Transcripts For CNBC Power Lunch 20161213

Welcome, everybody, to power lunch. Were just 98 points away from dow 20,000. It is worth noting all three major indices record highs today. Among the biggest winners, nike, ibm, apple, exxon and microsoft. Tyler . Melissa, im tyler mathisen. Thank you for joining us. Here is what is happening at this hour. Apples new air pod earbuds are now available on online ahead of the holiday rush. They hit the stores next week. Nfib says it is Small Business Sentiment Index jumps to the second highest on record. And 85. 5 of all u. S. Airline flights were on time in the month of october. Who had the best performance . Hawaiian airlines, the most on time arrival. The worst, virgin america. Michelle . Welcome to power lunch. I am michelle carusocabrera. We have a busy two hours ahead. We kick it off with your big market story today. The dow just a stones throw away from hitting 20,000. Bob pisani live at the nyse as we close in on the big 20 k. Bob, first you, the preview. Yes, the important thing is what pushed the dow and all the other major indices to historic highs in the most recent leg of the rally has been a notable rotation. Look at the sectors in the s p 500 in november that were the market leaders. We talked about the financials all throughout the month as well as industrial and material names. Consumer discretionary to a lesser extent. Thats changed in december. Yes, take a look at december. Yes, financials are still up there and doing well. We see Telecom Stocks, real estate stocks, we see utility stocks, we see consumer staples, these were all laggards in november. Theyre coming forward. As a result of that rotation, something falls back, like industrial material name, something comes to take this place. Like consumer staples, for example, you see this in the dow as well. And the dow is also seeing this. So, yes, you got Goldman Sachs and you got jpmorgan all doing really well. That hasnt gone away. But now youve got big cap tech that lags a bit in november, like intel coming to the floor. You got consumer names like walt disney and cocacola that didnt do as well in november. You have Telecom Stocks like verizon that are coming to the floor. Thats why every single day you can see the market moving forward because if something falls back that is a leadership group, something comes in and takes its place. A powerful rally were in the middle of. That was more immediate history of what got us there. Now to dom chu, a look at the stocks that got us here over the last year. If we talk about what bob spoke about, lets look at since the election, that last leg higher is the important part here. And we mentioned the biggest contributors, the biggest percentage gainers so far in the dow since that big election run higher, which is what got us to the election levels, look at caterpillar, bob said the industrials may be falling behind a little bit. Look at the chart, up 15 just since donald trump got elected. Again, a huge move here. And 96, carries a good amount of weight in the Dow Jones Industrial average. Jpmorgan chase, 85 stock, dow is price weighted, higher the stock price, the more impact it has. Jpmorgan, 21 since then. Biggest of them all, Goldman Sachs, dont say it over and over again. Worth pointing out, Goldman Sachs, a 238 stock, has a huge amount of impact on the dow. As for the biggest laggards, so far, the biggest weight, if these stocks can turn positive, maybe doing even better, past 20,000, Procter Gamble down 2 . 84 stock. Biggest drag since the election. Visa shares, off by about 4 , 80 stock. If these guys turn positive, some of these get some momentum going, we could see dow 20 k plus in short order. The nations second Biggest Pension Fund says forget dow 20k. Dow 21k could be around the corner. Chris, welcome to the show. Good to see you in person. Good to see you. Lets be clear, mostly through passive funds or active stakes in those companies. We own the market. 70 of our u. S. Equity exposure is in a passive russell 3,000 fund. These arent active bets, these are the thats the waiting of the largest stocks in the usa. Is your feeling that youre going to remain mostly a passive investor or has time changed and time for stock picking in this market . Sadly times have changed and time for more passive. More passive. It has been a tough year for active managers. Since the election, the value managers have done very, very well. But i think when we go back and look at 2015, most people, especially Retail Investors, will be disappointed with their active manager. Five minutes ago just said hes worried about a blowup in passive in some passive funds, etf, fixed income. Are you worried about that . Etf is all over the map. Youve got two times, three times market exposure. Were in just a straight cap weighted index fund. Those arent going to blow up. Those are the markets. We can do it almost no cost, a fraction of a basis point, we run most of that with an awesome team in house, all of the u. S. Equity is in house and part of the passive you run your own index, your own indexers, you dont ship it out to black rock or wherever. We used to. But now we run it all inhouse. Fractions of a basis point, cheaper than black rock can do it. We can track the market, very tight tracking, we can do smart rebalancing. We own the market. When the market dow 20,000 is off, were moving with the market and not having to take risks on active i look at your top ten exposures, the very top, u. S. Government bonds, 9 . Is that correct . Is that going to get smaller or bigger in the wake of the election. If you think dow 21,000 is around the corner, do you reduce that exposure . We have been. Were a longterm investor, we have been reducing our exposure to fixed income and i would say for most of the Retail Investors out there, they have got to go back and look at their 401 k s and fixed income exposure. Were about 20 in fixed income, reducing that down to 16 and were heading eventually down to probably about 12 . To michelles question, 30 year bull market in Treasury Bonds . Youre acting like it. Yeah, you know, i have to be honest if youre selling im laughing because i said that about three years ago and i was dead wrong. Really early. Thats indistinguishable from being wrong. But i think it is. The fed is tightening barely the long bonds already tightened four times for what the fed will do this year. I dont know if it is officially gone there is a tenyear channel. There is a 20year channel in rate. We havent quite broken out on the up side, but we will. Why do you think the dow is going to 21,000 . I think that were going to have some steady income from u. S. Corporations, they have decent earnings. Things arent going to be robots. Theyre not going to get there overnight. Is it because of the election . No, it is because we believe the usa has a decent economy, not a great, were the best dirty shirt in the country in the world right now. So we think well see some consistent increase. Were not saying, you know, were not timing the market. You know im a 30year investor. How do you build alpha into a portfolio where you say basically i own the market . Where do you get that little increment to perform that will enable you to meet the obligations that you have to your beneficiaries . First private equity. Were going to do it in private markets, private equity and real estate. A little bit out of infrastructure, im looking for more income out of infrastructure. And then it is going to be waiting within u. S. , nonu. S. When you say real estate, do you mean owning buildings or investing in publicly traded real estate corporations or a little of both . I consider reits publicly traded and they are more public stocks than they are real estate. We own buildings, physical buildings, office, retail, industrial, which is one of my favorites. And have done so for years. Most of the gateway cities in the usa are more than fairly priced. New york you do these investments yourself, your view on the economy has not changed one iota based on what has happened in the election, not on the premise that perhaps there will be a Corporate Tax cut coming or a personal tax cut coming. Nothing has changed . To say nothing has changed, we were uncertain coming into the election, and our view is right now we actually dont know a whole heck of a lot. We have a lot of speculation. We havent had Inauguration Day. I said to several people, lets talk after the first 100 days, which right now is may. Youre going to have leaves on the tree, spring, then well have a better idea. The challenge for washington is in my career, washington has not been functional. I know the percentage of individuals that own equities in america is at an all time low. But yet you represent teachers and educators. The russell 3,000, which is your biggest exposure, is up 12 this year. What does that mean for all the public educators out there . How much does a year like this help secure their future . I have a 30year horizon. This is one leg in a marathon, this is a good mile, and a good pace. For all those people who have been saying were in a low Interest Rate environment forever, or a low return environment forever, ive been saying, one or two years, buts talk over a five to tenyear time period. This shows were still seeing compressed returns, but youll have periods like this one year where we might get a double return at equities. Who would have thought. Not me. Thank you. A news alert in the bond market now. 30 year bonds up for auction. Lets check in with Rick Santelli and see how it went. It has been so long since we had a good auction, so stop the presses, we finally have one. 29year, 11month securities, original released auction in september, three years reopening, 3. 