Transcripts For CNBC Squawk On The Street 20170125

On what crossing this milestone might finally mean. We sat here a few weeks ago. Right. We got within a third of a point. Ill tell you the difference is the way you cross it. I mean, when we got there last time, i think a lot of people felt, wow, all these stocks are so stretched. Its really the banks that are doing it and thats not sustainable because banks have gotten way ahead. You look at the charts. And most of the of the good numbers that were in are more animal spirit driven. This is the biggest week of earnings, big week of earnings last week and were putting together a proctor, an american express, we look at ibm, 3m, which i know some didnt think was that great. It was fine. We look at United Technologies and boeing and say, geez, these are companies doing pretty well. So maybe its not all smoke and mirrors. Maybe its not all animal spirits. Maybe its not all trump inauguration. There was also a tremendous short base put in because people felt like no matter what happened its going to read bad. And somehow as if it was going to read bad would translate to the stock market. The stock market is a very different animal from what is being talked about. The only thing thats being talked about thats at the intersection with the stock market is a president whos bringing in ceos and saying i want you to do better. That is not rhetoric thats going to bring down stocks. So washington is much more benign. And the numbers are better than expected. And thats how you get it to be a little more sustainable. So i care about sustainability. You dont see that intraday upswing yesterday as a simple reflation trade responding to executive orders to pipelines, domestic basic resources . No, i mean, the oil is pretty much reversed at the end of the day. What was strong were some of the commodities and their reversing. Freeport didnt report a great number today. That would have been kind of a Market Leader. If you want to get granular, tech has been great. All that happened in tech was after the close seagate very heavily shorted name reported a true blowout which is going to lift a lot of semis. Texas instruments reported a great number. Lets not forget this morning that cisco, who we will be talking to is making acquisition in a space people really care about which is cloud space. I come back and say theres nothing in the way of it. And were still getting things like a bob evans splitting. Were getting selfhelp. Were still getting bids that are kind of, you know, not huge. Getting lodge tech last night out of europe that was absolutely terrific. The menu is set. And the menu is set by the companies that are reporting provided that the president is not out there saying, you know what, you rich people, you are going to be punished because its time to take your money away. That would mean a lot of the members of the cabinet would be rattled. Thats not happening. No, thats not happening. Thats not part of the plan at this point. No. Individual tax reform certainly seen as favoring the very, very top even though they keep talking about middle class and weve had the secretary of the treasury, at least incoming expected mnuchin said on our air some time back that actually the higher rates will sort of be maintained. But well see. Mnuchin gave you a demugs. People look at multiples and discount those based on a lower tax rate. You have the president saying basically to ford and gm we want you to make money. That is an example of where he really has come down. Lockheed martin hes come down. Greg hayes, United Technology, and theres two cents missing. Where is that from . Well, because they didnt move to mexico for gas furnaces. But in the end you look at boeing chrks got jawboned over the air force one, the air force ones and you see boeing put up a good number with a great backlog and say, look, i see these Companies Roll out and their numbers are good. I see takeovers still happening. I mention the cisco. I see the banks catching a bit again and Interest Rates came back which is important for the thesis. I dont have enough negatives. There are not enough jnjs and verizons to unnerve me. Jnj being an example of a company with a tweet, didnt think the quarter was that bad. I thought alex did a great job. Verizon was worst in show. Kind of textbook worst in show. Yeah, it was not good. It was bad. Very suboptimal. Yeah. The question, i mean, is what that means for the overall industry. At the same time you see freeport down but alcoa is the new steel. We have a lot of positive commentary. Say international paper. That is a classic life cycle stock that really comes into play right now. Say, listen, things are really getting great. Boeing backlog makes you feel good about aerospace. Even ge did not have a great quarter, but aerospace was good. Ge didnt do enough to destroy the thesis and its making a comeback. Ibm being the classic example of a company down five points in the aftermarket but actually did a good job. Gross margins are very good on software and consulting business looking a lot more like accensure. The companies arent screwing it up and the president isnt screwing it up. So what do you do . You say im not going to buy them because theyre at 20,000 . I look at biggest losers since the election, macys, urban, kors, nordstrom, pvh, some not down, just worst performer. Youre saying thats not a consumer statement. No, thats an amazon statement. Thats just a thats also border tax adjustment. Yeah. So those dont work. Restaurants and retail for the most part not participating in this rally. This is a look at the s p. Banks and finance huge really participating. Tech really participating. Industrial really participating. Oil really participating. So youre really looking for outliers. Theres just not enough companies not participating to bring this darn thing down. And were in sectors that are smaller weight of the overall index. Yeah. In the meantime i got valet i know thats a foreign company, but you see well use alcoa. Alcoa this is alcoas First Quarter the good since alcoa cant wait with harry callus, remember voice of the phillies . Yes. Its been a long time. Its when alcoa was when u. S. Steel was when the family was bigger than u. S. Steel. Right. You know what im talking about. I do. Its been a long time since the Industrial America has done well. And now some of this is because we have to believe that trump is going to help china. I mean help curb in china with aluminum. Claus ceo of ar c by the way registered. Before you buy aa, remember theres a huge slug of alcoa for sell out there. We have a takeover with Chuck Robbins, thats a big takeover. One thing here i think is worth mentioning is the fed and Interest Rates. And inflation. We get our first fomc decision i think february 1st. I believe thats 21, january jobs report we get on the third of february. You know let the debate over the Unemployment Rate begin. Right. But weve got inflationary trends that are in place right now to a certain extent. Wages are starting to move higher. Yeah, im waiting for something negative. Go ahead give me something negati negative. Something negative is rates are going to keep going up, if we go up say 75, 100 basis points over the next year. Lets play that game, mr. Watson, mr. Jeopardy. D. R. Horton yesterday home builder, business strong as theyve seen. It has not deterred. Now you can say wait a second theres going to be three more rate hikes. It has not deterred. Credits coming back in the system. What can i say . I cant dave, there are no alternative facts to hortons Conference Call. Also Housing Inventory a lot of that is regulation and red tape. Guess whats going to happen there . Its all true. And 2. 5 is still pretty low. Yeah, numbers were numbers. 3. A , 4 if we were to get there over the next 12 to 18 months. Did you see numbers about d. R. Horton that were smaller than the d. R. Horton numbers . D. R. Horton, david, it was popularly elected to be the strongest home builder. You want to contest that . Well have an investigation into that. Thats right. And ill tell you, the fbi will be all over you. Because nobodys immune, my friend. Just what i need. When we come back, ciscos Chuck Robbins on this companys deal to buy Software Startup app dynamics before the ipo. Well talk about a big day in national security, the president with more executive orders, comments from china on trade and well keep our eye on 20k. Back in a minute. Whats the value of capital . Whats Critical Thinking like . 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 a down to the wire deal. App dynamics was supposed to be the first big tech ipo of the year, going public tomorrow, until cisco said it was buying it last night for 3. 7 billion, which is well in excess of where it would be if it were going to start trading tomorrow. Joining us now the ceo of cisco, Chuck Robbins. Chuck, welcome back to the show. Why did you need to do this deal . And why did you pay so much more than the public probably would have paid if we waited for tomorrow . Well, jim, first of all, thanks for having me today. You know, i just like to call out, yesterday was a great day for us. We talk about two key lovers of innovation in our portfolio and one is our own ability to drive internal r d. And yesterday morning we launched a product called a spark board which was called the coolest product that ciscos ever launched. And then later in the day we made the acquisition of app dynamics. And i think if you look at app dynamics and number one they are the absolute Market Leader in their space in this cloud based application performance management. Secondly, they are growing faster almost twice as fast as their next nearest competitor. Theyre growing faster than any publicly traded Software Company today. And the synergies between the application analytics that they can drive and the infrastructure analystics that we can drive across both private and public clouds create Business Insights for our customers that no one else can deliver. So were pretty excited about the opportunity to go forward with app dynamics. Chuck, what does the Company Look Like now . I mean, i know one of the things you and i have talked about endlessly is if youre just going to be routers and switches, thats old technology, its a big legacy business, its a Good Business but it doesnt grow. Is there a percentage of cisco now that is going to be growing much faster that allows us to pay more for the stock of cisco because of acquisitions like this . Well, jim, what you see is that the core routing and switching portfolio is still Core Foundation of what everything is built on. As billions of new devices come on, the core connectivity layer is going to be the Mission Critical first step. But above that we want to continue to create value. Whether thats through our security portfolio, our collaboration portfolio or moving up the business relevance stack like were doing with app dynamics and being able to really help our customers understand whats going on in their environments these environments are more complicated than ever and being able to help them understand whats happening in my environment and what does that mean for my business performance. We think thats a unique capability. Moouing up, adding more value, helping customers transition to this cyber cloud and focused on the security marketplace which is going well for us as well. Chuck, weve also talked about repatriation, are you encouraged with some of the talk that President Trump has been saying which is that this is a major issue for him . And if you got the money back, would it be more appdynamics, putting more people to work, raising the dividend, buying back more stock or all of this. Tax reform we believe is good for business. When you look at the overall move to lower Corporate Tax rates as well as repatriation, we think it actually creates an opportunity to do all of those things. Dividends, m a, buybacks as well as create jobs here in the united states. So were pretty excited and were looking forward to seeing how this plays out over the next few months. Mr. Robbins, david faber. You know, to jims first question, id love to get a more specific answer from you in terms of the multiple you paid here. I think enterprise value to sales something around 10 times, thats on at least what were looking for. It grows very quickly, 54 revenue growth, but thats a really high multiple. Why as a cisco shareholder should i feel like youre paying a fair price . Well, david, let me take you back a few years and look at some of the other acquisitions weve made in this Software Space that in security and cloud, networking security like open dns or Jasper Acquisition we made, but the one i point out is if you go back four years ago we paid 1. 