Transcripts For CNBC Squawk Box 20161201 : comparemela.com

index that is normally, joe, thought of as a leading indicator for a bold market. >> what time do you get up in the morning? >> that was a great segue. that just flowed right into that. >> what time did you get up? >> 3:30. >> did you watch this show yesterday? >> yeah. >> if we analyze that, what kind of return it is is? >> that's incredible. >> so you don't know. you need a ti calculator. >> sorry. i wasn't taking notes. >> well, you would remember. you're a mathematical genius, right? >> it is 1250%. you do it on the ti calculator. you get three and a half times your money. >> pretty good. >> i thought that was interesting. you didn't like the facts? we probably won't. i don't think so. but it would be nice. >> we do need, like you should probably have that program. what is 5% impounded over 12 months? it is a lot more than 60. >> yeah. >> it is the eighth wonder of the world. >> we need a ti 83 calculator. i think mine got sold at a garage sale for like $10. that is not a good return to our investment. >> you're at the early part of your career. the impounding that can be done with saving money with you and -- >> mr. right. >> is that his name? anyway, it's very powerful. if you can do an ira, deferred comp. >> or even in a 401(k) where your employer matches you. >> right, right. >> trying to save some money. lloyd said that. people mocked him. >> no. there is a social thing. >> all right. wow. let's get a check on the markets overseas. i thought japan was pretty interesting this morning. up 1%, 204. what worked. suddenly there's 1,000 carrier jobs staying and japan weakened. >> we have different plans this week. on the pound. ftse did well at 122, 123 post brexit. >> ftse is one of the better performing markets since brexit. i would say the answer -- to jump in here. the burden of proof is on the globalist. all the doomsday scenarios, if trump were elected, frankly the markets in both places have performed quite well. >> did you watch at least in the morning? did you see mnuchin? >> i was traveling. >> mack, the one that runs the cameras. did we not have a long discussion on strong dollar or weak dollar? what would a treasury secretary want? >> should want a strong dollar. >> you hear all the ceos whining. but doesn't it attract capital? isn't this the best place to invest >> true supply side people do not see a concept between a strong dollar and strong market at all. is it global person? >> it absolutely is. if you have superior products. >> it is a question whether there is a virtuous circle. do you get a dent in gdp. how does that change the psychology of the market? >> the real risk in my opinion is that u.s. almost becomes -- or the dollar becomes too strong and you suck up all the oxygen from the rest of the world. so particularly for emerging markets, it is more of a problem than it is for the u.s. longer term. the u.s. is not a particularly big import/export economy. >> we may have some gdp to the work with where that won't be. >> i'm to not saying we won't have any. we'll see. there's tax cuts, less regulation. we're also watching crude prices. historic agreement by major producers. opec and russia agreeing to cut oil 1.2 billion. almost 53. >> of course everyone, jason, is trying to figure out where they can poke holes in the opec agreement. do you see any bad news we're ignoring? >> exempt for the eventual cheating that will inevitably happen. i think, you know, stable oil prices are best for everybody involved, i would imagine. i am not an expert in that area. i'm more comfortable with $50 a barrel oil than i would be -- at the beginning of this year, we had 26, 27. there were real questions whether we were going into an industrial recession. stable is better than other alternatives. >> we will talk a little bit more about some of the contours of that deal. here are some of the other big stories we're watching today. president-elect trump will kick off a thank you tour, visiting cincinnati, ohio and indianapolis, indiana. meantime, goldman sachs coo is considering leaving the firm. he met with the president-elect this week and politico reports he could be a contender to head the office of management and budget. cohn has been seen as a likely successor to plankf he ein. he has been a deputy for a decade. he is considering whether it is time to move on. fit bit is in advanced talks to acquire pebble. they launched a smart watch years before even the apple watch. the company has benefited from funding on kickstart thor. that's where it got its start. the combination would help fitbit ebs panned on on product offerings. they are reportedly hoping to sell for $200 million. that would be a big deal to swallow if you are fitbit. stock is up in premarket trading. >> weekly jobless claims are out at 8:30 eastern time, followed by i is sm manufacturing index and construction spending. loretta mester and rob kaplan reporting today. dollar general, workday and smith & wesson report today. >> in ever national newspaper includes a story on president-elect trump's pick for treasury secretary, steven mnuchin. and it matters what the treasury secretary does the at the behest of the president. yesterday he said americans should expect the largest tax change since reagan. >> our most important priority is sustained economic growth i think we can get to sustained 3% to 4% gdp. that is absolutely critical for the country. this will be the largest tax change since reagan. we've talked about this during the campaign. wilbur and i have worked very closely together on the campaign. we'll cut corporate taxes, which will bring huge amounts on of jobs back to the united states. >> he he also talked about dodd-frank. also talked about lending and a lot of other issues. >> the number one problem with dodd-frank is it's way too complicated, and it cuts back lend. we want to strip back parts of dodd-frank that prevent banks from lending. that will be the regulatory side. >> let's get back to the markets on the first trading day of the month. sarah hunt at alpine funds. and paul hickey of bespoke investment group. and jason with research partners. we had already talked a little bit and sarah and paul about the interview with mnuchin yesterday. did either one of you have strong feelings about what you saw? >> the pick and what he discussed is shows where all the bomb throwing in his rhetoric on the campaign trail, he is a practice ma activity in nature. and picks from the practicing ma activity. trump's tax plan -- mnuchin was one of the key proponents of the 33% tax rate. other people wanted it lower on trump's team. his rationalization was we are not going to get lower than that. so we will go with a number we can get past. they are going in with realistic expectations. >> as it was pointed out yesterday, there's campaign talk. >> yeah. but then there's legislation that needs to be written. who knows what that finally looks like. maybe something between paul ryan, mnuchin, donald trump. will it be productive do you think? >> i think certainly a lot of talk about corporate tax reform for a couple of years. if we can get something done on that it will help the perception and help some of the issues that have gone on versus more competitive versus less competitive for the u.s. there is a will to do it. you might be enough to get some people to the table. but do you have the enough to get it passed and how much horse trading is going on. >> how closely do you think the tax reform that we'll get matches the reform that the trump campaign was discusses before the election? because the house plan calls for corporate tax rate of 20%. president-elect trump's plan calls for 15%. obviously that would be a huge cost of revenue at the federal level. >> if i could handicap that i could do a lot of other things pretty well. i think there will be maneuvering around that. the question, is it going to be as much about the headline numbers and what goes on underneath. even for personal taxes, if you're taking away some things, are you putting in lower rates but taking away deductions. >> there is optimism something is going to get done. so it is just optimism that we will move forward and reign in some of the regulation, reform some of the tax code. >> i would say my own opinion, not to recap jack lew. the treasury secretary, as long as he shows up basically to block deals. having a treasury secretary that actually seems to be pro business -- >> is that like a technocrat. >> it's good. it's a change. >> i was actually watching the show before us, which is even earlier. we had the typical guy