Transcripts For CNBC Squawk Alley 20170106

Living good morning, welcome to squawk alley. Mike santelli is here with me, jon fortts at ces. Kayla will join us in a moment. Here, Brooklyn Dwyer and wells fargo investment institutes head of global Asset Allocation strategy, tracy mcmillan. Good morning to all of you. Before we get started, in about ten minutes, a first on cnbc interview with intels Brian Krzanich live from ces. You do not want to miss that. First up, our top story, donald trump expected to meet with some top intelligence officials at trump tower today in a little less than 90 minutes. It comes after a series of tweets from the president elect targeting yet another automaker. Our john harwood is live outside trump tower with that. Good morning, john. Reporter carl, fascinating mix of issues that president elect donald trump has put on the table or has on the table today. First of all, you mentioned that tweet which came last night against toyota, suggesting that theres no way they should build that plant in mexico. They should build it in the United States or be subject to a big, punitive border tax. Now, toyota has responded by saying that plant does not involve diminishing employment in the United States. So well see whether or not there are any consequences from that. The president elect also tweeted this morning about arnold schwarzenegger, the successor to him on the apprentice, which hes still executive producer of, saying that schwarzeneggers ratings have been poor compared to his ratings machine when he was hosting the show. In addition to going after schwarzenegger, whos responded, by the way, by saying he hopes much on the job of being president as much as he did on his apprentice ratings. He is now meeting with the editors of vanity fair and other conde nast publications. Hes feuded with vanity fair in the past, but the big business of the day is the meeting with top intelligence officials, john brennan, cia director, admiral mike rogers, the head of the nsa, james comey, head of the fbi, and james clapper, the director of national intelligence, who testified yesterday at the Senate Armed Services Committee Hearing chaired by john mccain and indicated that he did not appreciate the way that donald trump has diminished the work of the Intelligence Community in identifying russia as the source of that election hack. Heres james clapper. I think there is an important distinction here between healthy skepticism, which policymakers to include policymaker number one should always have for intelligence, but i think theres a difference between skepticism and disparagement. Reporter now, i think the Intelligence Communitys hope, being that theyre going to begin working with the president elect in two weeks time when hes inaugurated, is that he will emerge from that meeting accepting their conclusion without diminishing his election victory. You know, he tweeted this morning that he won because of the passion of his supporters. And a lot of people think the reason he hasnt accepted the conclusions about russia is he thinks that would delegitimize his victory. John mccain tried to separate those two issues at the hearing yesterday. Well see if donald trump manages to do that today. Do not know how long that meeting is going to last. Ive asked transition officials, have not heard back, or whether or not the president elect will come before cameras afterwards and advise of his reaction. Well certainly be watching to see if he comes to the camera or to his phone, john, which has been his preferred method of communication in recent days. Reporter thats right. John harwood outside trump tower. Talking about some of this. Weve gotten tweets on intelligence, tweets about arnold, tweets about mexico, nothing, though, specific on taxes, and that is the one thing the market is really trying to get clarity on, right . Yeah. They need a lot of clarity. Theres a lot of, you know, Unanswered Questions, a lot of what are your Unanswered Questions . Well, you know, how this protectionisttype policy is going to work. Weve seen the tweets for toyota in terms of trying to get u. S. Corporations or even Foreign Corporations operating in the touz do more in the u. S. What does that really mean in terms of effective tax rates and how corporations can shift their policy . And thats not really clear right now. Too many loose ends. If you put it all together, between what he has said is his intent and then also some of the tax plans that have been drawn up about corporate taxes, about really incentivizing Capital Investment here, it seems to spell, if it all happens, something of perhaps a highpressure, investmentled stage of this economic recovery when we already have full employment as we saw today with the jobs numbers, or near full employment. Does it mean inflation flexes in this economy . Credential thats the momentum now. All of the tax policy that is being suggested or talked about, both from House Republicans as well as trump certainly implies some sort of higher prices. So, will that feed through into the consumer and how do corporations deal with that type of balance . In the end, whether it be toyota, whoever, they still need to sell more stuff, so theyve got to figure out a creative way to do that. Tracy, were going to start getting earnings. Its going to come slowly next week and then quickly after that. One question is whether companies are going to comment on 17 Business Conditions anywhere near what sentiment is hoping it will be, right . Right, exactly. So, we expect