2 billion for a company that was 100 million in bookings and today thats a billion dollar business four years later. We believe the synergies we can drive through our Technology Synergies and more importantly even is to go to market synergies. Look at an appdynamics, they havent been able to take advantage so far of the Partner Ecosystem we have on a global basis. Our Sales Organization that touches every account around the world almost every day. You know, appdynamics is sold at 275 of the fortune 2,000. We can bring our teams together and penetrate them more effectively. If you look at what we did with that company, we think thats the same play we can run here. Right. Given that there seems to be at least an expectation that you guys are making a greater software play, or focus certainly, can we expect more deals of this type from you . Youre going to see us continue to drive. Weve built great partnerships with Companies Like apple and we will continue to leverage our company to do m a where it makes sense. Ill take you back to our last Earnings Call where our deferred revenue from Software Subscription and our sass business was up almost 4 billion on our balance sheet. Weve been making that transition and you can assume well continue to leverage every capability we have to continue that transition. All right, chuck, i got to tell you, i know you talked about the nearest competitor. Here were speaking about new relic. I sat down with lew, the ceo of relic, i think he would disagree. He says we have this covered, we are the Ecommerce Company able to monitor traffic. And that companys 1. 7 billion. Its going to open up substantially, why not just buy new relic . Didnt they have the nice public cloud exposure you would want . Well, if you look at where appdynamics has really played, theyve played in the upper end of the enterprise space. And as ive listened to my customers over the last few months, its been clear that appdynamics has not only the footprint demonstrated through growth as we need. I believe as we got to know them, we are a customer and have been for a couple years, so were very familiar with their technology, we were going down the path of a partnership with them and frankly as we got in and really understood what they were capable of and really understood how those synergies between the two Companies Come together, it just became very clear to us that being a part of cisco was a right answer. Chuck, you were in that meeting with the president a few days ago at trump tower. Anything that was telegraphed or talked about in that meeting now being put into practice from where you sit . Well, david, the key things we talked about were, you know, their commitment to tax reform. There was a great deal of dialogue about the different issues that matter to the Tech Community like immigration, trade. And i think that everything that we heard was constructive. We feel like theyre moving in the right direction from a business perspective. But i would say that the moves were making are moves we would make independent of anything thats going on there. We like this asset we bought yesterday. We love the Product Launch we had yesterday morning. I said to you guys over the last year that 2017 was going to be a year of tremendous innovation for us. And we had the first major launch yesterday. And youll see more of that coming from us this year. So were operating just as we would have been independent of that, david. Well, this is david. That was carl. But, chuck, you know, when you think about this year particularly as it relates to tax reform, how are you guys going about planning . Are you making any assumptions in given jims earlier question about repatriation on a lower tax rate, on the ability to write off Capital Investment in year one, on the nondeductibility of interest, is that something part of your plan or are you waiting to see what actually comes . First off, carl, i apologize for calling you david. [ laughter ] you can assume, david, one of the things cisco has shown for years is we run our business very responsibly. I think its safe to assume that we have done several scenarios. And weve done the appropriate planning based on how things play out. And were ready to move forward with whatever comes through tax reform and through the different policy changes as we always have been. So i think you should assume that we are prepared for that. Chuck, jim. Some people felt that after that last quarter the stock dipped down and maybe there was a level that even yourself you thought maybe some disappointment. Now, i know youre in quiet period, but do you sense that the customers are feeling some of the optimism that say were feeling in the stock market . Has the tone changed since we spoke last . Well, i think, jim, we are in a quiet period, but i think in general most of our customers are in a bit of a wait and see mode. Theres a lot of dynamics that are happening on a daily basis, as you guys report every day. And i think many are waiting to see just how things play out with different issues like tax reform. And so well wait and see over the next couple quarters as to how this thing transpires. And, you know, you guys have had a lot of momentum in the market as youve seen lately. And typically that leads to, you know, more positive emotion in the overall marketplace. But i think well have to see over the next couple quarters. All right, chuck, falcons or patriots . Hey, jim, what do you think . I knew you were going to be pulling for my Atlanta Falcons in the super bowl. I really appreciate that ahead of time. All right. I had to give that to him because that is really his team. He talks about it a lot. Chuck, thank you so much. Chuck robbins, ceo of cisco, swooping in and buying a deal that we would have been covering tomorrow. Thank you so much, sir. Good to see you. By the way, have you ever seen anything like that in terms of timing . Ive searched through mine and could not. It looked like there might be a deal coming and did hasten things. I was ready for this company. I was ready to talk about it because i am very excited about the Enterprise Cloud and how to monitor it because i had new relic on which is such an exciting company. And looking up 20 this morning on this in part on the multiple being paid by cisco. Yes, because you could argue 12 times if you wanted to. Right. The great thing about this deal, my travel trust owns cisco, that last quarter did not have the kind of oomph that comes from an understanding of the deferred revenues he was talking about. It was a misinterpreted quarter. As you watch the stock go higher youll realize cisco is a changing company, even though it had to pay a lot for this, the one thing cisco has a lot of, cash. Yes. 60 billion. Boy, if they do get the they are in many ways a trump stock. Trump stock, trump stock, trump stock. Right. They export. Right. A lot. But theyre not importing as much. But the repatriation. Just repatriation as a percentage of market cap, youre talking about half their market cap being part of that overseas cash. Half. Thats not bad. Half . 60 billion. Is it that much . Yeah, well, 60 billion overseas as of the last q. Thats why im saying on a ratio basis, apples got 40 per share. Now obviously theres going to be some tax. Hes boosting the dividend. I thought he would do more boost dividend but frankly this is what the Company Needs because this is higher multiple. When their core legacy business, not unlike ibms, has slowed to the point that other companies in the sector, this is a very good deal for the company, for the shareholders because it accelerates the revenue growth. And it accelerates the Software Company. Theyre trying to become more of a Software Company, bingo, this is what they did. Large companies have really needed this. New relic has worked in small medium size. Theyve got some large. This is an opportunity for them. Back to what chambers used to say about survivors, longterm survivors in terms of megacap enterprise and how there would be only a few over the long term. Right. And the steps they were taking to make sure cisco would be one of them. Absolutely. What was the last one . Ebay buying paypal . That was near the wire, right . You mean prior to them going public. Right. Im not sure i can remember it was a day prior to the public but certainly when you consider going public you also do consider, well, what would a private whole Company Transaction look like . Thats part of what you put down on paper typically. In this case theyre obviously in a position to get a multiple far in excess of what the Public Markets would have awarded them at least on the open. I was going to say appdynamics when i looked over financials i thought it would double at the open. It may not be such a big price that chuck paid. I thought it would double. This and then snapchat. And this market is different from the end of last year. That 1. 7 was a nice come on price for a sliver amount. And then the back end trades much higher, not unlike what we saw with well, with twilio. Last year as we know was a particularly weak year for raising capital. Yes. In an ipo. Snapchat you mentioned. Animal spirits seem to be running fairly high. Yes. Im hearing snapchat could come early march, i think is what they may be targeting. So were talking six weeks from now we could be seeing snapchat. Right. Thats going to be one where i think theyre going to try to fight to make it so its not too nutty. Not too nutty. Yeah, dont want a too nutty opening. I think if you sat down with them and talked about the way it continue maybe they can reign the bankers and the bankers can reign them in because you dont want a situation where it just explodes higher. Weve seen that in 2014. That was the peak when we had certain dot comes explode higher twitter, was that in 14 . Twitter. Remember twitter . I do remember twitter. I did a documentary on it. Its been three years since the ipo of that company. Well, twitter is basically a forum for like Donald Trumps President Trumps advertising what hes about to do. And then a lot of people being mad at trump. And then some stories by adam chef ner about changes in head coaches, right . Is there more to it . I dont think so. Thank you. Twitters been mentioned above the fold on all the major papers for the past few days for obvious reasons. Right. If they could make money, would it be dynamite or dynamite . They get a fulltime ceo, they make money, next thing you know stock goes higher. Thats the way its supposed to work i guess, right . So simple, isnt it . Make money its an equation. More money. The stock goes up. Anyway by the way, drawing a line from cisco to the dow, cisco a dow component. Thats one reason the dow looks to open above 20k, but others will come into play here. We have 1 gains on boeing, jim. 1 gain almost on Goldman Sachs. Ciscos up 1. 5 . The goldman window i think is closed for people although gary cohn certainly got out. Congratulations to gary cohn on a hundred. Hell be getting made whole by goldman as is often the case for goldman when one of their employees goes into public service, they accelerate the vesting of stock. He also is getting cash. He will defer the taxes on it. Its not that he wont pay taxes on it. It defers it until such time as he leaves government. All right. And goes into a trust. Thats important. On the boeing, boeing is always subject to the Conference Call, but i was worried about wide body. I was worried about what streamline accounting. So far so good on streamliner accounting. Maybe verizon can reverse and j j, but those were the two that didnt make sense in terms of wanting to own them. J j maybe at 111, but ge making a comeback. Ibm reiterate going to 200, the seagate Conference Call last night igniting the dram sector and the flash sector. The pipelines ready to roll, oil down 40 cents may not work. People are jumping the gun. I mean, you have caterpillar. We dont know what caterpillar is going to report. We have some rolling Sales Numbers out. I thought i saw some negative prints. I got to look at that. The tenyear, jim, above 2. 