on. typical strategist saying three to four, no way gdp growth. no way you can do it. probably the same group that said if trump is elected, the markets will collapse. but then it was the same thing. he said, you know, productivity. you can't get the growth. population growth isn't enough for three to four. you can do the stimulus maybe for a couple quarters. absolutely no credence to supply side stuff, like cutting taxes or deregulation. all we can do is that is the kind of thinking that got us 1.5%, isn't it? >> the one thing companies have been doing because of low rates and high regulations, as long as financial engineering as opposed to cap spending. the reasonist has been weak, most are issuing bonds to the buyback stock. >> they are using the money to buy other company's bonds. >> right. if you do something affirmative to build growth, productivity won't be close to zero. it will be like one or two. i'm not as defeatist i think as some of the other people on 1% to 2% growth. >> what about 3 to 4? >> i think it is very possible. >> for more than two quarters? >> it is is certainly possible. you're not going to get there shooting for 1% to 2% growth. as so many people seem to think that is the maximum potential. >> if you're going to spend eight years with our basic goal as redistribution, you're going to accept 1% to 2%. that looks okay under certain circumstances. do you think it is possible? >> i think it is. i don't think you can get it out of the gate. reregulation will help. taking some of the shackles off some of the things we have had. and changing some of the health care might help too. that has been a big cost to the a lot of firms. and that made people somewhat reluctant to say, hey, i want to hire people full time. people, generally speaking, are optimistic. i think it takes a little while. you have to the see what they can get done. >> okay. sarah, thank you. paul. >> thanks. >> jason, you'll be with us for the entire time? >> if you'll have me. i'll be here as long as you want me to. >> he did get up this early. >> at least, jason, if you're here, you'll see the show. where were you yesterday? >> i was in chicago and milwaukee the last two days. >> for business? >> for business, yeah. >> no cnbc in milwaukee. >> coming up on cnbc, the trump transition is at a historic moment in time with ripple effects in every is sector of the market. if you're not sure how to play it, stick around. we'll run through potential changes to the tax code, and regulation that could break or make your portfolios. "squawk box" will be right back. welcome back to stock box. here's what president-elect trump's pick for treasury is secretary said on "squawk box" yesterday about economic growth and his expectations for interest rates. >> i think that interest rates are going to stay relatively low for the next couple of years. and we're in a period of time of low interest rates. and i think we'll stay there. interest rates have come up a little bit, which i think makes sense. we'll be looking at the treasury, all different types of opportunities. we will look at potentially extending the maturity of the debt. we will have higher interest rates. that is something this country is going to have to deal with. >> all different opportunities. >> but we went from everyone you talked to were talking about the savings, supply problem. and we were fully comfortable thinking we would have another three, four years of sustained. you know, we go up a little with the fed. we were all convinced this new normal will keep us at low interest. it was an aberration. we will go back to this mean of 2% or 3%. all of a sudden people were thinking we're immediately going back to 8% or 9%. when he said it, it was like, wow, maybe the dollar doesn't go so high it cuts off exports. maybe we do still stay -- we go up a little today, 2.4. it doesn't mean we go to 5%, 6%. we don't blowout the deficit. he's not even president yet. do you worry we blowout the deficit and worry about a bond market collapse? >> no. usually the rule of thumb is it is where nominal gdp is. >> no matter we have been low. >> we are about half where you would normally be. so exceptionally low, artificially taopg because you have had all of this input from central banks around the world, getting back to normal interest rates is good. it's particularly good for bank. the steep epping of the yield curve is good for interest margins. you need banks to participate in monetary policy. in many ways the policy we had under the obama administration is sterilized by tight regulatory policy. so the irony was only the wealthiest people really benefited. the average person that had a savings account did not benefit. so this is a good -- in my opinion, it's a good policy mix. >> what happens when the fed begins to unwind its own balance sheet at the time? >> that's an interesting question. i don't think they're going to do that. i think they will keep the balance sheet pretty high for a long period of time. that's the plan. you grow into the balance sheet, which i think would take 2023 or something. you would get back to where it would have been normally. but i don't think -- i don't see the fed tightening aggressively. i also say, to be fair, despite some of the rhetoric of president-elect trump on the campaign trail, i don't see him replacing -- first of all, he can't really do it. >> right. >> a lot of people talk about tight money until they're president. and they had we don't have to be dramatic, tight money people. >> central bank input. growing into the balance sheet. >> cut someone off at the knees. >> joining us now with more on the trump trade, chuck gabriel is managing director the a capital alpha partners. let's bring you into the conversation. we were talk building what happens to a trump presidency, what happens to spending, interest rates. which are you more focused on right now? >> i'm very much focused on the legislative side of it all. like jason was suggesting, is cognitive dissidents and disbelief about what is doable, if you will, and the process we'll have to go through. the fed will be dancing like ginger roplgers with fred astaire with the physical side of it all. we have be gown see warnings from fed chair yellen not to get too ahead of itself or for, too, aggressive. >> you say the street may be enjoying false confidence right now. why don't you think it's real confidence and what's to come after january 20th? >> again, there are a number of pieces to all of this. clearly, you know, there are certainly reasons optimism after seven, eight years of what we've been through. an administration has been coming in. dethe regulation is very important for medium to longer-term bases. beginning to make assumptions about that immediately. that is certainly very rational. they are beginning to make sump you shuns about lower or corporate insurance rates. the next leg, for instance, for financials, you're going to have to see a number of things fall in place. i'm not suggesting they're necessarily ahead of themselves. but particularly in terms of what they are expecting in washington -- i watched cnbc yesterday. the tphoegsz of a big trillion dollar giveaway is ahead of itself. and a former cbo director saying, hey, listen, you guys are way too focused on the trump proposal thrown in at the very end for the american voter in a package that the house republicans put together for an intellectual exercise. we're starting fresh. there will be pressure to create at least some bipartisan support for a bill. i think the markets are expecting 2 trillion doctors to $4 trillion. i put the over/under at a trillion and i go with under. i think they're hoping for a 20% interest rate. i think it would be herculean if they could get it down to 25%. and there would be pain involved for some companies just based on the tradeoffs. >> well interest rates are going to stay low? >> well, i think they will stay lower longer. i think mr. mnuchin is right. >> i don't think you're right about a lot of this stuff. >> joe, i'll make you a one dollar bet. why don't you think i'm right? >> i'm more optimistic that mnuchin -- trump is not supposed to be president either. were you predicting that? >> i had 45% odds at the end what was going to happen to the markets if he was president, in your view? >> i felt strongly that the worries were grossly overdone and you would have a reversal just like with brexit. >> i think it will do over a trillion probably. and i think we can get under 25 out of the corporate tax rate. we have a republican congress. >> it is just not that easy, joe. right now you have 51-49. hopefully