Transcripts For CNBC Squawk Box 20161117

Flatter . If it was zero. Ditto for almost all of europe. Hardly anything there. Crude oil at this hour is stronger by 37 cents, 45. 93. That may be because the dollar has taken a breather after its rampant run. It was one market that just kept going and going. Today a bit of taking the edge off. Carl icahn warns that the strong rally in stocks since Donald Trumps election might be overdone. Even more overdone than the overdone market that hes been warning us about for the last six months, maybe the year before that. Ive known him 20 years, hes been warning me for 20 years about the market. Speaking at a conference yesterday, icahn says investors can expect trump to help fix washington and improve the state of the economy. Icahn has been a strong trump supporter. He said he bet about a billion dollars on u. S. Equities after leaving trumps Victory Party early last wednesday morning. Thats interesting. Before the election how many times have we had this as a headline . I stand over there at the top of every show. In the last year i have said carl icahn is warning about the stock market at least its always something dire. Overvalued. It doesnt and i certainly have some sympathy for that viewpoint given that a lot of it has been orchestrated with the animal spirits of easy money and the fed. Maybe we eventually this woman is pulling up her shirt out there. This is bizarre. Go away. My god. Look at this. Wow. Dont take a shot of that. Dont take a shot of that. We didnt need to see that. She had a bra on. She did. A black one. It was black. I saw it and lacy. You have to ask yourself good morning. Thank you for that. Dont you try anything like that, allison. Alison is coming on in a second. I wont either. Dont you either. You have to wonder about the run in the stock market. Its been tremendous since youre changing the subject. Yes, i am. And so, yes, you can be very excited about potential changes. He doesnt take over until january 20th. How much more can you get until you know really what he wants to do with doddfrank. Stop being distracted i think theyre going to a protest. I do. That was the whole well see. The Trump Building is that way. Going to get a starbucks. Okay. Yeah. All right. Well see with with carl. I dont know if i can continue. The fed out in force this week speaking late yesterday. Have you turned your frown into a smile yet, alisonalison . About the election . You okay now . Have you read the notes . Shes nervous. Well interview her in a few minutes. I worry about her. We talked before the election. Ive been worried. Philadelphia fed president Patrick Harker said he favored increasing Interest Rates and suggested that the central bank might have to hike more aggressively if Donald Trumps administration enacts fiscal stimulus. The fed said it will increase rates gradually otherwise but inni independei ininvestors believe inflation could increase. Weekly jobless claims out at 8 30 a. M. Eastern. Headline cpi forecast to rise. Housing starts are due out at 8 30 a. M. Followed by the November Philly cheese sorry, philly fed survey at 10 00. When you see philly, dont you think philly cheese steaks . Yeah. I would love to have one. Sometimes if we mention them, they deliver. Yeah. Half a dozen fed officials are speaking throughout the day. The highlight will likely be fed chair janet yellen, testifying on capitol hill before the joint Economic Committee. Thats at 10 00 eastern time. In earnings central, walmart, best buy reporting before the opening bell. Target yesterday was interesting. Hearing from gap and sal salesforce. Com. Yesterday i mentioned cisco, whether thats something i thought that was interesting yesterday. All we talk about is social media. And software. Cisco is trying to move towards software, like everybody else. Was interesting if we talk about everybody sitting around at home surfing facebook and twitter and snapchat no wonder productivity is at zero. The reason that facebook is worth a gazillion dollars in market cap is because they have to be advertising something that people buy. If were not making anything to buy, theres just advertising george bu in my stream i get advertising for apps. Still sitting there in your basement. Exactly. Mmhmm. I hope thats not a day of reckoning. The social media, thats not the first internet bubble s there . Is there a social media bubble . A lot of those dotcom companies didnt make money. Facebook makes money. You know what today is . Thursday . The 17th or the 18thment. According to my apple watch, the 17th. National black cat day. I didnt know they needed a day. Why . Theyre the last to get adopted. Really . Yeah. They would be my favorite. I got married on friday the 13th. I block cats. Mysterious. Sleek. I dont worry if they walk in front of me. You encourage it . I do. Thats the nonconventional wisdom. How many times does it have to happen . I think it will happen over and over again this year. It never doesnt happen. Thats true. That makes life exciting. Well sometimes. For some people. Turn that frown upside down. Lets tell you some political news. Japanese Prime Minister shinzo abe is set to meet with donald trump today. He will be the first foreign leader to do so since the election. Abe says he wants to build a relationship of trust. Among the president elects other pleatimeetings today, nik haley, henry kissinger. Fedex ceo fred smith and safra katz. Ciscos First Quarter profits falling 4 , largely on restructuring charges related back to job cuts that were announced in august. Revenue was down more than 2 . The company also warning that revenue will decline again this quarter as challenges continue to mount. Ceo Chuck Robbins on the conference call. We delivered a strong q1 in an environment that continues to be challenging. We executed very well in the quarter with revenue growing 1 , nongaap earnings per share growing 3 . Along with continued strength in nongaap gross and nonoperating margins. This quarter total product orders declined 2 , largely due to Service Provider orders declining 12 which was worse than our expectations heading into the quarter. Well talk to an analyst about cisco in a few minutes, and later on this morning, robbins will be joining squawk on the street at 9 00 eastern. Han celestial says it has found no evidence of wrong doing in relation to its Financial Reporting this is after conducting a review of its own accounting. The Companys Audit Committee examined whether revenue from certain distributors into the u. S. Were recorded in the proper period. First solar is cutting 1600 jobs or more than a quarter of the its work force. The Company Expects to post a loss for the year and is forecasting 2017 sales will falwe falwell e. Fall well below estimates. The dollar is pulling back, 2. 2 on the tenyear. The 30year got above 3. A month ago it was 1. 7. The delta matters. When we went from, like, 9 to 7 on the way down, it was the most powerful thing for stocks. Tremendous. It was unbelievable. Right. We will never ever in anyones lifetime see anything near 5 on the 30year. On the way down. Never happen. I remember. I remember. 5 sounds like 5 sounds like 500 . The dollar also pulling back after climbing to 100. 57. Strong index. Highest level in 13 years for the dollar index since april of attention to Janet Yellens speech today. Joining us is alison and jack. Theyve done it. Theyve waited so long to raise rates, that at this point theyre absolutely with the election, with whats happened in yields, with the markets, with all the notion of inflation coming back. They can finally do it. Now the bond market has done it for them. They can finally do it without wringing how do you wring your hands . Do you go like that . I thought it was more like this. Thats shaking your wrists. Shake it off 6. The notion that these guys are smart, they know the future of economic activity, you have to beat them over the head and say its okay before they do it. Are we excited and watching with great relieved in. Are we watching with great anticipation . No, not at all. Why did we say that . Why did we say what . I said wed be watching with great you said it. Whoever wrote it said it. The bond market is telling us what is going on. And its healthier to overly worry on the government to do things and drive things. Now i sound like a republican. You never you never sound like that. Thats why im trying to cheer you up. That woman did it a lot more. Your face i was like what is she doing . The next thing i realized. I think she was coming for a march two days ago and hasnt slept yet. You could smell her through the window . Gross. Jack what we have going for us, after they raise once they generally raise a second time. We can talk about when. Then a third time. Next year, once we get this one, we can talk about whether the next one is coming. Wheres three, four, 25, 50 . That will be a long time before we have that discussion. Are they going to change the wording . They will. For people who believe theyre behind the curve, that was one of the reasons people thought they should have raised a while ago. If you start back here, then you can go slowly. If you wait up here, it becomes much steeper. You should also keep in mind what has the fed been asking for for years . In every bit of testimony we would like some fiscal stimulus. We would not like to be the only game in town and we would like help. I think thats what changed at least in terms of the markets perception coming out of the election. We might get a stimulus bill and tax cuts. We dont know what well get. We keep trying to guess. Is it regulation in your view if you get rid of the heavy handed regulation, is that like fiscal stimulus to you . Because it is. I think it lets management teams make the decisions off of what they think will be most profitable and hopefully they can move faster. Did you hear sam zell yesterday . He said the last couple of years, the amount of paperwork he has to do. When you look at the way economists think about gdp, population growth versus productivity. If you assume regulation decreases dramatically, i assume you get higher productivity, which feeds no you s ns no feed expectations for gdp growth. Gets you more sustainable productivity. This is a matter of fewer lawyers running most of these firms. Think how bullish that is. Im playing a violin. I want a marching band. Youre worried about the stock market still . For the past year i thought the market was overvalued and we needed something to drive the market. I think the infrastructure spend is fantastic. Some healthy deregulation and tax reform is good. If we get into trade wars, 40 of the s ps revenues comes from oversees. I dont see how you dont have a ballooning deficit which means higher Interest Rates . I would not get out of equities but i would trim back. Given how we given how we have been trying to engender any inflation at all, and rates are basically zero, wouldnt this be the time f youre not going to worry about blowing out the deficit and you need economic activity, isnt this the time where you dont have to worry about it quite as much . Go ahead do it . Knock yourself out . Fiscal stimulus, thats fine. Trade war, thats not fine. Were a global economy, the corporate and stock market relies on global revenues, not domestic revenues if we back off from the trade wars, eliminating nafta, not going through any aspect of tpp, it would be less worrisome. Thats significant. The other thing about trump which you would be hard to admit, he is a businessman and does want to succeed. Unless youre not a smart businessman i would love for him to succeed. You understand about global trade. Theres rhetoric before youre elected and action afterwards. I think if you came to him and said if we do this to china, theyre never going to buy another iphone, i think that might cause rethinking. Do you think . Busine businessmen are more pragmatic. We like to think we are. To the point we talk about the s p generating about 40 of its revenues internationally, you also have to think is that true exports or local operations . To the extent you can look at somest multinationals, they have costs within those economies. And their revenues are in those economiesy s ssh economies, is it a translation impact . A ballooning deficit may get you higher Interest Rates or a higher dollar . So were trying to handicap the way the market goes and how people respond. Its a set of probabilities. Both candidates were pretended to be antitrade. I dont believe either one of them. I dont believe Hillary Clinton would have been that way. But if you go to the true center of the Democratic Party right now, Bernie Sanders and elizabeth warren, they wouldnt just say it. I dont know why youre so they would do it. They would do it. They would follow through on it. Surrounded by paul ryan and all these other people. Just i would been more worried about your party and the fringe elements there. You just called them the centermen center. I think the center is fringe right now. Both fringes average to the center. Policy takes longer. It takes a year or two before you can change anything. You take the average, you add Bernie Sanders and elizabeth warren, cut that in half, youre way the hell out here on the left. Arent you . Michelle carusocabrera . Yes. Yes. Preach to the choir. You can nod and give me help. Okay. Theyre playing music. Im a first child. They want me to go to break. Im not talking. You had brothers and sisters . I was the first child. You were the first. Okay. Oldest. Oldest. That happens. For eight years . Eight years. Eight years . Only child for eight years. Thats an only child. Ky go i can go to break now . Cisco posting an earnings beat. The stock is falling sharply this morning. Reaction from an analyst next. And later, Neel Kashkari is here. Cisco posting better than expected results for the first c fiscal First Quarter. Joining us now to break down ciscos earnings is brian white, global head of technology at hamilton. I think of them as ibm. They used to do one thing and now want to try to do something else. They used to have all this hardware. The biggest part of the revenue, they would like to be doing security software, recurring revenue, annuity streams. This feels like its slower than what people wanted, this report. Is