5. We need it to go to 2. 6. Essentially a high for the year. We need a 2. 6 in order for j. P. Morgan to break out. That will be an important stock. Big reason we saw that 10year in the 2. 6 neighborhood. Some argue kept us from cracking 20k before. Yeah. I mean, look, we want this to be a staged rollout, so to speak. We need the banks to go up, to break out and then we go to 2. 6. Then the banks break through where they were. Lets see what happens. The opening bell here at the nyse and the nasdaq looking for some opening prints. We do expect the dow to crack 20k for the first time in its 120year history. And it is done. We were on when it happened, our grandchildren will remember, hey, those guys were on. We were on. When it hit dow 20,000 we were on television. Yeah. Is that what youre saying . Yeah. Exciting. Kind of like first man on the moon. Yeah, im sure its equated to that. 20,030 for the dow. First time in history. Interestingly, guys, dows had 78 calendar years up, 43 calendar years down. Best year ever 1915 up 81 , worst year 1931 down 40 . See, the market does make sense. The republic might not have made it through 1931. Nice comeback the beginning of world war i. The interesting thing about this market, again, i want to emphasize this was done in earnings, not in a vacuum. These are real earnings that we are discussing right now that are moving stocks. And do not forget that therefore its rooted on something. Its not like it was two weeks ago when we were kind of on fumes hoping for the best. Its rooted. And when a cisco can go up on this, when they actually did make it so you want to pay more for their earnings, that does matter to me. When i look at 3m, which i thought was not nearly as bad. Consumer decision 3m important for the dow high price stock, i was not thrilled with the consumer division, other divisions were fine. If you went division by division youre okay. 3m can go up today. So really only a couple stinkers. Yeah. Best boeing, cat, j. P. Morgan, ge. J. P. Morgan did win that big business from state street. That does matter. J. P. Morgan not expensive stock talking 13 times earnings. With boeing leading the charge this morning at least seems a lot of investors are looking past any concerns of trade war. When you look at the boeing backlog, i mean, the boeing backlog is so big. That also by the way United Technologies in their Conference Call, United Technologies stressing how Strong Aerospace is. Ge, again, not a good quarter. But wow, how Strong Aerospace was. When you have a backlog of 473 billion and 5,700 commercial airplane orders for boeing, it is a very tough stock to short. And dont forget apple. Oh, i havent downgraded apple unlike everybody else. Yeah. Well, interestingly apple and more so facebook and google and amazon have been extremely strong performers this year. Yes. They suffered after the election certainly versus the Broader Market when we saw the financials take off and so many other what we ended up calling you called trump stocks. Yeah, trump stocks. But their return to growth has typified this year more so the last few weeks, jim, and one reason why we are i forget the dow, but the nasdaq comp is 5638 and s p is also up almost 0. 5 to 2,289. If you were on the call last night with steve really good executive, he was talking Strong Demand storage, Strong Demand data. Thats going to be google. People will talk about that. Were going to get google of course earnings. Alpha. Those should stall and should be a return to the banks. Argument this morning stocks are not over their skis because in terms of earnings. But its not weve seen agreed upon in principle even. No, i refer to reed hastings, listen to me, if you want to do a nerd drama, go over the proctor call because proctor told you everything. It told you, listen, were going to be able to do okay with the dollar. Able to do okay with commodity headwinds. The fact is were taking share. Then you say, okay, look, maybe theyre killing kimberly. But then kimberly came out and had a good quarter too. So those are companies that really had nothing to do with trump and theyre doing quite fine. There isnt any Conference Call that ive been on where people have said thank heavens hes president. In the horton Conference Call, the home builder, said theres a good tone about employment. Employment doing well has meant a lot to a lot of companies. To my earlier point employment doing well may also mean that were going to get wage inflation, which would be good in some ways but overall inflation. Kbur yous to see what janet yellen is thinking about this come the next fomc meeting. We have a president now not unwilling to tweet perhaps his thoughts about fed policy. No. So that could be interesting. Theres a lot of difference of opinion about who what the president s allowed to talk about historically versus a president who talked with taiwan from the getgo. And talks openly about the dollar also. But to carls point, jim, there are some believe were getting ahead of ourselves in terms of expectations for what were going to get out of washington. I spent a lot of time and im going to continue to talk about tax reform because it is so vitally important to so Many Industries and will reshape them. But it could be a while. It could be a while. Right. Are we getting ahead of some of those expectations . Are we taking those gains forward . I think were willing to say theyre going to happen some time during this year and thats going to boost a lot of the companies. But companies that im looking at that are lets say the rails. Theyve always been great commerce leaders. The rails they keep going up. Why is that . Its a special situation csx but you cant asterisk them, commerce is strong, airlines upgrade today. I just find what im saying is could we be this high just on earnings without trump . No, because the financials are really very counting on deregulation. And higher rates. But you can get higher rates based on the fact theres strong Housing Demand and strong employment. Right. But youve got the boeing earnings right in front of you with your hand on it. I mean, again, our relationship with china is changing dramatically. Right. Peter navarro on with the squawk crew this morning, key advisor to the president on trade. He has a very particular point of view about china. Thats an unknown. In a day where the foreign minister gives a quote to the chinese newspaper, be cautious in your words and actions, respect the reality is the translation. The message to the u. S. Basically mind your own business. Well, you know, look, im not saying that this boeing backlog is that china is key to the backlog. It is very important. China was very important for otis for the Elevator Company that is United Technology. Chinas important to cisco, china important to ibm, they had great numbers for china. Could be whistling past the graveyard each day he tweets, each night he tweets about what hes going to do. Were waiting for a tweet right now. Right. If tomorrow he says, listen, im tweeting against china, then we will have a pullback. Right. And there are those who believe chinas economy is on the precipice of disaster frankly because of their banking industry. My friend kyle bass has made a number of presentations about that. And continues to. Property bubble. Property bubble, just assets and Banking System far exceeding anything weve seen here in our country in terms of relative to the size of the economy. So will be interesting to see what our relationship with china evolves into because clearly its in the midst of drastic change. And what happens with our own economy and whether those who are saying that actually its completely overfueled and going to see a significant devaluation as a result. Okay. Because of losses in the Banking System. Let me tell you what i struggle with, United Technology key business is otis. Otis does not have great ord frers china. Chi chinas gigantic, orders are good, but theres not a lot of big buildings being built, no demand. Alcoa, why is that going up . A lot of that is belief that the president is going it intervene again after obama intervened for aluminum. But, david, copper goes up pretty much every day. Iron ore, i mean, a lot of the companies that are Raw Materials makers are acting if china is about to reaccelerate. I agree with you that thats a questionable call. Questionable. When you look through the numbers, it certainly at least raises some questions. But their pmis, their trade data. Not bad. Looking okay. Yes. Some say they could weather a trade war better than we could because of their political setup they could stomach it more. Well, i mean, its communist party. Remember, they have executed people for white collar crimes there. Some of these companies have missed their numbers they should be very glad theyre american based. Chinese companies missed your numbers kind of Supreme Court doesnt like that. Their Supreme Court is heavily involved in the economy. They have a lot of loss making enterprise over there. Theyre allowed to lose because they hire millions of people. The staterun corruption they started to crack down on that, but yes, chinas a quandary. I agree some of the datas good. You can argue otis which is boots on the ground some data not good. But when i see the things that are going on like the seagate, like a western digital, these are about secular trends toward greater data. Why cisco has to make that acquisition thats greater and need to organize it. The cloud based stories are very, very aggressive. At the same time the Consumer Products based stories are very, very good. So, i mean, youre kind of you can piece together a lot of positives, but the key is rates going higher. Because thats how j. P. Morgan goes higher, bank of america, citi, the nair do well, is there something negative today on wells fargo . Not that ive seen. All those stocks up nicely this morning all up at least 1 . Wells has been going up because of less aggressive cross selling. They get both ways do well. I dont know. If rates go higher, banks go higher. Period. Its a great thesis. Its what ive been banking on. Alan blinder had a great line in his oped, i think it was last week where he said the fed basically begged congress for years to do fiscal stimulus. And now that the economy we dont need it. Some dont need it and now theyre onboard. Look, i did a lot of work on the wall, its actually probably only 400 miles that you need. But every single stock related to the walls already up. Lockheed martin had a wall i want to see how Marillyn Hewson does on that. They had a wall krocontract . Were going to get some indication today with these orders. We expect the president to sign an eo directing funding of a border wall. During his visit to the department of homeland security. Along with other orders temporary ban on refugees, tripling the number of enforcement agents, limiting the inflow of refugees to the u. S. All things he promised he would do. David, if you want to talk about if you want to talk about rising wages, you keep immigration down. Thats true. Limit the labor, limit the growth in the labor pool, i guess, yeah. And i think thats something, again, we should this is all that tradeoff. I mean, you keep hearing about how, look, things are going to cost more. Its going to cost more for steel. It will cost more for aluminum. The guy on the line here is for the f150, cant move down to mexico for the smaller cars, hes having sees the president every day. I dont know what his schedule is, but does he get any nonpresident ial time . Well, goldman with the chart out today just tweeted u. S. Auto demand has peaked. Well, thats the last thing we need is more plants. Thats the point. Mark fields is really on the firing line. I just dont think that im using as a metaphor that mark fields meets with the president a bunch of times and where are you going to put your next plants. If i were ford, do we have to idle some plants six months from now . Remember the last quarter wasnt that good. No. One name today, guys, thats not participating is verizon after, again, that significant loss yesterday in the stock market. Its down another 2. 