Transcripts For CNBC Squawk Alley 20170112

Good thursday morning. Welcome to squawk alley. Carl quintanilla with jon fortt and Kayla Tausche at post 9 of the new york stock exchange. Joining us, Business Insider ceo Henry Blodgett. And in minneapolis, bill george, former medtronics ceo, former exxonmobil board member, of course a cnbc contributor. Good morning, guys. Our first story is amazon today, announcing it will create more than 100,000 new fulltime, fullbenefit jobs across the u. S. Over the next year and a half. Our deidra bosa is at one market with more on that. Hey, deirdre. Good morning, guys. Amazon was already on track to become one of the largest employers in the country and this announcement confirms that trajectory. The company emphasized that the opportunities will be for people across the country and with all types of experience, education and skill levels. Ceo jeff bezos says these jobs are not just in our seattle headquarters or in Silicon Valley. Theyre in our Customer Service network, Fulfillment Centers and other communities throughout the country. That is an important point, because of course, trump has made jobs his focus and the Tech Industry can be known for making a lot of money with a smaller workforce than say the manufacturing sector. It may also be an opportune announcement. Many, if not all of these jobs, were already in the works. But the big headline number put out in this way could help further ease past tensions between the president elect and bezos. Heres what trump had to say during the campaign. I have respect for jeff bezos, but he bought the Washington Post to have political influence. And ive got to tell you, we have a different country than we used to have. We have a different he owns amazon. He wants political influence so that amazon will benefit from it. Thats not right. And believe me, if i become president , oh, do they have problems. Theyre going to have such problems. Now, guys, amazons announcement is also notable because it talks about direct jobs. That is in contrast to recent pledges by other tech giants, alibaba and softbank, to create jobs in america without such a clear road map. Back over to you. Deirdre bosa out west. Thanks. David faber, among others, noted this morning the plan has been previously disclosed by amazon, but the press release could be to gain the attention of the president elect. The trump team was quick to take notice. Incoming White House Press Secretary Sean Spicer made reference to it on todays transition media call. Take a listen to that. The announcement was made after the president elect met with heads of several other Tech Companies and urged them to keep their jobs and production inside the United States. This, as you know, jeff bezos and others who were part of that, and the president elect was pleased to have played a role in that decision by amazon. So, lets turn to Henry Blodgett first on this. Henry, is this where we are now, companies trying to get its unverifiable whether these are truly new, whether they would have done these anyway, but certainly its expedient. Its expedient, but its also great. And lets celebrate it. And lets also note that amazon takes a lot of flack for not maximizing profit. One of the reasons, one of the things it enables them to do is invest like this. They invest every dollar they take in on future growth, future jobs in the United States. This is great for them, its great for the United States, its great for their customers. We should encourage all companies to do this. Dont dust off the party hats quite yet, though, i would say, because we dont know what jobs amazon is going to be destroying in the process of doing this. Amazon is kind of walmartesque in a sense that they disrupt whats already there. It could be grocery jobs. They could be in affect killing 200,000 grocery jobs over the next year and a half by rolling out fresh in a bigger way, even as theyre creating 100,000 in something else, so if you are going to object to that, we basically have to push pause on the economy and say no innovation. Im not saying i object to it. Apple has destroyed millions of jobs across the pc and cell phone industry. Im not saying i object to it or that its necessarily objectionable to anybody, but dont see the headline and just assume thats 100,000 new jobs without other implications. The economy is bigger than that. Its an ecosystem. When we were discussing with regards to ibm, for many in the usa op ed, she said she would create 20,000 new jobs, but the companys laid off double that over the last few years. Bill, i wonder how easy it is to put out a press release with the job number youre going to create, but how is this enforced . How are they held accountable . Were taught in journalism school, show, dont tell. Its easy to tell, more difficult to show. Journalism needs a lot more closedloop feedback these days and im not sure youll see that, but i learned 15 years ago, never bet against jeff bezos. These are Fulfillment Centers all around the country. He is working his distribution system. Its a quasi bricks and mortar without having stores. Yes, youre right, hes going to put macys out of business. Macys just closed its downtown store in minneapolis about a block from here. This is going to happen. But this, as henry says, this is the nature of innovation, the disruption. This is a good thing for america, and we should applaud it. It reduces the cost to consumers, which we somehow forgotten about. But i think we have to look at the deeper issue here. Every ceo is trying to either, a, curry favor with trump by telling them whats in their current plans to create jobs, or b, stay out of his way, as the farm industry found out yesterday. And im not sure this is entirely a good thing. Youre seeing a lot more people like the autos rushing in to say, oh, fiats going to add a million jobs or whatever sure. There are a billion Capital Expenditures this is already in their plan, 200,000 jobs. This is peanuts. So i wouldnt take too much credence in this, in everyone trying to curry favor with the president elect. Theyre just afraid of his powers. Its true, relative to the labor force, its a small amount. We do have a halt on fiat, as youve been talking, bill. Lets get to phil lebeau with more news on Fiat Chrysler. Phil . Reporter and carl, as expected, the Environmental Protection agency has formally filed charges against Fiat Chrysler, or is announcing that it will be accusing Fiat Chrysler of installing software on about 100,000 vehicles that allows those vehicles to allow excess diesel emissions, those vehicles being 2014 to 2015 jeep grand cherokees and dodge ram 1500 trucks. Those are the models that have the 3. 