that a correct way to think of it . I think all big i. T. Companies are going through a transition, transitioning to the cloud. No doubt theyre making the transition. Their transition has not been as painful as ibms. Last night they called out carrier spending, Service Provider spending was weaker than they thought. I went back the last four novembers, and the stock on average has dropped 5 after earnings. There is something about a hangover effect. The fiscal year ends, you do okay in the First Quarter, but the order of growth is slow and it impacts the Second Quarter guidance. This is when the bad quarters usually come up. Thats in november call. I would do they think carrier spending is week . Good question. Orders were down 12 year over year. They mentioned a lot of different things. Number one, fx, some of the fx still had an issue. Also a lot of regulation change. Net neutrality, trump is against net neutrality. Well see what that means. That would be a positive for cisco. In certain areas of their portfolio, they werent well positioned. Capex hasnt been phenomenal. To be down 12 year over year is a big decline. You ever have a buy on this stock . We have a buy on it, yeah. I wasnt going to use dog with fleas anymore, i love dogs. This has been dead money for ten years . So, if you go back to a lot of these big tech names in the bubbl bubble. If this is tech, we need a new word for what tech is supposed to be. The market cap is 150 billion right now. It was 600 billion at one year. I want to see a 10 or 20year chart. I dont care to see where the i do. Oh, remember that . Yeah. Im talking about in the last five years. The last ten years. You can do anything with your money. Is there any reason you have a buy at 30 on this. Why . Well a couple things. I think its still cheap. Its not 100 times earnings like in the bubble. I guess when you have single digits, its a buy. You have a dividend yield in this market thats attractive. I go back to the cocacola, pepsi, kelloggs of the future, they get better multiples but are not growing at the hyper growth rate. If you look at a basket of those companies which have grown 2 for the past five years, trade it 21 times earnings. Cisco growing 7 a year over that time frame. Whats the best you can expect for eps growth over the next five years . Theyre looking for high single digits. That would mean low single digit revenue, high single digit eps. What multiple is that . 10 . Because they have a great dividend yield, i would say you could probably give it a mid teens multiple. Mid teens. What is the market . What does the market grow at . 5 . It has 15 or something for a multiple. Yeah. This is not a company that i think has meaningful downside, doesnt have huge upside, but you have that nice dividend yield, its cheap and they dominate the market theyre in and theyre expanding in the new market. Under a Trump Administration, gdp growth will be good. Net neutrality wont be an issue. All this talk about a trade war, they already suffered. Its only 3 , 4 of revenue. Theyve had their trade battle with china. Theres no hope there . There is hope because the jv they started with was announced a year a go kicked off this wee. Inspur has an initiative, billions of dollars over the next five years or so, to create a jv with inspur that is that size. It just kicked off. 51 is owned by china based inspur. They will trail blaze like they wouldnt be able to because of exactly whether you said. When you partner with chinese companies, you can do well. They were switchers, routers, all that stuff. Building out the internet. Yeah. They need to transition . Is there still a business there . 30 switches, 17 routers. They have a Big Data Center business. Theyre in security, in software. Theyre in servers, number two blade server in the world now. The cloud, too . All this is in the cloud. All of this can be sold into the cloud. Thats the initiative. Look at you throwing around the cloud . I need to go back to school. Im not we always used to talk about cisco. I thought that the color selection for the routers, i thought they didnt have all they had was that tan. I wanted a blue or a teal or Something Like that. Because im not sure what the hell so you hook everything up with this stuff . Keeps the internet running. If you could have your they didnt care about what color. Pink. You know, mcintosh came out with remember, they did come out with a bunch. They had it right. Those routers, same ugly tan. Theres purple switches out there. Are there . Extreme networks. Its the game. Now theyre selling to business only. Really . Yeah. Theyre not selling to consumer anymore. When we do Remote Access to our computers, theres some type of cisco thing i use to click on. Yeah. Ive seen that. Its a software thing. 60 market share. Is this the best idea in tech . I think its a core tech holding. An attractive play. Thats a no . Not the best idea, but a solid play. Im noticing more and more Value Investors have warmed up to cisco. Why . Execution. Their operating margins this quarter were the highest since the Second Quarter of 2005. Thats impressive. Weve seen what happens with high multiple stocks in the face of higher Interest Rates. Thank you, brian. Thanks. Tune in to squawk on the street for a first on cnbc interview with cisco ceo Chuck Robbins. When do you think they pick the medal of freedom winner . I dont know. Do you see who the two are . Springsteen, de niro. Right after remember all of the publicity before the election, both of them, de niro said it feels like 9 11 after. And springsteen felt do they pick after . I dont know. Does the president pick . I think the president picks. Coming up, a look at the minimum wage debate. A closer look at how donald trump could approach an issue crucial for the american economy. Heres a look at yesterdays s p 500 winners and losers. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. They are the natural borns enemy of the way things are. Yes, ideas are scary, and messy and fragile. But under the proper care, they become something beautiful. When whirlpool builds an appliance, they put everything they know into it. But once its sold, there usually isnt a way to keep improving that product. Today, whirlpool can analyze iot sensor data from connected appliances on the ibm cloud. So they can continuously learn how customers are using their products. And how the machines respond. Harnessing data to make great products better thats what the ibm cloud is built for. Its been over 100 years since harnessing data to make great products better the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back to squawk box on cnbc. U. S. Equity futures at this hour marginally positive for the session. Nasdaq looks good this morning after a winning session yesterday, even though the broader averages were down. The s p is indicated up one. Wouldnt take much of a rally to get the s p to new alltime highs at this point either. Guess thats all well look at. Jpmorgan will reportedly pay more than 250 million to settle a government hiring probe in china. Allegations are that the bank hired the children of chinese decisionmakers to win business in china. 200 million will be paid to the s. E. C. And the justice department, and more than 50 million will be paid to the fed. No individual prosecution is expected. In deal news, oil refiner toroso is buying western refiner in cash and stock for about 4. 1 billion dollars. A 22 premium to western refinings close yet. The company will have Refining Capacity of more than 1. 1 Million Barrels a day. Some stocks to watch, our own experience with l brands earlier today. L brands Third Quarter, a flasher a flasher earlier. Happened. Were in new york. Wait until we moves to times square. They dont have to flash. Theyre naked all the times any way. I hear elmo is completely naked. Underneath . Its hot in there. Elmo is always naked. He doesnt wear clothes. Thats right. L brands falls following weakness at victorias secret. The company is giving a downbead outlook for the Fourth Quarter which includes the Holiday Shopping season. That means snuffaluffagus was naked and big bird was naked. You know how nice elmo is. If you dont pay him after your picture is taken, he slugs you. Thats new york. Thats why you dont take a picture with him. Thats times square. Elmo will sucker punk you if u you dont pay. You hear were moving. I hear. How i do get from the car into the i think you have to walk a half block. Its a pedestrian zone now. Yeah. Is there a carrier . Do we have a an egyptian thing . No, am i allowed to a carry . Not in times square me. Is times square before giuliani or after now . Before, right . Kate rogers is here more on the minimum wage debate that wall street has been watching. Main street is closely watching that wage debate with 29 states and washington, d. C. Currently requiring wages above the federal floor of 7. 25 dollars an hour. On Election Night higher wages were approved in four states by the year 2020. President elect trump spoke out in favor of a 10 minimum wage while on the campaign trail, but Small Business advocates hope raising the wage wont be a priority. I think its very unlikely this congress will increase minimum wages beyond where they are now federally. However, a lot of states and localities have increased minimum wages where they are. For the minimum wage debate, the debate will continue to move to states and well see big disparities with some states and localities moving to 15 wage. I think its a concern for our members if theres going to be an increase in the minimum wage at the federal level. I think what weve seen and supported is state and local action on this. And we think its impossible to set a federal minimum wage. Also on the main street radar, potential lclaw backs of the overtime rule and obamacare, a lot of the reporting requirement thats take them so much time and money. The compliance cost. People think its just about the employer mandate, even if you dont have 50 or more employers, if you have less than 50, you have to prove you have less than 50. So tons of paperwork. Theres no denying that momentum is swinging towards higher wages, but a lot of advocates say while members do pay above the federal minimum, they would like to see it continue a state and local battle rather than something at the federal level. A contract between the employer and employee. What . I dont think there should be a minimum wage period. Zero minimum wage. I was going to ask that. A lot of people say not federal, but let the states do it. That makes more sense, in the middle of the country versus new york, you cant have the same or similar or do new york city versus new york state. In a growing economy, wages take care of themselves. Remember nixon . I dont remember nixon. He did wage price controls, which we still talk about and laugh in economic terms. Because its venezuelan. You dont set wages and prices. Were setting wages here. You can feel virtuous on the front end, just dont look at the possible consequences. Coming up, google earth goes virtual, a look at the vr app, and Neel Kashkari will talk rate hikes and his new blueprint to end too big to fail. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Mshe said i should think of my rteeth like an apple. It could be great on the outside not so great on the inside. Her advice . Use a toothpaste and mouthwash that strengthens both. Go pro with crest prohealth advanced. Its uniquely formulated with Activestrength Technology to strengthen teeth inside and is better at strengthening the outside than colgate total. Crest toothpaste and mouthwash makes my whole mouth feel amazing. Advance to healthier gums and stronger teeth from day one. My checkup was great. Crest. Healthy, beautiful smiles for life. Time for the executive edge. Activist Hedge Fund Starboard Value is up by 10 this year. Returns are said to be led by its sake in this company, depomed. So far this year the drugmakers shares are up 14 . Starboard best known for its shakeup of yahoo which you probably recall. Funds performance stands out given disappointing results from other activist investors this year. I asked the other day, starboard . Whats a starboard . Starwood. These guys look around what will we name the hedge fund . Starwood . No. No. Someone isnt it part of a ship . Starboard. Starboard. It pronounced i tonight know. They usually talk to faber, dont they . The activists . Google earth is getting the Virtual Reality treatment. The companys new app lets you stand in the middle of outer space or fly over the eiffel tower. Users point and click with controllers to travel through 3d renderings of world cities, landmarks and natural wonders. You can download google earth for free in the steam vr store. It is on the side of a ship or aircraft, on the right. Starboard. Thats how it is pronounced. Starboard. Is that the other i have to read. Spacex is requesting government approval to operate an extensive Satellite Network that would provide high speed Global Network coverage. The proposal port. A Digital Communications array of 4500 satellites. The network would we begin with the launch of 800 satellites to expand Internet Access in the United States. Elon musk said the project would cost at least 10 billion. Left and right. Starboard is right. Port is the other one. Aft . Lee . You know who knows these things . Kids who grew up sailing. Near the ocean. Children of the elite . Kind of. Coming up, minneapolis fed president Neel Kashkari rolling out his blueprint for too big to fail banks. Hell join us on squawk next. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. See ya next year. This season, start a new tradition. Experience the power of infiniti now, with leases starting at 319 a month. Infiniti. Empower the drive. New biwhat are we gonna do . Ys. How about we pump more into promotions . Nah. What else . What if we hire more sales reps . Nah. What else . What if we digitize the whole supply chain . So people can customize their bike before they buy it. That worked better than expected. Ill dial it back. Yeah, dial it back. Just a little. Live business, powered by sap. When you run live, you run simple. Minneapolis its a jumble. I shouldnt tell people the answer. Minneapolis fed president Neel Kashkari releasing a plan to end too big to fail. Kashkari says the plan will enable the u. S. Economy to grow without exposure to risk of another financial crisis and taxpayer bailouts. Joining us now with the details minneapolis fed president , Neel Kashkari, Steve Liesman is also with us. Someone who emails me quite a bit says if we get 3 , 4 growth, you may not have to worry so much about banks every five, ten years, and whether they would fail. It would be nice to have some serious growth. The other thing the other comment, we really have not fixed this . We still need i guess we get rid of doddfrank, then we have to go back to the drawing board . Heres the thing. Thanks for having me. The imf has a database of history of financial crises around the world. This is the best we have at predicting future crises. Its like terrorist attacks. You have to look at history and draw from that. Weve reduced the risk of a financial crisis over the next century to 67 . With the current level of regulations. With the current level. But theres still a 67 chance. If most americans knew that, theyd say thats ridiculous. Thats much too high. According to a lot of people, there was a 98 chance Hillary Clinton was going to win the election. How much confidence do you have in those numbers . I mean, how do you get them . Whats the margin of error . Whats the standard deviation . Do you have faith in i mean, do you believe those numbers . No. Well, its the best data we have. Otherwise other people who say do you . Is this like your work when you come up on unemployment friday . I just cant believe that do you believe weve lowered it from i dont doubt the work that was done in that regard. I think its a really uncertain proposition. I think what hes trying to figure out is the chance of another financial crisis in the next hundred years. The question as i said yesterday when i reported the plan from minneapolis here is this. We can reduce it, but at what cost. I think its worthwhile to go through the plan here, right . Youre going to hike the equity to risk rated asset level from 23. 5 to 13 . Lets stop right there. Would most Bank Executives be throwing up in their coffee as they see that . Theyre already throwing up in their coffee at 13 , neel. One of the reasons why dodd frank is now potentially on the chopping block is u. S. Growth has underperformed. One of the reasons people think u. S. Growth has underperformed is because of the stringent regulations in dodd frank. You want to hike it up by another ten percentage points. Heres the thing. Borrowing costs in the economy is very low. Its cheap for cooperations to go into debt today. Its not like theyre saying cost of credit is so high thats whats holding us back. Thats clearly not holding back the economy. But the spirit in what steve says is true, right . Theres a basic issue here. The more capital banks have to retain, right . The higher the ratios are, the less they have to lend out. I agree. I mean, that is the tradeoff. The more you raise it, you yourself acknowledge that the overall cost is a percentage of gdp could region 41 . That sounds extraordinary. Correct. And you know what the cost of the 2008 financial crisis . 158 of gdp. If my plan avoids one financial crisis, main street the u. S. Economy is way better off than if we accept financial crises. We as a society have to ask ourselves are we comfortable having a devastating crisis every 50 years. Lets put this in a way first, i want to understand that math. So it was more than 100 of gdp. What are you including there . Thats not my estimate. Thats the consensus estimate for the bank of international settlements. Right but what is in that . How much the u. S. Government spent on bailing out the banks . No. Its the longterm effects of a Slower Growth economy responding to a financial crisis. As we started the segment acknowledging the economys been growing slowly. If you take that present value to today thats 158 of gdp. You tell me. Do you want a 158 of gdp downturn event every 50 years . I dont. Maybe youre okay with that. Theres a lot of other things that have happened in the wake of the financial crisis that would lead to a weak economy. Im sorry, were going to run out of time. And you can go on, read minneapolis plan. Ive read it. Im telling viewers. Of course youve read it. Neel, i want to pivot to policy here. Sure. The prospect right now of greater deficit spending, fiscal stimulus tax cuts coming out of washington with a new president elect. How does that change the trajectory and your outlook . We want to wait and see what actually happens. Right now theyre looking at what the new congress and president are going to do. So far seems to be helping the fed. That would be good if it actually comes true. It would make our jobs a he can of a lot easier. But if you get more inflation from deficit spending, if you get more growth, if our neutral rate of interest were to rise, then the thinking of other fed officials has been the fed might have to hike more quickly. I think that thats fair. But all im saying is we have to wait and see what happens. Its hard to know. Theres a lot of speculation coming out right now. You done on Monetary Policy . Never. Im not done right now. You go. Right now we have no idea what your rate of increases are because in your tugtenning cycle, youve only done it once. So if you have a point, you cannot measure slope. Dont you need two points . Thats what forecastings for, joe. Yeah. A is real and b is a consensus forecast. You have another one so we can see the slope . Its not a cycle if you do it once. Will you just do it . You have a chance right now right here to say youre going to do it in december. I dont think its helpful, personally. Im just telling you my own personal policy. I try not to make these predictions because when theyre wrong people like you get really mad at us. Id rather not im mad now. Is the time right in december . I want to go back to lets go back to december. In december, would you support a fed rate hike . It depends what happens between now and december . Given the circumstances right now. Im looking at core inflation which is still under our target. Im looking at Inflation Expectations and im looking at the headline unemployment rate. Those are the three measures im most focused on right now to see if this story is going to keep running or if its running to a conclusion. You like the room to run idea. I think there is room to run but im going to reserve judgment. As the markets are changing the signals theyre telling us, we need to factor that in. Im not going to change based on one market move. One time you were a republican. I dont know what happened to you during the financial crisis, but if we do get supply scarred. Hes scarred i think. He ran in california. I know. But if we do get supply side policy, do you think we can do 3 and above for gdp again some day . Yeah. I think its possible. Okay, good. Thats all i need. Absolutely. Im an optimist, joe. Good. Me too. Now at least. Thank you. Earnings alert. Walmart and best buy just minutes away. Well bring you the reaction on wall street. Seriously . Verizon limits me and i gotta get home. Youre gonna choose navigation over me . Maps get up here. Umm. That way. Girl you better get on tmobile why pay more for data limits . Introducing tmobile one, unlimited data for everyone. Get four lines just 35 a month. Today, were seeing new technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. Earnings alert. The nations largest retailer reporting Quarterly Results. The numbers, a preview of holiday rush, and reaction from the street coming up. Plus janet yellen heads to capitol hill. Expected to be grilled on mop tear policy and potential trump plans. What the markets will be watching today and where you should be putting your money to work. The president elect looks to fill his cabinet. Reports and rumors are flying this morning. Senator rob portman will join us to talk trumponomics as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc. Im joe kernen along with Michelle Carusocabrera and wilfred frost. Wilfred frost is here. Welcome. Morning. You missed all the fun in the first hour with the flasher. I know which is a great shame. But the second hour is going to be more fun. Good ride . Smooth ride. Dont come down 5th avenue. I dont know what route they take. I just let them go. Hes reading. Futures at this hour are indicating a little bit higher this morning. Well see what happens as we get closer to the open. But the dow is indicated up about nine. The s p up less than a point. Nasdaq which had a good session yesterday for the bulls up about 5. 5 points. And walmart is just out with the Quarterly Results. Courtney reagan joins us with the numbers and more. Looks like this is a mixed quarter. Beat the street by 3 cents. Revenues a little light. U. S. Comparable sales are up. Strong 1. 2 . But that is just a hair shy of what the analysts had been expecting at 1. 3 . Now, the Worlds Largest retailer is also upping the lower end of its full year guidance. Traffic in the stores up 0. 7 . Transactions increased as well. I spoke to walmart cfo brett biggs and he said it was strong akrss the board in e the u. S. He continues to point to walmarts continuing story of transforming the business from a position of strength. They also have a lot of cash. Its in the process of exiting. With it, ecommerce sales were up 20 points. Thats whats comparable. Jet. Com was also included in the quarter for several weeks. When it comes to the election, theres no notable change in the spending patterns. When it comes to changes in a Trump Administration or anything that he may implement, biggs says well be paying attention as everyone does. Well be prepared to react as we see things come along. Then he laughed and said were ready for the holiday season. I think we are. We want the election behind us and have to move forward. A continuing transformation of the Company Means going from big box retailing to more online . Yes and no. Stores are more the Main Business and will likely remain the Main Business for a very long time. The vast majority comes from upward of 90 . Thats the piece they need to offer more options. Thats the transforming part. Exactly. But the stores, too, have actually come a long way. Their cleaner inventory levels are down but theyre also in stock more. Really theres been a lot of things that walmart is working on. Basics. Getting the retail basics right. Execution. Already had a good year. Thanks. Weve got a couple other analysts on walmart in the next hour. Japanese Prime Minister shinzo abe set to meet donald trump today. Hell be the first foreign leader to do so since the election. He says he wants to build a relationship of trust. Among the president elects other meetings today, nikki haley, jeb hensarling, rick scott, henry kissinger, fred smith, and former oracle ceo. Wow. Thats pretty interesting. A lot of busy, busy, busy. Going to be focused on the fed today. As looking for the sign of a rate hike next month. Here now is mike ryan chief investment strategist at gbs and jason trenert at. I was on the day after. Youre out of the fetal position now. You going to be okay . Im going to be okay. I was on the coast election week. This was not in your models. We thought hillary was going to be in. Republican congress. So this was surprisings. And are you negative now . No. At the end of the day in fact, we talked about this before. We were going to look past the elections and focus on the fundamentals and binary election outcomes. I think what youre also seeing is its amazing to me how quickly we shifted from focusing on the vices of the candidate to the virtues of policies now. Were starting to focus now in terms of regulatory relief and whatever the Infrastructure Program is going to look like which could be something from the government but also private sector as well. Theres no doubt and weve had people come in say the reaction in the stock market was a continuation of the improving earnings picture Interest Rates were already going up. Blah blah blah. Market went up on the animal spirit by maybe doing supply right . Maybe supply side . So i was been having both houses. Thats supposed to be bad. If people love gridlock, why is it trading up . I was on the morning after the election with you. Then after that i was on for four days in a row. Thursday, friday, monday, tuesday. And it is amazing. I was at a conference. Many ways this has been the bull market no one loved. If you actually look at that mutual fund and etf flows since 2009, theres actually been net redemptions of money flowing in. And now were starting to see our clients or institutional investors. Maybe theres some good things that will happen here. I think people are weighing the fiscal and regulatory side of things more than trade. And thats positive. How much more until you know . The markets see exactly what you saw. Tremendous run. But doesnt take over until january 20th. So what do you do . Im very much in agreement. I think you want to be a little bit careful here on certain things. Because the devil will obviously be in the details to use a cliche. I think the move down in technology in my view is overdone. I think people are worried about trade but youre also going to have a tax cut on repatriated profits. That will help them. Im not so sure its going to be as bad for tech as people think. And the other question is the dividend question. Just to talk about broad themes, you know, things we cant necessarily discount. I think well get more inflation at the margin. The height of end payers are going to have trouble. So people are less willing to pay 20 times earnings for utility than they might have been when you were looking at steady growth. So you havent given that its not going to be Hillary Clinton at this point as was your assumption. With all of the myriad assumptions you can make from that whether its higher Capital Gains taxes, whether its more regulation, whether its growing government. Take your pick. Hillarycare versus obamacare. So now youve got a different set of parameters. You havent changed anything about ubs outlook . The world is almost 180 degrees from what you expected. Lets go back to what was said before. Well see what is transformed into policy. I would say its more encouraging. By the way, i