the administration to go for a couple of really quick wins, one with tax policy probably in the form of bringing repatriating assets back to the u. S. And another quick win we might see from them is the appeal of the aca and then some repeal of some other regulatory options that are out there right now. Now, we think thats going to be very complex, so that will probably take some time. And theres the potential that investors could be underwhelmed by the changes that theyre expecting. Yeah, theres well, you can be underwhelmed by size or timing, right . Or composition. Theres a gap right now. Exactly. Between expectations being built up right now and that delivery. And we dont know. Theres a lot of trading days between now and when the delivery comes. So shortterm wins is key to keep the momentum going. Exactly. Tracie, if you look back at a year ago, we obviously dont have oil crashing right now, but when companies were getting set to report fourthquarter numbers last january, the strong dollar was a big area of focus. You did have a lot of focus on perhaps the possibility that the economy was decelerating. Do you see any echoes right now on the environment . So, what we see in the environment today is a very different picture. Instead of the fed coming in saying that theyre going to raise rates four times the expectation in the markets themselves is for a two to threetime increase this year. So that is a very different picture than what we saw last year, where the market kind of pulled the fed in to a one rate increase in 2016. This year were almost seeing the markets leave the fed to that two to threetime increase this year. So that is, again, kind of a very different picture in this quarter than what we saw last quarter. Bricklin, your base case is two hikes in 2016 . With a bias for more. Thats right. What do you nee to see for that number to go to three or four . That gap we talked about earlier needs to be filled with a lot of good news. We need investment to really happen. We need to see things really starting to build momentum. Weve seen the shift in expectations from businesses, and weve seen that in just about every survey right now, which is that expectations have been dramatically improved. Weve got to see that followthrough. Weve got to see investment plans shifting. And for that to happen, we probably need a bit more clarity on the tax front. I assume the minutes from earlier this week dont suggest the fed has any more clarity on this than we do, right . Unsurprisingly, no. Yeah. Yeah, and i guess the other question is here, the s p 500 is made up of companies that have been forced to be global, i mean, in large measure. So, now when you have china saying, look, were going to look closely at companies doing business over here, is that where you would place the Downside Risk . Yeah, theres a lot of external Downside Risks. You know, this kind of disconnect between expectations. We had the jobs report this morning on our trading floor. We were talking about, you know, what if we see a really weak number, you know . Will that really kind of discount expectations for near term right now . And then we need to see that followthrough happen much later, but well deal with that when we start to see that. I think thats exactly right. Nearterm expectations, disappointment. External front, you know, do we see any kind of trade tweet that kind of ruffles the feathers again or Something Like that. A lot of scope for disappointment. Hypersensitivity to any response from the president elect on social media. Tracie, bricklin, thank you guys. Its going to be a fascinating year. When we come back, a first on cnbc interview with the ceo of intel live at ces. Then, why Donald Trumps pick for defense secretary reportedly resigning from one of Silicon Valleys most controversial Corporate Boards. Later on, why wecodes kara swisher is calling on Silicon Valley to join the debate over cybersecurity, when squawk alley comes right back. Announcer post 9 is sponsored by fidelity investments. Innovative ideas for serious investors. All right, lets get over now to jon fortt at ces in las vegas sitting down with a special guest. Jon . Reporter thank you. Im joined by Brian Krzanich, the ceo of intel. Were here in the intel booth at ces. Thanks for being with us first on cnbc. Its my pleasure. Reporter i want to talk jobs. We got the jobs report out today. Int intels been in the process of streamlining, restructured, i think targeting 12,000 job reductions by mid2017. Are you looking to add also . Because theres i lot of focus on perhaps upward pressure in wages. If that happens, its going to come from Companies Like yours. Sure, you bet. There was a portion of this that was reduction and there was a portion that was about restructuring how our workforce looked as we moved from a pcfocused company to focused around data center and iot and things like Virtual Reality. And so, there was absolutely some hiring involved in that, too. Reporter speaking of Virtual Reality, you had a keynote here at ces that involved vr headsets and barf bags. Youve got a headset here, which is better than having a barf bag. Yes. Reporter and its a visceral experience. Tell us about the technology thats in this headset and when were going to see Something Like it on the market. Sure, you bet. So, first, it was a great experience. And nobody had to use their barf bag, but we had it there to just kind of show or remind them just how real the experience can be in Virtual Reality. Whats unique about this headset is all