it will be 52-48. >> maybe with reconciliation. >> again, let me just say, what a lot of people are missing is the dollar number is associated with net tax relief, 2 to $4 trillion you can do an awful lot that will have a market impact. but there is a big difference between tax reform and tax relief. mr. mnuchin himself talked to you about tax reform yesterday. he has to get confirmed. how much opposition do you think mnuchin will face? >> oh, it will be loud and noisy. but there are a number of factors will will give him the right to have his treasure seu secretary. he will win. goldman sachs will be blashemed in the process. the company announced results of one of its cancer drugs. the ceo is next. what i love most about tempur-pedic mattresses... is that they contour to your body. it keeps us comfortable and asleep at night. get your tempur-pedic. the most highly recommended bed in america for as low as $25 per month and 90 night free trial. ♪ >> welcome back to "squawk box" on cnbc. u.s. equity futures at this hour are up. at least for the dow. but next because the down fraction a alley on the s&p. nasdaq is down 2.5. yesterday was weird. i looked at it about 3:15. it was still up 30 or 40 points. then i looked away. when i checked at close, up a point on the dow. all right. now, though, the check on the latest news and rumors from the trump transition team. three ts in a row. did you see broadcast news? you've used spray or something. we haven't seen your fauxhawk since that one day. that got a lot of play on twitter. >> that was quite something. i love to be known for my hair style. i'm a fashion forward kind of gueye tv person would never be be known to be concerned with their hair. that would be the first concern ever. what's going on? has it stopped raining yet? 40 days and 40 nights. >> it did. it is a little bit dryer out here than yesterday. it is probably a lot more rumors and news than today at trump tower in terms of who is going to sit on the sidelines. we have a couple wall street related surprises. the u.s. attorney for the southern district of new york stopped by here at trump tower yesterday. folks were surprised to see him, wondered what that meeting was all about. when he came down from the meeting with donald trump, he stopped and talked what it he was doing here. here's what he had to say. . >> he is aware of the great work our office has done, asked to meet with me to discuss whether or not i'd be prepared to stay on to do the work as we have done it independently and without fear of favor for the last several years. we had a good money. i would absolutely consider staying on. i agreed to stay on. i have already spoken to senator sessions who is, as you know, nominee to be attorney general. he also asked that i stay on. so i just assume i will work at the southern district of new york. >> he is a democrat. started out his career working for senator chuck schumer as his being a democrat on capitol hill. he said he spoke with him and schumer said he endorsed ferrar ra to trump. that's where we are here at trump tower. also 12stopping by is gary coh rumored to be the consideration for omb chief. we will see whether that materializes and goes anywhere. clearly a lot of new york and wall street connections here in this upcoming trump administration, guys. >> amon, i've got bad news for you. there's more rain coming today. >> good to know. we have our umbrellas out here. we have everything covered in plastic flt we're ready to go. we'll be here all day. donald trump, by the way, will not be here. he is going to indiana. >> and cincinnati. god's country. >> that's right. >> we were missing an i. if anyone doesn't have the sound up, they think he is sad. >> he said he will stay on. >> i don't think he expressed. he looked happy. >> i can't see the graphics because it is floating in the air. >> if's trying to read his facial expression how he felt about this. >> okay. if you want me to think about it. >> i think he wanted to the stay on. it can be tough to tell. he is not the most emotive guy in the world. kind of can't tell. >> he's nonpartisan. he is pretty well regarded in all circles. so that's a good sucking up to him. sorry? >> you set up a dynamic where the u.s. attorney now has a direct pipeline to the president of the united states. that makes him something of a super u.s. attorney in terms of his power and he will be seen, the fact that he met directly with the president-elect puts him in a different level maybe than some other folks around the country. >> good point. >> that will be an interesting one to watch, particularly if he handles any cases that implicate the trump administration, friends trump, anything like that along the way. >> that's a good point. thanks. we'll see you later. gene therapy. bluebird out with news late yesterday that blew the stock up 20%. we have the details and a special guest. >> that's right. bluebird coming out with data approximate using cartine immun on o therapy, beefing them up, and then giving them back. we're joined by the ceo of bluebird bio. nick, thank you so much for joining us stpwhrfp. >> hi, meg. >> i can't see if you're wearing your signature blue sneakers. this is showing surprise among investors. what does this mean potentially for people with multiple myeloma. >> this is for patients who have tried pretty much everything. they were willing to take a risk where we try to harness the immune system to attack their cancer. as you said, this data is clearly early and exploratory, but also quite exciting. the efficacy is quite profound. it's coming with a mild toxicity profile, which is i think what maybe the a little bit of extra excitement is around the field. so we're very pleased. this doesn't happen often in our world. so it's a good day. >> you mentioned the safety. that being a focus last week with juneau, having to the stop one of their programs because of safety issues with their cartine program. how has that affected how you are thinking of testing this drug? >> this is early, right? my heart goes out to the patient that juneau is trying to help as well. i think they are doing the best they can. again, this is quite a different disease. this is a different construct going after multiple myeloma. it hasn't affected our plans. we are watching this carefully. we're getting pretty profound responses, which is unusual at this stage for these unfortunate patients. so that coming with very little of what you said the immune system starts to attack. we're seeing little early on, but we're getting to the efficacy part. that is the exciting piece. we will continue to explore it and see where it takes us. >> nick, i also have to ask you more broadly about the political environment in the drug industry right now. obviously you are precommercial. kwrao you not pricing drugs just yet. there has been alevation of that pressure on biostock since trump was elected. and it may free up cash for mna. how has it affected you guys? >> it wasn't. maybe i'm naive. the way we focus on the bluepeurd and the approach we're going to take, which we are fortunate enough to bring this is to really think about the value that it brings forward and be considerate of all stakeholders. there are patients, access that has to be considered. there are payers, private and public, that has to be considered. because if year thinking about bringing one time potential transform active treatments to the market place, the system is not ready to digest that. we have to find creative pricing models that work for everybody. we share risk. everybody feels good at the end of the day. innovation of our type and others in the industry are coming along with us and behind us and can be supported by that. and i think that's administration independent. >> a lot of our viewers out there saying, what about the response? but is that typically one of the problems is that you can see that? is it full-blown sepsis or just a little bit of a response? because that will kill you, right, if it's bad enough? >> it can. it absolutely can. remember, what we are trying to do is we harness the immune system. we are taking out part and engineering cells to basically go into the bead and specifically target the cancer. and then basically set off a reaction at the site of the tumor. imagine if it goes off at the wrong place. that's what we have tried to focus on. how do we get it to go off at the right place. >> nick, thank you for joining us. >> thank you for having me. riding the trump rally. blue chips gaining 4%. small caps gaining twice that. a live report from america's oldest student-runnin' vesting club. that's up next. ♪ we're drowning in iormation. 