0liter diesel engines. Those are the ones sold in the United States. The epa momentarily will be outlining why it believes that these vehicles are in violation of the diesel emissions standards here in the United States. By the way, we have talked with sources familiar with Fiat Chryslers response to this. It is likely to be that the company will, a, deny the allegations, and b, say that theyre going to fight vigorously to prove that these vehicles are in compliance with diesel emissions standards. And most notably, the Company Plans to work with the epa team of the Incoming Trump administration to prove that these vehicles are in compliance with pollution standards. That is whats going on with Fiat Chrysler and the epa. Guys, back to you. Our phil lebeau in atlanta today doing double duty on Delta Air Lines and autos. Phil, thank. We turn to peter thiel, the venture capitalist and Trump Transition Team member, speaking out in a rare one on one with the New York Times maureen dowd, commenting on the president elect and the highprofile tech summit at trump tower i think early on, everybody was worried that they would be the only person to show up. At the end, everybody was worried they would be the only person not to show up. I think the bigger Tech Companies all wanted to get a little bit off the ledge that they had gotten on. As for other Public Companies like apple, he says the early age of innovation is over, we know what a smartphone looks like and does. Its not the fault of tim cook, but its not an area where there will be any more innovation. Henry, we know thiel likes to light it up, hes contrarian. Is he right . I will say there will be some more innovation, but i think this is a product that has come in, its a product cycle and is now maturing as a product. It is the most profitable and successful product in the history of the world, and its slowing down, so thats obviously going to have an impact on apple. I do think there will be anticipation about the launch of the next iphone, which is supposed to be significantly different than the current version. Its not going to be radical. Its not going to revolutionize anything, but i think there will be excitement about that. So i think apples in decent shape for a little while. In the sense that pc innovation died five or ten years ago, i guess its a reasonable thing to say, but i wonder what you think about what he said about the tech ceo meeting with trump, the idea they were afraid of going, then they were afraid of not going. Now we have the Trump Transition Team kind of taking credit for this amazon announcement. What is the state of affairs between tech and trump, just sort of cautiously working things out . Well, president elect trump, as he did throughout the election cycle, as he did in the press conference yesterday, has a habit of throwing a big fist from the sky that youre not expecting, and suddenly, the entire pharma industrys reeling because he says theyre getting away with murder in the press conference. Now theyre scrambling to figure out whats going on, putting out press releases saying, hey, we want to manage prices and so forth. During the campaign he said, you know, apple, im going to force you to bring all iphone manufacturing back here. Amazon, youre going to have all these problems. Okay, he got elected. A lot of people spoke out against him. Now i think this is just a meeting where in one way, they are kissing the ring, coming in, saying be reasonable. And i noticed also in that meeting, president elect trumps tone was more reasonable and inclusive, as it should be, because these are great companies. We should be celebrating them. Right. But thiels saying one of the reasons they went is because they needed to step back from the ledge that they had gotten themselves on during the election. And bill, companies we dont normally see being that political. And im wondering if you think that tech and Silicon Valley learned a lesson with getting themselves on the wrong side of this election or if you think it was worth it to them. Well, first of all, peter thiels getting a lot more publicity than he deserves. He hasnt built anything in a long time. And lets look at the builders, the larry pages at google and the Mark Zuckerbergs and the tim cooks. They are building something. And i can tell you, theres a lot of innovation, new technology and new iphones coming out. So, just because you have the first product doesnt mean the Technology Ends and its not a dramatic breakthrough product like we thought the ipad was. So i think youve got to look at the real builders here. They are creating tremendous amount of benefit to the u. S. Economy, world dominance. My fear is that were playing the game with trump, and its becoming a crony capitalism game. Were not playing to basic economics. Just having jobs come back to the United States, theres not necessarily a benefit. Consumers gain tremendous benefits from what apples doing, producing around the world. We dont want everyone rushing back to the United States to bring their production. The innovation is here. They create huge numbers of jobs. So give credit where credit is due. On the farm industry, i have a different