the compute is inside here, so you dont have to be tethered to a pc or anything like that. And then it has two real sense cameras here right in the front that actually map the environment and allow you to walk around. And so, you know, if you want to walk around and play a game, you know, you wont run into your couch or your coffee table, but you can also map the room and turn those things into part of the game. Thats what we kind of demonstrated was we turned them into bunkers and turned our living room into a spaceship fighting aliens. And so, it can really transform your play area. When were thinking about longterm revenue and margin for intel, is it more about the chips that are going to be inside these headsets, or is it more about the data centers that might be feeding data through into experiences like this . You bet. So, its all about data. You know, the thing thats explosive about whether its Virtual Reality or whether its autonomous driving, is the massive amounts of data, right . The kind of data that you know, i always talk about the data centers of today are built on humans, the data you and i put together. The data center of tomorrow will be built on the machines. Autonomous cars will put out Something Like 4,000 times the amount of data the average human does in a day. These headsets about 2,000 times. So its quite a bit more data. So, its the data center thats really powering intel of the future. Reporter now, i know youre transitioning intel away from reliance on the pc market, but there were some hopeful signs in the pc market in q4, at least from gartners numbers and things said from hp. What is your take on the health not just in the u. S. In developing markets but in emerging markets . Sure. The way i look at intel is its not that were giving up the pc. We want to strengthen the other areas so were a more balanced company. But were excited about the pc. We think this is some of the best products in the history of the pc. We have a product coming out. I demonstrated our 10nanometer cannonlike product at our press conference. And our oem partners are really innovating. So were excited about the pc for 2017. We think the Innovative Products and the really thin and light and great battery life are going to drive people back to the pc. Reporter now, youre in that meeting at trump tower last month with the president elect. Yep. Reporter i was shouting at you from the rope line but couldnt get you to stop. I saw you, though. Reporter see, dont tell me that you saw me and didnt stop. I want to ask, now that youve had some time to chew on what was said in that meeting and the implications from intel, when you look at even relations with a country like china thats become important for intel from an intellectual property perspective from a partnership perspective, what do you think about the dangers of this trade tensions rising . Are there opportunities you see . You know, i guess i look at all of this as opportunity. One thing i always remind people is intel is what i consider one of the Great American manufacturers. Depending on the technology, anywhere from 60 to 75 of our chips are built in the u. S. Our major manufacturing is in the u. S. , yet we export 75 of our product. Were the second largest exporter in the United States. So we consider ourselves kind of the role model manufacturer. You produce hightech and ship it to the world. Chinas an important market for us. Its the Fastest Growing market we have. And so, you know, for us its constantly balancing between, you know, great relationships with china and growing there but also the manufacturing presence here in the u. S. Reporter so, given that, what do you want to see policywise thats going to help intel to do more exporting to the rest of the world . And this was part of that discussion at the trump tower. The real answer is not a trade war, is not restrictions. Its really about making the u. S. More competitive, right . Lowering the tax rates, making it easier for people to do manufacturing here. You know, all of that discussion, thats what will bring manufacturing back to the u. S. And or make it stronger in the u. S. Reporter besides a lower tax rate, whats going to help you add jobs faster particularly that you have here in the u. S. . Well, its exactly that. Its the tax rate. We have the 35 tax rate. Its r d tax credits, because its really r d that fuels those factories. And then its, you know, making sure we dont do undue regulations. Reporter you mentioned cannon link and the 10nanometer process. Youre going to have more efficient chips that are also more capable. The pace of moores law still strong . Still going to, you know, be going for a decade or more . Yeah, i guarantee moores law will go way beyond my career. If you take a look at the history of moores law, and i went back and studied it a little bit over the last couple years its averaged anywhere from two to three years. Most of our time, its two years, but going back earlier, it was three years. Were going to end up about 2 1 2 years it looks like this time. So i still think it will be in that two to threeyear range, but i see 10 nanometers, 7 nanometers, beyond that 5 nanometers. Thats out there a ways, so moores laws alive and well. Reporter and intels ticktock pace on changing the technology and adding design featur features, will that get back on the cadence weve been familiar with . Yeah, and during this time period, weve learned that theres more opportunity inside the technology and the products. Weve added a third product to our