152. Thats 12 billion of them. Well below the one issued trade lower yield higher price. We give this one a c plus. This caps off 56 billion in supply, everything was above average. If you look at the bid to cover, 2. 39, well above 2. 28 ten auction average, 63. 9 on indirects. Almost 2 better than ten auction average. And 9. 3 versus 9 on direct. Dealers only take 26. 8 . This was a good one. The juiciest yield. We built in a big concession, and i guess the longer the maturity is given some courage to those investors who are a bit more fearful for 3s and 10s earlier in the week. Tyler and the gang, back to you. Pack Donald Trumps pick f diplomat is not a diplomat, but a dealmaker. Will his strategy of picking people unfamiliar with the job actually get the job done better . Plus, are things at trump tower got a little harder, better, faster, stronger today. Youll understand the reference coming up. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back, everybody. This happened today. Rapper kanye west stopping by trump tower for a meeting with the president elect. John harwood gets to see it all. Hes outside of the tower with the latest on the trump transition. Hi, john. Hi, tyler. We have a wide diversity of activity here at trump tower including which maybes the day more interesting too. Look, well start with bill gates, bill gates is in meeting with donald trump right now. And we did not hear from the transition advisers, exactly what the topics were going to be. But bill gates said hes hoping to take advantage of the wide latitude the president elect has to choose among a wide array of priorities that he has. Here is bill gates with becky quick this morning. Energy and wide range in conversation about the power of innovation. Thank you. Okay. So there you see bill gates speaking as he left trump tower. But heres what he told becky quick about what he intended to focus on with the president elect in that meeting today. I think there is a lot of fascination to see what the new direction will be. Donald trump was elected not so much for specific policies, but because the kind of leadership, you know, those voters wanted. Ha he has a lot of flexibility on which issues he goes after. Thats why i think that a dialogue now, you know, what are the positive things for america that hes thinking and who can help out with that. Now, it tells you something that the meeting with bill gates was the second most important thing that happened here at trump tower today. The most important thing was president elect announced his choice for secretary of state. That is Rex Tillerson, the exxonmobil ceo, somebody who the president elect is praised as a Global Business player, somebody who makes great deals. Theyre concerned in the congress about his ties to russia, especially in light of the russian hacking of the election. So Rex Tillerson may be facing a challenging confirmation fight. Now, the tillerson thing may have been the most important issue that happened at trump tower today, but the most interesting was kanye west, you mentioned, tyler, kanye west, who recently got out of the hospital, went up to meet with donald trump. He came they came down, they talked about life, they have been friends a long time. And who knows maybe ill have to run against kanye west in 2020. John, thank you very much. Lets get back to talking about Rex Tillerson, if hes confirmed, hell face a new set of challenges as he transitions from ceo of exxonmobil to the nations top diplomat. Lets bring in james jeffrey, u. S. Ambassador to iraq in 20102012. Both have long resumes related to supremacy work. Can a man who runs an oil company run the state department . Were going to have to wait and see. One thing that is clear is that the state department is not an oil company. The responsibilities and requirements for success as a diplomat are quite different than one would look at for a top oil official or top business man. So without knowing very much about mr. Tillerson, i think well have to wait and see whether he has the right whether he has the right makeup to be a successful diplomat. You have some doubts. What about you . Well, first, i served as adviser to exxon. Im not completely unbiased. I absolutely think that somebody with this background can be a fine secretary of state. We dont take our secretary of state from the ranks of diplomacy for better or for worse. We take them from the military, from politics, law, business and academia. And the people who do best are the people who have the trust in the president and the president s trust in them, who know the International Scene and who can negotiate. Sorry to interrupt you, but do you know Rex Tillerson, did you meet him . I met him, yes. What do you think of him . I think that he meets all of the qualifications that i laid out to be potentially a very good secretary of state. Is he friends with vladimir putin. How do you describe this relationship, already becoming controversial . Let me put it this way, in much many years in europe, i found many people who identified ideologically, philosophically with russia as an alternative to america. Thats not what youve got with tillerson. What you have is someone who did deals with the russians, just like he did deals in iraq when i was in iraq. And, in fact, u. S. Government wanted exxon and other u. S. Oil companies and other major u. S. Firms to work in russia and to work in iraq and other places as a complement to our diplomacy. Thats not abnormal and thats what oil firms and other firms do. They make deals around the world. Thats what keeps the economy going. How transferrable are the dealmaking skills that mr. Tillerson may have employed as the chairman of a Multinational Oil company with the dealmaking skills that hell have to employ as secretary of state . How did the two correlate and how are they different . Well, i would have to say that i think everybody in washington is either reading or rereading the private empire book that steve cowrote a few years ago, trying to come to some understanding of the answer to that question. It is the character the personality of Rex Tillerson, somebody who is going to be able to make that transition. I would say that the skill set that you require for secretary of state not necessarily what we have seen and what is understood of the corporate personality, the Corporate Culture of exxonmobil. Jim knows him. He knows the knows exxon better than i do. What i would say is that to be a successful secretary of state, you have to have strong listening skills, you have to you have to have a nuanced approach to issues. You have to be able to understand both sides of the question. And frankly speaking, you have to be willing to come to a compromise and not expect that youre going to win every argument that youre going to win every deal. And, im sorry to cut you off, just running out of time, james, back to you, the book that jerry referenced is called private empire. A country unto themselves. Do you believe that running a company like an exxon does in many ways put you at odds with american interests, even if you are an American Company . There is no doubt that firms have their own interests. But when it is the same thing running an army as Dwight Eisenhower did, a different set of skills and different focus than being president of the United States. Colin powell faced the same thing. But absent entire career and diplomacy, the people you get at the head of the state department are always going to come with a different background and a question is always will they be able to translate that background into the background you need for the department of state. Gentlemen, thanks so much for joining us. We appreciate it. Thank you. Were closing in on dow 20,000. At this point, were just about 50 points away. This is my headquarters. This is where i trade and manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. All right, welcome back. Get this, we are only. 6 of 1 , maybe slightly less than that, half a percent, from dow 20,000. The dow is now up 148 points to 19,946. Most dow stocks are hoyig highe you would imagine. Big blue getting bigger. Exxonmobil, the company we talked about, apple and nike, couple of laggards out there. But i think it is fair, why dont we focus on the winners on a day like today. The countdown to the fed is on. Tomorrow it is increasingly likely the Federal Reserve will raise Interest Rates for just the second time in a decade. Could it be the beginning of a more aggressive fed strategy . Plus, it is not a secret that donald trump is not a big fan of janet yellen. We look at who he could replace her with if he chooses to do so. How else do you think he gets around so fast . Take the reins this holiday and get the mercedesbenz youve always wanted during the