point of view. And i know that industry very well. I think im on trumps side here. I think theyve got to look at their pricing. Its egregious. Now, when you have a company like merck or eli lilly that are coming out with drugs that are changing the course of treating disease, its justified charging their price, but when you have Companies Like epipen or mylan, today cvs came up with a generic epipen at onesixth the price. I think there will have to be some constrain on drug prices. Allergen says were only increasing 10 . Thats four or five times the rate of inflation. So, i think there will have to be constraint and i hope trump does it with the pharmaceutical industry because its causing health care too much, and we know were going to have to justify the cost of everything we do in health care. We cant just keep going up, up and away. So i think we need to parse this a little bit, look at the difference between a breakthrough drug and an older drug that theyre just raising the prices on and reform those policies. Exactly right about pricing and health care. We do have to address that. Theres no question. I think in defense of everybody who works in the pharma industry, one would hope we would do it in a way just more methodically, deliberately over time, rather than throwing a fist from the sky. I dont think thats fair to a lot of hardworking people. Im with you, henry. You guys are way too reasonable for this show. Thanks, guys. Good to see you. Thank you very much, krarlg. As were talking, the dows down 166. The worst session since the fall. Lets get to bob pisani with more on that. Bob . Several problems weve got. A little bit of earnings jitter and a little bit of bonds jitter. Bonds are rallying. Take a look at 10year yield. Remember how banks have been, Goldman Sachs a big influence there. 10year yields, 2. 3 . Thats the low yst since late november weve had, steadily down for the last month. This is putting a lot of pressure on the banks. It has been. Remember, the bank rallies stopped in the middle of december, so kbe is what you want to look at, the big bank etf. It has slid a little bit here. Heres your big banks. These are the banks that will be reporting tomorrow. Everybody looking at jpmorgans head, jamie dimon, for guidance on the state of the economy, see whats going on with them overall. Theyve been sliding for the last several days here. The important thing on banks is the earnings revisions have been going up for them overall for 2017. Thats good news, but the stock prices moved up a lot faster. So, heres whats happened. On 2017, this is what we care about, earnings revisions. Dont expect jpmorgan to say anything. Theyre not going to give dainius. Jamie dimon notoriously dislikes giving advanced guidance. Jp, bank of america way up, but the stock prices are up and thats were getting jitteriness about delivering on these high guidance. Ingersollrand, textron, dover all to the down side right now. No clear direction right now for 2017. The markets a coiled spring. Thats the way im describing it now. Guys, back to you. Bob, thank you very much for that. When we come back this morning, former new york city mayor Rudy Giuliani, his new role in the trump white house, his focus cybersecurity. Then, it wasnt just pharma taking a hit during the News Conference yesterday. Defense was also on edge. Later on, more from thiels extensive interview with the the New York Times, including comments he made about elon musk, Mark Zuckerberg and more, when squawk alley comes back. Wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong insurance company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. 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 major averages having their worst day of 2017 so far. All 11 s p sectors are lower. The dow having its worst day since october. Meanwhile, president elect trump targeting lockheed martins f35 program again, sending the stock falling during yesterdays News Conference. Joining us now is richard saffron of the Buckingham Research group, director of equity research, to talk about this. And richard, you know, im wondering how much effect you think that the president elects targeting will have, because there is an expectation that defense spending will be expanding, but then you have this unwanted attention. Whats the net effect . The net effect is primarily in the short term. Youre absolutely right, defense spending, in my view, is going up and going up meaningfully. I think were at the start of a longterm spending cycle in defense. I think trump and his team will actually be getting behind that. So over the long term, i think that trump is going to be and his team are going to be very good for defense spending. In the interim, however, thats right, were now having a situation where washington is having to get used to a very different type of president who is now putting out these tweets on the f35 program. I think a lot of this is basically short term and headline risk only. I dont think this is substantive earnings risk. I think the president has the right idea here. He wants to rein in government spending, and i think thats what his ultimate objective is, and i think everybody applauds that. But in the interim, i think that youre just seeing some headline risk on lockheed martin, and i expect the impact to be relatively short lived. Vadvadim zlotnikov joins us the phone. Im wondering how you see it playing out because we saw pharma slump on the back of president elect trumps comments. You heard what richard thinks of a longterm expansion in defense spending, but im wondering where you would put your money depending on sectors and how this sort of rebalances Going Forward. Sure. I think two key drivers for our sector selection. First, theres clear evidence that the Economic Growth is starting to pick up. Were seeing improvements in Small Business confidence, were seeing improvements in pmi. So the base cases for Economic