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 don't. 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. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential stocks rallying big time since donald trump won the election. but are millennials getting on the action? morgan brennan joins us from pennsylvania, home of america's oldest student-run investing club. morgan, what are they saying? >> reporter: as you mentioned we are here at lafayette college, enrollment of about 2,500 students. they do not offer degrees in business or finance but is home to the oldest student-run investment club. it manages about $560,000. it is is part of the school's larger endowment. united health, activism, expedia, boeing. it has been a mixed bag so far this year. united health has been a big winner. not all have been quite that good. but it is a learning curve. we will be sitting on the club's meeting a little bit later today. in light of the big rally we have seen post election with trump taking the presidency, joining me now is the lafayette investment club co president. thank you for joining us today. >> thank you. how is the club approaching this rally? >> well, just recently we bought a big bank, barclays. this was due to donald trump's election as president of the united states. we thought might as well take advantage of that since some of his plans included raising interest rates and reducing regulation on banks. so we thought this would be a great time to get into the financial sector. we were already pretty heavy in it. we wanted to continue buying barclays. >> you have certainly seen forema financials. are you looking into other stocks? >> mainly health care. now that hillary is not our president. she was planning on raising prices for prescription drugs. this has definitely helped health care sector. we will continue the staying heavy on that sector since the health care is 80% of our portfolio. >> the other major events we have seen, we had the opec deal reached yesterday. the big surge in oil prices on the heels of that. we have the fed meeting. a potential rise in interest rates as well. are there other things that you're looking at? >> well, we're just looking at the general trends of the market. especially with the opec deal. we are trying to look into investing on the oil company. >> do you think this market could go much higher? >> definitely. we could definitely see that happening, yeah. >> othman, thank you for joining us this morning. we will be sit issing down with the rest of the students a little bit later this morning. kayla. an interesting conversation. we'll be watching morgan brennan out at lafayette college. thank you. all right. i wonder if they have to meet incognito? are you allowed to be part of capitalist, the whole system, and betting on trump and trying to capitalize on his election? >> energy stock. really? >> the safe zones. i don't know. >> trigger. >> i don't know. i hope we don't trigger anyone with that. coming up, small caps soaring. up 11% since donald trump won the presidential election. we'll tell you how to ride the rally next. 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 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it that propelled the russell? >> in the last month, three things. one is just think about who actually pays taxes. small cap companies pay taxes. much more so than large cap companies. they can't transfer money from overseas. they don't have e the ability. if you look at money actually paid, small cap companies actually pay taxes. the second thing is if you look at the regulatory environment, regulations generally are beneficial to large cap companies in that they prevent competition, create costs. made most small cap managers very, very happy. as they look into the future. >> but of how much farther they can go and how much more room there is to run. yes, they're up 11% for november, but in the last year they're only up 9%. there's an idea they had just fallen out of favor and they got a bid. >> think about two things. jason certainly can speak to trends and what's gone on. the second issue is you're right. they've been out of favor for a very long time. generally tend to come back into favor. >> what are your picks? what are you betting on right now? >> again, we think overall the industries are going -- companies are going to do very well. we only cover profitable companies in general. we're watching the earnings improve, everything pick up. the two names we're most -- that i would recommend today. one is amn health care and the other is nautilus. >> why those two? >> both have great growth, great track records in terms of where they are. high returns on equity and reasonable pes. in this market it's difficult to find some that meet all those. >> the small cap indexes are benefitted when more go public. there's more supply and more stuff to buy for investors. we're going to see more of that? >> i hope so. but again, between regulations and the consolidation among five or six large firms, you've really created some real barriers to ipos in the market today. >> it's good to see you. >> thank you very much. >> peter sidoti. jason, thanks for being with us for the hour. we were talking during the commercial whether you think main street and the retail investor will finally come back into stocks. >> i'm hoping so. there's been -- people have been expecting this great part out of bonds and into stocks. it hasn't happened mainly because people continue to make money in bonds. but now i think when they get their statements in the next week or two, they see some of the gains that have happened in small caps. perhaps this will be the impetus for people to move out of bonds and into stocks. coming up, we're going to talk about tomorrow's jobs report and trump nomices with paul mcculley. . could president-elect trump and santa claus be headed for a collision on wall street? we'll get you ready for the last trading month of the year and find out if investors will be -- steve mnuchin making global headlines this morning. >> this will be the largest tax change since reagan. >> reaction to that interview and more from former deputy treasury secretary robert kimett straight ahead. and at&t is entering the streaming warhead first. but is it enough to pull you away from your cable carrier? we'll debate as the streaming wars heat up as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box" here on cnbc. i'm joe kernen along with kayla tausche. futures are now indicated up 21 on the dow. kind of interesting. but the s&p is still slightly in the red. but by less than a point. the nasdaq under two points. and look who's here. >> kind of in a holding pattern the last couple days. >> people don't know you're here. they're like, whose voice is that. >> top of the morning to everybody. we've got a full house. >> we do. >> should i get -- >> if you want to. kelly evans is here. are you working this afternoon? >> no. >> just coming in for this. that's a good gig. >> like many i'm cramming for saturday, it's the cfa level one exam. unlike many, i don't have a shot of passing this thing. but i've been taking some time. a few busy things have been going on this fall. >> are you trying to get another job? why are you taking the cfa? >> in this job you can know too much. i would know about that. >> i wouldn't know about that. i'm nowhere close. here are this morning's headlines. u.s. automakers will be out with november sales. estimating sales will be up 2.7% from a year ago. sales would register their best november ever. mcdonald's is also apparently closer to selling its china operations. financial times reporting that a joint bid from citic and carlyle is the most likely winner. that sale could be worth $3 billion. and the largest owner of rental homes in the u.s. may go public soon. blackstone invitation homes has filed for a public offering. invitation homes is potentially valid at $7.5 billion. >> that's a really big deal. many don't know blackstone is the nation's biggest landlord. it's the biggest rollup of single family homes in this country. they went out and bought all of these properties out of foreclosure, picked off the inventory in the market. i talk to people in their markets who said why am i bidding against someone who wants to rerent this out? i'm trying to own this home and they're out bidding me. people who want to buy homes won't stand a chance. i wonder what this would look like as a public company. >> also american homes for rent, that was another biggie. this is what has changed the housing market