product line. So, used to be, you know, two products reached technology node. Weve added a third. That third is generating like cavylink, performance improvements in both battery life and just processing, equal to a moores law, but were doing it through tweaks and architectural changes in the silicon itself. Reporter now, you were telling me before we were talking in this interview that you did more than 15,000 steps yesterday. Yes, 4 1 2 miles, 15,000 steps. Reporter what have you seen here at ces thats maybe surprised you in terms of what people are doing with the technology that might influence what intel starts designing for the future . Well, i saw three trends here. Ai. Ai is everywhere, right . In all the things that you have that are connected to the cloud, that cloud is going to become smarter and have Artificial Intelligence that helps feed back. So, whether youre making a wearable or a Virtual Reality headset, youve got to think about ai now. Virtual reality is another one. And what weve really focused on is content is coming. You know, hardware always leads content. Contents coming. Great contents coming. And then the last thing ive seen is how far weve come in roughly a year or so with Autonomous Cars. I went on a sixmile drive with our delphi partner its intel, delphi and mobile eye six miles on the road, including freeway, all handsoff. Wow. Did it yesterday morning. So, Autonomous Cars are coming. Reporter speaking of great content, thanks for joining us here on cnbc from inside the intel booth, intels Brian Krzanich. Thank you, jon. Back to you in new york. Thank you so much, jon fortt. A great conversation with intel. As we head to break, tech stocks have been leading the market throughout the morning and leading the nasdaq composite to yet another record high, currently sitting at 5,510. Still to come, why James Mad Dog Mattis is reportedly moving on from one of the most controversial boards in Silicon Valley. Later, a cnbc exclusive with chicago Federal Reserve president charles evans. Hes sitting down with Steve Liesman at 3 10 p. M. On the east coast, right here on cnbc. Retired marine corps general and Donald Trumps pick to lead the department of defense James Mad Dog Mattis is resigning from a Corporate Board according to the wall street journal. The move effectively distances mattis from the controversial bloodtesting startup ahead of his confirmation hearings scheduled to begin on thursday of next week. Mattis, however, will remain on the board of general dynamics, which is a large defense contractor with some 15 billion in revenue tied to u. S. Government contracts. It does make you wonder, guys, what will happen to that board seat, whether they havent found a replacement for him, whether theyre waiting it see how the confirmation hearing goes, any number of reasons why. But you are seeing plans for tiller season to cash out of exxon, building the groundwork for the confirmation hearings to go well. They are, although interesting. It gives a glimpse of whats interested to be kind of a toxic relationship in the incoming. Theranos, nobody wants to be associated with it. Perhaps the confirmation is a good cover to resign from that board. You would think so. All right, we are counting down to the close in the uk and across europe. Lets get to seema mody back at hq. Good morning. Hi, mike. European stocks are trading in a tight range following the release of the u. S. Jobs report, but theyre still poised to finish the week in the green. Lets look at the rebound in european banks, playing a Critical Role in this resurgence that weve seen in european equities over the week. The sector now back to its levels of the year ago, up more than 22 over the past three months. Of course, a sharp contrast to what we saw last year when negative Interest Rates and bad debt resulted in a sharp decline in many of the big financials in europe. Take a look at currencies. The euro on track to post a weekly gain against the u. S. Dollar. Strategists surveyed by reuters say theres a 50 chance the euro will reach or fall below parity with the greenback this year, this on expectations that president elect Donald Trumps planned tax cuts will force Interest Rates higher. The euro trading at 1. 05 against the u. S. Dollar. Now, the weaker currency is one of the reasons ubs is slapping lufthansa with a accelerasell r saying the airline continues to struggle with rising fuel costs, uncertain demand and increasing competition. Shares down 3 . Speaking of losers, french Drugmaker Sanofi also among todays losers. A u. S. Federal judge ruling sanofi and regeneron refringed the patent they hold for a cholesterol drug. Sanofi ending lower by 2 . Back to you. Seema mody, thank you. Were about an hour away from trumps highly anticipated intelligence briefing at trump tower. Well talk to re codes kara swisher on what Tech Companies may do, when squawk alley comes back. First, two retail names moving in opposite directions. Jcpenney, the latest Department Chain to have lower sales but gap to the upside. Dows up 40 and now just 60 points away from dow 20,000. Back in a minute. Good morning, everyone. Im sue herera. Here is your cnbc news update at this hour. Elizabeth warren announcing via email this morning that she is running for reelection in 2018, seeking a second term as senator from massachusetts. She said voters didnt send her to washington to roll over and play dead to donald trump and his team of billionaires and bigots. Those are her words. The whale that killed a trainer at Seaworld