Growth to accelerate with government poll sepaey being potentially an addition to that. However, the one important caveat is that the valuation spread, the opportunity to make value bets has significantly declined since the election, and its narrowed. So you have to be making a bet on relative growth, and we see essentially relative growth in at least two, possibly three sectors. Industrials we think will continue to outperform. Technology should be a beneficiary. And depending on the degree of deregulation, financials could have another leg up, although that one is perhaps a bit more speculative and a bit more back end weighted. So vadim, when you look at a selloff like were seeing today, we had heard for the last several weeks that there would be some correction, there would be some selling after the new year because of tax implicati s implications. Is that what this is, or do you think theres something broader happening . Honestly, at this point, the pullback seems to be more technically driven in the sense that, yes, many of the biggest winners from the post election rally are the ones that are pulling back. We have not seen anything in terms of probably looking at the mix of the performers, any significant decline in the expectation of Economic Growth or in terms of expectations being overly aggressive at this point. Richard, im wondering, you said that you expect the Trump Administration to be good for defense over the medium to long term. Im wondering, though, when it comes to investment over that period of time, the aerospace and defense index in the s p has done particularly well over the past five to seven years, say. Do you expect more volatility . I expect the volatility, but i expect that volatility primarily in the short term. You know, once the president takes office, once the secretary of defense is confirmed, i think the president is going to have his eye off of defense, and i think thats going to pretty much be, you know, pretty much now be the domain of the secretary of defense, as it should be. You know, President Trump is going to have a lot more things to worry about than the f35 program or air force one. So what i would expect Going Forward is a lot less volatility once we have the administration, the secretaries and the undersecretaries taking their positions and we start getting down to the business of now, you know, looking at how were going to spend the budget, how much were going to increase the budget, that sort of thing. Richard, there was so much focus just after the election on this borrowandbuild theme and the focus on infrastructure, potentially 1 trillion in Infrastructure Spending. We havent heard about that as much as the Incoming Administration has developed its policy agenda. But there was a comment from peter thiel in his interview with the New York Times, where he said trump isnt necessarily retro in focusing on that stuff. Cell phones distract us from the fact that subways are 100 years old. Where do you expect the Infrastructure Spending to flow through, how long does it take, and who ultimately benefits on their bottom line . Well, the Infrastructure Spending is obviously a lot broader than aerospace and defense. I mean, to repair our infrastructure roads, bridges, subways, which you mentioned, et cetera i think its going to take a little while to work its way through the system. But one of the areas, and the one reason why i like defense, is that if youre interested in Infrastructure Spending, if aerospace and defense is part of that, thats something i think that you could turn on fairly quickly. In other words, if you wanted to build more systems, thats something i think that you could do fairly rapidly within defense. You have ongoing production programs, you have Ongoing Development programs, all of which i think that if trump wanted to either accelerate or President Trump wanted to accelerate or he wanted to build more of the current systems, he could do, you know, i think in fairly short order. Vadim, really quick someone made the point this morning, people have been waiting for the market to give them a chance to get in since the election. If todays not it im not saying it is how much of a decline would you need to see before you got interested in having that value you talk about reappear . Yeah, i mean, look, timing the market from week to week is extremely difficult and a rarely profitable thing to do. Its interesting. Even though were seeing the market decline, were not actually seeing valuations pressed, meaning the difference between the cheap and expensive stocks widen. So honestly, i dont think trying to time it week to week is going to be desirable. What i actually would rather do on days like today or when there is weakness is to reposition the portfolio toward the sections that i mentioned in anticipation of some pickup in Capital Spending and continuation of strong wage growth. Okay, well leave it there. Vadim and richard, thanks to both of you. Thank you very much. Good to be here. When we return this morning, House Speaker paul ryan expected to make comments in about ten minutes, maybe less than that, on capitol hill. Well bring you that and well watch the dow, down 160. Squawk alley continues in a moment. Europes going to close in about 60 seconds. Question is whether the ftse can hang on for another recordbreaking win. Seema modys here at post 9 today. Seema . Hey, carl, thats right. Just like were seeing here in the u. S. , stocks are falling in european trade. Some parts are in green. But take a look at the ftse 100. The indexs historic 12session winning streak in jeopardy. Meantime, reports say that the uk Prime Minister theresa may will deliver a major speech on the brexit this coming tuesday. Keep an eye on that. Meantime, pharma in focus. European pharmaceuticals not escaping the trump effect. Thats continuing to fall in reaction to yesterdays comments by the president elect on drug pricing. The