the last couple years. all of a sudden the investors aren't in there. they snapped them up at cheaper prices. >> paul, thoughts on this? >> who are you? >> paul mcculley. >> okay. i thought we were going to introduce you as bob lear from the grateful dead. but you're paul mcculley. >> i am. >> you're not leon russell. >> good to see you, joe. >> good to see you. you got the glasses going. what are you doing now? are you up on that mountain still in the lotus position? >> actually, i just finished teaching a semester at the law school at cornell up in ithaca. >> no way. >> tuesday was the last class of the semester. the next couple weeks i'll be grading exams and all of that. >> teaching what course? >> actually, i created a course that's a joint venture between the business school and the law school. dealing with finance, law, and macro dynamics. it's a seminar level class. it was great fun. i really enjoyed doing it. >> excellent. you'll be here all the way until 9:00. >> i will. >> good. fantastic. the front page of every international paper includes trump's pick for treasury secretary. steven mnuchin. he said to expect the largest tax change since reagan. donald trump's pick for commerce secretary wilbur ross was also here on "squawk box" yesterday. >> our most important priority is to sustain economic growth. i think we can get to sustained 3% to 4% gdp. >> it's also not true that all jobs are created equal. a guy who used to work in a steel mill now flipping hamburgers, he knows it's not the same. so it's the quality of jobs as well as the quantity. and one of the problems with the recovery is when the newly created jobs are not nearly as remunerative as were the jobs that were lost. >> we're going to cut corporate taxes which will bring huge amounts of jobs back to the united states. >> the treasury secretary designate also talked about dodd/frank and lending. >> the number one problem with dodd/frank is it's way too complicated and it cuts back lending. so we want to strip back parts of dodd/frank that prevent banks from lending. and that'll be the number one priority on the regulatory side. >> and we're going to have a lot more reaction to trump's pick for treasury secretary in just a bit with former deputy treasury secretary robert kimmit. >> he has been called the new face of american business but he is very familiar to "squawk box" virus. >> and businesses that run the gamut. not just domestic but globally as well and finance and autoparts. i mean, he's had an amazing career. he has. and he's got, you know, a couple of billion dollars to show for it too. not that that's a good thing or any measure of anything. >> well, that was quite a coup yet to have both of them here yesterday to talk about all of that. kicked into overdrive by the plans of the president-elect and his newly formed team, certain stocks have found a striking new lease on life. dom chu joins us now with a look at what we're calling the redemption. rotation. stocks once left for dead now seeing a renaissance. >> absolutely. the election plays a part into the strength. but many sectors have seen a huge resurgence, rebirth, a phoenix from the ashes move since their lows over the past 52 weeks and maybe exacerbated a bit by the possible trump policies we will see. one we'll talk about here in the s&p 500 energy sector. we know about the massive moves in prices for oil. we know about the trading volumes in energy futures. while we have seen a nice surge just over the past few weeks or so, check out what's happened since the lows we saw in january for the s&p energy sector. we talk about oil all the time but three of the best performing stocks within the s&p 500 energy sector are actually related to natural gas than they are oil as well. let's take a look at some of these stocks that have posted the biggest gains since their respective lows this year. first of all, the biggest one out there in the energy sector since its 52 week low, chesapeake energy. also williams, natural gas play as well from the pipeline side of things. as is oneok. 195% gain. these are among the biggest gainers as people look to see whether or not they can find some way to buy these value stocks. the question now becomes whether or not these are gone a little bit too far too fast. there are only a handful of sectors that have seen this massive move higher. energy is certainly one of them. but joe, certainly from at least a trading point of view, you got to wonder whether or not some people are thinking maybe these stocks have taken great profits so far. we got to see whether or not we can keep up these types of gains in the future. by the way, joe, i want to say mr. mcculley is a cornell graduate. i'm happy you were teaching at that school. >> i know someone else who is a cornell graduate. >> usually sets right here. >> in that spot right there. him too. >> that's what -- you're standing in front of one of my favorites. my entire life i thought it was like a native american -- oneok. it's oneok. it's not -- well, move out of the way so we can see it. >> the best way to learn how to pronounce the name of a company, i learned this one of my first days. you pick up the phone, you call the company and you see what they say. >> i've done that like 25,000 times. >> it's a good trick. let everyone into the fold on that one. >> sometimes they don't know. used to think that about j-bill circuit. it's jay and bill. a couple of dudes that started the company. jay, what should we call it? i don't know, bill. thanks, dom. let's talk more about the trump rally. joining us now jeff stoudt. jeff says small caps, industrials, and tech are all places investors could make money. and also paul is here, our guest host this morning is paul mcculley. senior fellow at cornell law school. former chief economist at pimco. i'll start with you since you're not going to be here quite as long. i remember all your calls. i remember the rally that was going to really be good and then it didn't happen. you got really bullish again. most recently. >> february. >> and now we're seeing it. >> yeah. i think the first leg of the secular bull market began in october of '08. it peended in may of '15. i didn't think it's going to be longer than the first leg. in we're transitioning from an interest rate driven secular bull market to an earnings driven bull market. >> and i don't think you're on my list of people that were just dead wrong not only about the election but about what would happen if the election turned out this way. >> i was dead wrong when i called the second week of december of last year for a rip your face off rally. >> i'm not talking about that. but for the election, you didn't automatically think hillary was going to win. >> that's right. >> you didn't think if trump did win that it was going to be trump-pocolypse. because it hasn't been. it's been -- >> i think the people he's appointing are, you know, people that can get things done. and i think the market is sniffing that out. >> all right. let's get to a bond market expert. what's the worries of blowing out -- you have never been the big hawk on things like that necessarily, right? you've liked the fed's accommodative stance. you thought we needed maybe even more of that. are you worried more about blowing it out? >> i've liked the accommodative stance. my ax to grind in recent years is we needed more fiscal policy expansion because we're in a liquidity trap. and we're putting too much responsibility, too much duty up on the fed. and we needed some help with quite frankly larger budget deficits. >> you shouldn't throw duty at the fed. nobody should. that's what monkeys do, don't they? you better watch out. because you're almost going to sound like you're happy trump's going to do the fiscal spending. you'll sound like a trump guy. >> in a narrow sense, i am. >> oh, my god. i think it's about like this. >> no. i've never had an issue with increasing the size of the budget deficit. i think it's been too small. you have zero problem with increased public investment and funding it with deficits. and to the extent that mr. trump wants to do that, i think that is the right keynesian policy. my complaint about the person i voted for mrs. clinton is i will not add a penny to the national debt. that basically was putting you in a straight jacket of fiscal austerity forever. >> you don't have to worry about that anymore because she's not -- that's not going to happen. >> but i look at the market right now essentially is celebrating the end of fiscal austerity. it just happens to be in the vehicle of mr. trump. but the end of fiscal austerity is the key