Transcripts For CNBC Worldwide Exchange 20161215

Good morning. Welcome to Worldwide Exchange on cnbc. Im sara eisen. Im wilfred frost. Good morning to you from me as well. Throwback thursday, throwing it back with a winter theme. We still have about a week to go until the official first day of winter. Really . Its cold enough. We havent got winter yet . Welcome. Good god. Welcome to new york city. We saw a selloff yesterday postfed for stocks. First triple digit decline for the dow since the election the worst day for stocks since october, even though they were down less than a percent. Just a strong few weeks for the stock market. Looks like things are back on a firmer note. Dow futures up 47. S p 500 futures down more than 4. 5 up, excuse me. We saw the bond selloff resume and pick up on the twoyear. Also on the tenyear. 2. 6. Were heading towards a close that would be the highest since back in september of 2014. Twoyear yield sharply higher, biggest reaction in the currency market where the dollar raced higher after not just the fed rate hike but the forecast for three hikes next year. The slightly muted reaction in equity market because the gdp forecast hardly moved. September forecast, 2 for 2017, now 2. 1 . Not bullish about growth under trump as they might have been. The twoyear highs yield term since 2009. Markets around the world. Europe reacted all right. Lost a half percent yesterday to the hike. Has rebound almost all of that level today. The ftse 100 is down a little bit. Germany and france are up nicely. Asian trade. Lets look at that. Quite negative in hong kong. Property sector leading that market lower. The yuan early saw the mid point fixed lower. The offshore market hit the lowest level since late november, intraday did stabilize after that. As weve been saying, keep an eye on that currency. Thats one reason for the negativity in the asian markets. Higher u. S. Rates puts pressure on china. Dealing with capital outflows. Having deja vu from the last time the fed raised rates, their currency dropped so did the markets. As for the broader market, oil sold off which led to the selling yesterday. Its back rising this morning. Wti 51. 29. Brent up almost a full percent, 54. 41. The dollar has been the center of the action postfed. Dollar yen, strong dollar, weak yen. Th almost at 1. 18 on dollar yen. Back down to 1. 0495 on the euro. Even the pound is weaker against the u. S. Dollar, 1. 2516. If you add it up, the dollar index the highest several since 2003. This is always the risk when you have the biggest central bank out there raising rates and forecasting it might raise rates more aggressively. That makes the dollar assets more attractive. Money pours in. Quite the opposite from the ecb last week. Will it be the opposite from the bank of england at 7 00 a. M. . That will be important for the pound brpairing. Gold selling off a bit. Down again this morning, 2. 2 . Finally yesterdays move, what was expected, investors were focused on what janet yellen had to say about the future, her t outlook somewhat cautious. All the fomc participants recognize that there is considerable uncertainty about how economic policies may change and what affect they will have on the economy. And insofar as that will affect Monetary Policy, of course we will have to factor those policies along with many other things including the Global Environment and oil prices and other matters. We will have to factor that into our outlook and figure out what is an appropriate response. But were operating under a cloud of uncertainty at the moment. Steve liesman joins us now this morning with more on the feds forecast, really the takeaway from Janet Yellens news conference. Careful not to dive into politics or fiscal policies. At the end of the day the market took it in a hawkish way. You noted that theres now that threehike forecast for 2017 versus the two. Its interesting. We went into it with our fed survey showing the market at 2 1 2. Half the market had the third hike built in, half didnt. Im sure thats not why its up 12 basis points but the math works. Yellen didnt bless need did the fed bless the trump policies, didnt criticize them either. You have a 0. 1 increase in gdp, but higher or about 0. 3 increase in the outlook for rates. Finally, the uncertainty. We dont know which way it will go. If you look at this chart, it says what happened yesterday at the fomc. You have six members voting for three hikes. It had been one before. People were to the left and a bit more to the right. Thats where the center is. I went into the meeting yesterday. I did the math. It only took two guys two guys or women to go to that third hike to raise the medium to three. I will point out people shouldnt get too excited. We went into 2016 with the fed forecasting four. We got one. Jim bianco says it is a seat change because its the first time the fed raised the outlook for the first time. Ill be watching that. Does the change weve seen in terms of expectations for rate hikes next year, now around 3, justify the move weve seen in the yield curve since the election with the gdp forecast sticking pretty much where it was, or is the market ahead of the fed in terms of what they expect for gdp . Is that an area where there could be disappointment and things could turn around at some point next year . The market is definitely ahead of the fed. I think the fed has some good t advice for the market. If you look at what happened policywise, theres nothing. Cabinet members have been nominated, but we dont have pollities. We dont know how much of what the president elect wants will actually be implemented. Do we get a 6 trillion tax cut . 