3 after disappointing earnings that were released yesterday morning. Yeah. And this is a wellowned stock with a very high paying high yield of course that has attracted certainly people whove been searching for yield, people on fixed incomes and the like. Were talking now 4. 72 dividend yield again on verizon. Which may certainly put a floor in for the stock. But at t also down about 1 again off of those numbers from yesterday. Theres been follow through to the selling. That was a dismal call. Its boeing thats done some wall work. Boeing, not lockheed martin. Boeing in 2011. How much are you going to watch freeport today . Down 6 . More than reversing the breakout from yesterday which took it to new highs. Yeah. That was one where the facts just didnt just got in the way of the story entirely. They just didnt do nearly as well as i thought they would. Now you can delay that. If copper keeps going up, theyll be fine. Thats been a benchmark stock. Someone like a. K. Steel, a. K. Steel put up a really good print. They did have rising prices, but then chatter was prices are going to stall for steel. And then aks gave it up. I think freeport is one you need to see. The china chatter we just gave get stronger and stronger. We dont use that much copper in this country. The better stocks are the ones the Pipeline Companies are the companies that build pipelines because theyve gotten the go ahead. And allegheny tech which has that sophisticated pipe. When i go to rigs, we always use mexican pipe in this country. Its like wheres that pipe made . A pie ner but not at pioneer, he was at chesapeake, say wheres all this pipe coming from mile long pipe, he said we use mexican pipe. I said what about american pipe . He said well we got to make money. Interesting. A lot of discussion about wto, treaties, gat, 70yearold treaties about discriminating against foreign suppliers and what happens to the first time it happens to us in another country. Well, you have to believe it will. Lets watch whirlpool when they report. I mean whirlpool does a lot of export. Chief leader in brazil. By the way, brazil and argentina bright spots so far in this quarter. But, yes, i mean, there are a lot of things we make that we are not necessarily the best at. One company we are the best at illinois toolworks reported amazing quarter today, stock is not up a lot. Dont take any cue from that. But use apple as a good example. I mean, samsung has dynamite i didnt mean to say dynamite, thats probably the wrong analogy for samsung. Samsung has a red hot samsungs got explode some samsung products are doing well and thats a good example where you can sub apple out and use samsung, or wa way a great phone apparently according to skyworks solutions. So you dont need an apple phone. You could block apple. You could say cat no, komatsu yes, which im very worried about. But if we do 550 billion in make America Great bonds, im sure trump will say you cant use komatsu, you have to buy cat, which is one of the reasons why cat keeps going up. We dont know the quarter yet. Watch tonight. What do you think of that rap i just gave you . Im going to watch rentals for insight on how the cat quarter will be. Wont matter because it will be all kind of for not because it will be out there in the ether and then cat reports in the morning. Cat is favored by the Trump Administration is that what you just said . No, im saying if pipe has to be made in americ yeah. In order to be able to be part of the deregulation of pipe, right . Yes. Of pipelines. What would keep the president from saying we want to do infrastructure but we dont want komatsu. No tractors, no anything allowed, no earth moving equipment allowed thats not made here. It will be a classic trumpian quid pro quo. Ill give you expedited approval, you use American Steel. Komatsu if you decide to build, you give us a plan to build ten plants, then you can have the standing to bid on some of these contracts. I want that plan, i want that plan on my desk or im going to tweet the heck out of you. Thats protectionism. And theres plenty of people who think that doesnt end well. Its tweettectionism. We made history this morning, index being led by boeing and cat. Question is now will it hold. Lets get to dominic chu on the floor. Hey, dom. Thats the big question, carl. As we talk about it and everyone is wearing the dow 20,000 hats as you can see here floating all over the floor, big question right now is whether or not we can hold these levels. The sense from a lot of traders down here weve been speaking to just around the opening bell is that there is a sense of optimism. But remember the trump rally weve seen ever since the election did stall out the beginning of december, weve been in still water since then and this has been a little catalyst, a breakout to the move higher. Thats the reason why some of the traders down here are a little cautious about whats going to happen next. A couple guys i spoke to over here have been saying, listen, this is a great story for the overall market. The deregulation side of things, potential tax benefits for certain corporations, but now its the time to put up or shut up for the markets overall. The reason why is because we have seen material stocks do really well since the election. We have seen financial stocks do really well ever since the election. On the hopes things could do actually better under a Trump Administration. Now as these executive orders are coming out the question becomes whether or not those actions will actually lead to benefits for these corporations. Thats a big theme among many of the traders down here on the floor. We also want to highlight the fact that with the financials always a huge focus, especially for the folks down here, but also technology stocks. You know, jim, david, carl, you guys all mentioned the fact that Google Alphabet near record high levels right now, could tech be taking some kind of leadership . And if so, that restores some of that conventional wisdom for normalized markets. That when bull markets take off it is those techs and financials that help lead the way higher. The materials, the infrastructure play, weve known thats going to be the way for a while now, now the issue is whether or not these companies do, the cats, the john deeres, martin marietta, making construction aggregates all become part of the big story. As we talk about whats happening with the picture overall, volatility is languishing 10. 8 last look at the vix. So were talking about volatility being really still. Last years trade you made a lot of money if you were short or selling volatility as opposed to buying it. Now for a lot of traders is that going to at least revert a little bit . A lot of people saying over the course of the past 200 days the dow jones has gotten really ahead of itself. Its playing catch up now. Now its about whether or not we see any mean reversion, carl. Thats going to be key. And holding steady, not a lot of volume. A lot going on, dom. Thank you for that. Viewers writing in, jim, asking if in your view if this is the end of something or beginning of something. Well, look, im an earnings guy. On the earnings coming through it is very difficult to dispute if you have earnings and guidance that is good and you do have some pot of gold at the end of the rainbow maybe with republicans and Corporate Tax, then youve got a reason why you can say, you know what, i want to stay long. Thats whats going on. I think people dont want to part with stocks. The last two weeks there have been a lot of people that gave up on this market. And there was a very big short base that was building up. Believing once he came in it cant be anything that good. And the first thing you see is the guys whose stocks you want to own are around the table. And hes saying what do i do to make your do more business. So hes not in the way, trump is not in the way of higher valuations. And were not hearing anything derailed about the agenda. We are hearing aggressive deregulation. All im saying is it may not finish above 20,000 but now we have a call on a lot of the dow stocks. Look, yes, verizon was not that good. I argue that ibm was good. J j wasnt that good to some. I would say j j was good. 3m i think was fine. Im going over the ones people didnt like. Ge. I was hoping you would say that so i didnt. Yeah, ge wasnt that good. Look, ge miss eed some big turbe orders. It was surprising. Look at that stock creep up. Apple. These companies are apples what 13 times . Nothings really that expensive. Now that weve seen the numbers. We got a call on the numbers in the Fourth Quarter in this country was very strong. In the Fourth Quarter a lot of places around the world europe and other places were good. Im saying fundamentals could have gotten us to some of this, not all of it. Some people say, listen, that election is over, turns out the guy was more pro business versus the one less pro business, but i would say overall that the quarters give you a reason to think that 20,000s not nutty at all. Yeah. By the way, the eurozone pmi to your point yesterday was not just a 69month high. Employment was rising the fastest in nine years. Yeah. Input costs the fastest in six years. And Deutsche Bank san tan der today. People talking about doing radical stuff like splitting, no, doing it on its own. The Deutsche Bank run has been rather amazing, right . Been rather amazing. Yes. From the lows when everybody was worried about the fine they would be paying. Right. The unicredit revaluation that we saw in italy. The unicredit salvation, so to speak, has really helped italy being the big drag on europe. Just not been that good. I think rates have to go up. I think the dollars reflecting some of the fact that the rates should go higher there. But in general all we really have what do we really have . We have the fundament of the quarters and the quarters so far whether they be from a western digital, from a seagate bleeds over to western digital, from a Texas Instruments which bleeds over to a skyworks, except for drugs and thats because of the tweeter the tweets, pretty good. Yeah. Caterpillar a twoyear high going back to late 2014. Isnt that something . 2. 50 from 100. They have big business in china and it does matter. Doug oberhelman didnt quite make it. No, he got left. Little deep and wide. I became a big doug fan because he got that Dealer Network which has been so really tough to deal with. He got thaem in line. He got their costs down. And in the end they said heres your hat, whats your hurry . I dont like that. Stay behind. Doug will end up in a good spot because doug ended up in going through the trough and came out on the other side. He just didnt cross the jordan. Lets get to the bond pits this morning. The tenyear another big story. Let get to the cme in chicago. Rick. Good morning, carl. Yeah, lets stick with that because to me the most important issue today is that relationship that exists between fx and the fixed income market, the Interest Rate market. Why . Because conventional wisdom dictates that everything going on in stocks, a fed thats moving at normalized and tightened policy, all of this going to make a dollar thats going to hurt multinationals. Well, maybe theres another side to the story. Look at a twoday of tens. Covered a lot of ground from the 30s right back up to 2. 5 . Look at a oneyear chart of tens. Basically hovering at levels of course will be the new high closes of 2017. But maybe heres the big story, look at a oneyear chart of gilts on the move higher approaching 115. Look at oneyear chart of oates, the french 10year, getting close to 1 . Look at that move. Pretty aggressive. Look at canada, 1. 80 moving higher as well. All of these are higher than they were around november 8th, you know what happened that day. And look at a oneyear chart of the bunds, approaching 50. 