winter event. Now lease the 2017 gla250 for 329 a month at your local mercedesbenz dealer. We need to be ready for my names Scott Strenfel and r im a meteorologist at pg e. We make sure that our crews as well as our customers are prepared to how weather may impact their energy. So every single day were monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. During storm season we want our customers to be ready and stay safe. Learn how you can be prepared at pge. Com beprepared. Together, were building a better california. Hi, everybody. Im sue herera. Here is your cnbc news update for this hour. Russian Opposition Leader Alexi Navalany announcing his bid to run in the 2018 president ial election. He repeatedly said russian president putin and inner circle are guilty of corruption. He is currently on trial accused of fraud. Russia and iran planning a deal to develop two oil fields in western iran since striking a landmark nuclear deal with world powers, iran has markedly increased crude production. The ieiffel tower is close due to a workers strike over salary and working conditions. It comes as paris is struggling to revive its tourist trade after a string of deadly terrorist attacks. Sports illustrated honored lebron james as the 2016 sports person of the year at a star studded event at the Barclays Center in new york last night. This is the second time in five years that james has been honored. And he joins tiger woods as the only twotime recipient of the award. Thats the news update this hour. Back to you guys. Brian . All right, sue, thank you very much. Stocks as we noted hitting session highs once again. Were just now about 50 points away from dow 20,000. Now about. 3 of 1 . If the buyer keep coming in, it is likely we could faster than the sellers. If there is more buyers than sellers, things could go higher. We could hit 20,000 today. We could hit 20,000 while im standing here. Thats how fast things are moving. It is all about the rotation. Were emphasizing that a lot. Thats really what is going on. Remember consumer staples, nobody cared about them in november. They have been stronger and stronger again today. So your cisco, whole foods, tyson foods, hormel foods, and dow, disney, cocacola, theyre all coming to the floor now in december. This is what i mean by leadership group. At the same time, groups that were strong in november kind of fall back. We talked about industrial materials. Look at what some of the material names have been doing. Theyre falling back. Other groups are really strong in november. Now they stopped going up the last few days. Theyre going nowhere essentially right now. This is what i mean about the leadership. Some infrastructure stocks we have been talking about, eagle materials, wallboards, aecom, these stocks soared in november. Last few days, mostly december, they have stopped going up. So you got consumer staples, utilities, you got real estate stocks, you got some select names that didnt do well like apple. This rally is particularly powerful. Big cap tech names catching up, the day before a lot of the major leaders are meeting with donald trump. Thats right. And, remember, same thing with microsoft, with intel, apple, notable example. All up today. Bob, thank you. Okay. Bob pisani. Small Business Owners feeling good following the election. Kate rogers has more. Main street is experiencing a surge in optimism in the wake of the election of donald trump. New data from the National Federation of National Independent business finds confidence soared thanks to expectations of real sales being an improvement in Small Business owners for Business Conditions post election. The nfib monthly reading hit 98. 4, the rate is above the 42 year average of 98, the second highest reading since 2011. It also the largest month over month increase since the same time period. The nfib responded before and after the election, averaging the response for the final reads. Post election, the number climbed to 102. 4. Eight of the indexes ten components increased this month, overall expectations accounted for 69 . While Donald Trumps specifics on the campaign trail in terps terms of how he would tackle policy, they say those things are responsible for that huge climb. It all matters whether or not he follows through on the campaign promises. We have seepn a spike on Interest Rates. They tend to pay a little higher Interest Rates than average person. One thing i learned, theyre very disconnected from what we see on wall street. While Interest Rates are expected to go up, it does hit them at the end of the day, but not paying as close attention to it. Thats how they gauge whether or not theyre going to borrow. Kate, thank you. Thank you. Kate rogers. Donald trump has been a harsh critic of the fed and janet yellen. Even while he says hes a low Interest Rate kind of guy. It seems unlikely he would reappoint her when her term ends. But who might he consider to replace her . Steve liesman with the results of the cnbc fed survey. Our cnbc shows wall street is looking for a hike tomorrow and higher Interest Rates from the fed in the month ahead. But who do they think will head the fed in the months ahead. Janet yellens term expires in january 2018. And we ask for a trump reappointor, 82 said no, 11 said yes. Who could replace janet yellen . John taylor, the stanford economi economist, the fed can follow in terms of making Interest Rate policy, 38 picked him. Kevin warsh, pretty staunch critic, both guys staufr s stau critics of current policies. Other people named, glen hubbard, jerome powell, richard fisher, cnbc contributor but also fed president , and john allison, outspoken head of bb t who called for abolishing the fed but said he wouldnt mind running it. 46 think that trumps appointees to the fed are likely to support faster rate hikes than the current pace. 5 say have interesting for a fed president for a president to want the Federal Reserve to hike rates faster. Usually they dont. One other thing on the issue of should the fed follow a monetary policy, something that is rejected by the current Federal Reserve. 84 of our respondents say no, they should not, which is something that i think kevin is in favor of. It seems to me the cabinet picks have been very conservative. Really . If he tends to be the same person when the opportunity comes up to replace the Federal Reserve, he would go with somebody more conservative. What is conservative mean in that context . In the world of economics, you dont think there are conservative economists . You mean a person who would want higher Interest Rates, what does that mean to you when you think about conservative monetary policymaking . Thats the question i have. It would be unusual for the president to want to raise rates faster. I think somebody very concerned about the distortionary effects of very low Interest Rates. Well, thats become one of the critiques of, i guess, conservative economics when it comes to fed policy now. Thanks, steve. Stick around. We bring in Ellen Zentner from morgan stanley. We can begin right there or talk about your thoughts on Interest Rates. I assume you think theyre going to raise tomorrow. If so, how many more hikes do you anticipate in 2017 . So, i think were right in there with 98 of investors that think they will raise rates. Out on a limb. Way out there. Way out on a limb. Conservative viewpoint. I do think that expectations that the fed is going to deliver some kind of higher path at this weeks meeting are overblown. Policymakers are the last to take on board fiscal policy assumptions, the slowest to make the changes. Oftentimes and particularly so for academics. They wait until current policy in order to build that na their forecast. Theyre the last to adopt changes. I already see this in my meetings and investors are getting ahead of themselves, expecting the fed to pull in some kind of positive assumptions around physical policy in tomorrows meeting. If you look at the market, the stock market particularly, you say, wow, everybody is really optimistic, everything is great, the fed will be aggressive. Is there a theme where the Federal Reserve is sitting around the table going, trumps bringing in a lot of people, were not sure whats going to happen, we better remain conservative . Mbelieve me, thats not the discussion around the table at this meeting. Prudent monetary policymaking tells you wait until things are moving in congress. And it is okay for the stock market to be optimistic for yields to react in a way they think a better economy means higher Interest Rates. But this is one of those times where we see a disconnect between the market and the fed because the fed makes slow moving decisions and a High Frequency world. If youre a true believer in what is happening in the u. S. Stock market in the policies of an Incoming Trump administration, you are to accept that perhaps in the back half of next year, the fed will be playing catch up in a big way. We believe that they hike rates twice next year and think it is back loaded. But we think a lot of the catchup comes in 18, 19, the catchup is not in 2017. Think about when all this fiscal policy hits. How fast is inflation going to go . For the first time, the fed has a chance at meeting their growth forecast and the path they envision, rather than the perennial terrible move we have gotten in with the fed where they constantly are overly optimistic and revise downward as we go throughout the year. We think now why do you seem comparatively skeptical with the people who are part of the Incoming Administration to think economys baseline growth, if the policies are adopted, can be 3. 