Orlando in 2010 has died. Tilikum was also profiled in a documentary that helped sway popular opinion against keeping killer whales in captivity at seaworld parks. He was estimated to have been 36 years old. No cause of death yet. According to adobe digital insights, 2016 online holiday sales topped last years tally by 11 at nearly 92 billion. Mobile sales those that were made on smartphones and tablets rose 23 to more than 28 billion. And having a mean boss could take a toll on your health and your reputation. A new study shows workers who felt bullied or intimidated by their bosses were unhappy, more depressed and unproductive. They were also more likely to behave badly themselves. Thats the cnbc news update this hour. Back downtown to squawk alley. Carl, back to you. Sue, thank you very much. President elect donald trump set to meet with top u. S. Intelligence officials next hour for a classified briefing on russias alleged hacking and influence on the u. S. President ial election. Trump has routinely questioned the validity of this intelligence, even telling the New York Times this morning, china, relatively recently, hacked 20 million government names. How come nobody even talks about that . This is a political witch hunt. Joining us to talk more about this, the executive editor of re code. Kara swisher joins us having written about this lately. Good morning to you. Good morning. Your point is that with so much doubt being sewn about these findings, its incumbent upon the Tech Community to weigh in with whatever they know, right . Can you expand on that . Yeah. All im saying is i think they should support full investigations of all of these things, which john mccain and Lindsey Graham are trying to do. These are republicans trying to do this. I dont think that we shouldnt think that theres not a lot of political fraughtness around this, but that, you know, Tech Companies especially have been hard hit by hacking for years, and any support they can give to these investigations to find out exactly whats going on would be great. And i think they have a lot of expertise in the area. They should support, you know, and publicly support full and, you know, fulsome findings around this. And i am not quite clear why protect trump wants to not do that. I think thats the issue i have. And if he wants to not do that or wants to only investigate one or the other, i think we should investigate the entire thing, because it really impacts the Tech Community here. It impacts our economy. It impacts their ability to do business, and its a concern to everybody in the United States. What kind of disclosure, kara, do you think would be hurt, though . Because weve had the founders of crowdstrike, which were hired by the dnc back in may when they first realized that there was some rogue actor in the system, and they will say loud and clear on the record that it is russia, that it has the marcations of russian code. How much will it take to convince people who are skeptical . Well, i think there are some statements, just general its the same thing ive been talking about. Its general statements of principle. And in terms of what can be done and to lend its expertise to, or support to someone like john mccain, whos trying to get to the bottom of this. I think whats interesting about that quote from trump today is nobody said we shouldnt investigate china, too. Im not sure why thats just being thrown out there to cast doubt and aspersions. Nobody said we shouldnt be looking into all the hacking by china, which is extensive, and i think we know that, but this is a really important issue, and its not a political witch hunt. Its what happened here . Lets figure out what happened, how to stop it and what to do about it going forward, because its only going to get worse as we move forward. And i cant imagine anybody, whether republican or democrat, wants to be manipulated by foreign governments in this manner. And i think theres nothing wrong with finding out, and i think the Tech Community could help do that and lend full support and weight, whether via lobbying, via public statements, via behindthescenes help, so that we can get to the bottom of this. And as difficult as it is, and what the problem is, is saying its confusing doesnt mean anything. What we should try to do is try to take that confusion and make it into some sort of clarity, if we can. Of course, weve seen companies who have been targeted by trump even in the past 48 hours. Do you get the sense that Silicon Valley firms have the nerve to step into this debate, knowing what could come back at them on twitter . Well, thats a selfinterest thing. I think this is in the interests of our whole country. I think thats what they were talking about. Theres nothing wrong with skepticism about intelligence information. Of course we should have skepticism. Thats the whole point of the checkandbalance system. I think skepticism is different than just casting aspersions with no evidence and making it look confusing. Obviously, we should look into this, no matter how it comes out. And so, i think they have to make a Decision Just the way apple did on encryption, that this is a bigger issue than just their companies. Apple has gone on the line, went far out on a limb on that issue, because they felt it was an important, critical issue. The same thing about foreign hacking. Tech companies not just Tech Companies, every company should be worried about this issue and every citizen in the United States should be worried about this issue. And again, the more