economic issue. >> i'm sure you like the deregulation and the tax cuts. >> i don't think he's going to get to 15%. but even if he gets to 25%, you get another $10 in earnings for the s&p 500. and what's happened so far, it makes the $130 bottom up operating earnings estimate for next year look achievable with what's going on in profits. >> quick question on that. it's unclear to me how many companies are reporting close to the statutory rate or how many of them have an effective tax rate that's lower or not affected that much? >> there's a lot that have lower than 35%. but i would point the negatives came on here and told you third quarter earnings would be negative. but came up 5.2%. >> but you said $10 million you can put on the -- >> if you get a 25% tax rate. >> so that takes into account the fact they might be reporting lower effective tax rates than 35%? >> yes. >> even with that being the case, because that's a big deal. >> it's a big number. you bet. >> let me come back at you on that one. you're saying we're going to have an earnings driven bull market from here which implies that from the standpoint of corporate profits as a high share of gdp in our lifetime, you're going to continue growing corporate profits. so what is the cap in your viewpoint of how big profits can be a share of gdp? remember mr. trump got elected from the standpoint of main street finally getting a piece of the pie and effectively you're forecasting that wall street's piece of the pie is just going to get bigger and bigger. square that circle for me. >> i think profits as a percent of gdp are around 7.2% right now. i don't know how high that goes but i am in the ronald reagan camp. if company dos well it will filter down to the guy on the street. >> but the guy on the street wants a bigger share of that right now. >> i think they'll get a bigger share of that. as businesses do better, i think it flows down. >> that means if the gal on main street gets a bigger share then corporate sector gets a smaller share which implies growth less than the economy. why doesn't that arithmetic work? >> i think that u.s. companies have gotten so lean and mean as revenues pick up and revenues are picking up across the board that profits to the company will increase and i think that valuations are too low, by the way, in the s&p 500. i believe in trickle-down economics. >> fair enough. he's honest. coming up, he's splashed across every major newspaper this morning. the president-elect's choice for treasury secretary steven mnuchin telling "squawk box" yesterday the largest tax change since reagan is coming once donald trump takes office. we ask robert kimmit about the trump tax plan and the challenges he faces. "squawk box" will be right back. our most important priority is sustained economic growth. i think we can absolutely get to sustained 3% to 4% gdp nap is critical for the country. to get there, our number one priority is tax reform. this will be the largest tax change since reagan. we've talked about this during the campaign. wilbur and i have worked very closely on the campaign. we're going to cut corporate taxes which will bring huge amounts of jobs back to the united states. >> that was steve mnuchin yesterday here on "squawk box" on what to expect from the trump administration's economic agenda. investors are expecting some pretty sweeping changes. joining us now is former deputy treasury secretary robert kimmitt. thanks for joining us. >> thanks very much. >> how quickly can the trump administration move on some of the things that mr. mnuchin was talking about? >> some quickly. particularly in the tax and bank regulatory area, there's ban lot of activity by the current treasury department in the regulatory area. the treasury secretary working with his bank regulatory and tax counterparts will be able to go after those right away. of course tax reform of the sort of mr. mnuchin was talking yesterday in your rather extraordinary session with the two nominees will take at least a year, probably a year and a half before it could be enacted. >> and what ultimately do you think the numbers are going to be? as you probably heard in the last discussion, that's the mind of where people are. how low can they go? should we get our hopes up yet for something like that to happen? >> i think that the chance for major tax reform is as good as it has been since 1986 when we had our last major tax reform. i was jim baker's general counsel at that time. very involved in our tax reform effort. by the way, at that time tip o'neil was speaker of the house. mr. mnuchin and president-elect trump face a republican congress both in the house and senate. i think that will give a good chance for moving this and moving it within the first two years. as to numbers, i think first of all having the overall theme of sustained economic growth is the right one. secondly, i think putting a 3% to 4% number out there even as some people might view as a stretch is a good thing to do. and of course i think you should put out where you think this should land. i think 15% is a great starting point. i personally would like to see it end there. if it doesn't, it will end up closer to 15 than 20. >> today the president-elect is in indiana to discuss the commitment of carrier to keep a thousand jobs at a plant in indiana instead of moving it to mexico. it follows ford's commitment to keep jobs for its lincoln mkc production in louisville, kentucky. and i'm wondering how often it happens where the president or president-elect will pick up the phone and ask a company to keep jobs in this country. how often it works and how powerful it is to have this specter of tax reform behind that ask. it is an unusual step for a president and president-elect. personally i like to see candidates following through on the campaign trail. said in indiana that he was going to address this issue even before he became president. he has done so. i like to see that. i will say once he becomes president, i think there's going to be less time for him to be involved in inindividual cases. that would be for people like wilbur ross, steve mnuchin and others. the other thing is to create a good investment climate in the united states. both for existing companies to grow. but also to attract new domestic and i would say foreign direct investment. there's 6.5 million americans who work in the united states for companies headquartered overseas. and interestingly, 40% of those jobs are in manufacturing versus 13% of the overall economy. so i think making this a more attractive investment location, lower tax, less regulation is going to help bring those jobs back. but more importantly great new jobs. >> certainly that is the focus of the administration. but how many jobs reasonably do you think we could keep in this country? do you expect what ford and carrier are doing to be one off situations or is it the beginning of a domino effect? >> i believe personally it's the beginning of a domino effect. i believe the word is going out that this is going to be an administration committed to economic growth fundamentally to produce good american jobs. and the movement i would say first on the regulatory side is going to take some time obviously for legitimaslative change. there's a lot that can be done on the regulatory side. then broader changes to get dodd/frank, volcker rule, and others amended. >> even fannie/freddie. thanks for joining us. >> thank you. coming up, the cord cutting wars are heating up. it looks like pressure is coming to get you to leave your cable company. but is it worth it? we find out. plus president-elect is already negotiating deals before he takes office convincing carrier to keep a thousand jobs in the states. he plans on visiting that plant today. a live report is straight ahead. 