3 trillion tax cut . What janet yellen is saying is wait for the whole package. The market is excited. The market believes animal spirits will do something and excaccelerate growth. To me, this is a reasonable wakeup call for the market to say, you know there are good things that could happen but an uncertainty band surrounding that. You should price in the lower end of the band as well as the upper end. Since the election, its been straight up. Any idea who he will appoint . What sort of names are out there for the two vacant spots on the fed and how the makeup will change . I thought she did quite well when it comes to not wade nothing po not wading into politics at all. I asked her a question that i thought she might answer but i think she saw the logic behind it when i said you said you are looking for policies that will enhance productivity. Do individual and business tax cuts increase productivity or not . She said tax cuts can do that. I dont think she will be reappointed, janet yellen. I dont know that stan fisher if he were reappointed would want to stay. Perhaps he would. There are names out there, john taylor is among them, judy shelton, who is known as a gold bug around Monetary Policy circles, her name is out there as governor. Kevin worsh is being named. Which are hawkish names, considering that trump wants to fuel Infrastructure Spending and deficit spending. What he really wants is low rates. Its hard to find a president whoever wanted a higher Interest Rates, you had a president campaigning saying, you know what . The fed rates are too low, theyre being kept low for political reasons. Now the fed is saying, okay, heres what well do. Heres higher rates f youre going to spend more as wilfred points out, its the lack of a growth increase. That may happen. They may come around and say all this stuff will boost growth, well get higher growth, higher rates together. This is a reminder that were not sure how much of what will happen, and how much of what will happen will ever really boost growth. Coming into this, everyone expected the 25 basis hike. We were wondering if it was buy the rumor sell the fact type thing. Are you surprised by the extent of the postfed meeting rally in the dollar . I am surprised. I thought the market would be ready for that we had it in the fed survey priced in as a strong possibility that they could put that third hike in there. I would point out they didnt put further hikes in there for 18 and 19. When you look at the outlook for the Federal Reserve, every year is higher by a quarter point, only by that initial quarter point in 2017. When you get to the long run rate, its 3 versus the prior 2. 9 . You can never know how the market is priced. All you can do as a fed reporter is step forward and say here is the most likely scenario, here are the possibilities, the market prices the probabilities. I was surprised by how much the twoyear has run. It looks like the market will correct today. From the aftermarket aftermeeting selloff. I think thats probably right. If the market has chosen to this point to ignore whats happened with Interest Rates and the dollar, im not sure why because of what the fed did it should suddenly recognize it ive been surprised, the equity markets have done well with what happened to the dollar and Interest Rates, im not sure why because of what happened at 2 01 yesterday they would decide, oh, the dollar an Interest Rates are a headwind to our growth and profit outlooks. Been a different dynamic. Its not a good head wind when the fed is raising rates, its a good headwind when theres talk of economic stimulus. Heres the other side of that. 5 10 in the morning, no tweets from the president elect yet. That was always a risk after the fed. See what happens. Steve, thank you. Thanks. Steve liesman, senior economics reporter. Todays agenda is still full of further mick data. Weekly jobless claims, Consumer Price index, philly fed survey, the bank of england will announce its monthly Monetary Policy at 7 00 a. M. Eastern. No changes expected. Also the Norwegian Bank decision, no change. There the swiss one coming any minute. Tech names like oracle and adobe systems. To the top corporate story, yahoo disclosing another major breach. This time affecting 1 billion accounts. The newly discovered hack attack revealed names, phone numbers, passwords. Its believed to be the largest ever theft of personal data the breach taking place august 2013. Its believed to be separate