5, 4, 5 , maybe even more . Because trump is not a dictator. Now, we could be wrong. Maybe he comes in and he is a dictator and muscles congress to deficit funds every bit of his plan. Even a dictator cannot mandate that people be more productive or work longer hours. Those are the two things that matter most for growth, right . What is interesting is when you hear what the fed says about fiscal stimulus, what theyre looking for are things they said this repeatedly, things that increase the product capacity of the nation. I think the market is looking for pure juice. They just want a sugar high, they want fiscal stimulus no matter what it is. The fed is trying to caution two things. One, you can help the economy, you want to do so, they think more in terms of automatic stabilizers. They dont think this economy needs a major jolt of stimulus. What it needs is a jolt of assistance to become more productive. The other, as we move into the First Quarter of the year, markets are impatient. Theyre like a 2yearold. Gimme, gimme, gimme, now, now, now. We have this so how quickly can congress at least move the receiptor nick that direction. 56 of our respondents believe the market is too optistic about what theyre planning for policies. If you think about the logistics of doing all of this stuff, i dont know that the congress has bandwidth for more than one or two things. To think theyre going to do a major tax overhaul, repeal obama care, rehaul the epa, i dont think so. I think that some of it can happen, can happen overtime. But i think i would set my sights on one of two things. Okay. I think of all things that business is looking for, it is that. That would help profit. You could get more profits per unit of growth. 1. 5 on the tenyear yield, 3 . So our pro month view on the tenyear is 1. 5 . Within that, by the Third Quarter of next year, a lot of the tax policies are hitting the economy, we see 1. 75 on the tenyear. Get to 1. 75 before it comes back down to 1. 5. We have to leave it there. Thank you very much. Appreciate you being with us. Stocks are at session highs. Lets check in with dom chu. Casino stocks are higher. Mgm and wynn all up, 2 to 3 so far. Japan as casino bill passed the upper house of parliament today. This bill would allow high stakes gambling for First Time Ever in japan. The market is estimated up to 40 billion a year. Thats according to research firm. Wynn shares, a bast aftoost aft Company Announced they will pay as part of a partnership for retail offerings. On deck, opportunity just for you, the big wall street calls that you need to hear about today. It is called street talk. It is next. As we head out, dom says, stocks are at session highs. Dow,. 3 away from dow 20,000. Will it hit it . I dont know. T for everyone gar. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Time for street talk. Cocacola, the new incoming ceo is the right person for the turn around, according to this analyst. But investors are migrating out of staples. Thats not the move we are seeing in todays session. Coke, already a laggard versus the market pre and post election, one of the worst performing stock on the dow. Deutsche bank also cutting Procter Gamble. A lot of things you can put in analyst notes. Were facing a backlash against soda. The second stock is called core sight realty. Data center citigroup adding it to the small cap focus list. Buy rated. Like another boost to the stock. The analyst says the sharp post election rotation created an opportunity to invest in suckler growth trends. In other words, if youre an Interest Rate sensitive stock, youve been beaten down. And citigroup says the Overall Health of the data center is still healthy. Cvs, upgraded after natio gh viacom. Remember the reports yesterday that verizon might be interested, lifted the stock. They said, not so fast. About 10, 11 more upside with that target. This market not terrible given the run we had. Molina health care is the small cap call of the day. Medicaid provider. Stock beaten up. Down 8 over the past year. Basically enough is enough. They upgrade molina to a buy from a neutral. Boost their target to 65 from 59. Say their earning issues should be behind the company. 20 upside. Repealing obamacare, we were told yesterday by many people on the show is job number one when Congress Returns in january. Pay attention to that. Look at that pop on the election day. Because of the threat of the repealed obamacare. That is an overhang here. Another health care issue. Outrage over the surge in the price of drugs likely to remain in the headlines. Next, the ceo of glako smithkline will way in on the issue and the race to develop new vaccines. Tracking the rally, dow 50 to tf the information disclosed. Its not a subject matter waiver. The rule 502 generally was really driven by the scale of ediscovery and the problem of reviewing thousands, tens of thousands, sometimes hundreds of thousands of documents and then you find you missed a privileged one in there and it was completely unmanageable frankly for all parties. I think that was the heart of rule 502. In our context, 502a provides valuable protections. Its important to understand and the Advisory Committee knows to make clear the exception, if the waivers intentional which would typically occur in an internal investigation, here are the interview memoranda. Does the disclosed and undisclosed information concern the same subject matter . Certainly theres going to be internal memoranda between me and my associates and perhaps with the client discussing weighing the benefits of disclosing, those would be on the subject matter. The third criteria in fairness to be considered together, the Advisory Committee notes made clear whats intended is to do away with subject matter waiver. That the important consideration is, its unfair if its misleading. So if i turn over an interview memorial d memorandum from an interview with rick that said x does not happen, but i have an interview with leo that says x sure as hell did happen, that would under the rule would be misleading and misleading attempt. So in fairness, they ought to be considered together. Typically and traditionally under rule 502, its intended to be a waiver of only what you welcome back. If you look at what is happening with the dow now, 30 components were evenly split. Now a lot more green than we do red. The biggest gainer so far is intel on the chip side of things. We know semiconductors have been a large part of that momentum story. At least over the course of the past few weeks. Intel spoken about on todays halftime report. One of the biggest laggards over the past year. Boeing one of the biggest point contributors to the downside with 3m shares as well. Overall, you got to say that it has been about 24 trading days since the election. The dow posted a negative return in four of those days. So the momentum certainly with the market now and certainly with the financial side of things. Well keep an eye on jpmorgan and Goldman Sachs. A perfect storm in a way. Not only do we have the prospect of lower tax rates, we got Interest Rates ridesing, financials look more attractive. Oil, opec did something amazing, said they would come together, well see if they do, oil is up. The energy names are done. We have five dow components up more than double digits in the last 30 days. Five of them in 30 days. I think a lot of that has to do with the cabinet picks pro business, pro business, pro business, every time. Deregulatory. Over and over. The real kicker, the participation of technology, which we have seen largely sitting out this post election rally, particularly in the names like facebook, amazon, as well as netflix. Those are big gainers. I want to say ironically, but ahead of that big meeting, with trump tomorrow. With all the chief executives, at trump tower. Of course, the tech makes for a great story line. There has been no doubt the f. A. N. G. Stocks, facebook, amazon, those particular stocks have done at least a little bit of a lagging job so far since the election. Overall, technology, the financial is part of that story. Conventional wisdom is the technology also plays a role in that. If these guys start to see some life, that could be a huge push for the dow. Guys like cisco and intel, big dividend stocks. This is amazing. Ive been tough on this company. Saying as a journalist, i dont necessarily understand their strategy. However, if i ask you right now, ill put all my cohosts on the spot, facebook, apple, amazon, google, or ibm, who has the best year . Ibm. Correct. Ibm. Did i set it up wrong . No, i think we did it last week. You know whats really the day after the holiday party. Ibm is up 23 this year. It was the ive been critical, i dont know about their strategy, investors are clearly on board, and beaten apple and amazon you know what is sad. Twitter cant get a break. The president elect uses twitter all