biggest decliners include shire, btg, novo nordisk, which has become the subject of a classaction pricefixing lawsuit. Shares there down 4 . Lets talk about autos. Fiat chrysler tumbling in italian trade after the u. S. Epa accused the automaker of violating the Clean Air Act by installing software in diesel vehicles that could boost emissions. Fiat says it will contest the epas findings, but you can see thats a big mover in todays trade, down 17 . Meanwhile, european luxury in focus. Richemont with an upbeat christmas quarter, a sign that the market may be bottoming out. Sales up 5 from a year ago at cost and exchange rates. Swatch and lvmh among the gainers. Of course, theres been an active discussion around which sectors could benefit from a stronger dollar, a weaker euro, and european exporters, particularly in the luxury space, seem to win for that. All right, seema, thanks. Ill take it. And president elect donald trump selecting former new york city mayor Rudy Giuliani today to oversee efforts on cybersecurity, especially in the wake of reported russian Cyber Espionage during the election. Heres mayor giuliani at trump tower moments ago. Hacking is ubiquitous. And the defenses to it arent as robust as the methods that people have for hacking. The industry has spent a great deal of money and time in figuring out how to gather information and analyze information. It hasnt spent as much time and as much money on how to protect that information. Austin berglos is with k2 intelligence and joins us here at post 9. Austin, good morning. Good morning. Actually, first, sorry to interrupt, weve got to go to paul ryan at his weekly press conference. Here he is. Administration. And after he is concerned, hss secretary tom price. So this will be a thoughtful, stepbystep process. Were not going to swap one 2,700page monstrousity for another. Were not going to jam some bill through harry reids office on Christmas Eve only to find out whats in it after its been passed. Were going to do this the right way. Were going to do this the way it was designed to do through the Congressional Committee system. And that is why we had to get it right. Of course, our goal, though, is to deliver relief as soon as possible, because this is just not a matter of us keeping our promise to the american people, this is a rescue mission. And the reason we need to act and act as quickly as possible, using the process the way it was supposed to be designed, is because we are on a rescue mission to prevent obamacare from making things even worse. Look at the premium increases that were getting hit with just this year minnesotas 59 increase in premiums. Tennessee, 63 increase in premiums. Alabama, 58 increase in premiums. North carolina, 40 . Maryland, 25. 2 . Pennsylvania, 53 . The law is collapsing. Take a look at the deductibles. The deductibles are becoming so high that people dont even feel like they have insurance in the first place. And families that barely had the ability to find something better. In many areas, people are stuck with just one option to choose from, which isnt an option, its a monopoly. These are not doomsday scenarios. These are reallife scenarios. Theyre affecting real families and real people. So we are determined to provide relief as soon as possible because this law is collapsing while we speak. And working with the new administration, taking actions step by step, that is what we are going to do. [ inaudible question ] so, as you know, i like to run a bottomup process thats collaborative here in congress. Were going to work with all of our committees that are in charge of Health Care Legislation the Education Workforce committee, the ways and means committee, the Commerce Committee and were going to have a full, exhausting conversation at our retreat to go through all of these things. What i think people are beginning to appreciate is we have lots of tools in front of us. Its not just a oneanddone bill kind of a thing. And so, that is what we have been walking our members through, are all of the options available to us to get this done. We have the budget reconciliation option, which is actually something that were moving on right now. We have the other regular order kind of options. And lets not forget, we now have an hhs, an administration that wants to work with us to fix this problem. So we have many tools in front of us. And if you want to take a look at what our vision for replacing obamacare looks like, if you want to see what our plan is, go to our website and see what all those plans are. And now were looking at exactly what is the best way to deliver on all of those reforms. And thats the process were going through right now. [ inaudible question ] no, were working together on this, actually. Not at all. Ive spoken with president elect trump probably two times in the last three days on this. Mike pence was in my Office Yesterday to discuss this. So we are in complete sync and we agree, we want to make sure that we move these things concurrently, at the same time, repeal and replace. We need to show that theres a better way forward. We need to show that even though this laws collapsing, we can bridge ourselves to a much, much better system. The pillars that we stand upon with replacing obamacare more choices, more options, lower prices, and more control over your own health care those are the things that we all believe in. We are completely in sync, planning on a daily basis with the administration for how to roll all of this out, and thats what were doing. Tomorrow, when most of us report that the house has voted to repeal obamacare, dont you think a lot of americans are asking that question, wheres the simultaneous replacement part . Tomorrow is a we had the vote this morning. Im very pleased, by the way, with the senate vote. Were having that vote tomorrow. That is a procedural vote to get the process in place. Then were going to go, as i mentioned in my opening