50. And all the negative rates in europe, see, heres the other side of the story. That if all global rates go up, not everybodys currency can go up because theyre all in the same circular pool, right . So whats happening is, is that european rates may have a delta that affects their currencys move higher quicker than the dollar. So what do we have happen . All rates are moving up. And if the dollar takes a little bit of a breather, just think about it. Were basically moving up in our rate, were at record territory in equities and it isnt only unique to the u. S. , maybe other countries arent at alltime highs but definitely grabbing some of the gusto. Wheres the dollar index . Flirting with its breakout of months ago at 100. This is a big story. And if you look at december 1st of the euro versus dollar, whoa, if we start to get above 1. 08 youll see this really start to open up on the global stage. Carl, back to you. All right, rick, thank you very much. As we continue to watch the markets a pretty sturdy performance at least in the first half hour. Yeah. Look, i come back to the two biggest areas of the s p, a tech and banks. And banks got rates going for them. You see a lot of stocks that are big dow stocks. See a visa breaking out here. Visa did not particularly have a blowout quarter but people are refining that quarter and saying thats not bad. Im using all these as metaphors for whats happening people going back saying that wasnt so bad. Fortunately in the dow when you have retail you dont just have walmart. You have home depot. And home depot is just, you know, there it is. Theres the high. And home depots regarded as being a little more insulated from amazon. A little more insulated from border tax. Not that much because a lot of the tools they sell indeed are imported. Imported, yeah. We dont make Stanley Works in america but home depot sells a lot of stuff for them. Theyve also had this stuff thats very easily delivered by amazon. The difference is you have to find a retailer that both is nonamazonable and at the same time doesnt have all foreign goods sold. But theres Companies Like travelers yesterday people kind of say that quarter was all right, mention dow stock that wasnt that bad. It wasnt that bad. You can say that is a half empty, half full. Apple yesterday we had a downgrade. Barclays. I mean, ive been reading barclays stuff and he was fooling around with price target 1. 19, 1. 20, but in the end it was a downgrade saying the quarter is not going to be that good. Was really focused on the guidance not being that good and yet the stock is moving up. Fed ex is a good example. Thats a Company People didnt like the quarter at all. Now weve decided that the quarter wasnt that good. Adobe we didnt like the quarter. Now adobes up ten from the quarter. So people are looking back at quarters and making new judgments on the same exact numbers saying maybe we werent paying enough. So the things youre cautious on i would argue drugs, pharma, health care, biotech, retail, anything else you would add . Restaurants. I find a lot of people were going out, i come back to Dominos Pizza theyre staying in playing video games. Chil chiles number particularly disappointing. Bob evans farms taking things into their own hands. I thought mcdonalds quarter was great. If you listened to the Conference Call, you would say ive had enough, im working at wendys. Investors looking back at earnings they initially thought werent that good and deciding to revisit what theyre willing to pay for these stocks and pay more in terms of a multiple. Right. Why is that a positive . Why isnt that reflective of animal spirits but also of kind of speculation and bubble . Well, because i think that so far the president has not cast cold water on the idea he can get the tax breaks. It comes down to the tax breaks. All right. Youre saying its about whats going to occur in the course of this year. To go to the next level we have to have the tax breaks. Weve kind of gone as far as we can go just on the earnings. Now were doing multiple revision. Its true. We have a guy say ill pay 18, no, ill pay 19. That game cant last. What has to happen is there has to be another element. We need rate hikes to have bank numbers up. We have brady, house and means saying the lower rate is vulnerable depending on how border adjustment comes, or doesnt. Right. Well, because in part they have to have it scored as revenue neutral to be able to do it under reconciliation. Right. I know this gets a little complex in terms of the rules, but thats the key. And so the revenue raising part the key part of it is the border tax adjustment which is seen as raising as much as 100 billion a year over ten years, a trillion dollars a key part whereas if you go with trump and him just saying lets call it 35 because hes tweeted that number though he hasnt said it recently, it could be very different in terms of tariff or border tax adjustment but gets to the complexity of getting a tax deal done, jim. Cisco can go to 31 on that appdynamics, can it go to 34 where it was before they reported the quarter . I think with 60 billion that you could repatriate, yes. I think without repatriation the stock could stall. So thats a good example. Good gran ular so thats a good example. Good gran ula example of what could happen. That stock cannot go past where it was when reported that last quarter without some sign that repatriation is a go. You need that. Really need it for that. Jim, how are you going to do this tonight on mad . Were talking oil. I got core labs on, which is probably the foremost scientists. I think oil holds a lot of the keys to the next level because oil is jobs. We had a lot of jobs created by the oil boom and then oil cratered and lost a lot of jobs. You want to create more jobs, you dont do it with auto plants, you do it with pipelines. There are people who dont want it to come out of the ground. Im sympathetic to that view, but if its going to come out of the ground, you want it through pipelines. I want to hear what david says because hes been exploring where there really is a lot more oil than people realize in our country. Remember, the president wants to smash opec. Comments out of gas did they really do that . Did they challenge the president . Its like a dare. Are they quitting me . Oh, hes going to blow them to kingdom come. Do they read twitter . Oh, yeah. They got a guy works at twitter. Everybody else does, why dont they . No. The only people they should have on looking at twitter, we need management. Management of twitter should be able to make money off it. Havent figured that out yet. Not yet, but david, its only been a couple years. Mark my words, within this administration theyre going to figure out twitter. They will figure it out. Well see you tonight. All right. Might see you tonight if we yes. Big day. Mad money of course 6 00 p. M. Eastern. Dow Holding Onto Gains up 1. 19. Lets get to dom chu on the floor. Carl, near session highs right now. Yes, its still early, but this idea we have the dow 20,000 rally that could build on itself is something a lot of traders are at least talking about right now. A number of comments ill ek ch from the beginning, there is not a huge surge in volume on the heels of whats happening with this move. Its a nice move higher but we have yet to see floods and floods of orders to say buy stocks. One thing to watch here. Also few traders mention fact financials, thats one to watch here because financials did gap up a little higher on this open on this push towards 20,000 and have now seemed to kind of falter or at least stall out a bit. If they can hold those gains and build on them, that could be key for todays trade whether we can close above the 20,000 mark. Financials always a big part of the market, second biggest sector in the s p 500. Also talking about some of the folks down here about what its like to actually feel this dow 20,000 mark hit. And, yes, there is a sense of excitement. But also remember there are always leaders and laggards in all of these types of stories. Remember the last time we hit that 10,000 mark in 09, october 14th of 2009, look at some of the big winners and losers. Among current members of the dow, the dow has reconstituted since that 2009 mark, United Health group far and away the best performing current dow member, home depot, apple, visa, disney, all at least tripling in value and perhaps more so. As you watch those stocks, thats been the leadership weve seen over the course of the past six, seven, eight years. The laggards, notable one there for me is Goldman Sachs. It hadnt been public for that long at that point, but still a financial stock thats still trying to regain some of those levels that weve seen during the financial crisis. All of the dow members are up since then. However, ibm, walmart, cisco, goldman, exxonmobil among some of the biggest laggards. And throughout the course of the day guys well keep a look at whats happening internally with the market. For now watch financials some traders say back here. Back to you. Dom, thank you very much. S p today also fresh alltime high, fresh alltime high for the nasdaq. Vix lowest since july of 2014. Lets bring in art cashin, director of floor operations at ubs joins us here at post nine with his hat. Art, good morning. Good morning. You had that on prior to the open, i should point out. Yes, we were kind of locked in. We took a look at futures and became pretty obvious thats where we were going to go. We hope we can hold onto it. Kind of broad. You got help from things like boeing and travelers and mm3m. How good is this . I think its pretty good. What were waiting for tomorrow morning it will be on the front page of every newspaper in probably every town. And that may bring in some additional retail money. And we see where we go from there. What are you seeing in terms of internals . How broad is it . What do volumes look like . What does that tell you . Volumes are a little d disappoi disappointing, but that indicates its a litd l narrower than you like, although the breadth of the market as i say isnt bad. I would like to see a bit more volume because we oldtimers believe volume equals validity, good volume means youre there for real. Also waiting to see will the momentum continue. And can we see bullish foll followthrough after this big round number. The fact weve stayed above it since the open. I think its reasonably solid. I would tell you that theres a bit of a political underlay to it. I think when theyve seen the president okay the pipelines and a variety of other things, theres an assumption that he is step by step going to review every one of his Campaign Promises. And that means youve got more certitude or certainly a great deal more likelihood that you will get tax reform and you will get deregulation and you will get the other things he spoke of because hes going down the list and trying to put them all together. That encourages the market. The other thing you had speaker of the house ryan saying he was working on a first 200day agenda. So that kind of tells you his timeline is within six months try and get tax reform and a few other things. Concerns about inflation, trade wars, protectionism, buy american requirements . Do those carry any weight right now . Well, the buy american requirements are going to be a little difficult to put together step by step. Next thing were looking for is quiet period for the fomc. Theyve got a meeting coming up. Well see how aggressive they are in the statement. And that will get everybodys attention. Other networks are going heavy, im sure, on the process, the white house process, press briefings, government credibility, alternative facts. Does that weigh on stocks at all . Is it a legitimate discussion for investors . I dont think quite yet. As i said, i think theyre somewhat impressed that hes going step by step over the things he can do instantly by executive order. So hes fulfilling the Campaign Promises chrks give everybody an idea that what were really going to see here is hes going to followthrough on all of them, or at least get them teed up. You mentioned the politics, which of course are very much at play here. Weve also got earnings. And i know jim was saying theyre definitely good enough. If you look at whats driving the dow today, boeing, one of the earnings this morning. And youve got the World Economy healing. I mean, as this happens the msci all world index is about to close at the highest level since 2015. Better economics there as well. So a number of pieces are sort of coming together. Yeah, it is coming together. I would be careful keep my eye on europe. Theres a little friction coming between the german camp and ecb. Well see how long they let draghi keep his quantitative easing going. Finally, if the president comes out in a few minutes and tweets about dow 20k, does he dee serve it . The credit . Well, he deserves part of it. And as i say, i think the fact that hes moving in on his Campaign Promises are one of the things and decent earnings that are underpinning this. So some credit, yes. All the credit, not quite. Thankyoutrump already going around, people are thinking its a snarky, all the grievances, now you can add the dow 20k. It will be an interesting close. Certainly is. All right, art cashin. Nasdaq intraday rorecord hig there as well. Bertha coombs with whats happening. Good morning, sara. The nasdaq yesterday went over that 5,600 mark intraday and then actually closed there. And that moved from 55 to 5,600 took just 12 sessions yeartodate, but the real momentum on the nasdaq yeartodate has been the large caps. Nasdaq 100 is up more than 5. 