the time and it is a laggard that just doesnt what would twitter be without trump . True. Just a twit. Yeah. Thanks, dom. Were moments away from what were calling the 2 00 p. M. Lift. Stock moving much higher about this time for the past four trading sessions. Will it happen again today . Will we achieve dow at 20,000 . Well find out next. With welcome, everybody, second hour of power lunch. Glad youre with us. Im tyler mathisen, melissa is here, michelle is here, brian is here. It could be a historic day in market history. In the homestretch now as we move toward 20,000. Will we get there today . Who knows. Over the past few trading sessions we have seen stocks get a bump in the 2 00 p. M. Hour. Hold on. Stocks near session highs. Three major averages hitting record highs yet again. Look at these staggering stats. The dow surging well over 1500 points. Just since the election. Little more than a month ago. Energy, technology, consumer discretionary, those are the leading sectors. Michelle. All this as we countdown to the big fed decision on Interest Rates. Rate hike widely expected. Well know this time tomorrow what they do. Stock on the move now, Patterson Uti down right now. 77 Energy Shares soaring 70 . Alphabet is up 2 , google units striking a deal to put servers in cuba to increase the speed there. The wait is finally over. Air pod Wireless Earbuds have, headphone, they go on sale, this follows a twomonth delay. To bob pisani on the floor of the New York Stock Exchange for more on this rally. Important thing is this rotation we keep talking about. About banks, industrials, materials. Now in december, were seeing other sectors come to the floor. Look at consumer staples. Cocacola, walt disney, whole foods, tyson, food companies. Theyre starting to move a little bit here. At the same time, remember the big tech stocks, the new tech stocks, if you want, your facebook, google, they had a tougher time in november. Theyre also starting to come back. Even the Old School Tech stocks, intel and microsoft, old school, qualcomm, apple, cisco, they had a tough time in november. These have big market caps, bigger than real estate stocks. Utilities that are also strong. This is really now powering the market for some of the tech stocks were seeing. At the same time, remember the industrials, materials, what happened to them, theyre not doing quite as well. I noted how the stocks stopped going up. The infrastructure stocks that might benefit, they have been starting to fall back, Companies Like aecom, jac, american eagle, also on the weak side. Rotation, very, very powerful. We could hit 20,000, 20,000 points today. Very easily. Back to you. Thank you very much, bob. President elect trump announcing he intends to nominate Rex Tillerson as secretary of state. And also former Texas Governor rick perry to be secretary of energy. What kind of Energy Policies can we expect . Here is what rick perry said during the speech last year. It would be wise for north america to be energy secure, canada, the United States and mexico. And that region has more known Energy Reserves than russia and saudi arabia combined. Lets develop those so we dont have to rely upon venezuela or some mullah halfway around the world for our energy supplies. Microsoft founder bill gates is forming a new Investment Fund for clean energy projects. He thinks they could be he thinks they could be good bets for the government as well. This administration, like the good deal, and i think i and others will go to them and say that maintaining american leadership, making sure that the products that will be in demand around the world, that are lower cost, that provide energy security, making sure that our labs and our private Companies Generating jobs are out in front on that makes energy, R D Investments good to do. It can help the economy like shale gas has. Opec secretarygeneral also speaking with cnbc earlier. And as he tends to do, dodges the question about Oil Prices Going forward. What we are committed on is restoration of stability on sustainable basis that will ensure continued and Sustainable Investment in a predictable manner. Look at oil this year, up more than 40 . What is ahead for next year . Lets bring in jeff curry at Goldman Sachs, and power lunch exclusive. Ill be sarcastic here, right price for continued investment, they all say that. What is the right price for everyone to make a little bit of money, but also continue to invest and not bring down prices by overproducing, is there a perfect price . If you look at what we have learned over the last year, we have some idea where that cost curve actually sits. And that cost curve is somewhere in the 50 to 55 a barrel range. We were trading below that. We had too big of a surplus, higher inventory levels weighing on the market. Now that were beginning to see a deficit in sight, markets are trading back up close to that. 55 is your target for next year . Thats the target for the first half of next year. We think youll see a shale reply response later on next year which pushes back toward 50. Oil man, secretary of state, if he gets confirmed, to me it seems no brainer, that means more oil in the world. Is that too easy a path . Thats too easy a path. I think the expertise he brings is in the art of negotiation within many of these different regions around the world. You think about what exxon really does, it negotiates the ability to produce oil in different regions around the world. If he believes that energy, security, and ive heard him use this phrase, not energy independence, is extremely important as ceo, hell bring that viewpoint to being secretary of state. Thats going to be about making sure there is more Oil Available in the world, right . I think under the mandate of secretary of state, the focus will be more on the u. S. Than on exxon. Energy security is one of these issues that many people focus on in terms of the international negotiations. I would say the focus is going to be much more broader bases than energy. What about an oil state governor and reality tv dancing with the stars participant as the energy secretary. What does that mean . You heard him say we need to develop all of these vast resources here in north america so that we are energy secure. I would argue that the focal point will end up being shale gas as opposed to oil. And one of the key reasons we would argue that is that if you see the Trump Administration back away from climate agreement, back away from renewables, from a cost perspective, natural gas wins across all other fuels. And because if you think about what the shale revolution really generated, it generated an enormous reserve of gas. Does that mean gas prices go down . That means gas prices go down . Struggled to go up. You say that is there doing to be an emphasis on trying to produce gas, i would say yes. Prices stay low. They struggle to go higher just because there is so much supply of gas. This is outside what you do. Do we need an Energy Department . I ask that because rickrunning president , that is one of the departments he would eliminate. He didnt say that. Does the Energy Department really drive what comes out of the balance . Im not going to focus on the Energy Department. Im going to focus on energy policy. Do we need to have Strong Energy policy and the answer is yes. Because if you actually have a commitment behind the ability to produce gas, then youll see the investment on the downstream or the supply or the demand side to actually consume the gas. The problem is without that commitment behind shale gas, we dont get the commitment for the consumption. Well let you go with this, youre in the just an oil and gas guy, youre a commodities guy. You brought interesting ideas, almost everything is up across the board. Where is Goldman Sachs help our viewers make some money. What is the best commodity investment idea right now . Right now we like the broader index. The gnci commodity index. We recently recommended back in november a long position in the gnci enhanced index. For our viewers, what is in that . What is the makeup of that . Energy, which includes oil and gas, then you have your industrial metals, and then you have agriculture, Precious Metals and then livestock. A mix of all of the commodities. Towards oil, though. It is production weighted in terms of the global value. Youre bullish across the board then. It is important to ask why do we get bullish and why do we argue for an opec production . Kind of the same story. It really is where we are in the business cycle, were entering the second half of the business cycle. You look at the discussion of whether to raise rates, the u. S. Is approaching full employment or capacity, when you go to the second half of the business cycle, the output gap turns positive. The key is that that is a buy signal for commodities. Commodities outperform all other Asset Classes in that environment. The key so why that is the case is that the level of demand exceeds the level of supply. Were beginning to see that happen across the commodity markets. Thank you. Thank you, jeff. Thank you. Lets go to meg tirrell. Were here at the opening of the new vaccine center. Thank you for joining us. My pleasure. Gsk had a presence in vaccines in america. We had manufacturing