from a breach the company disclosed in september which compromised 500 million users. This calls into question verizons acquisition of yahoo . Back in october after the first breach verizon said they may renegotiate terms of the deal after the hacking. Verizon shares dropped on the news. 1 billion. A billion at risk. Nation under major siege from cybercriminals is what the cover of usa today warns. Scary number. Mytips on how to deal with that. S haves ha emerged on the alleged hacking of the u. S. Election. U. S. Intelligence officials believe with a high level of confidence that Vladimir Putin became personally involved in the Russian Campaign to interfere with the u. S. President ial election. According to officials his involvement started because of a vendetta against Hillary Clinton and morphed into an effort to show corruption in american politics and split off key American Allies by showing other countries they couldnt depend on the u. S. To be a credibility global leader. The cia also believes the russians wanted trump elected. Shares of mondelez are on the move after reports surface ed yesterday in a swiss magazine that kraftheinz is planning on acquiring the snack giant. Up 6 premarket, mondelez said they had not heard about any potential takeover from kraftheinz. Mondelez has said they do not believe theres any reason to believe theres truth in that report. Swiss a german language swiss magazine publishing this report. Its not a new idea that mondelez could be the next takeover target of 3 g and heinz, buffett and that equity firm in brazil. The question was timing now and whether theres credibility to this report. Feels like its being shot down. In terms of the location, odd it feels, but theres a focus on that sector because of nestle. And because european investors right now probably want to invest in u. S. Assets. The question is can they afford it with the u. S. Dollar. Is it real right now. Well see. Still to come, the trade of the day. The sectors that win and lose after a rate hike. First a look at the s p 500 names that were hit hardest after yesterdays postrate hike selloff. Were back on Worldwide Exchange in just a couple minutes. 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 welcome back. Lets get you up to speed with the markets. Futured called fractionally higher after a selloff yesterday following the fed decision. Lost about 0. 6 for the dow. The s p was down a bit more. 0. 8 . Called 0. 2 higher this morning. Eurozone composite pmi unchanged. 53. 9. Adds up to the strongest quarter of the year according to the survey. Hasnt done too much to the currency markets, which remain a strong dollar this morning. Extending a strong dollar yesterday. Lets move on. The major banks have wasted tho time no time in hiking their lending rates. All will have hiked the prime lending rate from 3. 5 to 3. 75 . The banks move the rates for borrowers immediately and in full. The prime rate is what banks lend to their most credit worthy customers at, but similar increases in all floating rate loans will take place today including credit cards and mortgages. The credrate increase for saver slower to start. Of the large universal banks, bank of america was the best performer yesterday. As it has been since the election. Why . Its the most geared towards Interest Rate increases because of high domestic exposure, High Percentage of exposure to Retail Banking and a high deposit base relative to the size of its retail bank. Relative to the recent run, bank stocks were muted or down yesterday, the reason being that the fed only increased the preelection forecast from 2 to 2. 1 . Though, if they get the three hikes that would be good for profits. The yield curve already moved significantly. Still to come, trump plus executives representing 3 trillion. The highlights from the mega tech summit inside trump tower straight ahead. My business was built with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Donald trump met with tech heavyweights in new york city yesterday in what seemed like an effort to mend fences. John harwood joins us from trump tower with the main headlines. Good morning. Good morning. It was an effort to mend fences. You know, one thing weve seen with donald trump is that he likes confrontation more from the podium during the campaign when hes fighting than he does in person, in close quarters. We saw from the beginning of this meeting he had the biggest names in tech, tim cook, jeff bezos, cheryl sandberg, all of these people around the table with donald trump, his two children or three of his children, ivanka, donald jr. And eric. With his chief of staff, incoming chief of staff, reince priebus, and donald trump emphasized all the positive things he hoped to do for them. Praised them as the best in the world. Envy of the world. Instead of talking about tariffs, he talked about well get fair trade, better trade. Thats the tlip side of the argument that he made during the campaign. Tech executives have plainly learned the lesson of chief executives from boeing and Lockheed Martin