remarks, through the process as it was designed, through our Committee System to make sure that we spell out exactly how were going to deal with this law, using all the options and the tools we have available to conduct this rescue mission to rescue people from the collapse that is occurring now with obamacare. Let me put it another way around. I think the president elect said it pretty well on this front. We could just stand back and do nothing. As republicans, we could just stand back and just watch obamacare crash. We could watch the further pulloffs that the insurers tell us are coming, the massive deductible increases, premium spikes, we could watch the collapse of the Health Care System and say look at what the democrats did. Were not going to do that. We have a responsibility. Peoples lives are being affected by this. And so, we have a responsibility to step in and provide relief from this failing law. And so, were going to use every tool at our disposal to do just that. And we have to do it all at the same time so that everybody sees what it is were trying to do, and that is why i say were in sync with the administration on that. Yeah. You said youve been speaking with the president elect a couple of times in the past few days. So, do you agree with him that members of the u. S. Intelligence community are behaving like nazis . And if not, have you expressed your view to him . Look, i think as he gets to know our Intelligence Community better, i think hell learn to appreciate all the great work that they do. Ive spent a lot of time with the Intelligence Community, given my line of succession, and ive spent hours and hours with them in certain locations going through this. He is just beginning that process. So, obviously, those are not words i would use. But he is understandably very frustrated at whats happening, because it isnt fair, and its all unsubstantiated. So, his frustration is completely understandable, and i do believe that as he begins to see what the men and women in our Intelligence Community do im not talking about the political people on top, but the people who are actually producing the intelligence, who mike pompeo and dan coats are going to be working with, i think hes going to learn to appreciate what they do. Yeah. So, do regularorder options include for repeal and replace include the fiscal process and when you say relief, arent republicans going to have a hand in that scenario by create this processes in the budget . So, the budget process is the regular order process. We pass a budget every year and we use budget bills that come from that process. That is regular order. That is what were doing. And were going to use every other tool at our disposal. Thats the other point im trying to say, is there are many steps we can take to bring relief, not to mention an hhs now that wants to bring people relief from obamacare in addition to the things we can do here in congress. All taken together, we feel the need to step in front of the collapse of this law so people dont get the rug pulled out from under them, so that they dont, you know, collapse with this law and bring a new system that will work. Thats going to take time. Thats going to take a transition, and we want to make sure we want to put peoples minds at ease that theyre not going to lose their health care some february day, that were going to have a good transition period while we move on all of these steps to rescue us from the collapse that is now occurring with obamacare. How about over here, casey . You are setting up a process where you can repeal large chunks of obamacare with just republican votes. To replace it in a significant way, you need democrats. How is that not pulling the rug out from under people . Let me say it this way the premise of your question i would disagree with, casey, is because obamacare is collapsing. Dont forget this. Remember, the base case that we are walking into in 2017 with this new government is were staring at a Health Care Law that said, if you like your plan, you can keep it. Thats not true. That said it would lower your premiums by 2,500. Thats clearly not true. Oh, and that said that your deductibles would be reasonable so you would be able to use your insurance. Thats not true. Oh, and by the way, five whole states have one plan to choose from, and were being told they may lose that. Oh, and 31 of the counties in america, one plan to choose from, a political monopoly. Thats not choices. So you have to remember, the law is in what the actuaries tell us a death spiral. So weve got to intervene to prevent this from getting worse. And so, yes, i do hope and believe that some of this can and should be bipartisan, but if people are going to be so partisan and so ideological to try and cling to the failure of obamacare, which is doing damage in peoples lives, then, you know, shame on that. But weve got a job to do, and our job is to use every tool at our disposal to fix this problem before it gets worse. Yeah. Mccarthy yesterday said i believe you would have the reconciliation repeal bill to the president s death by the end of february. Is that the timeline . Were working on an aggressive timetable. Well work the process as best we can. Were not holding hard deadlines, only because we want to get it right. Again, we need to move quickly because the laws collapsing, but we also want to get it right, and were going to go through regular order, unlike what the democrats did. Were not going to do the gatorade and the cornhusker kickback and do this on Christmas Eve, you know, and then pass a massive bill that you dont know whats in it until after its passed. Were not going to do that. Were going to do this the way congress is supposed to work, but we feel the need to act quickly, because again, this things collapsing. Yeah. Defunding planned parenthood how that would possibly impact moderate House Majority leaders in 2018 . So, were working off the bill we passed last