we can figure out what happened, we can figure out whats going to happen and what we can do about it going forward. And i dont know why thats an unreasonable thing to want to do, and that president elect trump has made it unreasonable to look into things is i find it unusual. Kara i dont know. As youre talking, were watching pictures of elon musk walking into trump tower. What do you think he and the president elect could be discussing . Although we should point out, the pool is reporting hes there to meet steve bannon. Okay. Just to be clear. What do you think is on the agenda . Do you think it would be economic . Do you think it would be Something Else . I think probably Climate Change with him. I think thats a big issue for elon. I think probably, if i had to guess and im just guessing i know he wants the paris accords to be supported. So i think hes probably making his arguments on that issue. Obviously, energyefficient vehicles is important to him. He may be talking about that. Maybe space travel. He has a lot of issues and things that are important to him that would be something he would want to advocate for. And hes a very forceful and convincing advocate around the issues that he has. And so, he has any number of issues he could talk about, but im guessing its Climate Change. He also is a domestic manufacturer of cars. I dont know if thats going to come into play exactly. Yeah, yeah, yeah. Good for him they cant attack him, right . Yeah, yeah, hes got a lot of things that are very he has a lot of Important Companies that are all in these areas that trump talks about. So im sure they have plenty to talk about, all kinds of things, including with steve bannon and others. Kara, i just wonder, you know, 14 days ahead of the inauguration if you have put into your head expectations for what the first 100 days will look like, whether thats from a policy standpoint, from an optics standpoint, from the standpoint of west coast reaction from Tech Companies, any of that. What do you think the storys going to be in the First Quarter . I think everyones looking at the repatriation of funds. I think thats if you want to go into just purely economic issues, i think thats going to be an interesting thing. Really . And then what companies do with those funds. Yeah, i think thats an i mean, i had all those reasons. I wrote the article about the reasons tech likes trump. And obviously, trump people retweeted or put on facebook, which was interesting. But i think one of them is the repatriation of funds. The second one is how much regulatory relief these companies are going to get. A lot of them feel like theres too much regulation. A lot of businesses feel that. So, i think thats one issue. I think that probably those two issues the most. And immigration. Whats going to be the stance on immigration. And especially immigration as it relates to visas for foreign engineers and things like that. So i think those are three major issues. Yeah. Some commentary this morning is focused on china and whether or not once we start getting earnings coming in, whether or not Companies Comment on fears of chinas retribution to anything trumprelated, whether thats targeting u. S. Companies, buying fewer products, more antitrust investigations. Is that valid . Sure. Yeah, absolutely. I mean, a company like apple, thats one of its key business areas. China is an important market for apple, for example. Some of the others say facebook, they dont operate there. But i think for a company like apple and many other technology companies, obviously very bad relations with china would not be good for a lot of companies. You know, well see where that goes. Theres nothing wrong, again, with pushing back on china. A lot of u. S. Companies have trouble operating there. Its just how you push back and what kind of dialogue you have. And if you just want to fight with them, i dont know how thats going to get anybody what they want. But whatever. Im not a political negotiator, so i dont know what the best tactics are, but it surely will hurt if u. S. And china have a lot more acrimony, some companies here. Your piece on recode this week is a good read. Everybody should take a look at it. Kara, thanks again. Thank you. Kara swisher from recode joining us from out west. Coming up, Richard Gelfond talks to us from post 9 about china to expansion. Still watching the 20k level now 55 points away. Dont go anywhere. Bri coming up today on the halftime report, is the momentum for facebook, amazon, netflix and google back . All four f. A. N. G. Stocks up big. Plus, investor andrew left known for his short suggestions gets long for a key name in cybersecurity. Find out why he is doing that. And a call on commodities that will simply blow you away. Then, two notes set off debates today on disney and mcdonalds. Well discuss and debate those as well. Halftime report top of the hour. Mike, well see you in a little bit. Thanks, scott. Youll be talking about the big tech stocks. They are some of the leaders today. Lets look at what the index is doing. The dow got within 44 points of the 20,000 mark, trading just a couple points below that right now. It has not been the typical reflation trump trades that have been working as is tech. It is industries. Also, the 10year treasury yield is higher, helping the financials. Pretty much as close as weve gotten. The s p 500 came within a point of its alltime intraday high as well. So a quiet rally building throughout the morning. Havent had a new high on the s p since december 14. Its been