not to antagonize this president elect because of what can happen with twitter, comments for him. They were very tightlipped coming out of that meeting. And they vowed to have more meetings. Not a lot of substance came out of it, but if youre Silicon Valley, at least you begin the new regime in washington without an overt confrontation. Everyone is trying to figure out whether the Campaign Trump is going to translate into the president elect trump. There have been really mixed signals, right, on both of that. He has gone after china like he did on the campaign. Absolutely. Is the upshot to this meeting that his conciliatory tone suggests hell have a clean slate. He wont go after jeff bezos for what he calls antitrust issues, or tim cook, making him create more jobs, iphones in the u. S. And those specific targets he called out in the campaign . I think its going to be circumstantial. Donald trump has said that he is a counterpuncher. Not somebody who initiates fights but responds strongly to being attacked by others. He has also said, weve seen this in the rallies hes had, he will make fun of things that he himself said during the campaign. For example, there was a rally the other day where some of his supporters started saying lock her up. His response was, with respect to Hillary Clinton, yeah, that sounded good in the campaign, but we dont care about that now. There will be some things on which donald trump simply says, well, that was campaign stuff. Im not doing it but it will depend on the particular issues. The rubber will hit the road when policy issues begin to get decided. For example, his attorney general choice, jeff sessions, has been sharply critical of the h1 h1bv visa program. Theres no reason to fight about that now because no policy has come forward, one that happens, it will be interesting. The other good news is i dont have that visa, i have another one. Youre not going to lose me. Thank goodness. The least genuine look of worry on your face ive ever seen. Because i wasnt worried. I know youre here to stay with me. Tech up 3 in the last three months. Has been an underperformer. Wonder if the narrative starts to trade or these trade concerns filter through. Still to come on Worldwide Exchange what next for stocks . The dow sits close to 20,000. Well update you in a couple minutes. Good morning. The bulls hit the brakes as the fed flags more hikes ahead. What comes up next . Historic hack. Yahoo discloses another data breach of a billion accounts. Is its deal with verizon in jeopardy . And the salary for a host of the oscars revealed, and its not quite what youre expecting. Its thursday december 15, 2016, Worldwide Exchange begins right now. Youre as cold as ice good morning. Welcome back to Worldwide Exchange. Im sara eisen. Im wilfred frost. Its throwback thursday, throwing it back with a winter theme. Cold as ice. I like it. Ice was in the top song. Vanilla ice. Maybe well have snow popping up as well. Ice has a double here. Lets check in on the Global Markets. Fed fueled selloff, potentially just a chance for markets to take a breather yesterday. The first triple digit decline for the dow since the election. Things are looking up and going the opposite way this morning with futures up 70 points. S p futures up 8. Nasdaq futures up 14. Big moves in the bond and post currency market, the potential surprise to three forecast for rate hikes in 2017. The dollar shot up to the highest level since 2003. The twoyear yield the highest levels since 2009. Right. Big move in the short end and a big move in the dollar. Also the selloff was because we didnt see much enthusiasm from the fed and janet yellen in terms of the potential increase in gdp growth. That forecast for 2017 increased from 2 to 2. 1 . The first words out of her mouth, this is not hawkish. This is still low, low Interest Rates, very accommodative policy. The european boards are slightly positive. The german dax up 0. 6 . France up more than that. Ftse 100 is flattish. Its the notable underperformer. Italy up almost three quarters of a percent. The euro turned around. We got some flat european pmi data. Inside services not so hot. Manufacturing doing better. Doing better, overall this was in line with forecasts. 53. 9 for the composite. Quite a lot above 50s. This is not expansionary territory, but not something forecast. A ray of hope for europe. China always a bit sensitive to the u. S. Rate hikes after what we saw this time last year. Big selloff in the chinese currency and markets. Watching that one closely. Not quite the same moves. The shanghai comp did close lower 0. 7 . Hong kong down almost 2 . The nikkei rallying only 0. 1 . We got a giant move in the dollar versus the yen. That weaker yen is usually good news. The nikkei is one of the stronger markets in asia. Oil prices did slip yesterday. Down about 3. 7 . It is only down just shy of a percent for the week as a whole. Oil has been strong in the last few trading sessions ahead of that. Up a bit today. 51. 3 on wti. Tenyear treasury note did rise, rose sharply, intraday high of 2. 