presence for a long time. Were a pig suppl big supplier. Marketplace. What were opening here is the third of our three Global Research centers and we did it here because it is the epicenter of the best minds in america who work on vaccines. The nih, sca, all this area is the epicenter of great Vaccine Research thinking. Around this area, you can collaborate with Government Agencies on some things you start focusing on, emerging Global Health crisis. Involved in ebola, in zika. How do we get ahead of the next one before it comes upon us . We deployed first vaccine. What were looking to do is really a twin track approach. Commercial, Vaccine Research as we could do elsewhere. Part of this facility will be dedicated to working on bio research. That should lead to a deeper relationship with nih and it would mean we can take great science, great ideas from that basic Research Arena and more quickly test and scale up. What does that mean . More reliably respond to crises. We tried to learn a lot from the stresses and strains of the ebola crisis and need to do things differently. Being here in washington gives us a good segue in politics. President elect trump saying to time magazine, he doesnt like what happens with drug prices, hell bring drug prices down. As the ceo of one of the biggest drugmakers in the world, how do you respond when you hear Something Like that . I think ive been very open in lots of conversations, you and i had along with otherthingn price. I think in medical price generally in the u. S. , i think it is clear that there is widespread concern about the longterm sustainability of the system as it currently works. And i think there is a need for more transparency and a need for all of the various stake holders to start coming together, to really start to think about how we modernize and change the way all health care has been tried and paid for, including pharmaceuticals, to make this a much better longterm prospect. What we all want, Better Health care for ourselves, our kids, grandparents, thats what we got to do. Gsk, we tried to really see that change happening in the acts of what were doing. The last six major drugs we launched here, we launched prices at or below the technology that were aiming to replace. What were seeing is tremendous response in terms of volume and demand. I think there is absolutely solutions we can be following here, it is all about bringing together the key stake holders and the government, and the private sector, to really start to rethink this model. We got to get it right, it is crucial we get good value for money for consumers of health care. If we end up with one or the other, nobody is going to be happy. Not easy and going to require great collaborative approach. Well leave it there. Thanks so much. I want to take a check on the yield of the ten year note around 2. 5 . Remember yesterdays close, mondays close was record high. Rates on the rise, conventional wisdom might say steer clear from dividend stocks. Some picks will pay out and pay off. Good thing for biotechs, gilead, endo and amgen among the best. Your path to retirement may not always be clear. But at t. Rowe price, we can help guide your retirement savings. So wherever your Retirement Journey takes you, we can help you reach your goals. Call us or your advisor t. Rowe price. Invest with confidence. Welcome back. Stocks had a great run this year. Many expecting a rate hike tomorrow, where is the best place to find yield and growth . Our next guest has impressive dividends no matter what rate environment were in. Lets bring in mark subtleman. I want to start off with the consolation brand. It has a 1 yield. Correct . It has been doing not well since the it is down since the election. Has not participated in the rally because of the fear of mexico, the border being shut off, exposure to mexican beer. Thats why we like it. Thats one of our newest holdings. Down 10 after the election, down 15 to the low, like you said, the fear being a 35 tax on beer or imports from mexico. The likelihood of tax on beer that much is very, very low. That would be the first time in hundreds of years it would be like that. Mass deportations, 65 of the operating income comes from beer. 45 of beer drinkers are considered to be i h eed to be. Last week we have data that shows their beer brand up 21 in the last four weeks. Thats not down. Sales are up 21 . Sales are up 21 in a 12 week period. Thats post election. Thats accelerating. Before that, it was up 18 . Were not too worried. We think this is a great opportunity to run the stock. People should be drinking more, not less. Easy to celebrate or nurse the wounds, whatever. Winwin. Plenty of deportations of hispanics over the last eight years. This is not a completely new phenomenon. We like the company. Not a big yield. It is raising its dividend. As the earnings in Free Cash Flow grow, youre going to inflation protect your dividend, investors will be able to inflation protect it. The typical bond proxy stocks will underperform. Amgen, we almost never hear from them, the stock is down 4 this year. Kind of a quiet giant based in los angeles. Highest of the yield on the names you brought in for us today. What makes amgen so attractive . This stock is very, very inexpensi inexpensive, 11 times earnings, zero debt on the balance sheet. This could benefit from bringing money in from overseas, you have that element too. 2. 8 yield, over 20 , we dont think there is a lot of downside left in the stock. We think 12 to 18 , 12 to 18 months from now, youll have a stock that is thats a stock we also added to recently in our rising dividend fund. Starbucks, new management, this is viewed as a seamless transition. The company missed targets. It hasnt achieved yet its longer term u. S. Stores sales target. Looking for opportunity in this market, we added that stock within the last quarter or so too. Thats another recent one. Thats another company that generates lots of cash, very dedicated to raising that dividend. There is a that happens before the election with consumer spending. So we think same store sale numbers will start increasing. I think avoid stocks, because they tend to sell off. Why are these going to be immune from that . Thats the key question. I think thats what were trying to get across. Bond proxies are probably not going to perform well going forward. Utilities, consumer staples, leading up to this period we had pretty much any price would be paid for those stocks. 3 earnings growth, 25 time earnings. Thats not a long term sustainable. Your previous guest showed 20, 30 year decline in Interest Rates, we do think there is a secular shift. And the way that to play that is not through the bond proxies which are overvalued, but go for the yields that are growing dramatically and inflation sector. Why do you seem to put such a premium on rising dividends as opposed to absolute value of the dividend. What i was mentioning about. As bond yields increase, the competition for that dollar is go to be less attractive for those bond proxy stocks. What you want to do is were now in a stock will raise its dividends. Absolutely. Going to increase the cash flow. More income to you. With the fiscal stimulus, increase the cash flow, that will allow them to increase the dividend. Names i had on the list, 25 increases in the dividend. Thats what i noticed. We dont think it is trade. It is a secular shift in the next couple of years. Thank you, mark. Coming up, a porch pyre rir poses as a pizza purveyor. You did that well. Thank you. Pick some peppers . He got caught on camera. There he is. Well tell you more about that. An Investment Club trying to figure out how to get their piece of the trump rally. Contessa brewer is live. Ill see how many cs i can work into this one. This Investment Club says it is harder than you might think to get a piece of the action, theyre trying to game where Donald Trumps position will be, whether they changed from his campaign trail rhetoric and the one stock theyre now ready to buy, but are they late to the party . I have it all for you right aof this break on cnbc. Everyone wants a piece of the trump rally. All trying to figure out what the president will do and how they can make money off of it. Contessa brewer is in warner robins, georgia, where she sat in with the Investment Club. Youre also going to explain that Stealth Fighter behind you. Yeah. Isnt it awesome . This is at city hall. They have a fighter jet at city hall. Pretty great. This is a place that is really focused on Robins Air Force base and the Investment Club that started 20 years ago was an off shoot, still going strong. It has more than a quarter Million Dollar portfolio shared among the 11 members of the Investment Club. After a december meeting, they hammered out a plan, factoring in the Trump Administrations priority. So they had hedged their bets in the campaign figuring that Hillary Clinton would Cap Health Care and drug prices. They sold their holdings in gilead. But now donald trump is banging the drum with high drug costs. So pharma is out. Banks and oil and gas are in. Were searching what industries there are, influenced by position, Current Administration has. Theyll fall out of favor. They say you should buy tend to be out of favor