wanted to share one thing. We did a survey of investors both before and just after the election. So its already interesting how the sentiment changed dramatically. Before the election we had more people concerned, in fact, taking more defensive positions in their portfolio raising cash. Its fascinating how their outlook has changed. Opposed to 25 before the election who were constructive on equities. Now 53 . This is a radical shift in terms of just a few days. In terms of the way were looking at things, joe, is we had gone in with a prorisk bias into the election. We didnt think this was going to translate into a significant outcome. Whether weve become more constructive Going Forward and we start raising our earnings forecast and our growth forecast will depend upon how these policies ultimately translate into legitimative solutions. Why arent we concerned about the stronger dollar . Suddenly were relaxed about it. This is the one thing were focused on. What it will do. This act z as de facto tightening. Were also concerned about our earnings outlook is contingent upon two things. First of all, the continued solid gains in terms of business model. But also a weakening of the dollar and also a recovery in energy prizes. This is creating once again head winds for earnings. This could create some issues for our 2017 earnings outlook. Jason, the sector yesterday was banks. Was that a bit of a pullback . Im quite bullish on financials from here. The yield curve is steepening so that helps. And then also on the cost side, one would presume especially for the Smaller Banks that have been hit most by dodd frank, their cost should moderate some. I think going back to what he was saying, we think the dollar is very much the responsibilisp. Wasnt the fed tightened in december. As they talked about tightening four times. Then you saw this cascading series of events where oil prices got hammered and widened and all the rest of it. So i think its going to moderate. The dollar is going to moderate how quickly the fed can tighten. Thanks, guys. When we return, streets reaction to walmart earnings. And were also watching shares of bust buy reporting earnings of 62 Cents Per Share. Beating estimates by 15 cents. Sales also better than expected. They are up 7 this year. Take a quick look at oil this morning. Its gained in the last hour or so. Now up 1. 4 . The president and the ceo of American Petroleum jack gerard will join us in a bit. All that still to come here on squawk box. On a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. Walmart reporting earnings just minutes ago. Joining us to discuss them, robert good morning to you. Lets just summarize them at the top in terms of the u. S. Compare same store sales. Strong but a little below estimates. Is that right . 1. 2 . We were expecting 1. 3 . I think what you do need to keep in mind is the environment in terms of, you know, with all the retailers that have reported that we cover with the exception of off price and tjx, walmarts the strongest number so far. In terms of moving forward if they continue that sort of momentum, the comps get a little bit better for next year. Yeah. Our expectation is around a 1. 5 comp in the Fourth Quarter but also into 2017. They have a lot of momentum. Traffic was positive this quarter again. Up 70 basis points in retail thats one of the biggest and strongest metrics you need to have positive. And of course the big story. This transition to ecommerce integration of jet. Com particularly. What are the signs of how thats going . So far so good. Its still very early days. Overall we like what theyre doing in ecommerce. With a lot of the investments theyre making, with the infrastructure in place. Theyre really trying to approach the business from two sides. One is keep the store operations humming along and theyre doing a solid job with that. And the second is to really stay focused on the ecommerce opportunity the company has in front of it. And from both walmart earnings and other retailers and your own expectations, how do you think a Trump Presidency changes it . I think ultimately it remains very strong and that helps a lot of the consumer spending. That should also put additional pocket in the moneys pockets of the consumer. Overall i think the consumers in a very good position. Hopefully continues to be strong. The shares were looking at them now. They are down sort of 3 in the premarket. Based on the fact theyve had a strong run this year. Whats the call on the stock . We like the stock. You have 2. 8 dividend yield. Theyve been very transparent and very open about the investments theyre making in ecommerce. And really part of what theyre doing is accelerating the ecommerce investments because they feel so good about their operation. So we think the earnings estimates as we saw today, they were a little bit on the eps side. Theyre managing very well. We think its a very solid stock to own in this environment. And your price target . 82. Thank you for joining us this morning. So best buy also raised its outlook for the Fourth Quarter. The estimate was 158 and they raised it to 167. In addition to the big beat in the current quarter. Remember how bad it was for retail just a few quarters ago. People supposedly shop at best buy and buy on amazon. I wonder. Well find out about that later. Still got that image of if all you played soccer, what would dicks suppoporting goods its not based on soccer. Its based on Sporting Goods. Soccer is a feature in its if it wants to be. His point is you cant have a Dicks Sporting Goods and you cant because theres only one sport. Theres lots of sports in the uk. Theres more than soccer . You can sell merchandise. You could sell cricket. Balls like that with a different design on them. And you could have but it would get old really you would not need to browse and go through the entire store. There are collectible soccer balls. Its funny because im pretty sure its comfortably the biggest sport in the world. On almost every single measure. Dont let facts get in the way. Spoken like a true globalist. Coming up, speaking of which, who is the most valuable player in baseball . Now, thats a sport. Plus google earth is bringing the most amazing places to you thanks to Virtual Reality. Details after the break. Squawk box will be right back. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr for decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. You recognize that version . Right. The peanuts. Got me feeling very holiday. Very nice. Yeah. In culture, all those peanut christmas special, we hear that music and we think christmas. And we think of snoopy. Stocks to watch today. Cisco falling 4 on job cuts. They were announced in august. Revenue is down more than 2 . Company also warning revenue will decline again this quarter as challenges continue to mount. Ceo Chuck Robbins on the conference call. We delivered a strong q1 in an environment that continues to be challenging. We executed very well in the quarter with revenue growing 1 and nongap earnings growing 3 along with continued strength in nongap gross and operating margins. This quarter total product orders declined 2 largely due to Service Provider orders declining 12 which was worse than our expectations heading into the quarter. Later this morning, ceo chuck robin will join squawk on the street. Thats at 9 00 a. M. Eastern time. Haines celestial found no wrong doing. Auditing Committee Looked at whether it was recorded in the proper period. Solar now expects to post a loss for the year and is forecasting 2017 sales will fall well below estimates. Stock off 12 . Google earth is getting the Virtual Reality treatment. The companys new app google earth vr will let you stand in the middle of outer space. Users point and click with controllers to travel through 3d renderings of world cities. You can download for free in the vr store. That looks cool. I love it. And none of us can go everywhere. Well but none of us can go everywhere, right . Of course. Sbl speak for yourself. Youre going to bhutan. Youre going to nepal. Are you going to go to yeah, probably. Places in south america. Probably. Youre going to all those places . Some day. Iceland . Id love to. It would be need. Feel like youve been there. Major League Baseball will announce the american and National League mvp winners today. The panel of 30 voters for the american and National League will make the announcement later today. Mlb network will be hosting a live special at 6 00 p. M. To announce the winners. Like our bats, theyre round. Is that possible . Wow. Experts say mike trout of the angels and chris brian of the World Champion cubs are the front runners. Thats take me out to the ball game that song. I swung a bat a few times in one of those cages. Good fun. Still havent been to a game yet. Theyre great. I know i want to do it. Did you watch any of the world series . I didnt, no. It was too late. Oh, my gosh. It was late. But the seventh game i didnt get to either but its unbelievable. Yeah. I need to go to a game next season. But not with you, joe. Ive tried to get joe to take me to American Sports and he refuses. He wants to bring a camera. And hes very tall. I wouldnt do it either. Hes very tall. Thats what i said. People see him and think i must be 56. But people said im very so youre a heightest. I am. I can bring a couple of other anchors around here and wed have everything. Right . Coming up and then theyd see i was actually normal. And im what . Youre tall. Youre like 66. Where could oil prices be headed . Well ask the head of the American Petroleum institute. Then well talk about the trump transition. Look at the futures at this hour suggesting a positive open. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Welcome back to squawk box. Among the stories front and center, a grand slam of Economic Data coming up about an hour from now at 8 30 a. M. Eastern well get the october Consumer Price index, october Housing Starts, the November Philly fed index, and the Department Look at jobless claims. You might call it a quadruple play. I dont understand. Grand slam i do understand. Do you understand it . I do. Bases are loaded and its a home run. But a grand slam in tennis is all four majors. It started with baseball. Are there bases in cricket . When a guy swings the bat and hits it, what are the maximum amount of runs . Six. You can score six . If he hits it over the boundary. But theres nobody on hes not scoring other runners . And if its just a normal hit that doesnt reach the boundary, you can run back and forth. The same guy can have all those runs . Yeah. That is such a stupid that is really youre offending a large part of the world. Very big following. Any viewers from Southeast Asia are going to be angry right now. I just got the idea of how it should work and i heard that and it just were going to go to a game as well, joe. Lords cricket ground. Theyve got a big thing at citi field some time. They do. Lets get back to what is front and center from the Business Community today. Janet yellen has a date before congress. Shell testify for the joint Economic Committee of Congress Beginning at 10 00 eastern on the economic outlook. And check out shares this morning of Electronics Retailer best buy. Theyre surging after the Company Reported earnings that beat on the top and bottom lines. Also better than expected comparable samestore sales jumping some 6. 5 in the premarket. Wow. Fourth quarter guys. American Energy Priorities about to change drastically under donald trump. Hes vowed to rescind obamas jobdestroying executive actions including the Climate Action plan and to save the coal industry. Joining us now from washington is jack gerard, president and ceo of the American Petroleum institute. Good morning. Happy to be here. Are you the happiest guy on the planet as a result of the trump win . I think theres hope for optimism were going to focus now on energy and really look for opportunities for the United States to achieve its full potential as the Energy Superpower of the world. People say sometimes he shifts his position. Still, bottom line, when it comes to what would have been better for the Energy Sector and investment in the Energy Sector, Hillary Clinton versus donald trump you agree donald trump was the better outcome for what youd like to achieve . Yeah. I think its clear. While mr. Trump has talked generally about issues related to energy, i think theres two key areas we should focus on. The first one is hes commented about the need to review the regulatory tsunami, if you will, that weve been dealing with with. We have 145 pending regulations on the oil and gas industry right now that were dealing with as this administration concludes its service. So a focus on there to make sure were regulating smartly, not overburdening it. But the second piece weve been heartened by is his focus on infrastructure. As you know right now, theres opportunities potentially for keystone pipeline, for the Dakota Access pipeline. Recent studies show theres a potential 1. 