65. Its 2. 63 this morning. Twoyear note the big mover. It hit highs since 2009. Short end of the curve playing catch up with some of the longer ends. Big moves in the yield curve. The dollar moved sharply higher. The broader index up 1 yesterday. Its added another chunk today. Another percent against the yen. 1. 18. Big move there. Decent moves on the euro and the pound. Gold prices, as expected, soft, down 2. 7 today. 1132. Fed chair janet yellen commented on the recent stock market rally rates and the stronger dollar. The changes, the Financial Market change, is that you described, particularly the increase in stock prices, the increase in longer term rates, and the strengthening of the dollar suggests that many Market Participants anticipate expansionary fiscal policies that would raise Interest Rates some what in the United States relative to abroad, but Market Participants are uncertain, too, and i would expect changes in our understanding of what is going to happen to also affect market prices and Financial Markets as we move forward. A whole lot of fed speak for someone who is extremely cautious not to make any kind of comments or market moves when it comes to markets and fiscal policy and the election. With us here to discuss this is dan clifton, head of policy research with stregis policy research. Perfect to discuss the Politics Around the Federal Reserve which is something were starting to question ahead of this new administration. Candidate trump called out janet yellen for being political. So far hes been quiet on the fed. How much of a risk is this . Its early. He hasnt even taken office yet. What were seeing is the switch from Monetary Policy to fiscal policy. Thats a big move for Financial Markets. Trump is preparing what hell do on tax reform. The fed is starting to normalize Monetary Policy. Where it will get interesting is the second half of 2017, when trump has to replace the next fed chair. He may reappoint janet yellen, but seems unlikely he would. Would appoint somebody more hawkish . Why . He likes low rates. The dollar is at a multiyear high. He has all these plans to spend. I would argue theres not many people more dovish than janet yellen. Also to your point about fiscal stimulus, you will start seeing tax reform come into place. When that happens you cannot have very low Interest Rates. Its not hes putting somebody in there more hawkish, generally you will be normalizing Monetary Policy so fiscal policy can pave the way. Youre saying the markets are expecting tax reform, less regulation. Yesterday janet yellen only increased the 2017 growth forecast from 2 to 2. 1 . Clearly, at least so far, the fed is not expecting those policies to deliver much more growth. Is that a wakeup call for the market . Theres two things going gongonon. The fed has to work with the current facts. Hes not even in office. Once you see his plans, you can assess where growth will be 17 or even 2018. We need more information. Investors are already gaming out what that tax reform will look like. Theyre making bets that growth will be maybe higher than what the fed is projecting. Cover story of the journal, Silicon Valley fines gentler tone in the tower. So, at stregis are you telling investors its safe to go back into big cap tech . Theyll be okay . Donald trump wont single them out . All of these headlines are good. We want a gentler dialogue between elected officials and business. I would argue when we look at tax reform, theres a big proposal called border adjustability. This would restructure the entire u. S. Tax system, where we would be taxing imports and exempting exports suppliers. As you see that tax plan, you will see some of these Tech Companies get uncomfortable about it. The retailers are very, very upset about it. If youre an exporter like boeing youll do well. The specter performance of financials soaring, amazon and the like lagging a bit, thats justified . Yes. I dont think its because donald trump doesnt like jeff bezos, the market is moving towards better value. We will s dan, thank you very much for joining us. Thanks for having me. Im here to help you folks do well, trump told the 13 tech executives. Music to their ears. Depends if he delivers. Lets get to the top corporate story. Yahoo disclosing another breach, too time affecting 1 billion accounts. The hack attack exposed private information of users such as names, phone numbers and passwords. Its believed to be the largest ever theft of personal data the breach took place in august of 2013. Its believed to be separate from a breach the company disclosed in september which compromised 500 million users this calls into question verizons planned acquisition of yahoo which was expected to close early next year. Back in october after the first breach verizon suggested they may rediscuss the details of the acquisiti acquisition. Other Corporate News of the morning, mondelez shares are on the move after reports surfaced in a swiss magazine that kraftheinz is planning to acquire the snack giant. Pared its gains after reuters reported