because theyre cheaper. And here where the air force base is the Economic Life force, the Investment Club has new concerns about defense spending given trumps recent tweets, challenging boeing and lockheed on the high cost of new planes. Im surprised because comments that he made during the campaign, im going to build the defense industry, im going to really drive it up, were going to have 100 shift and now some of the comments hes making youre concerned. The group here says their success depends on a longterm strategy. Theyre up 23 this year. And theyre sitting on 22 cash. They say the rally is making it hard for them to find good buys. The research topic, last stocks, they agreed to buy some facebook, why theyre waiting so long to get into this game, they say because their Club Guidelines demand five years of Stock Performance to study before acquiring. Theyre very 23 this year so far. That is pretty good. My port foale yes is not it is really it is really good. And they say they are complete they know theyre missing ipos, some of the big startup companies, but they say this is a longterm strategy. So really, they say who is going to be in the white house, theyre going to take it into consideration. Theyre looking at this as a longterm hopefully the fiveyear Stock Performance isnt all of the Stock Performance. Got to do me a favor, can you turn around and say, talk to me, goose. Contessa, thank you very much. Donald trump is promising to cut taxes. Now facing opposition from both parties. Will any reform get passed . Larry kudlow there in the administration the last time we got it passed will join us. We get the final trades out of oil when power lunch returns. Well, if you want to sing out, sing out and if you want to be free, be free cause theres a million things to be you know that there are and if you want to be me, be me and if you want to be you, be you cause theres a million things to do you know that there are hello, everybody. Im sue herera. Here is your cnbc news update at this hour. The Obama Administration is ending some armed sales to saudi arabia over concerns about the killing of civilians in yemen by a saudi led coalition. The sales being canceled involve precision guided munitions. Microsoft cofounder and philanthropist bill gates immedia meeting with donald trump at trump tower. We had a good conversation about innovation, how it can help in health, education, impact the foreign aid and energy and wide ranging conversation about the power of innovation. A handwritten and hand illustrated volume of stories given by jk rowling to the editor who launched her career sold at auction for about 468,000. Soth bees sold one of the seven original copies of the tales of beeter the bard that she created to mark publication of the final harry potter novel in 2007. Back to you guys. Thank you very much, sue. The dow creeping closer to 20,000, topping 19,900 for the first time today. The oil market is closing for the day. Crude ending up flat. Top economists and Money Managers and the policies. Steve liesman has the results of our cnbc fed survey. A little background, this group was positive on Donald Trumps impact on the economy before the election. Less positive about the effect on stocks. They had that wrong. Now we have to take all the policies, what you know about his policies and what do you think the effect will be on employment. Increased somewhat over 50 . Nearly 60 . Stocks somewhat as well. You see that already. Overall growth getting a little warmer now. Also, increasing inflation, increasing deficits, you see they think it will increase deficits a lot. And increasing bond yields. We asked for the views on individual policies, and you can see there is some changes, very positive in general. 76 like the individual tax cuts out of the 46 who responded to the survey. 89 , they love deregulation, they really, really like business tax cuts. What they dont like is on my Left Shoulder here. They dont like trade and trade policies at all. I want to show you, we asked about this issue about putting tariffs on companies that send jobs overseas. What we did is we sent a contingent of our staff to go put dpra fegraffiti on the cont here, he cant oppose them, 27 dont know. We asked what if he did. Another paint job, 85 say that means lower growth for the economy, 9 believe in what ross and others have said, actually increased growth. Couple of comments we got, lou green, trade policy will be a key aspect of trumpomics. Over at the National Retail federation, trumps opposition and suggested tariffs on imports could drive up the price of goods retailers rely on. Well, president elect trump may already be seeing opposition to his tax reform plan. Democrat and republicans. Mitch mcconnell warning yesterday that any tax cut must be offset to ensure the u. S. Debt does not get bigger. Yesterday, we spoke with senator orrin hatch. We discussed whether trump can get his plans approved. Took him three years in 86 and a lot less complex than it is right now. So i think we can do it in a year. But it depends on the president , and i think youll have an active president , as you can see. And it depends on democrats and republicans working together. I think ive proven over the last two years we can work together. Get it done and how fast. Joining us to discuss the tax plans and the latest news is larry kudlow, senior cnbc contributor and informal adviser to president elect trump. What do you think, you heard all the discussions now about by the way, were not even to Inauguration Day but everybody is debating whether tax reform can get done quickly and what it will look like. What hatch said is positive. Revenue neutrality has always been a goal. The house bill is revenue neutral. I know that it is not yet revenue neutral, theyre moving in that direction. A lot of details have to be put out. Im very, very optimistic about it. It is a question of timing and i hope they go for tax reform right away. Tell us about this. I want to show you video. Eric schmidt, havana, two days ago, to sign a deal to get some google servers placed in cuba. Tomorrow, hell be meeting with president elect donald trump as are a lot of the Silicon Valley ceos who are very antitrump with the exception, of course, of peter till. What do you think is going to happen at that meeting tomorrow . Like when he called in the journalists to yell at them or some kind of truce, embrace . Whats the diplomatic term, fair, balanced discussion. Frank discussion. Yeah, a frank discussion, a frank sharing of views. I think thats what theyre going to have. Look, those guys, they may not have been for mr. Trump during the campaign, okay, fine. However, i think theyre very much in favor of his tax reform, very much in favor. And many of them have said so, even though they may not have backed him in the final vote. So i dont see why they cant work together. Look, mr. Trump is an innovator, hes an entrepreneur, hes giving business tremendous new incentives to make both short and longterm investments. I think thats progrowth, what those guys want. Larry, talk to me about the partnership that needs to take place to get tax reform through. You remember 86 and there really was a partnership, bill bradley, jack kemp, tip oneill. Who were the democratic partners going to be here or are we in such a different sort of universe in terms of political cooperation that that is unlikely were unlikely to see that. Who could be the bill bradley here. Great question. And things are very acrimonious or they have been prior to mr. Trumps election. Thats an important question. Look, i dont know, tyler. I would suggest, moderate democrats, very much in favor of Business Tax Reform, and other tax cuts, senator manchin of West Virginia would be another one. Senator hyeitkamp of north dakoa would be one. I think senator cardin would be open to it. There is a lot of good potential there. There may be tradeoffs. You know how these things work. I think that Business Tax Reform is extremely popular. And i personally wouldnt mind seeing them go out republicans in the white house, go right after that. Because i think thats the guts of the deal. But my book, jfk, the reagan revolution was all bipartisanship. And i think that tradition lapsed a bit. That doesnt mean it cant come back. Mr. Trump is a former democrat, as you know, by the way, so am i, so is ronald reagan. I think the art of the deal plays right in here. Well see if mr. Trump can make deals. Did you see the editorial, getting critical of the Banking Industry that suddenly doesnt mind dodd frank so much anymore . Regulatory capture. What do you think actually happens to financial reform . I dont know. There is going to be some legislation, whether it ends dodd frank or amends dodd frank, i dont know. One sort of framework that im using is i think there is bipartisan support for higher Capital Requirements and much lower leverage ratios. Okay. I think Capital Requirements, a lot of people think should go all the way to 15 . In exchange for less regulation. Thats correct. And less regulation in particular would be aimed at the middle size Community Local banks, in particular on that. There is other stuff that going to be up in the air. The volcker rule and what not. Leverage was one of the huge