1 trillion in infrastructure investment. These are private sector dollars just from the energy opportunities. So this is a big deal getting us back to job creation, Economic Opportunity for all. So were heartened by this. Look forward to working with him and the new congress to see what we can do to achieve our potential. Jack, do you think the big exporters around the world, do you think they should be worried about a Trump Presidency . Well, im not sure anybody should be worried about a Trump Presidency. But i think youll see the free market come into play perhaps more so than it has over the past seven or eight years. What i mean by that is i think youre going see more focus on things like export. More focus on domestic opportunity. We believe that if given the opportunity to compete, we can compete well all over the world as its been demonstrated with the shale revolution. So i dont think anybody needs to worry so much as folks that sounds like a lot more supply coming online down the road. It could be, but at the end of the dau, our view is let the market decide where it comes into play and where it comes from. Because we believe ultimately as u. S. Producers, well do very well under those circumstances. So our hope is get back to market forces. Make sure regulation is smart. Its not excessive, its not unnecessary, and duplicates what the states are already doing. Jack, when we think about some of the Campaign Rhetoric for mr. Trump that everyones now debating which parts of it gets carried through into policy and which parts perhaps gets left behind. Specifically with his rhetoric towards the coal industry and getting back jobs and supporting that. Is that somewhere that you think might be left behind . There might be a commitment to domestic policy but not so much towards coal . Well, i think once again if we allow the free market to work, what unfortunately has happened over the past eight years is weve got government putting its finger on the scale on behalf of preferred forms of energy. We shouldnt discriminate against the coal industry any more than we should discriminate against oil and gas, solar, wind, energy efficiency. We need a true all of the above. So i think the market will ultimately dictate what portion of the market place is filled by what form of energy, but we need to get back to a true, a more free market, if you will to allow those Energy Sources to compete. So coal is just one example of that. Where the current administrations put their finger on the scale and my view thats harmed the coal industry. They should be allowed to compete like everybody else and let the market decide what benefits the consumer most. Jack, im reticent to pick this topic up with joe so close to me. But what about the climate talk. I think thats one of the great misunderstandings we need to get focused on and talk about. What i mean by that is look at where we are today. Cleaner burning natural gas brought to us by the rich abundant supply we have in the United States has driven our Carbon Emissions down to a 20year low. But you dont hear the administration talking about that. We should have gone to paris and said we found the model. Its called clean burning natural gas. But we dont talk about it in those terms. So the we develop the technologies, the capabilities to protect the environment. We can have it both ways. Some people think its an either or. Its not. We can improve the environment while producing more energy. I dont know, jack. The api, you could call it Carbon Dioxide at least. Its a clear odorless gas found in trace amounts in the atmosphe atmosphere. Every time you say carbon, you play right into the church of climatology. In other words that its some sooty, black particulate material going up into the sky and blocking out the sun. Pollution. Youre conflating pollution with one of the most u bbiquito gas. Ill call it Carbon Dioxide. Thats not my intent to create a misunderstanding. When you bring up words like denier and when you call it only carbon and you dont call it Global Warming now. Its climate change. So every adverse weather event can be attributed to it. Including isis. It gets hard to separate the fact from the religion. I understand. But id also suggest we need to talk to the American People with facts and figures on the terms they understand it as well. I wouldnt start by calling it carbon. Well, i and i dont disagree with you on that. Okay. I stand corrected. Ill do better next time. People say coal. They see black sooty carbon coal and they think thats co2. Which right now im expelling a lot of co2. I understand. Ten times whats in the atmosphere. I would never accuse you or your colleagues of ever doing that. Exactly. We might be worse than cow farts, news anchors. You, yes. As one who grew up on the farm, i understand that very well. Jack, if the world were to act the way they want it, lets say we went to this freak market utopia. 20 years from now, how much would solar and wind be a part of it . Well, solar and wind has a place in the Broader Energy mix. But i think all the experts will tell you and in fact its the obama administrations projections show that oil and gas will still be the dominant form of energy by 2040 and 2050. Oh, no. And thats a reality. We will continue god help us. To fill the role of energy producer. So solar and wind i guess the spirit of my question was can they be competitive at some point without getting all kinds of subsidies or forcing people to buy them . Not for jet fuel. Some people believe they can continue to play a role. Our view is they will always play a smaller role than people think they will. So we need to be realistic about which forms of energy carry the most energy at the lowest affordable price for society and oil and gas is still the leader in that. And youve got to be honest with people when theyre charging up their tesla and all this coal being burnt to give energy to the grid. Coal burning cars. Right. Jack, good to have you on. Always great to be with you. I feel so virtuous driving one. So good about myself. Thank you. Coming up, republican senator rob portman on tax reform, immigration, and obamacare under president trump. That interview is next. In the meantime, check out the futures at this hour. Largely positive across the board now. Headquarters. This is where i trade and manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Welcome back to squawk box. We are watching shares of best buy this morning. Take a look. New alltime high. Company reported earnings of a new yearly high. 62 Cents Per Share beating estimates by 15 cents. Sales also better than expected. Trading higher by 8 , a gain of 3. 30. Also want to show you whats going on with oil this morning. Which has rebounded. Dollar is a little bit weaker for the first time in days and hence that may be why we see some strength in wti which is higher by 75 cents. A gain of more than 1. 5 . Still below 50. 46. 33 per barrel. If you want your crude delivered in december. Some other stocks to watch. L brands, Third Quarter profits falling among continued weakness at victorias secret. The retail chain fell more than 1 . Company also giving a down beat outlook for the Fourth Quarter which includes the Holiday Shopping season. And net app narrowed but still beat forecasts. Companys turnaround efforts continuing to pay off, it says here. The data storage provider raising outlook above analyst investments. And amgen reporting positive results for its new migraine drug. Its in a lawsuit stage trial. Companies says paushts experienced three fewer days of headaches per month. Which sort of tells you how awful that would be if you were i used to get them horrendous. Yeah. Amgen is developing the drug to treat both episodic and chronic migraines. President elect trump has big plans to reduce taxes in america and senators on both sides of the aisle are confident they can work with the white house to help find relief. Joining us now with more on this ohio senator rob portman. Your name was ears were probably burning a lot through the yearlong process leading up to the election, rob. Starting out with worries about down ballot effects from donald trump. Then you increased your lead in almost all the polls and people said youre the one guy doing it right. Not really overtly endorsing but not really pulling a kelly ayotte or anything like that. Suddenly youre up about ten points and people said youre, you know, youre the model of how to go through this election season. By the end of it, though, people that were with trump seemed to get that it was almost like a trump tail wind instead of a headwind. Did you go through it was like war and peace what you went through the last year, wasnt it . Well, donald trump did very well in ohio. He won by almost nine points. Nine points. Nine points. I thought it was a half a point advantage. Close, close. Very close. Going into election. Its unbelievable. Nine points. And you won by like eight or nine but you had like 60 didnt you . I won by 21. Oh. Sorry. And it was a good year. Unbelievable. Great state. Yeah. Voters in ohio were looking for a change and they want to take a new page out of the book, a fresh start. I think thats why he won. I think we now need to deliver. You know, you mentioned tax reform. Thats one way we can get the economy going and bring back some jobs. Theres so much opportunity there. So i think people were looking for something new and thats what the congress and the new administration has got to do now. You also are reaching out i saw on the notes that you think maybe democrats are going to want to be active as well in whatever the governments doing. But be nice, i guess, but its not necessary is it . Well, it would be good in the senate because the senate you need 60 votes to do most anything. There are a couple of exceptions to that. One is this Congressional Review Act where you can actually look at some existing regulations and send them to the president. Hopefully hell sign some of those changes. Then secondly under b the budget you can change whats reconciliation. Theres some exceptions to it. But i think on tax reform theres a chance we can make this bipartisan. Theres a sense that too many jobs are going overseas, investments going overseas. The code is clearly broken. The highest Corporate Tax rate in the world. And its affecting workers. I think thats where you can see a lot of consensus between republicans and democrats. But youre ready to play hard ball there. You can do reconciliation with tax reform. You know, no one was nice to you eight years ago with obamacare. They didnt say, gee, itd be nice to bring you along. Why would you know, tit for tat. Reconciliation is a way to do it. Youre right. Its kind of a fancy word for being able to do it with 50 votes instead of 60. But it also is limited to a tenyear period. And we saw this with the bush tax cuts that we had to after ten years go after a painful process of trying to renew some of them. You want to put permanent changes into law and particularly on the International Side i think its important for us to provide some predictability and certainty. Lets see what we can do. And if its impossible to do it under regular order, then there is another option under the budget reconciliation. You spoke about regulation in certain areas. Specifically what do you want to see within that sector in terms of changing regulation . Well, theres a broad swath now. You know, if you look at the environmental regulations and the finances regulations that come out of dodd frank. If you look at what the department of labor is doing, theres opportunity here to take in the pipeline and by executive action deal with those. Hopefully slow some dun. Others, you know, stop them altogether and start over again. And ones already been passed. Theres an opportunity for us to be sure that were using Congressional Review Act appropriately to begin to change those. And then funlly and this is the one i think is most interesting. Change the structure and the process of regulation. You know, require cost benefit analysis and the least burdensome alternative to get to an objective. Actually enforce the independent agencies to live under the rules that the executive branch has to live under. Looking at the cost and benefits. That would be a huge change and that would be a statutory change Going Forward not just for this administration but future administrations. And i think thatll make a huge difference. A lot of Establishment Republicans when the win happens said great. Paul ryans got a whole legitimative agenda ready to go. The bills are written. Health care reform, for example. All that stuff is just ready to go. Is there inevitably going to be some disappointment among republicans if donald trump doesnt want to go along with that whole program . I mean do you have any sense yet of just how much of that is going to happen and how much hes going to want to tinker around the edges as many. Im optimistic of what hes been saying so far. And the fact there is this agenda thats been laid out called the better way. I think we have actually the ability to work together. Therell be some give and take. Look, there always is. And republicans and democrats alike are going to want to get their point of view included in the process. But i think theres an opportunity here to get some things done on the big questions. You know, how to get the economy moving, how to deal with the middle class squeeze. Not just getting wages up but dealing with the defense side particularly as you say the Affordable Care act and the skyrocketing costs of health care for Small Businesses, for families. And then with regard to regulations and taxes as i talked about, i think theres a real shot here to get something done that will actually help move the needle. So im hopeful, but youre right. Therell be some give and take. Thats what, you know, the democratic process is all about. Youve had like every job in washington already. I guess youre not going to be in a cabinet, huh . Youd be good though. You got some experience. Youve already done it all. I think, joe, im best where i am which is trying to get some things done. I ran a campaign about results. I talked about our accomplishments and vision for the future. My view. You know ohio very well. People want to see things getting done. They dont want to just hire people to throw out the red meat and talk a lot. They want to see some accomplishments. I think thats the great promise and opportunity right now. Thats what im going to be working on. Have you talked to kasich . Whens the last time you spoke the to him . I stay in touch with john. Whats he saying . Hes got a couple more years. What about that thing he signed about supporting the nominee . Did you ask him about that . Youd have to ask him. Hes fired up for the next two years. Oh yeah . Oh, thats nice. Talked to him about ohio and reforms. Well see. I think one area we need help with from the governor like john case sick how do you reform the Health Care System in a more state based model. And i think thats one place where he can play a valuable role. Do you think that in ohio considering how big you won thats unbelievable that people said your seat was in jeopardy. Youve got that and a ninepoint win by trump. A little bit hes like the last guy on earth to come around thats a republican. Right . Yeah. Look, i saw a nice statement he made when donald trump was elected. Were all patriots. Now is the time to pull together and figure out how to pull the country forward. Senator, weve only got about 30 seconds left. But quickly on trade is that an area that youd like to see mr. Trump dial back his Campaign Rhetoric when it comes to policy. Look, i think its an opportunity for us to level the Playing Field more and we talked about this on the show before. I have talked about the fact that i still think we have a real problem with regard to unfair imports. Particularly dumping and subsidizing imports. Thats an area where we seem to have a consensus now. Steel jobs in ohio for instance is coming back. Because we have won some of these cases. All were asking for a level Playing Field. Thats a scenario we can make progress. I think currency manipulation is one. But we do need to expand exports. Trade agreements are important. Weve got to go. Do you know in Hamilton County what was the margin for trump . Hamilton has more democrats. So he didnt prevail there. But it was close. All right. But it was close. All right. Wow. Thank you, senator. Good to see you. See you again soon. Take care. Coming up, a not so sexy outlook for victorias secret Parent Company l brands. Well ask an analyst if the company can turn things around. Well be right back. Coming up at the top of the hour, the ceo of Dicks Sporting Goods joins us for the hour. From holiday expectations to washington expectations, ed stack talks retail, the consumer, and the state of the american economy. Starting at 8 00 a. M. Eastern time right here on squawk box. . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley okay, so you launched your banks app. Now what . How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. Coming up on squawk box, Dicks Sporting Goods ceo. Were back in a couple of minutes. Attention are you eligible for medicare . The medicare enrollment deadline is just a few weeks away. Changes to medicare plans could impact your healthcare costs. Are you getting all the benefits available to you . New plans are now available that could increase your benefits and lower how much you pay out of pocket. To update your coverage or enroll for the first time call healthmarkets. Well help you make sure you have the right medicare plan. Hi, im doctor martin gizzi. Its a new medicare year. That means more changes. And more confusion. Heres what i tell my patients. Start by asking. What kind of care is best for your Current Situation . Have there been changes in your health or medications . The key question is what can you do now, to ensure you get the care you need in the coming year . To find the coverage you need, call healthmarkets today. 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Call this number by the deadline. And let healthmarkets find the right medicare plan for you without cost or obligation. Call now. Janet yellen will testify before congress at 10 00 this morning and she will tell them that the case for a rate hike may be appropriate relatively soon and she repeats the case that the rate hike has strengthened. She also talks about of the dangers of rate hike. And delayed rate hike could force Financial Stability in nugs to encourage excessive risk taking. The economy she also says is making further progress towards the feds dual goals of maximum employment and price stability. Though she does say that the labor market has, quote, a bit more room to run. Thats something we just heard from Neel Kashkari. Shell tell the joint Economic Committee growth gdp has picked up. Consumer spending showing moderate gains. Business investment is soft. And she cites the drag from energy. Manufacturing has been hurt by foreign growth and a strong dollar. Inflation she says is running faster than earlier this year but still below the 2 goal target. She expects that to pick up. She also expects Global Growth to firm. Guys, just a fun little thing, something we talked about before. The strong gdp number. She is also citing the surge in soybean exports as a reason for the recent strength in growth. Back to you guys. Steve, youre a good soldier and, you know, we played some breaking news music for you. So give me the most exciting thing you just said and it better be good. Shes telegraphing this december rate hike, joe. Isnt it whats the fed funds right now . Its about 80 or 90 depending upon which metric you use. So its 90 and shes now telegraphing there might be a hike. So you got you dont have my break you got to can we put something out as a flash, an alert or something . Come on, man. I just did, joe. I think its this one. Cites dangers of delaying the rate increase. Right. She hasnt really done that before. In fact, its not even handed. She doesnt cite the dangers of hiking too fast which shes done in the past. Okay. Because yeah, youre right. But when do you think Richard Fisher came on and first said, you know, maybe some of the oil move . That was when oil was 100 a barrel. Maybe he was wrong, but other people have cited, you know, there may be some asset inflation that was probably not good. Thats about three years old. Shes finally coming around to that, there could be risks staying at zero . Yes, shes definitely citing that. Shes trying to tell the market she agrees with this idea. That was years ago, right . Joe, if you dont like what im reporting here no you can blame me. Im covering the fed here. Talk to the back and complain to him. You can go up the chain and complain even further. Im doing my job over here. Not complaining. I guess my job is to stand here and take the bullets that youre throwing at me. If you throw a bullet, its not going to hurt anyone, steve. Thank you, steve. Another mixed metaphor. No i said take the bullets. Thank you, steve. Its my pleasure, michelle. Ill be back for the exciting cpi report and jobless claims. Again, joe, if you dont like that production decision youre going to change that. You have a say in that, i believe. Walmart and best buy out with Quarterly Results earlier this morning. Courtney reagan in. Courtney, your stuff is awesome. And we get Christmas Music and christmas countdowns. Interesting. So lets start with the Worlds Largest retailer because thats interesting and big and important. Walmart had some pretty strong results here beating by 2 Cents Per Share for profit. Revenue, though, of 118 billion, below consensus. U. S. Comparable sales, this is in the u. S. , up strong 1. 2 . Thats actually the best in five quarters. Though analysts were looking for 1. 3 . Walmart upping the lower end of its fullyear guidance. So traffic was up 0. 7 . I spoke to walmart cfo brett biggs, he said it was strong across the board in the u. S. He points to continuing story of transforming the business from this position of strength. Biggs also points to online progress. Ecommerce comps up 20 exkpluding the Chinese Market place. Ecommerce sales were up 20. 6 . Thats what were showing here. Thats the comparable number to pass quarters. Jet. Com also included in walmarts quarter for several weeks. Best buys blowout quarter adjusted profits soaring past expectations on better than expected revenue. Comps 1. 8 . And best buy is keeping its Holiday Quarter earnings guidance. This is interesting though. It notes its Fourth Quarter revenue guidance and includes a 200 million hit from the samsung product recalls. It also expects that thats going to impact comparable sales by 1. 5 in the Holiday Quarter because those products are not available. So thats an interesting call there Going Forward. Stul the showers are up sharply. All right. Thank you, courtney. Lets talk more about retail. Paul trussel and ed stack. Mr. Stack, let me start with you. It feels like for a lot of companies, suddenly retail is better when macys has gotten their Inventory Management in place, targets doing well, targets doing better, best buy is doing well. Has something changed from the doldrums when we knew everybody was going online . Well, i think our business has been very good like you said. A lot of businesses have continued to improve. And i think the consumer is feeling a little bit better about themselves and were pretty enthusiastic as were Going Forward into the fourth quart per. Whats the retail environment right now based on what you heard from walmart, target, poem home depot, lowes . Cautious optimism. I think the consumer as you all have noted for some time has had the ability to spend. Has a healthy, you know theres an income statement, if you will. I think weve better than waiting for them to make a trip to the store. Christmas will always come. So i sense a bit of cautious optimism here across the retail landscape heading into the Fourth Quarter. Does the election change your outlook at all when you see what the markets have done, how its risen . Does that improve your outlook . The reality is that the election does present some, you know, finalization of that process. And so i do think you can have a consumer kind of looking forward. But for walmart in particular, i think its more about the rate of change. And while walmart put up very strong results, traffic and u. S. Same store sales decelerated from the Second Quarter to the Third Quarter and their guidance for the Fourth Quarter also suggests further deceleration on a twoyear stack basis. And i think thats the reason why the stock down a lult butt premarket this morning. But we have a whole rating because of that rate of change. And what would make you chaung change it to a buy . Is it transforming more towards online sales to match whats happening with the rest of retail . Given the law of large nur numbers, were not expecting robust topline growth for walmart. What we would like to see is better flow through. And walmart is in a period where their Earnings Growth is relatively flattish to low single digit growth. A lot of that is because of investments theyre making. We give them credit for making those investments, but the j jet. Com acquisition was dilutive. Which on b one hand is to be in line with aldis on the grocery side. And to be competitive with amazon on the ecommerce side. I think thats a difficult environment as we look at our earnings forecast. We see little opportunity for there to be upside. When we talk about walmart, you are very specialized when it comes to Sporting Goods. They sell Sporting Goods. Right. How do you think about them as a competitor . We keep an eye on what walmart does, but the overlap between us and walmart is relatively small. We overlap with them on some of the outdoor categories but with the main brands we have, you dont find them as walmart. Were going to talk to you after the break and introduce you properly and Everything Else. Didnt introduce yet . No. Thats in the hang at we have much more throughout the next hour. Thank you very much. Still to come, well talk to ed stack ceo of Dicks Sporting Goods. Well talk to him about the collapse of Sports Authority and what it means for his business and much more. Squawk box coming back in minutes. This is where i trade andrs. Manage my portfolio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Hey nicole. I just wanted to think your support team for walking me through my First Options trade. Well, were all about educating people on options strategies. I wont let this accomplishment go to my head. Get help on options trading with thinkorswim, only at td ameritrade. Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Get organized at voya. Com. How else do you think he gets around so fast . Take the reins this holiday and get the mercedesbenz youve always wanted during the winter event. Now lease the 2017 gle350 for 579 a month at your local mercedesbenz dealer. Welcome back to squawk box. Lets have a look at the futures right now. This of course comes after the dow had its first decline in eight sessions. A slight decline down about 0. 3 . The nasdaq was positive. As you can see were pretty much flat at this hour. S p and dow fractioning the red. We did get some sector rotation yesterday. Banks the worst performing sector were down 1. 5 after a strong posttrump rally on the prior week or so. Oil prices, lets have a look at those. They are up about a percent or so. Big move in oil came on tuesday. Up 5 then wti in positive territory today. Quick look at the bond market. Yesterday we saw the yield rises that wed seen recently go the other direction. But today as you can see, the 30year at a session high. The 10year note pushing above 2. 2 after the comments from janet yellen. The markets acting like they really believe her this time. They certainly do. The 2year note playing catchup. Shes been so dovish for so long, here she is kicking and screaming into the real world and maybe she will do it this time. But this move today, yes its but its a fractional move. But its moved for them already. The bond market has already moved. Doesnt matter what they do. They can do it without worrying about repercussions which i think made them feckless for years. In the middle of next year if its marching higher, will they have to pause it and prevent having an outright move in it . The dollars not going to get out of control with 0. 75 point. Its not but if the world is a sad place if we cant stay in 1 without currency im not disagreeing. Im just stating. Its great to have you here, ceo of Dicks Sporting Goods. And who was it that started the company . My father. Your father started it. When did the first superstore when was it built . 