that mondelez has not heard from kraftheinz. For a long time, 3g, they went after heinz, went after kraft, combined them, is looking for another target. Mondelez is top of that list. It has the international exposure, strong brands, synergies with cost cuts. According to investors, hedge funds the deal makes sense the as for the timing now, the reliability of this german language swiss magazine odd source. Kind of hod odd. Seems like its being watered down. Our top trending stories. Jimmy kimmel revealing how much hes getting paid to host the oscars this year. Yesterday the talk show host saying he will make 15,000 for the gig. Kimmel adding, you know why . I think its illegal to pay nothing. Were surprised at how low this is, is that right . Im surprised he admitted how much he got. I think 15,000 for one nights work is a hell of a lot. Its great exposure. How cool is that to host the oscars . I would do it for free. This story implying its too little . People are surprised. He makes 10 million a year. 15,000, id do it. The term brexit officially being added to the Oxford English dictionary. Its defined as the proposed withdrawal of the United Kingdom from the European Union and the political process associated with it. 1500 other words and phrases were added including words like youtuber, brexit. Brexit makes sense. The second word the second line said it is the most used word on Worldwide Exchange in 2016. Which is true. I think we contributed goegt getting into the dictionary. When we come back, the must read stories. And another check on global bond yields this morning. The u. S. Tenyear yield is surging. Hitting the highest level in more than ten years excuse me, two years. The gap between the u. S. And german tenyear bund at the widest since 1990s. Low yields abroad, higher yields in the u. S. , potentially why the dollar is so strong now. Well tackle more markets when we come back. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to Worldwide Exchange. Now to our must read stories catching our attention. My pick is in the usa today. Do this now if youre a yahoo user. Its not really an oped, more a useful list of tips after it was revealed yesterday that a yahoo breach a separate one from the fall, puts 1 billion people at risk. If you have a yahoo account, users need to think about passwords and security questions from other accounts on which they gave the similar or the same information used for their yahoo account and possibly change them. Once hackers have access to id and password information from one system, they try the same combination against multiple other platforms to see which ones work, an easy automated process. Terrifying. Good tip there if you have a yahoo account and you use your password for other accounts as well. All sorts of recommendations, like change your password, do the twostep authentication process. This is becoming way too common. The scale is worrying. My pick is in the wall street journal. Yesterday it was focused on the middle east policy, today europe. Whats going to be top of the agenda on Foreign Policy for mr. Tillerson if confirmed. Saving europe from itself again. Though the continent is dangerously weakened by ideological fevers, malaise and the importation of bereft masses from warcrazed cultures, keep your eye upon the sparrow a resurgent russia which with continued success is recobbling its lost empire will look westward to the rich lands between the atlantic. Rather than arriving late as in the two world wars, the u. S. Should take military and diplomatic measures now to deter yet another catastrophe. Strong warnings and citing strong memories to suggest dont be too close to russia. Theres a serious issue for europe and the creeping of russia into the baltic region. This hits the pages every day across europe and is less talked about here. But an important area. Theyre unnerved. Unnerved. Certainly the baltic regions. Criticism of nato by donald trump in the election campaign. One area where people wonder is that something he sticks to or will he actually back up some of those u. S. Allies. Or maybe productive. I remember Henry Kissinger making comments yesterday written up saying we want somebody with good dialogue already with russia because thats one of the Critical Missions here, and it hasnt worked in this administration. Dialogue is important, but you dont want to step back and allow president putin to do what he wants in that region. We are approaching the top of the hour, the team is getting ready for squawk box. Kayla tausche has a look at whats coming up on that show. Its all about the markets for us. You guys have been talking about futures being in the green, u. S. Tenyear and european trading piercing 2. 