causes of the financial crash. And inadequate capital, another large cause for safety purposes. Nobody wants to go through too big to fail again. I dont know where it is going to end, but i know there are going to be changes. Larry, good to see you. The income hitting record highs, not all time highs, and inflation adjusted, thats around 7500. Trailing behind the other indexes, recent rally in technology, also keep going. Trading nation is next. You might have heard about this dow 20,000 thing. Right now, were just about 80 points away. Momentum slowed down a little over an hour left in trading. Will we hit it . Power lunch will be right back. At cognizant, were helping todays leading manufacturers make things that think and do, automatically. Imagine that. A world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready. Because were helping leading Companies Lead with digital. A porch pirate posing as a pizza porter. The man walks up to the door with his pizza, rings the bell, no one answers. He grabs the package off the porch and gets back into his car. Neighbors now say they had seen the man in the area, but they didnt question him because he looked confident. Like he belonged. He had a pizza. He had a pizza. There he is. There he is again. Watch out for that man. Indianapolis. So he stole the pizza or stuff on the porch. A package. I see. The pizza is a prop. It is a prop. The pizza is a prop. Pepperoni pizza. Like a magician, your hand by the way, can i just address america, we saw the little nose of that plane going out behind Contessa Brewer and i said f16. Ive never gotten more tweets, f15 apparently. Im a fool. Just waiting for you to correct that. Im just going to quit, you know, definitely not a Stealth Fighter. Thats what i said. I was trying to i want to apologize to the entire universe. F15. Eagle. Time for trading nation. We dont need the sound effects. Sincere apology given. Traders trade better together. After a month of underperformance, the nasdaq doing pretty well. Where has technology been prior to recently and do you expect this tech run to continue merely because it is basically the only sector behind utilities that hasnt done well . Well, i think it is a twopronged situation we have here. One part of it is fundamental, a part of it is technical. On the fundamental side, it was interesting. Right after the election, barons ran an article, Technology Week section, and just talked about how no matter what happens with trump and what he might do, negative for the tech area, cant do anything to touch Cloud Computing. What did they highlight . Microsoft, google, and, of course, amazon big leaders in that area. As we got past the election, people thought that would be something that takes over the stock a lot higher. On the technical side, we also had the xlk, the Short Interest and the xlk hit an all time high. Not only were they short going into the election, they shorted more after the election. Thats taken all the boats higher because it has been a fairly broadbased rally. We have ibm hitting highs for the year. So as that short selling subsides, i think what is going to become more of a stock pickers market, in the technology sector, and people want to focus on those who have the exposure in the Cloud Computing area. Dennis, your review on technology, little recent run we had. In the triple q, we have seen about 2 billion of call buying go through the pipes today. I called up a friend of mine who runs a fund in california, involved in that call buying and asked him what was his motive, and he said that you saw a lot of people underweight tech heavy or sorry, underweight and long tech heavy, f. A. N. G. Stocks into the election. Then violently left the sector. Kind of had pause post the election. Now that were seeing this more of a rotation today, people are moving back into those tech heavy stocks. Inexpensive stocks, they make up 45 of the triple q. So thats where were seeing the buying coming from a structure point of view. In the options market, over to the other technical aspects of the market. All right, well leave it there. Matt and dennis, thank you. If youre interested to see more of this, go to tradingnation. Cnbc. Com, two daily segments every day. Shares of solar stock down 40 this year. Some concerned that the Trump Administration might mean bad thing for clean energy. Well speak with a man joining bill gates new Investment Fund. Very famous venture capital. Well keep a close on the dow. Dont go anywhere. Overbought and oversold indicators such as momentum oscillators are generally used differently depending on whether the stock is range bound or transent. Look to buy a range bound market when it falls into oversold territory. And look to sell when the oscillator rises in overbought territory and then drops below it. Every great startup begins with a simple idea. But with growth comes complexity. Thats why so many innovators are on the ibm cloud. Like refinery 29, with nearly a billion views a year. Or runkeeper, a training app used by over 50 million runners. Or Game Developers whose popularity depends on launching new updates fast. Helping to keep a companys success uncomplicated thats what the ibm cloud is built for. Billionaire bill gates discussed his brand new billion Dollar Energy fund which aims to make clean emissions, clean Energy Cheaper than dirty energy like coal or gasoline. The fund is backed by some of the most richest entrepreneurs. Venture capitalist is on the team and joins us from palo alto. Welcome. Good to have you with us. Great to be here. Is it as simple as saying there are forms of energy that are simply dirty and others that are simply clean . Absolutely we need clean energy. Low carbon emissions. And so this fund will do what exactly and why do you participate in it . I think the need for a fund that takes high risk, high technological risk with break through technologies and takes a long term view of returns is a great Economic Opportunity there. Do you think in our life times and i have no idea how old you are, i am in my early 60s, that we will get to a point where Renewable Energy in the United States will be used more than fossil fuels . I believe we can get there if we try hard enough and if we invest in the right technologies and take the right risks. The ideas fuelled by technological ideas can achieve a lot as we have seen with examples like tesla. But at what cost . Thus far when we have seen alternative energy used its tended to drive up electricity cost for homeowners. Its mandated into use by law and leads to higher prices for individuals. Will it be cost competitive someday . I believe we can have technologies unsubsidized. We need to encourage them to get started because fossil energy has lauds of subsidies. We have spent 7 trillion just patrolling sea lanes. We have lots of other subsidy tax structures like submarket leases for fossil energy. If you create a level playing field, absolutely. What do you think of Rex Tillerson as potential secretary of state . I think he understands what kind of risk is about. Climate change is different than climate risk. He understands that risk needs insurance. We agree we need insurance. Willing to pay a higher Insurance Premium than he was. It is a matter of how do we manage the risk of Climate Change and the consequences there and more importantly, does it create great economic opportunities. I do believe it will create great opportunities if you are patient and take high technological risks. What is the single best Clean Energy Investment right now based on kilowatt hour . There is tesla. Its an economic decision but electric cars. There are things like food restrictions. It dramatically reduces. Clean energy or Clean Technologies is a very broad term designed to reduce carbon emissions, the coalition will invest in things that can reduce carbon by half a giga ton or more. Did the fund come together after the election or prior to the election when donald trump was a presumptive nominee . Im wondering what the politics back drop is behind the fund. There is a guy who challenged epa regulations heading the epa. We have a Texas Governor who is going to be d. O. E. Secretary. When you take a change in four years or eight years and who knows who will be in power 16 years from now. You take the longview and also independent of just u. S. Policy. Its a global problem and we look at the global market. Its a 6 trillion energy market. Thank you for being with us. We appreciate it. Thank you. Power lunch is back in two minutes. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. Check please. 83 1 2 points away from dow 20,000. Participation of technology is a headline. We are so close to dow 20,000. And it is the cnbc holiday party. Tyler will take his shirt off. Im going to do that anyway. Make sure you watch tomorrow for the fed decision on Interest Rates. Im going to twirl my shirt tomorrow for that fed meeting. Closing bell right now. I will have what theyre having. And Merry Christmas everybody. Welcome to closing bell. Im kelly evans at the New York Stock Exchange. And im bill griffith. Is today the day . Does the dow hit 20,000 . Up 117 points closing in on the big round number. Today the dow is under performing the s p and especially the techheavy