1986 up in syracuse, new york. In syracuse. When was the store built out in near where i live. I go all the time. Its on route 22 or route 10. How long has that been . About ten years . About that. Id never heard of dicks before. To see a superstore concept come into that fragmented business and really put everybody else out of business, thats what were trying to get at. How did that happen . Well, we grew our business in concentric circles. We started in binghamton, new york. Then we moved the company in 94 to pittsburgh. We stuck to our knitting and never tried to do more than we could really accomplish. And what happened with these other guys is they were all private all of them . The ones that went out of business. This year around 20 million square feet of Sporting Goods have disappeared. City sports up in boston. Sports authority. And the ski they were full line Sporting Goods. They were big into ski but they did full line Sporting Goods. You know, baseball, golf, athletic footwear. Did private equity make the classic mistake of too much spending . All these guys they all imploded at the same time. We did this we said our business is going to be great right now. We need to take a look at these businesses and dissect them and say what was the symptom of the disease that ultimately they died from . And we went back and looked at a number of things, attributes they had. They were all privately owned, a lot of debt. They squeezed cost. They really never invested from the internet point. Our first ecommerce was in 1999. Weve been involved in this for a long time. So servicing the debt didnt allow them to spend money on getting into ecommerce which helped you. Were they able to carry everything . It seemed like from the debt. And they didnt invest in their stores. Their stores looked the same as they did 15 years ago. They didnt really invest in those stores. We looked at that and thats what we think they atrophied from and died. We have no debt. We have no longterm debt at all. We continue to invest in our stores. Weve got an ecommerce business this year that will be roughly a billion dollars. We feel that we dont have the symptoms that ultimately they died from. Because most areas of retail are pulling back from brick and mortar stores. Are you saying you can expand that now because these other guys stepped away . Weve continued to expand. Weve got a very small presence in south florida. Very little in california. A couple weeks ago in houston which is the fourth or fifth largers city in the country. We just opened up there. Tell me about the size of the Square Footage that you assume though. I imagine that with the shift to online retailing, are you assuming your stores are going to be as bill as the old superstores . They will. Our primary store is 50,000 square feet. The categories that we carry and the choices that the customers are looking for, we dont see the store changing in size. Where do you put them . Do you want to be in a mall now . Or is mall traffic declining so rapidly that its better to stand alone . We want to be in the best piece of real estate. If its in a mall and we can be there, we want to be there. Its in a strip center along with walmart, target, costco, we just want to look for the best piece of real estate. Thats where we want to be. Think of nike i used to think of it as a sneaker maker. Now its the Worlds Largest apparel maker. I think of you if ive bought gym equipment and all kinds of stuff. What i really see there is apparel. How much dicks success is apparel now . We do theres a little more than 50 of our business that is apparel and footwear. A little bit more than 50 . Thats totally different than the way i used to think of a Sporting Goods store or baseball gloves. Do you make money on that other stuff . Yeah, we do. But the issue today is that apparel and footwear is part of the equipment that these kids and these athletes are wearing. So whether its an underarmour compression top or bottom or the shoes theyre wearing, thats part of the equipment today. Wuch has been great for our business. Notwithstanding the fact that clearly its doing great overall, has there been a slowdown in athleisure over the last six months or so . Not for us. Were really focused on that core athlete. So that young man, young woman whos going out playing baseball, softball, soccer, football, whatever it is. They need that product. And they need to replenish that product. All of us with kids, theyre out playing in their uniform or compression top. This stuff gets dirty. They need to replace it. When joe asked do you make money on all those baseball gloves. The look on your face you smiled. Are the margins that much better there than apparel . Theyre not that much better but from a hardline standpoint, people think theres not theres little margin in the hardline side of the business and theres a lot more margin than people think. You mention nike and under armour . Hows adidas . Adidas is doing well. Theyre doing great. Mark king has taken over the adidas north america. I think hes done a great job. Its a hot brand right now. Im touched you mentioned the word soccer at least for me there. You know what they sell . They sell soccer balls. Weve done this too much. All right. Its doing well though, soccer, right . Its doing great. The world cup was terrific for soccer. Got to admit you stand corrected. Do you stand corrected . Okay. So and think about it. Youve got all these kids that need equipment and to be a good corporate citizen, you can do stuff in neighborhoods and find ways that, you know, that help your business but also help all these kids get equipment. You thought about that . We do. So weve got the Dicks Sporting Goods foundation that we did a few years ago. Theres a real Funding Crisis in this country around youth sports. Its expected that by 2020 you could have 27 of the public high schools have no sports program. And if you think about that, all of us that kind of grew up playing sports, going to sports, you think about what your High School Life would have been with no sports and to have these kids not have a place to go, a place to belong, its catastrophic for our kids whats going on. And this is going to impact the most and first is the places that need it the most. We produced two movies about this. Where they combined Germantown High School and Martin Luther king high school, these two rival high schools. And what happened with this doomsday budget, they couldnt have programs and coaches. They ended up putting it together in this football team. And we film these kids at home. We filmed them at class, at practice, in the streets. You see how important it is for these kids to have a place to belong. Its a great movie. If you get a chance to see it. Thats trusk. Youre staying for longer . Yes. Staying for the hour. I saw that. There you go. You going to do more . We are. We did a second one called keepers of the game. Youre not going to do a soccer movie . I think thats a great idea. What do you think . Definitely. That might be next on the list. It should be. I think it should be longer than normal. So you get all that great stuff. You know what the big thing, someone scores a goal. That would be. All builds up to that. Coming up, bad news for 6 million linkedin users in russia. Why it has been blacklisted in russia. That story next. Is it a force of nature . Or a sales event . The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. bing were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to squawk box. No more connections for linkedin in russia. A russian communication regulation ordering that Public Access to the site be blocked after a court ruling found the Company Guilty of violating storage laws. Websites that store personal data are required to do so on russian servers. Something that authorities said linkedin had not done. It will be blocked in 24 hours. Its the first major social Media Company to go dark in russia. It has more than 6 million registered users in the country. Tough luck there. Coming up, a flood of economic reports. Were minutes away from weekless jobless claims, Housing Starts, and cpi. Well bring you all the numbers and Market Reaction next. Welcome back to squawk box. Rick santelli here live on the floor seeing a litany of data points. Lets start out with jobless claims. Wow. A big drop. They dropped 19,000 to 235,000 from 254,000. Youre having to lean in the early 70s to match that. Even continuing claims dropped dramatically to 1. 97 million. Unreal. Philadelphia, november number. 7. 6 . We were looking for 7. 8 . Its a decent number. Lets get into the money ball. 25 jump on Housing Starts. 25 jump. Were expecting a number about 1. 15 million. It just leapfrogged to 1. 323 million seasonally adjusted and annualized. If we look at the permits number, you know, it was only up 0. 3 . We were expecting a number a little under 1. 2 , ended up with 1. 229 million. Not too bad. All right. Cpi. Unlike ppi we are up. We are up on headline number up 0. 4 . So much data. Up 0. 4 . Strip out food and energy, up 0. 1 . Year over year, core. Weve been watching this one. Up 2. 1 . Now, that follows 2. 2 . We were expecting 2. 2 . Just to give you some context on this number, the low read for the year was 2. 1 which equals what we have here. Weve had several of them. It was august to 2. 3 . And that year over year core to find a higher one than 2. 3 had to go to the fall of 2008. Okay . So if i had to summarize the data, Housing Starts, i dont know why that is such a big jump but most likely itll mean revert. But the data should push yields higher all things being equal. And it has. Just not by very much. We continue to play around in the mid20s. And the preopening equities have yawned through this whole thing. Wilfred, back to you. Thank you very much. And for that, a litany of day pa, litany of people around the desk that want to comment on it. Steve leisman here with us. And Michelle Meyer. Whats going on around the table is disbelief in the numbers in their sustainability. A huge bumpup in Housing Starts. Probably the place to start. 25. 5 . Now, i will say the underlying question here has always been how is it possible the United States is producing housing at such a low level given the demographics, all of that stuff. But i dont think we get back to where we should be in a single month. So i think what were going to hear later from Michelle Meyer who is here thankfully to help put all this in context is this is an unsustainable rate. Big jump in Single Family. You had a jump in multifamily which was expected. But a huge jump in Single Family. I have to go back and find out when the last time we did Housing Starts. The other number that is just jumping off the page is this 235 on claims. I was trying to figure out when we last were at such a level. Whats that . Down 19,000. 235,000. I dont think that number let me just take a number. What is that right there . Thats 253. I dont think i can find that number. Ive got to go back a thousand weeks hooer. All of this is so better than expected. There is not a single thing here that would prevent a december rate hike. Only pushes it more likely, right . Thats a good point. I dont know what the 2year is doing right now. I can check right here. But not just that, but it was not a lot of inflation with it. You also had 1. 6 on the headline numbers. That came down as well. Lets just bring in michelle. Youve had a chance to process this. While im spewing out the data here. What do you got . It does seem like its clearly better than expected for Housing Starts. Better than expected for initial jobless claims by far. Although i think were supposed to be a little bit careful with how much we read into these numbers. Single months data. Yeah. Its one months data. Theres got to be some noise here. Youve got this big multifamily the Single Family gain i think was interesting. It wasnt with a comparable gain in permits. I would want to see both starts and permits move up in tandem to feel confident. But i think generally speaking what weve been saying is the trend is higher for housing construction. Its not supposed to happen all in one month, but it is higher. The core cpi was 0. 1 month to month. You were expecting stronger than that . We were. Thats a little bit softer with core ppi also coming in a little bit weaker. But look. I mean, if it is the case that were seeing these gains in activity if it is the case, initial jobless claims continue to come down. Job growth accelerates, its a matter of time before you see more inflation pressures build in the economy. Because youre hitting up against capacity. In terms of the release comments from yellen earlier, what were you main takeaways from that . So i thought largely as expected in that she didnt really change her tune from the last time she spoke. I think thats largely appropriate because theres just a lot of uncertainty as to what will end up happening on a policy front out of washington. So i think she reiterated that the case has been made for a hike before the end of the year. The markets have priced that in. The data this morning is consistent with that. I was going to say, so, rick highlighted yields should be rising. And he looks at them but not as much as he might have expected considering this data here is up. Because its all priced in because weve already had such a tremendous run in yields. Because this inflation wasnt quite what you expected . Yeah, i think its because people know following the housing data that theres a lot of noise that comes with the housing statistics so you have to be careful over, you know, jumping the gun on it. And then inflation was a little bit softer. I think probably the biggest thing is youre going to wait to see what yellen says. Michelle, if this number were much higher, if Housing Starts were lower wed be talking about the dangers of an economy that was slowing. I wonder now if its time to start having the discussion we did three and change in the Third Quarter, rapid update has been rising. Were at 2. 