about four weeks its taken a breather. Well see if we get anywhere here. Goldman helping the dow. Lets get to the cme and Rick Santelli and get the santelli exchange. Rick . Thank you, carl. You know, when i was doing some earlier hits, when Interest Rates and the dollar started to turn and you could look at a twoday chart of 10s, there are some important aspects there, i made a comment, how long will it be before the dow moves into positive territory . And indeed, it did, and it has, and its actually powered significantly through there given the size of the ranges outside of the last few days of volatility to the downside. The number this morning, well, as many have said it was about wages, but theres a lot of issues as we get to year end. I want to focus more on other things. That twoday chart that you were looking at. What i find interesting is that yesterday and today virtually both stopped in the low 2. 30s. I always say intraday is important, but its the closes. But it gives you important information, because normally, intraday swings are reactionary movements to today, of course, it was data. Maybe china leftovers from some of their overnight rate volatility. But indeed that tells you where closes become important. The other chart is, of course, the dollar index chart. And the reason thats important is because it really is linked at the hip. Now were going to go to something broader. Were going to do a channel check, but not like the business newsy channel check. A 30year channel on 10year note yields. And im going to go through this quickly because it isnt that tough. This is what a squish charlotte going back to basically 93 looks like for 10year note rates. Here we are right now, of course. We have turned. Since this is a big chart and the scales are big, its just important to know that 2. 60ish is the high yield close. But this is what i want to point to. The reason channels are nice is the reason theyre following it right . But somethings happened thats different. We hit the channel, we hit the top, make a new low. We hit the channel, hit the top, make a new low. We hit the channel top, we make a new low. But look it. Do we hit the channel here . No, we do not. Do we hit here . No, we do not. As a matter of fact, everything after this area is where all the gold is hidden, because once this thing failed and it bottom a double bottom, all bets are off. So, basically, what i would think should happen is, is that the next time we go through the channel is the important issue. If we back away, its just going to turn into a consolidation trade. Remember, this is a longterm chart so, as time moves on, months and months, just by the very nature of the channel coming down, we will eventually test it. So, whats the point of all this . The point is, given that weve actually broken the pattern, i think its going to be a volatile year for treasuries, especially if youre looking for a big 3 move. But should we get it and close above it on a daily and weekly basis, that is the most explosive setup for 2017 that you need to monitor. Kayla, back to you. All right. Thanks so much. Well be watching it, rick. Still to come on squawk alley, imac ceo rich gelfond joins us at post 9. Look at stocks. We came within 44 points of dow 20,000. Were getting close again. Were awaiting trumps intelligence briefing as well, and well have more squawk alley in a moment. Were opening more Xfinity Stores closer to you. Visit us today and learn how to get the most out of all your services, like xfinity x1. Well put the power in your hands, so you can see how x1 is changing the way you experience tv with features like voice remote, making it easier and more fun than ever. Theres more in store than you imagine. Visit an xfinity store today and see for yourself. Xfinity, the future of awesome. The first alltime intraday high since december 13. The dow at session highs, 19,961. 39 points away from dow 20 k. Still have been looking for 1 intraday moves in the s p. Tough to come by, especially on the downside. Yes. Havent seen up with of those, i think its one of the longest stretch necessary 20 years you havent had a 1 downside move. It seems like you needed bond yields to resume their climb in order to get stocks unlocked again from this rang. At least for the moment it looks luke they likes the jobs number, not too strong. Upgrades of disney and the banks working again. Well see if its just a matter of flirting again with that 20,000 mark. Its been hovering for four weeks now. Although it was a as joe described it, ham on rye jobs report we got this morning. 156,000 jobs added. But the best wage growth since 2009. Thats something that people are hanging their hat on. Although now people are saying with the employment picture where it is, if we did get those 25 million jobs out of the trump wants to add, unemployment would go negative. Thats right. So figuring out where to put those is need a lot of immigration in that case. Really full employment. So were doing to keep our eye on all these levels. Dont forget next week, earnings, Bank Earnings a week from today including jpmorgan, pnc and others. Alstt an n m, s p hit that all time intraday high a few moments ago. The dow session highs, 39 points away from dow 20k. Were going to keep on eye on that. Kayla . Earlier this morning elon musk met with the Trump Transition Team continuing the president elects teams to. I max announced a new deal with regal today to expand the u. S. Footprint while remaining optimistic on china which is a key moving market, especially