5 yeartodate. Today being helped by alltime highs with the likes of microsoft which will be reporting later this week and google parent alphabet as well. Also csx which has been a strong performer here on the nasdaq added to the nasdaq 100 last february, that has been a big driver. If you take a look at a oneyear chart of csx, that stock is up huge. And we are seeing tremendous investment, strong results coming from the industrial sector, a lot of these transport numbers are here on the nasdaq are whats helping to lift the sector and performing very well. As far as the usual suspects that have really provided the most impact, its the four horsemen. Now, its not netflix, but amazon, facebook and apple and google that have been providing the lift. And effectively provided all of the gains that weve seen in the nasdaq 100 so far this year, guys. Bertha, thank you. Joining us for more now on what we can expect next from this market, Goldman Sachs chief Investment Officer and paul christopher, wells fargo head Global Market strategist. Welcome to you both. Charmine, great to have you here onset. What are you hearing from clients . Do you see it as an entry point for Retail Investors that have been on the sidelines . We tend to focus on High Net Worth clients. And our recommendation now for eight years running has to be has been to be invested in u. S. Equities. So its not a new entry point for us. But our recommendation is to still stay invested in equities. We think theres still some upside left. Paul, its an interesting point. I mean, this has been one of the longest running bull markets in history, goes back to march 2009. Is this a fresh new wave that were getting since the election . Certainly the gains post election have been pretty strong 9 for the dow. Well, it might prove to be a short term sort of a top of the wave, but we still like the economy going forward. And for a while weve been bullish, lets say overweight on the cyclical sectors. Were playing an improvement in the economy going forward. We like that view. So, yeah, we think the market is in our target range right now in the s p. We think the market could do a little better some time this year. We like the cyclicals, but we do think there are some risks out there on the horizon. Some are political and some are going to be in terms of people maybe overshooting what the economy can do this year. But are any of them really unknown . Here weve been sitting talking about the rise of protectionism, rise of populism, sort of scary words, even the collapse of the global world order. And yet stocks continue to climb that wall of worry. Yeah, i think that sort of talk was more common in late 2015 and in early 2016. Right now its more kind of a question of, well, what sorts of volatility could the market have this year, what kind of swings could it have if we have a new tweet, lets say, that sounds very bearish on tariff protections against china or mexico, that could send the market a little bit lower. But if we get something a little bit easier along the lines of what mr. Wilbur ross was talking about last week, just some renegotiation, then the market maybe moves a bit higher. We think investors should focus on the economy, focus on those cyclical sectors and use those swings not sort of apocalyptic swings but higher and lower swings to take their positioning more to their advantage. Sharmin, how do you navigate around potential tweets on tariffs of china . At these valuations of china that are very high, what tends to see downdraft. Probability of 5 downdraft from here is 100 . So we tell our clients that you should actually expect downdrafts when equities are so expensive. The probability for 10 downdraft is actually over 60 . So our recommendation is that when you look at the economic backdrop on a global basis, its improving, its solid, the underpinnings of the u. S. Economy are solid. Weve had that view for a long time. And thats not a reason to go out of the market. So stay invested. We actually think theres more probability to the upside than the downside. If the probability for u. S. Recession is very low and our base case is about 15 , then the probability of the equity market actually doing better than our base case is much higher. So if our base case is about a 3 hike return, you are upside is actually more like a 9 type of return. And that tends to be our base case. Do you like the sectors that have been working after the election, financials at the top, materials now number two and actually doing better so far this year . In terms of different sectors, the one sector that we focused on for a while is actually the bank sector. And obviously the theme of deregulation and pulling back on some of the regulation is very supportive. So we do like the banking sector. We think theres still more upside there. In terms of other sectors we like the limited partnerships in the infrastructure part of the energy sector. We like high yield energy. Were somewhat concerned about whats going on in china. We dont think its a 2017 issue, but starting to become increasingly risky. We think when we look at the whole spectrum of risks, actually headlines and tweets arent going to be as big a risk relative to what could happen in china over the next several years. Youre talking about the economy . When we think of china we think of two risks, one is the economy. We use the term china could submerge under the burden of its own debt. If you look at any of the debt measures in china, theyre tremendously high. When you look at credittogdp gap number put out by the bank for international sentiments, china is about 30, the u. S. Was at 12. 4 just before the crisis. And if the u. S. Didnt avoid a financial crisis with all its strength, how can we assume that china will . Youre saying this is a 2018 story . Some time in the next the probability start to increase after 2017. So they get through their sort of november reappointments. They got their party congress, right, thats important. So all of that transpires. And then we have to see in 2018 will they put Structural Reforms on the front burner or does it stay on the back burner . Interestingly, paul, ill give you last word here, 2018 is actually when were expecting to feel the brunt of the trump and Republican Congress stimulus, if it actually starts to happen. Just wonder how that sets us up and how far ahead the market is looking at this point. Yeah, probably six to nine months ahead. If mr. Ryan can get his program together in 200 days, thats the middle of the year. That might be a good time for the market to start thinking about 2018 growth. We would caution investors not to necessarily expect its going to be a big boost by the time gets through Congress Compromise could easily dilute some of the more attractive features of the tax reform plan. Once again its best to stay fully invested, use the volatility in the markets as an opportunity to rebalance, take profits, buy good value and stay with those cyclical sectors. We like consumer discretionary, industrials, the financials and health care right now. All right. You both like this market. Thank you for joining us. Paul christopher, wells fargo head market strategist. Sharmin, Goldman Sachs ceo at the private wealth bank with the dow, carl, up 1. 35, past 20,000. Lets get to josh lipton in San Francisco and get more on the tech components involved in this dow 20k day. Hey, josh. Carl, if you want to see whats helped lead the dow on this historic charge to 20,000, look to cupertino, california. It is apple thats helped lead the way since october 14, 2009, the dows first close above 10,000 after the financial crisis, apple is up more than 330 . That does make it one of the best performing tech stocks in the index. But pull back that timeline and apples gains are even more impressive. Since march 29, 1999, which is when the dow first closed above 10,000, apple has surged more than 9,000 percent. Over that timeframe the tech giant is the best gainer in the dow period. But that was then. And this is now. Investors of course make money by placing smart bets on how a company will perform in the future. And there we do have a debate. A central question is the health of the iphone franchise, which accounts for some 60 of the companys revenue. Bears will argue that the best days of the iphone are now behind it, that innovation and dynamic change has come and gone for this product. And now like all hardware products the iphone will suffer declining average prices and margins. Bulls counter that there is still growth left here. That new technologies like a. I. Software and augmented reality can enrich and expand this platform. Theres also a question of what a Trump Presidency means for tim cook policy. Tims call lowering tax rate is good news for apple, but trump has suggested tariffs on goods manufactured outside the u. S. , that could have a big impact on apples business. Guys, back to you. Okay. Thank you, josh lipton of course in San Francisco. When we come back, were going to talk to the president s Informal Energy advise tor during the campaign, Continental Resources founder and ceo harold hamm on trumps executive orders, energy policy, market rally. First give you another quick look at the dow of course in record territory as you see well above 20,000. Wheres your hat . Its sitting here on my desk. Got a lot more squawk on the street coming up. Miles per hour. S traveling o0 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. The dow making market history this morning. Our next guest called the trump rally back before President Trump even took office. Take a listen to harold hamm back in july. I think you could, you know, say that thats a trump rally. Billions of people across the world are seeing the possibility of donald trump being president. And i think this is a big thing that is inspiring people to put money here in america instead of germany or other places where we have, you know, a lot of things going on. Joining us this morning Continental Resources founder and ceo harold hamm. Harold, good to have you back. Good morning. Good morning, carl. Im thinking of that call, thats pretty good along with your oil call which has also turned out to be pretty good. What did you see back then that perhaps others did not . Well, this is a great historic day. You know, we have a new sheriff in town. Hes called president Donald John Wayne trump. Doing everything like art cashin said, step by step, nothing more, but nothing less. Hes doing exactly just what he said. The markets reacting to it, as it should. I mean, you know, you buy stock on whats going to happen in the future and certainly in america things will get much better as these regulations are discarded and we set america free, business free and able to do what we can do. So its a pent up potential that i talked about back there thats making this happen. So im thrilled to be with you today. I want to get your views on the executive orders that we saw yesterday, the move we got in the energy complex. I noticed this morning one of the officials from gaz dlmz prom said its unlikely the u. S. Becomes the next exporter in nat gas. Do you see that as sort of a dare . How likely is that in the medium