5 on the Fourth Quarter. On gdp. Is it time to Start Talking about an economy that is potentially strengthening here . And by the way, a labor market that is strengthening quickly. Yeah, i think that clearly from the first half of the year to the second half of the year we saw acceleration. Part of that is because you had these diminished head winds. First half of the year you were dealing with the drop in energy investment. The hit from the stronger dollar. The kbangts. Now you have some pent up investment and pent up spending which i think is relevant. But look, i mean, this has been the recovery of fits and starts. I would anticipate it continues. Could wow ask the guest host quickly are there any signs out there . If there were pent up demand and more money in my pocket, i might go out as i have done and buy a more expensive baseball mitt for my son or more expensive bat. What are you seeing in terms of purchases . Our comps in the last quarter were up over 5 . Not too shabby. Very good. It was a big surprise to everyone we beat the street by a wide margin. And we think the consumer is feeling a little bit better. You know, as paul said earlier, we think theyre cautiously optimistic on a whole. Were pretty optimistic with our business because of the consolidation thats going on. We saw both an increase in traffic and an increase in ticket. The retail numbers were better than expected and there was talk about being better. You want to be careful not to take this too far. Because its one months worth of data. But so far the data is pointing in a better direction. Well have to leave it there. Thanks. Coming up, its a big week for auction houses as art lovers are placing their bids on classics. Ted smith will be here to weigh in on the market right after the break. Stay tuned. What i love most about tempurpedic mattresses. Is that they contour to your body. It keeps us comfortable and asleep at night. Shop our biggest event of the year, including all tempurpedic mattresses. Save up to 600, now thru november 29th. Get your tempurpedic. The most highly recommended bed in america. Oh caroline. So corporate put you up in a roadside motel. But with directv from at t, you can download then binge watch your dvrd shows from anywhere. That makes you more powerful than whatever it is you just stepped in. Or that friendly dumpster diver outside. I wouldnt sit there. Its your tv, take it with you. Now you can watch your dvr anywhere, at no extra cost, with directv from at t. Welcome back to squawk box. Have a look at futures right now. Pretty much flat after seeing the dow snap its streak yesterday with a quarter percent decline. We are fractionally lower for the s p and nasdaq. The dollar index this morning just fractionally giving up some of the ground. But its gained back a little bit today since some of that data came out. A little more Dollar Strength than an hour or two ago. Big week in the art market as the auction houses hold their fall actions. Robert frank has more. Is this the biggest week . Or every season theres one . The spring and the fall. May and november. But this was big and it was a great week. Christies last night selling one of monetts grain stack paintings for a record. That brings the total for auction houses for the week to more than a billion dollars. Tonight is sothebys night. Theyre going to hold their contemporary evening sale expected to top 200 million. Joining us for his firstever live tv interview is sothebys ceo and president tad smith. Thanks for coming. Thanks. Good to be here. Its not my first, but its my first on squawk. Is it . First on squawk. Then it is your first. I guess thats right. So the big question. Has trump been good for the art market . Its a really good question. I have to say, this week since the election you know, if i step back, really the election both had an impact and has an impact. It had an impact leading up to it because the uncertainty around it gave some consigners some pause. And so the overall level of sales this week reflects that. But since then, i think earlier today we talked a little bit about some animal spirits and the markets feel a little better. And i think theres been a fairly good feeling among the art collect irs this week. Its your first live interview as sothebys ceo. Thats what i meant. Thats right. You mention that the problem the reason that the market is down from its 20142015 peak is sellers not buyers. There are tons of buyers out there that want stuff. But its the guys who want to give up their paintings. And there was so much uncertainty. Looking towards the spring, you probably have some visibility conversations. Is the spring going to be better than november . I think the spring is going to be better. And i think consigners as long as the week continues to do well and it should are going to feel better by the spring. And why are collectors feeling those animal spirits this week . Is it because tax cuts are going to give more money in their pockets . Sit because theyre more bullish on growth . Is it because of the market runup weve had . What are the main drivers for that optimism were seeing in the sales room this week . Well, everywhere i go around the world, and really for almost 15, 16 months, weve had a long group of buyers that have plenty of money to spend and they want to buy things. The trouble particularly in the last 6 to 12 months has been there hasnt been enough that they were offering. And as long as we have a good confident week and i think were going to do that, were going to have more offered in the spring. That will free up the buyers. Its convincing those sellers that the buyers are there thats the opportunity here. We are blowing through these estimates by i mean, that was supposed to sell for 20, 30. It went for 60 million. This hay stack went for millions more than expected. Do you think that were going to see in the spring another 100 million, 150 million picasso. Are we going to get back to that level in six months . Too soon to say, but i wouldnt be surprised. The short answer is if you see big numbers going out for big pieces of art and high quality pieces of art, it brings out people who had been thinking about it but had discretion not to. A lot of people think about the art market as a place for flight capital. Is a lot of sales driven by people who are in some countries where they have to be worried about their rights with their money and its a really great way to sop up a lot of liquidity in a very small space. Yeah. Its a great question. The truth is when you look at it, the people who are buying art around the world are the people who are buying a lot of other things. And theyre buying from all types of countries. Some where there are capital things and some where there arent. Fundamentally the underlying opportunity here is that theres just a lot of really very wealthy people and they have a lot of capital to deploy. Its like weve been asking about all different assets. Will the rise in Interest Rates that were seeing which when youre at zero, thats great for art. People move out the risk curve and asset values go up with rich people. As they rise, will it be offset by a stronger economy, lower taxes, Everything Else . Are you okay with rates going up . Is would you like to say at zero forever . Its a great question. It depends on the reason why rates are going up. If rates are going up because people feel stronger about the economy, growth is pulling a little bit on the tether with the banks. Thats a good thing. And rates going up is a strong indicator. And its associated with something that makes people want to buy art because they have a lot of confidence. If rates are going up for other reasons, thats a bit more worrying. Thats not the situation we have right now. You dont have animal spirits at zero. You have worries at zero. And thats the paradox. Things are cranking. Zero makes assets relatively high in value, but the worries take the edge off. Do you have any of those . We just sold one. It was wonderful. Gosh, i dont remember. It was monday night. Was it more than like 800 . Oh, yeah, it was. I tell you something, joe. Weve got a lot of things for you. We have a lot of things for everybody here. At sothebys, 60 of the things we sold for the last six months went under 10,000. And thats on 50,000someodd things. Does the fee go lower with the price . Well, the total fee is lower but the percentage is higher. What percentage on a sub10,000, what do you do . 25 . Thats a nice margin. Speaking of which, i want to end on the stock because you have really transformed sothebys rapidly the 18 months youve been there. The stock is almost doubled just since february. Is there more room to go what is going to be your main priority for the rest of this year and next year in terms of transforming this company . Yeah. The key things that were continuing to do is rolling out our growth strategy. And fundamentally embracing technology in ways to bring frankly sothebys and the power of the brand to millions of people around the world that dont currently experience it. Were excited about the future. Great. Growing in the job from what you did before. He looks like sothebys. He came in looking like sothebys ceo. I think thats why he was picked. Its working, tad. I hope we can get you all out there. You promised me a sutine. Was it millions of dollars . It wasnt inexpensive, no. Its like six negatives there. Thank you. Great to have you. Its a pleasure. Dress like the job you want. Coming up next, were going to head down to the new york stock exchange. Jim cramer will join us live. Stay tuned. Youre watching squawk box here on cnbc. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Lets get down to the new york stock exchange. Jim cramer joins us now. Jim, yesterday we were talking about, you know, home depot and how you do Something Like that. Dicks on today, thats Pretty Amazing as a Success Story too because there are already Sporting Good superstores. I dont know how you put them all out of business and thrive. I remember my friend from Credit Suisse said, look, this is the modern big box winner in that segment. It was hard to foresee that, but it really has been and it did wipe out Sports Authority. You know, i dont think that you would order a lot of Sporting Goods stuff online. I guess you do, but i thought best buys best days were gone. But suddenly thats a pretty good number too, isnt it . I thought we were buying everything on amazon . 20 increase. It was a remarkable number in terms of online, and they point out mobile phones. This is the same thing as target did, what that is apple target reversed apple from the doldrums of 106 to 110. I think pleasantly surprised to hear about apple. And where is walmart in its efforts to thats a tough one. I think walmart still gets the pass because of what its doing. And i hesitate to just say, okay, look, base it on 2018. The numbers are coming down, shortterm. But theyve got a Long Term Plan to be able to stay in the game with amazon. And its too early to make a judgment that its failing. Thatd be ridiculous. Yeah. Jim, in term of the sector rotation weve been seeing, banks coming off yesterday, is that a sign that the posttrump rally is done for now . I think those stocks still, wilf, represent some value but run up much more than tangible book valuable. If you think multiple rate hikes, i dont think bank of america is going down to 18. 5 or maybe 18 before people come right back and start buying because they think there will be multiple rate hikes given the fact what were seeing from trump. Jim, if you were like really pow powerful, and you are, but if you could just pick a treasury secretary out of the ones youve been hearing about, do you think any one would do a better job than the rest . Well, jamie di momon, but i dont think thats going to happen. I actually know mnuchin. He would be fine. I think people are misunderstanding because hes young, hes not that young. Hes been around. I think he would be okay. Obviously you would like someone dick would be great. What about joe kernen . How about the captain of arsenal . Well, im okay with that. I want a winner in this saturdays winner. Why not . We need an international flavor. I agree. Jim, im doing epa. You have to hope that maybe one of those running backs by committee guy gets it, joe, and that Cincinnati Team they got seven running backs, make one of them. I dont know thats not my team anymore. The reds. Thats it. Johnny bench, could he be treasury secretary . Love him. Yeah. Cool head. Big red machine. Why not . Big occasions. Were talking sports now. He loves when we can get back to baseball. Thanks, jim. See you in a couple minutes. Coming up on have you looked at catchers mits . Theyre expensive. I know you have a tough time with that. I do. Coming up on squawk on the street, a first on cnbc interview with cisco ceo Chuck Robbins, thats at 9 00 eastern. Squawk will be right back. Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential our guest host this morning, ed stack, ceo of Dicks Sporting Goods. There are some correlations with someone sent in and i usually dont ask these questions, but this was interesting, so correlations between trump and some Sporting Goods or nike types that if there was a trade war with china it would be affected. And i heard your stock actually moved negatively correlated with trump and that nike and others did. Have you seen that . Would it matter if something happened with china . Well, it would depend on what happened, how it happened, when it was going to happen. I think it will all be fine. I think trump so ive never met him, but my sense is hes a deal guy. And hell make a deal and hell make it right for the country. And hell make it right for all the businesses that will be affected by it too. If Roger Goodell called you and said what happened, you know, you just said off camera something that soccers taken some interest away, especially with kids playing, some are playing soccer, not football anymore. Yeah. Whats ailing the nfl right now, do you think . Im not really sure. I think part of it was we had a great baseball season. So some people have talked about that. We had a great baseball season, great playoff season, and how good was it for baseball to have the cubs and the indians in the world series . And what a great series it was. Seven games, you know, goes to extra innings, theres a rain delay. I mean, it was as exciting a world series as in a long time. And i think that had a little bit to do with it. Im not going to say as we go forward because everybody says it but football probably recover later. Oh, i think it will. Footballs this year. Footballs a great sport. You got a lot of people watching it. Football will be just fine. Because of the playoffs. Yeah. Football, not soccer. You get confused because you call it football. Right. Over there. Ive learned to adapt certain words since i moved here, joe. Say american football. Could you say ecommerce and whats the other kind . Bricks and mortar. High street. Bricks and mortar. Excellent. Thank you. Thank you, wilfred. Thank you. Great having you. See you tomorrow. Squawk on the street is next. Good morning and welcome to squawk on the street. Im david faber with jim cramer. Were live from the new york stock exchange. Carl quintanilla has the day off. Lets give you a look at futures as we get set up for this thursday morning. As you can see, i can barely see, there it is. We are going to look for an up open this morning, at least on two of the broader averages. Though not by much. European markets, how are they doing . Well, not too bad. No. You can see it