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(cannon sound) still to come, we're watching oil prices this morning after oil output production agreement. rising above $50 for the first time since i believe late october. more on crude in just a minute. "squawk box" will be right back. welcome back to "squawk box." among the stories front and center this morning, we're watching shares of filtration company clarcor this morning. being bought by an $83 per share price. nearly 18% premium over yesterday's close. those will be stocks to watch. >> parker probably wishes it was -- or hannifin probably wishes -- do we tell everyone garmin is a guy named gary. this is -- >> i'm trying to think of how you'd rename "squawk box" in that philosophy. jobecken. squawk didn't either at 25 years ago. >> as long as it starts with joe, he's cool with it. >> as it should. >> it's also a busy day for economic data. in about an hour, we'll get the weekly figures on jobless claims. later on the november autosales, november manufacturing index from the october construction spending. those will all be headed our way. and passed a bill aimed at speeding up drug approvals. observers say it's likely to pass. so there's something to happen in the lame duck session. >> president-elect trump, meanwhile, will be in indiana today after striking a deal with carrier, the air conditioner manufacturer who is a unit of united technologies. but it is keeping a thousand or so jobs from moving to mexico. phil lebeau joins us now with more. some weird backdrop to this, too, phil. i guess pence as governor didn't try to do this as governor. but then he did it now as president-elect. is that -- got that right? >> well, he tried. he tried as governor. he tried as governor, but it's a lot different when you have the president and you have the united states government saying maybe you should reconsider. by the way, remember that you've got about $6.5 billion worth of defense contracts with the united states. that's not the sole reason according to people who have been tracking this, but certainly was an influencing factor. here's what's been happening here at indianapolis at this carrier plant. this is the plant that's been the focus of so much controversy ever since during his campaign candidate donald trump said we're going to keep this plant from moving to mexico. and that's what's happening. the furnace plant here for carrier will stay open. there are 1400 employees here but those 1400 employees, it's going to end up being about 800 who stay here. over a thousand when you factor in the staff. what did they do to get it to stay? there's an incentive package of about $700,000. that package by the way brokered the entire deal brokered by vice president-elect mike pence. keep in mind utx has about $6.7 billion in defense contracts. and it doesn't -- you don't have to go far to imagine the utx leadership said we don't want to start things off on the wrong foot with the trump administration. understandably workers here are thrilled that this plant is staying open. >> it was shocking. it just seemed surreal. the phones going off and people telling me our jobs are being saved. it was just crazy. >> they started talking and being happy that they would be able to maintain their jobs, their homes, and take care of their family once again. >> take a look at shares of united technologies over the last week. essentially this has happened within the last week. remember the first tweet came from donald trump on thanksgiving saying working on a deal to keep the carrier plant in indianapolis. the shares really haven't done a whole lot. president-elect trump along with vice president-elect mike pence will be here. we want to show you rxn. this is rexnord. they are familiar with it here in indianapolis. they have a bearings plant not far from here, guys. and that plant is in the process of being shut down and about 300 jobs will be shipped down to mexico. the steel workers union said this morning he plans to meet with president-elect d.o.t. ask him to keep that plant, the rexnord bearings plant from moving down to mexico. this goes over the question you were discussing on "squawk box." what happens with all these other companies as they discuss moving facilities outside the united states. does the administration become actively involved in trying to convince those companies to reverse their decisions? guys, back to you. >> you can take this too far, i guess. theoretically. i like it. it's great. i'm so happy for the people. so the government decides you're going to move? then we're not -- those contracts are canceled. that gets a little incestuous. >> well, joe, here's the thing. >> but they certainly implied it, right? i like it. i do. but it just seems like someone that didn't like it could make a case that it's a little too -- i don't know. >> joe, you could also make the argument that if you're the ceo of united technologies, the prudent thing to do is to look at this and say pragmatically does it make sense to move it to mexico? probably bottom line it does. business sensewise, is it wiser in the broader perspective to say, okay, we'll take the hit here but it's going to help us in the long run. that might be one of the considerations there. >> phil, for the bottom line, these agreements are put in place years before the move actually takes place. and carrier had nearly completed a 645,000 square foot facility in mexico. what happens to that once those jobs stay? >> good question. one of the questions a lot of us would like answers to. we have not yet heard officially from the united technologies leadership about the details of this deal. we've only gotten bits and pieces from third party sources. so that's one of the questions that's going to come up when the ceo of united technologies finally sits down and says here's what happened with this deal. this is why we made this deal. certainly that facility in mexico, it's there. it's ready to go. you would have to think at some point it will be utilized in some capacity. >> okay. all right, phil. thank you. we'll have some cameras there, i guess. probably be pretty raucous, don't you think? they're going to be happy, happy, happy. workers, anyway. oil touches $50 mark for the first time since october. here's crude up again. today up 1.25% over $50. and brent up. jim burkhart is ihs market chief. crude oil market research. do we move up our range now, jim? is it $50 to $55 now or still $45 to $50? >> it's probably above $50 on average. this is a deal agreed to in vienna. it's not going to instantaneo instantaneously change in the oil market. but it does tip the scales away from the surplus and into the deficit into 2017. >> what's happening in the past when they try to do things like this? who's going to cheat? people cheat now? are we now the swing producer here? do we turn everything back on and lessen the impact of this? >> the u.s. story has been a bit forgotten. over the last couple of days. going to return to month to month growth next year. and historically yes, there's not full compliance. but you don't necessarily need full compliance. a unique deal here is russia is part of it. if there's modest contribution from russia and the three that could tip the scales over the next six months. >> so, what could cause this to unravel? i mean, are any of the producers in such dire straits or could they be in a worse position based on emerging markets of currencies that have been hurt since the election? things like that. are there any real vulnerable players that are just for their own budget deficits or whatever they're going to need to sell more? is there an inducement for some of these to cheat? who's the weak link? >> the reason this deal came about is the vulnerability. the pressure has been so great over the past couple of years it really led to this deal that essentially iran and saudi arabia were able to come to an agreement. that is really remarkable. that's the result of this pressure. so there are going to be some opec members, you know, venezuela for example, production of venezuela may fall not because their complying to the agreement but because it's come down anyway. nigeria and libya, two wild cards. they're exempted. production could double in the next six months. or it may not. there's some big wild cards. >> what if we went flatout in this country? i've seen president obama giving a speech saying you're going to thank me for $2 gas. i don't thank him for $2 gas. i think a lot of it has been in spite of what the obama administration has been trying to do. what if you really had a government say go crazy with hydrocarbons. what could we do and where would oil prices go? >> government policy is important, but what's more important is the oil price. and the reason we have that great revival -- >> that's good. at least it's a market. good. that's what did it this time too. right? >> right. and costs have been deflated tremendously. the average break even price for shale oil in the u.s. is down 30%, 50%. >> we can turn it on quickly though. we appreciate it. thank you. we'll check back with you, see what happens. i don't know what to think of this. we'll see. thanks. coming up, at&t unveiling its answer to the cord cutting wars earlier this week. we're going to talk cord cutting and the companies trying to win you over right after the break. and here's a look at futures. it's been more of a mixed bag this week. but on the first