6 . First time in two years. Well be watching that with the dow potentially poised to open at or near the 20,000 mark. Well have rick reiter from blackrock here, doug shield to talk about equities. The highlight of the show is well have someone named wilfred frost talking about the banks . I have not heard of him, apparently he gets high marks. Thats right. Sadly not from the nsye. We are looking forward to it. See you in a bit. Squawk box in ten minutes time. Still to come on Worldwide Exchange, Global Markets reacting to the hike. The dollar index soaring to 14year highs. Well discuss that and much more when Worldwide Exchange comes right back. The fed surprising the markets by forecasting three Interest Rate hikes next year, and that number could increase once donald trump takes over. Joining us now is bruce kazman. Yesterday quite a sharp move in the dollar and in bond yields. Was that somewhat of a surprise given how well forecasted this 25 basis point hike was . The 25 basis point hike was well forecasted. I think the fed did give us a surprise. It made a move towards guiding us towards three rate hikes next year. There was a broad move among members in that direction. The idea that the fed is telling us not only that it moved yesterday but that it has works to do for 2017 was the surprise. It seems to us consistent with what were seeing in the economy. Well see where the data goes from here. Even if handle three rate hikes next year, can china or the emerging markets . Many markets are already in correction. The key is whether were right, theres a broad shift away from disinflationary forces at work here, Global Manufacturing is picking up, Commodity Prices are firming, were changing off problems of the last few years. Em economies dont need higher rates. The fed tightening will be a constraint. If its being offset by a stronger global economy, well be okay in that mix. In terms of what we can expect for gdp growth moving forward, the fed not as upbeat as maybe where the market had got in terms of that regards, whats the latest forecast for next year . The economy gliding at a 2 pace. We dont think well get big fiscal stimulus, certainly not in the early part of 17 and properly not later. So were not building in a big move on the policy shift side. The big call in our mind, 2 economy still tightens the labor market, puts upward pressure on inflation. Thats the dynamic in a world where policy rates are still low. At what point do you say, wow, this is happening a little bit too fast and theres some cause for alarm . I think its already the long side of the dollar, moving faster than we would be comfortable with if you start to extrapolate it. Its important that we see a fed thats not going at the next meeting, an economy thats not taking off here, its growing 2 . And markets that find some level here. I think part of this is about more balance in the global economy, which helps limit the dollars upside. As for the dollar, you mentioned d tshged it, you say upside. Ecb meeting recently, stark difference in terms of policy. What is your view on the dollar for the year ahead . Were hoping the dollar finds a level here. It might continue to go up a bit in the nearterm against europe, especially with some of the political concerns that we have as we go through the first half of next year. The other key call is Global Industry picks up, Global Pricing firms, some of the concerns that donald trump would be a very aggressive trade confrontation president start to calm down. The em currencies show more firmness offsetting some broader strength. There was some risk going in about the politics of the fed. Yellen traded carefully on this issue of fiscal policy, trump, the rally. The journal cover story, yellen trump on the same page for now. Do you agree with that . I would say yellen and most of the fed right now is taking a wait and see approach. They dont know what policy will do. I dont think they can respond to it then if we see big fiscal stimulus next year, that might be okay for the fed. It means they can more easily normalize. I think for now its a wait and see approach. We have to leave it there. Thank you very much for joining us. Bruce kasman. Thats it for Worldwide Exchange. Squawk box up next. Ex t n. Good morning. The march to dow 20,000, the rally taking a pause following the feds second rate hike in a decade. Futures pointing to a higher open on wall street. The tenyear now holding near 2. 6 . Yahoo hit by a cyberattack affecting more than a billion accounts. The biggest known data breach in history with the potential to unravel the internet companys tieup with verizon. The state of california hitting the brakes on ubers selfdriving car and that test program. Its thursday december 15, 2016. Squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Good morning. Welcome to squawk box right here on cnbc, im Andrew Ross Sorkin along with joe kernen and kayla tausche. The markets this morning, the dow pulling back snapping a sevenday winning streak. The move came after the fed raised interraest rates for the second time in a decade and signaled three hikes instead of two in 2017. Look at the futures this morning. You are looking for a snap back the opposite way. Dow looks like it will open 75 points higher. S p 500 looking to open 8 1 2 points higher. Nasdaq about 16 points higher. In asia, a bit of a mixed picture. Hang seng down almost