and short term . You and i both remember they said the same thing about natural gas. Here we are export r of natural gas, largest gas build in the world and more potential than anybody else with crude oil. And we can get there, you know, its going to be a measured approach, as ive said. Weve got some governing things like market and supply and demand we got to watch out for, but yeah, we can get there. And certainly, you know, getting the ban lifted on exports was a huge thing able to do. Exports is coming. Its growing all the time. And certainly in the future well be a net we can reach Energy Independence just like i predicted and do it very quickly. We said by 2000, you know, that by 2020, you know, maybe we can sit back here a year or two with a downturn, but were certainly going to get there. Thats ahead of us. Maybe you can help us with some of the criticism around the orders to Start Construction on the keystone xl pipeline and the Dakota Access pipeline. You know, the environmentalists will say that it contributes to climate change, threatens clean water, thats why president obama blocked it. Can you help us understand what President Trump does have planned in terms of a climate agenda . He told a group of auto ceos yesterday that to a large extent i am an environmentalist. But then he signed these sorders. So what do you expect from him here . Well, first of all, lets go back to Dakota Access pipeline. That was all about rule of law. I mean, they went through the process, they got all the permits and ready to make that happen, built 99 of it and at the last minute he stepped in and president obama stepped in and stopped it with the Justice Department at the very last minute. Like building a 20story skyscraper not being able to put the elevator house on top. So, i mean, thats what that was all about. President trump absolutely, you know, will do the right thing with the climate. We understand everybody understands that we have to march forward in a very constructive way. Were not going to be off crude oil in the nearterm, so why not have it here instead of beating islamic terrorism in the middle east . Its being pinched by the middle east. And use what we have here. And take the emp emphasis off the middle east. Thats what we have to do. Harold, we have you on a lot, but we rarely seem to talk to you about your company. So let me ask you a couple questions about continental itself. Do you have enough midstream takeaway from the oklahoma stack play right now . Or do you need more . No, we do have thats a good thing about working in oklahoma, you know, we got a lot of legacy pipelines and production in the state. And we do have enough takeaway capacity here in oklahoma. Thats a good thing about it. And certainly dapl will help a lot of people even though we didnt have oil committed to the Dakota Access pipeline, it will help other producers in the basin. And that helps all of us as well. Right. But here in stack were in very good shape. And what about in terms of just the costs of production at this point. Im hearing sand may be a bit of a concern in terms of fracking, more being used in each well, a full unit in each well in some cases, does the price of sand go up a lot . Look at you. Youre smiling. Well, weve been run out thin forever. Thats what i say about that. I dont have any concerns about running out of sand. You know, i think weve at a lot of points reached a point of diminishing returns with larger and larger treatment jobs. And were learning to do that with most stage completions up in the stages and cut down the size of jobs. Were not going to run out of sand. Finally, on pipeline sourcing, harold, a lot of people wonder ing if this buy American Steel thing runs afoul, of treaties that are 70 years old, you see any complications there . Well, we have to put America First. Thats what this is all about. If youre ready to do that, put America First, certainly dont let somebody weve seen a lot of people i say a lot of countries dump steel on this market over year after year after year. And, you know, thats happened theres been a lot of trade cases just over that. So if we give our steel producers a chance, they can compete here in the u. S. Does put America First really work when one of the first major inf Infrastructure Projects President Trump approved is a contract to a Canadian Company . Is it really going to create a lot of jobs in this country . Well, you know, first of all, lets just talk about the pipeline, xl, that is a canadian situation, certainly is. And, you know, im sure the president is aware of that. And hell be careful how thats done. Hes a very good negotiator. I have no qualms at all hell handle that in a very good manner. Harold, its good to talk to you. We hope youll come back often. Congratulations on a pretty nice prediction on dow 20k, which we did hit today. Harold hamm, thanks so much. Thank you. Lets send it over to Morgan Brennan now with a quick market flash for us. Thats right. Shares of state street, they are not participating in this market rally. The stock hit a sevenmonth low at the open. Shares now down about 3 , almost 4 . Shares are taking a hit on the news that j. P. Morgan would take over its custody of 1 trillion in blackrock assets. Now, the company also posted lower than expected Fourth Quarter revenue. That was hurt by reduced fees outside the u. S. But this news broke about an hour before the open. And heres the tidbit for you. The resulting boost in j. P. Morgans shares is what catapulted the dow, those extra points it needed over that 20,000 mark as the opening bell rang, guys, back over to you. And here we sit 20,041. Morgan, thank you. Boeing is leading the dow today as we hit 20,000. Our own phil lebeau has more after what was a well received Earnings Report this morning, phil. Yeah, better than expected, sara. Lets take a look at boeing shares if you go back to dow 10,000, how much has boeing contributed . Stock is up 220 since it was the dow was at 10,000 in 2009. With the latest move coming this morning after the Company Reported better than expected earnings on both top and bottom line for the Fourth Quarter. Boeing beat the street by 12 cents reporting an earnings of 2. 47 a share. 12 cents better than expected. Revenue coming in a little better than expected at 23. 3 billion. When you look at the Fourth Quarter operating cash flow 2. 8 billion, Free Cash Flow 2. 2 billion and the 787 profitability, thats improving. Those are some of the topics no doubt coming up on the boeing Conference Call which is just beginning with ceo dennis muilenburg, but real questions will come when it pertains to the issue of the air force one project and his discussions with President Trump as well as what might happen with our trade policy because boeing is very concerned about whats going on with our trade policy relative to china. Were going to hop on that call. Well have more a little later on this morning. Yeah, and the ceos had some facetime with the president recently as well. Phil, thank you. You bet. Well wait to hear from you after the call. Lets get to Jackie Deangelis at the energy desk with some breaking eia data. Jackie. Good morning to you, sara. Thats right. Department of energy coming out with weekly inventory numbers. You can see they depressed crude prices on the session. Crude inventories saw a build of almost 3 million barrels, gasoline almost 7 million barrels. Thats really where the pressure is coming from. We were trading 52. 90 before this. 52. 84 right now. I know everyones excited about dow 20k, but crude traders are telling me you need to watch stocks and oil very closely together because oftentimes they do correlate. If crude oil prices dont continue to move higher from here or stay around these levels, we might have Trouble Holding these levels in the equity markets as well. Back to you. Well see about that. Thank you very much, Jackie Deangelis. For the time being this is the best gain for the dow since december 9th, up 129. When we come back, donald trump expected to sign more executive orders on Border Control and immigration as he continues through his first 100 days in office. Of course well bring that to you live when it happens. Back in a minute. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Good morning everyone. Im sue herera. And here is your cnbc news update at this hour. British Prime Minister theresa may telling parliament shes not afraid to speak frankly to President Donald Trump ahead of their meeting in washington. She also said her government will be producing an official brexit white paper laying out its exit plan from the european union. Rescue crews in italy recovered several more bodies from the hotel that was buried by an avalanche last week, bringing the death toll now to 23. This is also as they mourn colleagues who were killed in a nearby Helicopter Crash as they tried to rescue an injured skier. A fire hazard has prompted the recall of nearly 9,000 childrens electric scooters sold exclusively at target. It involves the pulse safe start transform electric scooters made between september and october of 2016. And tiger woods making a major equipment change announcing that he has chosen taylor made as his new provider. The endorsement deal means tiger will put the companys drivers, woods, irons and wedges in his bag. Hell still use nikes irons until taylormade creates a custom set for him. And he has a busy tour date coming up. Thats the news update this hour. Sara, back downtown to you. Interesting news. Sue, thank you. Sure. The dow has hit the historic 20,000 mark, so whats ahead for markets under President Trump . Joining us now, fill dellty investments head of global macro and our very own senior markets commentator mike santoli. Mike, you and i we called it this morning on worldwide exchange. We were looking at those treasury yields higher. No coincidence that financials are at the top of the heap. What are you watching . Well, the last two days you really did see a resumption of that leadership we had in the first five or six weeks after the election where basically the world came to this realization that who knows what really is going to come out in terms of policy, but the economic leading indicators are turning in the right direction. And all this policy one thing you can say about it its probably going to be helpful for growth and inflation. So nominal growth going higher. Thats going to work as long as it works. I do think theres at least a case to be made that the markets refusal to go down and pull back seriously over the past five weeks maybe gave people a little more encouragement to basically say, look, i might as well do some buying in the face of these earnings. I still think the risk is feeling as if this is the very start of something, were up huge almost eight years, up 15 of the past 15 years, up 25 in the past 12 months, you have to be careful and see if the market is going to stomach these valuations for long. A great historical perspective, yurian, what do you say about that . Are we at the start of something, the end of something, or are we in the middle when it comes to one of the longest running bull markets in history now. Its one of them. I think its the third biggest over the last hundred years or so, but i agree with mike. We are eight years into an expansion. Were kind of somewhere mid to late cycle in the u. S. Were much earlier cycle elsewhere especially in europe. So i like kind of nonu. S. Equities better here for really a wide range of reasons. But, you know, to me dow 20,000 its like it was my birthday on sunday and its another day, but its an opportunity to take stock and to check in with yourself and see where are you. And 20,000 is nice. Its a round number, but remember, over the long run the market goes up 10 a year about 70 of the time. And so at 10 well be at dow 30,000 in five years. So it is just a number. And i think the valuation is a much more important concept than the price. So its what are we willing to pay for earnings. Earnings are coming up. Theres a global synchronized momentum in the economy and the markets. But are we really willing to pay 20 times trailing earnings or 17 times forward earnings at a time when there is some policy uncertainty and when inflations on the rise . Im not so sure about