sheets have had on the markets. Try to give me a glimpse into how you think those variables will affect the stock market in particular and generically all stock markets in 2018. Since 10, Central Banks have increased their Balance Sheets by about 10 trillion to 15 trillion from 5 over that same timeframe, u. S. Companies have shrunk the number of shares outstanding by about 3 trillion from buybacks, netted Share Offerings and cash takeovers of public companies. Over the last eight, nine years, theres been more money chasing fewer shares and the market value of all global stocks is up by 50 trillion to 83 trillion. Surprise surprise. I know. Its an amazing number okay, so now lets take a clinical look at this. If youre at home watching and trying to decide what to do with your portfolio for this new year, do you think things like the tax package signed at the end of last year, will that narrow the spread to reality between equities, for example, and how they perform in 2018 because really, supply demand isnt normally the main fundamental you look at when you decide whether to buy and or hold your stock portfolio. Well, i think you should because all there is in the market are shares of stock and then theres money available to buy the shares. So im 100 bullish right now. And regardless of a tax cut andh tax cut and regardless of anything else, i will stay bullish until the Central Banks stop printing more money than the share growth when they stop printing more money, theres going to be less money chasing more shares. Doesnt matter what the economy, Global Economy, is going to do doesnt matter employment, inflation. All that matters, there will be less money chasing more shares only one thing can happen, and its not good to the people sitting on 50 trillion of stock market appreciation globally all right now, how do we calibrate that . So how susceptible is the price of the dow, the nasdaq, the s p, to subtle changes in flows in other words, do we need to see a lot to see the market reflect that in terms of price finish it up well, until the ecb actually stops buying, until the boj actually stops, remember, they are still, even though they might reduce, which they havent yet, if they do reduce, there will be more new money than new shares, so until the ek we lpri the other way, prices will go up were out of time seems to be a simple investing strategy thank you, charles biedermann. Scott, back to you now over to john fortt with a look at whats coming up on squawk alley. John scott, new year, new money. Whats tech going to do in 2018 . Well talk about the platform companies, internet companies, bitcoin. Thats coming up on squawk alley welcome back to squawk on the street. Im dominic chu. Markets are ringing in the new year in the green with Consumer Discretionary up over a percent. Nordstrom up over a percent this morning, nordstrom upgraded to neutral after a strong positive season and l brands outperforming on new leadership optimism for its victorias secret unit. That does it for us right now. Back to the crew on squawk on the street. Dom, thank you very much. Meanwhile oil kicking off the year with its strongest start since 2014 Jackie Deangelis joins us with more crude is lower on the first day of the trading year, but clinging to the two and a half year high. With all the ups and downs last year, crude did manage to log a 12. 5 gain the question now, of course, are these levels going to hold heres how we get to 60 and why people think we could stay there. First, opec. A Production Cut of close to 2 Million Barrels a day, extending through the end of the year. Second, demand its been stronger than expected and while forecasts arent overly optimistic, analysts are bullish, even more so with the tax plan expected to stimulate the economy. Third, dollar index weaker trading around 91 fourth, political concerns north korea, now iran. Remember, if irans roughly 4 Million Barrels a day came offline, prices would go higher from here. Then the hurricanes, north sea pipeline shutdown, temporary events, but certainly having an impact the only real counterpoint is whats happening at home production of over 9. 7 Million Barrels a day is a recent high for u. S. Producers if that number keeps going up, if opec doesnt carry out cuts as promise, that rebalance could hit a snag shifting gears but staying in the energy complex, net gas prices up a little more. Right now trading up about 1 today. But a 15 move in about a week thats because of the frigid temperatures that are expected to linger, guys, for about a week or so longer. Jackie, dont remind me, dont tell me. I dont want to hear it anymore. I feel like such a wimp. My brother lives in minnesota, deals with it all the time its brutal were getting it here. Thank you very much, jackie see you in a bit when we come back, nasdaq keeps climbing this morning. Will tech in 2018 continue this run . And which companies will lead the way . Well discuss. And getting a quick chk teconhe market theres the dow up a quarter percent, nasdaq up 1. 2 well be right back. Nah. Not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. 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