year. And remember, our goal in that policy is to get health care to women, particularly in lowend communities who need it without all the controversy surrounding planned parenthood. Thats why we think these dollars are better directed to Community Health care clinics, federal qualified Health Clinics which i have lots of experience with in wisconsin, are very good. By the way, for every one planned parenthood clinic, there is 20 federal Community Health centers. Its 201. And we think its better to send these dollars to those clinics that do a very good job of giving women the services they need, the preventive services, without all the controversy surrounding planned parenthood. Okay. I think if we deliver our promises, which like we will, well do real well. Christine. Sorry. [ inaudible question ] thats why to caseys question i was saying were going to get this right. So were moving all of these bills through our Committee Process. And so, when we have all of this ready is when were going to move forward. Sorry. I passed over you. Go ahead. Can you tell us what you mean by rescue in the sort of immediate sense . A lot of this youre talking about yeah. Its a good question. So, we are hoping to pass reforms. Its not just repeal obamacare, but its repeal and replace. And so, were hoping to pass as many reforms as we can to bring new options and opportunities in the marketplace for people to buy Affordable Care. But also, dont forget the fact that the administration, which we now are getting an administration that wants to provide relief, thats not lashing people to the mast of obamacare, which is sinking. And we believe the administration will have the ability to give a lot of regulatory relief. I think mike pence, when we had the press conference with him the other week, made this point, which is, we believe with the new Administration Working with us that we can get some quick relief so that people can finally find something that they can afford. And thats just not the case these days. Yeah. [ inaudible question ] i havent looked at the details of the arrangement. Im confident that hes solely focused on his presidency, that hes turning the business over to his remaining family members who are going to run the business. Ill leave it up to the Government Reform Committee to look at this. Thats part of their responsibility. Last question. With the laptop. [ inaudible question ] yes, yes. Go to our website and youll see exactly what were looking at doing. Thank you very much, everybody. Oh, go packers. That is speaker ryan on a busy thursday morning talking about that Senate Budget resolution from last night. Briefly point out, carson, pompeo, mattis are all testifying. Got a presumption of the fiat trade, but john harwood, walk us through the headlines from ryan, specifically this notion that congress and trump, in his words, are in complete sync with regards to a repeal and replacement. Well, i think the speaker has gotten very skilled at trying to rhetorically bridge gaps between the president elect and republicans in the house. He did that again today. He said that we were in sync on the same page, but note some of the language that the speaker used. He talked about repeal and replace, and it essentially happening at the same time, which is what the president elect said yesterday. However, he talked about a Committee Process involving multiple committees, a stepbystep process, a transition to a new system, steps that hhs could take administratively to provide what he called relief. So he seems to be making a distinction between shortterm relief for what he described as problems with the Affordable Care act, and the ultimate solution. So, it is yet to be seen, since we do not have on the table a consensus republican plan, it is yet to be seen whether something approximating simultaneous replacement with repeal is even possible. Well, i guess we will see. As with any of these things. John harwood, thanks so much. And speaker ryan just now saying that president elect donald trump will learn about the great work the Intelligence Community does once he gets to know them a bit better. Austin berglos with k2 intelligence. John carlin, also joining us. Austin, continuation of the question i almost asked a few minutes ago before the speaker took the lectern. How does the president elects conversation around the intelligence committee, which as speaker ryan was mentioning has not been that positive, how does it affect the way theyre going to do their jobs, from recruiting to operations . Yeah, i think as far as how theyre going to do their job is not going to change. Theyre incredibly professional, the Intelligence Community. But i do think that his comments have eroded public trust in the Intelligence Community and i also think its deflated some of the intelligencegatherers and collectors we have in the government. I think with the appointment of Rudy Giuliani and some of, maybe in his first 100 days of his presidency, hes really got to focus on bringing the Intelligence Community back in the mix. Were almost in the media, hes almost portraying that the Intelligence Community and the president elect are on two different teams, and thats not the case. Its all one team, and i think he really needs to work on that message. It seems the president elect is portraying that a bit himself. And john, im wondering, as far as giulianis role within the administration, the explanation that came out is and im quoting the president elects intent is to obtain experiential and antidotal information from each executive, these are the tech executives that giuliani will be convening. On challenges faced by his or her company, how the company met the challenges, approaches which were productive or successful and those which were not. Given some of the tensions weve had, at least under the obama administration, on issues like encryption, how much buyin do you expect there to be on this initiative . Well, look, i think what youre seeing is, as the president elect has been briefed, and he was saying yesterday how russia committed these Cyber Attacks against the United States, also reflected in his appointment of tom bossert, a good, experienced professional i worked with when i was at fbi, who is experienced with cyber issues and how to come one the framework for responding to them. With the announcement of him as the homeland adviser, who have responsibility for the cyber portfolio in the white house, and now this latest announcement, which leads with a very accurate description of where we are, which is, the threat right now outstrips our defenses. And thats a serious issue that faces Corporate Executives along with government officials. We have to get better faster, both on the defensive side of the house and also at imposing costs, consequences and pain to adversaries, be they terrorists, crooks or nation states who are intruding into our system. So theres a lot of Common Ground here between government and private sector. And in order to meet this series of challenges, you do have to work together. It is indeed a tough issue, and we need to have more time to discuss it with both of you. Austin, here. Thank you. Before we go to break, some breaking news over at trump tower this morning. Our Michelle Caruso cabrera. Pretty fascinating. The leader of the french far right is at trump tower. We have not seen her go up the elevator, so no video of her. However, pool cameras did spot her eating in the grill, thats what were showing you now. They approached, they would not confirm that they have a meeting with donald trump today. But shes in trump tower. We await more. For those not familiar with marine le pen, a euro skeptic believes that france should be in control of its borders, has been called anti muslim, and an anti semitic, very against the euro, carl. As you well know. Similar in terms of law and order and border control. We should highlight, economically speaking, polar opposites. She believes in more state intervention into the economy. She believes in actually price controls on certain products within the economy. But marine le pen, carl, being at trump tower, is going to ruffle the foreign policies of the elite in a very big way. She is persono non grata in europe, right up there with nigel ferraj and this is going to upset them to no end. This is going to send what they think is a bad message. Critical tweets and nick burns and others, michelle. Were going to watch that and get some clarity on what she was doing there. Michelle caruso cabrera. Dont go away. Ert wher athg ppu coming up on the Halftime Report, wall streets dow takedown. A quarter of the index now hit with down grades this week. Do you take profits today . Plus, were going to hear from an analyst who calls the sector he covers unininvestable. And despite trumps attack, three top analysts agree there is one stock you should buy today. Its all coming up, top of the hour. Carl, see you in five. Thank you, scott. Lets get to the cme group, rick santelli. Good morning, carl. Whats the question everybodys asking that has anything to do with trading, markets, or investing passive or active. How much giveback are the markets going to put investors through . Maybe that was the second question. The first question, of course, before we had some replacement activity, many markets giving some back since the election, was, how far can a market go, how healthy is the market when its a linear move. Were going to try to answer some of those questions on the give and take of the post election markets. Quite simply, im going to look at four, twoyear, tenyear dollar and s p. Giveback is another word for replacement. And you all have your computer programs. Thats not the way i do it, im sorry, im oldschool. Fibonacci numbers. Yes, there they are. And replacements. Most people look at 62 , 61 and change. 38 , 23 . Many nontechnicians use 50 . Doesnt make it any less valid. We want to know where they come from. See, i was hoping you would ask that. The main thing about fibonacci numbers, its all there. You divide by the next one. For example, i took 8 as my base number, divided by 13, you get your 61 and change, 62 replacement. You skip a number, go to 231, get your 38. You skip two, get to 33. And you can put all those numbers as long as you want. Those numbers will be the same, no matter how you do it. Versus 50 . Now heres what we did, okay . We looked since the election at how much markets move. Thats the denominator and where it is versus its high. And in the case of 2s and 10s, high yield. In the case of the dollar index, high price. And what we found is, based on current prices, twoyear, 30 retrace, 39 on the tenyear. 42 on the dollar and 14 on s ps which means number 1, 2, 3 and 4. Dollar 10s, 2s and s ps. I think you want to pay most attention to this. Especially around 23 and close attention to the tenyear, versus 38 . Carl, were going to just take it right to break. Well be back after these commercials. M by m sh tclosergeo. Yolpsaonhoo . Huninle w weth m sh te huergeo. I gh w aot m mckw. Inle w weth m sh te huergeo. One of the big stories of the day has been Fiat Chrysler. Trade has resumed here at the nyse. Merck, led by an upgrade at morgan stanley. A slew of blue chips have been cut. Goldman, exxon, coke, p g. The kdw bank index, worst day since july. Bank and america and wells reporting earnings tomorrow. Well see what they say and whether they can turn the tide. A big friday. Lets get over to wapner and the half. All right, guys. Thanks so much. Welcome to Halftime Report im scott wapner. The dow pacing for its worst day since mid october as more blue chip stocks are called into question today. With us, joe terranova, steve weise and pete najarian. And kevin oleary, the etf chairman. We begin today with two more dow drags. Disney and boeing, which join a growing list of big names cut, including cocacola,