that. So my sense is that price will go higher, but maybe lag behind earnings for a change. Thats a good point. Do historical valuations his carry the same weight when were entering an era when we see a white house willing to let the economy run hotter than were used to perhaps . I think ultimately, yes. The historical scales are still going to matter. And i would say right now the valuation levels just, you know, objectively speaking are not to where youve gotten at the very peak of some prior bull markets. Its not as if you have to rewrite the rules to explain why the market trades where it does right here at this stage of a cycle. I do think though you cant really calculate exactly what the you know, some radical change in Corporate Tax structure might mean. Yes, if its going to be somehow these policies privileging capital over labor, frankly, i mean i think thats what the market would have to see to decide this is a new ball game and reprice things higher. If its just about how high can inflation and Interest Rates go and have us still be able to trade at these valuation levels for stocks, i still think were talking about, you know, same historical mix of factors. Yeah, how do you answer that . I guess how much additional good news in terms of policy for the economy can the markets continue to discount from here . Yeah, so my sense in talking with my colleagues running the various equity sectors is that, you know, the markets obviously rerated in a very dramatic day from election day to about the middle of december. And since the middle of december the markets gone absolutely nowhere until about a day or so ago. And my sense is that the markets have priced in maybe half of sort of what the Campaign Promises were. But at this point the market is saying, you know, show me the money before we actually do the other half. So i think we got to see whats going to happen in congress, the actual sausage making of legislation for tax reform deregulation and i think the markets right now are in a wait and see mode. But the markets have not priced in everything. So there is still another up leg. And then the question assuming that we get everything that was promised, by then the question is what will happen to rates and the dollar . Will they undermine that rally . What will the fed do . Will they lean into it, right . So the administration can let the economy run hot all they want, but if the fed starts to lean into that, then one sort of takes away what the other creates. So there are a number of dynamics including the valuation one i mentioned earlier. And finally, mike, i just wonder what the how much the optics are helping fuel this rally. The business friendly tone taken from this administration it really stands in stark contrast to what we got in the obama years. Yes, he inherited an economy in a crisis, completely different time, but the fact weve seen manufacturing ceos and auto ceos, it feels like investors like this. Theres no doubt about it. I do think on an emotional level and even on a calculated level as Business People decide whether things are going to get better or worse, it makes sense that they do feel things are getting brighter. I would say though that in terms of what that means for the stock market its just hard to say. I mean its not always the case that you want to be investing new money when everybodys already confidence and everybodys pretty convinced things are getting better. So if i look at the objective stuff happening in the markets thats encouraging, the cyclical groups are leading, its a global move, the indicators economically globally and with yield is all working in the right direction, so you dont need to have that kind of hope and wish for whats going to come out of washington to justify it. I do think though maybe it lets people count against these higher valuations for a while to say, well, down the road were actually going to get some help on the policy front. Maybe doesnt hurt to have a ceo in the good graces of the next president , or the current president. Well leave it there, guys, thank you. Jurrien timmer and our own mike santoli. I have a feeling well be seeing a lot of you today. When we come back look at dow close to session highs here at 20,058. Be sure to stick around for squawk alley this morning. Former u. S. Labor secretary robert reich will join the program. Well get his insights on the president s job claims, whether or not we can take the Unemployment Rate at face value and a lot more when squawk on the street continues after this. Whether youre after supreme performance. Advanced intelligence. Or breathtaking style. Theres a cclass just for you. Decisions, decisions, decisions. Lease the c300 sedan for 389 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. What . Pony neighing] hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Which stock thats about to report earnings presents the most attractive opportunity for you . Our traders give you their picks at tradingnation. Cnbc. Com. More squawk on the street coming up. Its not just a car. Its your daily retreat. Go ahead, spoil yourself. The es and es hybrid. This is the pursuit of perfection. Welcome back. Lets get to the cme group now. Rick santelli joining us with the santelli exchange. Rick. Thank you very much, david. Of course everybodys looking at whats going on with the dow, the s p and the nasdaq, but this is not just a national story. So if you look at a oneyear chart of the dax, boy, its been zoom, zoom, zooming. But if you open it up to a 20year chart, not zooming through alltime highs. If you look at the cac, the french stock market oneyear chart, its zoom, zooming too on a oneyear chart, open to a 20year chart, it has some work to do. But if you look at the rates, respective rates in france and look at the respective rates in the eurozone, theyre moving higher. Theyre moving higher in the uk as well. Their stock market as well. So lets paint the picture because this is key. We have really what has been in many ways a u. S. Equity rally thats been contagious. That rally has included Interest Rates. Under the Interest Rate heading are central banks. But also under that heading are negative Interest Rates in europe and in japan. Now, lets consider, when we look at the dollar, what we are looking at isnt a raw value. Were looking at how the dollar looks against the euro. Were looking at how the dollar looks against the yen. Were looking at how the dollar looks against the its difficult to get a singular view of the currency without the relative value issues. This is very important. And why its important is this, the greater fools theory. You know, mario draghi, kuroda, all these negative rates come into the marketplace really is a response and many times as an open invitation to Central Bank Policies was supposed to cure a problem. Im not sure how it could, but that was part of what the mindset was. But as this reverses there are no more fools to sell your negative rates to. Nobody in the right mind is minn investor of high order is going to be wanting to hold a negative Interest Rate instrument. So, the fuel for the fire and the reason i bring this up is, is that the dollars been kind of left out of this party. The dollars still hovering above 100, while were really zooming on rates and equities. So, what it may mean strategically is, is that some of the unwinding when the music stops, and Mario Draghis corners getting smaller, kurodas corner has been getting smaller, and our fed is doing the right thing that if they get traction in a different, more aggressive way, especially from lower rates and the relationship between their currency and their Interest Rate complex, ultimately, the dollar being left out may harbor a good thing. Think multinationals here. David, back to you. All right. Good points, rick, and certainly worth watching. Rick santelli. Lets send it over to jon fortt for a look at whats coming up on squawk alley. Jon . David, i think we may continue to talk about the dow 20k thing. I dont know, maybe weve been waiting for it for a while, the impact on tech, which was a part of this stage in the rally. And well have experts from both sides of the political spectrum weighing in on what this means for the american worker, plus President Trumps agenda and what impact that will have. 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. [phone buzzing] some things are simply impossible to ignore. The strikingly designed lexus nx turbo and hybrid. The suv that dares to go beyond utility. This is the pursuit of perfection. The dow is up about 150 points. Dow component United Technologies is moving lower, though, this morning. Out with earnings, the company out saying thirdquarter profit of 156 per share matched consensus estimates. Revenue was also roughly in line with forecasts and also confirmed its prior outlook amid what it called an uncertain global economy. Not enough to get the bulls optimistic on this one, down nearly 2 . Just going through the transcript, i did a little trump search on this one, because of course, United Technologies the owner of carrier, which made that deal with President Trump before he actually took office to keep jobs here. They were talking up tax reform, david, saying we look at this as a huge opportunity to drive growth in the business and bring cash back from overseas. Yep. So already the questions are coming on these earnings Conference Calls. And so far, ceos are pretty optimistic about that point in particular. Yeah, well, youve got to plan for the possibility of it. Interesting, a little less than a year ago, talked about honeywell making the bid for uts. Theyre virtually at the same value, 92 billion, just interesting to note. The exact market caps are the equivalent of honeywell and utx. And theyve had a pretty good ride. They have both had a fairly good ride. Industrials near the top of the list, along with financials as well this morning. A lot of alltime highs. Comcast, boeing, deere, norfolk, alphabet going to get earnings this week, mastercard and dow, near 52week highs. Best day for the dow since december 7th, up 147. Can 20k hold . Well talk about that after the break. Down here on the floor with my friend, dom chu, watching the dow up 150 points, holding these levels firmly above 20,000. Weve been talking a lot about whats working, dom, but there are some losing sectors today telecom, utilities, ratesensitive. The staples, ratesensitive ones. And the 10year yields are drifting up 2. 5 . As were talking about the first two days, worldwide exchange, 5 00 a. M. With you talking about where 10year yields are. Love it. I know. Talking about 2. 6, 2. 7 for four days now. All of a sudden we have a nice move to the up side here, 2. 5 . Thats more of that riskon indication. Now, if you see some volume trading on the heels of that, that could be setting up on the next move higher. Carl mentioned this is the best day for the dow since december 7th. Yes. That was just about the time the dow moved into that really narrow trading range for about a month paused the rally. So, curious. What seems to have ignited the new round of buying is the executive orders, President Trump making good on some promises, in particular on infrastructure, getting some pipelines, starting to get the construction going on that. The move yesterday in materials very high absolutely. And how thats going to translate into economic growth, which could explain what youre seeing in bonds. Sure thing. Absolutely right. And as we wait to see more executive orders, especially on the u. S. mexico border, the pesos actually up 0. 75 against the dollar, though not far from a record low. Thanks for joining me here, dom. Well send it to you, carl, for squawk alley. Guys, thank you so much. Good wednesday morning. Welcome to squawk alley, an historic day on wall street, the dow crossing 20k for the first time ever. Take a look at where we stand now. Dows up 152, close to the highs of the session. Jon fortt, Kayla Tausche and myself here at post 9. Also alltime highs for the s p, for the nasdaq, nearly a twoyear low on the vix, the 10year at the highs for the year, around 2. 5 . Bob pisani, people were wondering, where is bob on a day like today . Were going to talk to him in a moment, but a lot going on across all kinds of sectors,