for i max. Rich, its good too we you. Great to see you, too. You guys have a few screens in china. You worrisome of this rhetoric makes it tougher to do business there for you . I dont really. We have over 400 screens now open in china which is actually larger than north america in terms of how many screens we have. Here, we are Hong Kong Company there, so we spun out our China Business into another company about over a year ago. So we are a Chinese Company actually. And the Parent Company is a canadian company. I think even if the worst case happens it not going to effect us in a material way but also our business is pretty good over there. I think the movie industry is unlikely to be an industry thats impacted by a lot of the talk. So if the Chinese Government opened investigations into taxes or antitrust as now is reported that they would if this talk continues to be tough on the president elect, you dont think that would have any material effect on your business . I dont think so. Because, again, were not a u. S. Based company. Were a chinesebased company. The reason we did it is we want to be part of the landscape of china, our investors are big chinese mutual funds, state owned companies. We try to insulate ourselves in advance from what could go wrong. And in fact i think were pretty good shape. While youre talking, rich, we want to get to eamon javers. President elect is tweeting, within the hour before his scheduled to go into the highlevel intelligence briefing in which u. S. Intelligence officials will give him their report on russian hacking in the 2016 election and explain to him exactly how they came to the conclusions they came to here. We heard a lot about that yesterday on capitol hill. Now donald trump is tweeting about that. He says, aim asking the chairs of the house and Senate Committees to investigate top secret intelligence shared with nbc prior to me seeing it and to refresh you, let me bring you the story on nbc news said that they sell bracelebrated when tr. They reported a senior u. S. Intelligence official with direct knowledge confirmed to nbc news the report on russian hacking delivered to president obama thursday says that u. S. Intelligence picked up senior russian officials celebrating Donald Trumps win. Now, donald trump saying he wants to know how nbc news got that information and he is asking the chairs of the house and Senate Committees presumably here, hes talking about the intelligence committees but not specified in this particular tweet, carl. Well wait and see whether the president elect tweets more before that meeting which is scheduled at 12 30 eastern time at trump tower. An awful lot in the air today. Thank you for the update on that tweet as we now see the dow just about 31 points away from 20k. Rich, you make the point you guys are essentially in chinas view Hong Kong Company. Do you feel though for truly u. S. Based companies if, in fact, the chinese start to bristle here . I think its way too early to say, carl. I think, you know, president elect trump is he said things and then he backed off them. And i think chinas such a big part of the Global Growth story and the u. S. Makes a lot of money in china. I think its complicated. You did mention the movie business doesnt seem to be in the crosshairs, a big export of the states. What about china rationing more of the u. S. Movies that get to go over there . One of the things you look at is the chinese Film Industry than a very bright spot of growth for the chinese. And they went from like 2,000 screens to 41,000 screens. Theyre now the largest film market largest number of screens in the world. And thats going to real engine of domestic growth there. As you know they started to look at domestic consumption rather than export. So i just think why would they punish their own real uk succes. They also hope to have an export business in film. Thats been in the news. Why would they hurt that . They got rogue one today. They did. How does that matchup to force awakens . Some early numbers. As in the rest of the world the relationship of the box office to episode seven is about the same, which means 50 , 60 . I max indexing interestingly is way higher of the midnights. You dont want to wake too much out of it but did 35 of the whole country in the midnights. Geez. Incredible statistic as were looking to forecast how this movie going to go. Rich, always appreciate your time. Thanks for being here. Thank you. Rich gelfond from i max. The story of the near future as we play the dow 20k game just about 30 points away or so. Tenyear, 241 . Yeah. There had been talk about whether or not we were in this breather period, whether the reflation trade although not reversing was taking its time. Some air has come out of it although 261, i think, three or four weeks ago. Obviously a little ways to make up. Sometimes we have a case of jinxing ourselves when we put the market alert up. Dont we know it. Lets give the ball back to wapner at hq. Guys, thanks so much. Well pick the ball up right there. Welcome to the halftime report. Im scott wapner. S p 500 hitting a new record high. Carl and the gang were just saying we are once again closing in on dow 20,000. A little less than 50 points or so away. Weve been flirting with a little bit better than that over the last several minutes as well. Lots to talk about including whats happening in the markets. Keeping our eye on trump tower as well half hour before trump president elect trump is scheduled to get that intelligence briefing as well. With us