trading day, first day of the month of december, by the way, the dow the lone index in the green there. we'll be right back. is happening before our eyes. shift in human history sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential. the media sector's battle for eyeballs getting more congested this week with at&t unveiling directv now option. with some new smaller channel packages. joining us now for what they see as the future of tv streaming content and the media landscape under donald trump is larry halverty and porter bibb. larry, you say this is going to be like the cigarette industry? >> well, i think what you have here at the end of the day, kayla, it's the free cash flow. and you're probably looking at the paid tv universe. it's mature and probably going to decline 1% to 2%. but like the cigarette industry who has been doing this for more or less 30 or 40 years, it still has pricing power. the prices are going to go up, the units are going to go down. there's a tremendous amount of free cash flow that's going to be generated. use the free cash flow to retire stock shareholder value. people are fighting for the fringe customer. this is not the 10% of the universe that generate 90% of the cash flow. these are customers you really wish someone else would have because they're price sensitive, they switch. you know, give them to someone else. and it makes great news. and if you're at&t and have a little bit of an issue with the government maybe getting approval for a merger, you're showing the government that there's a lot of competition here. and this is really a good thing. >> but porter, if you think that -- or if you had thought in the past that the television industry was going to get killed, thought that cable was going to kill traditional television. and for a time people were scared about it. but it just expanded the pie. why can't this expand the pie? >> well, there's a flipside to the future of cable television as well as all of video. and that is the fact that the largest cable companies are also the largest internet service providers. eventually they will start to diminish in terms of what larry's emphasizing the free cash flow. but they'll make it up on new charges for faster and sharper internet delivery streaming. which is where it's going to be 10, 15 years from now. >> how does the m&a landscape play out under this new administration who appears to be talking extremely tough about potential consolidation in this space? so can any other deals get done if people are trying to make this a land grab for content? >> i think in the content area, there's still too many people producing feature films. and the six studios now, the six majors are probably going to consolidate into my guess would be in the next five years. so the studio business, i think is overcrowded. some of the cable networks will probably consolidate as the people who own a few networks will decide that they need to -- >> maybe a couple hundred of those. >> and at some point i think something will happen with the number three or number four cellular provider. so i think there'll be more mergers. it's hard to say who will be doing what. big conference next week. everybody will have an opinion. but it's very, very good for the investment bankers. i think i would want to be a media investment banker in this environment. >> before we came back, i was talking about espn. according to nielsen data, espn lost 1.5 million subscribers since february. lost 10 million since 2013. so they've got 89 million now down from 99 million. but since february they've been losing 10,400 subscribers a day. that's not troublesome? >> not because espn is going to pick up on streaming what they're losing in cable. >> are they? >> they're starting to already. and you're going to see more and more traffic going to the internet for live sports. it's not going to be just -- >> and you make money the same way there? >> well, that's where the advertisers are going. they're advertising on streaming. and the internet is going five times faster. >> you guys follow disney stock. it hasn't recovered since -- when was that? the initial time -- >> august 2015. >> it's $99 now. it hasn't been near $120 since then. so there's nothing happening here? >> i think that espn if you would ask me five years ago i would say it's the highest multiple in the media industry. i think right now it's a very high quality business and probably a 12, 13 multiple. if i apply a multiple to what i think is the espn cash flow there, i'm getting the rest of disney at an incredibly powerful price. and their ability to monetize this content, what they've done with marvel is just amazing. i think you're going to see what they're doing with lucas films when "rogue one" comes out. i think they're well reflected in the price of stock. >> it's still $99. >> well, you know, i'm a buyer of the stock. >> all right. >> you have to be a buyer of disney. >> if it's death by a thousand cuts we're going to be having this conversation for many, many years to come. >> it's not going to be over very quickly. >> thanks to both of you. we should mention cnbc is part of universal owned by comcast. we have some skin in the game. coming up, controversy surrounding drug pricing shining the spotlight on pharmacy benefit managers. meg tirrell will join us with the cmo of express scripts to talk about this after the break. the scandal over the price of the epipen this year turned a spotlight not just on pharmaceutical companies but also pharmacy benefit managers which negotiate drug prices on behalf of insurers and employ s employers. meg tirrell joins us with express scripts. good morning, again, meg. >> good morning, joe. nice to see you again. dr. steve miller, thanks for joining us. >> thanks for having me. >> joe was just mentioning that spotlight that's been turned on the role of pharmacy managers. do you think there's been a war turned on pbms amid this talk? >> there's been turned up heat. the reality is the pharmaceutical companies set their prices, plans actually make their copays. we administer this. we can survive in higher low cost environment. our whole goal is to get lower net price. >> the argument that the drug -- from the middle men like pbms to drive up slicprices so your sli will be bigger. how do you explain that? >> we pass the rebates back to our plan spon source. where it falls apart is when a patient is in a high deductible plan and they're paying full freight for a drug. the member's paying the full cost. the thing is when you sign up for a high deductible plan, you should understand you're going to be responsible for that first amount. that's how they're keeping the premium low. >> there's no incentives for pbms to drive the list price higher? >> 90% of our dispenses are generics. that's what we like and there are no rebates for generics. we can live with a high rebated drug or non-rebated drug. our model will work in either way. >> where are you focusing in terms of containing costs. drugs for cancer, inflammatory diseases. what's next? >> so we're working with the pharmaceutical companies to come up with value-added programs. so for inflammatory disease is we're letting patients try drugs rel tiffly risk free. the plan will give back two-thirds of the cost of that drug. that way doctors and patients can dry drugs risk free. we get them lowest net cost. but we also get them a refund if the drug doesn't work. for diabetes we've actually contracted a network where pharmacies are now going to be responsible for quality outcomes. is the patient achieving better blood sugar control? >> unfortunately we're out of time but would like to have you back to talk soon. >> thanks for having me. >> back to you guys. >> thank you. coming up, trading the trump rally. where you should be putting money to work in the final month of the year, hard to believe. plus more reaction to yesterday's historic interview with trudonald trump's pick for treasury secretary. "squawk box" will be right back. santa claus is coming to wall street. and he looks a lot like donald trump. investors' wish list coming true with the post-election rally. can the climb continue? we'll debate straight ahead. making america great again. president-elect trump taking a victory lap today touring an indiana manufacturing plant that's keeping jobs here at home. plus a sweet change. we'll tell you how nestle plans to use less sugar in its candy and keep the taste the same. the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with kayla tausche and kelly evans. the dow currently indicated higher. the nasdaq and s&p both a little bit lower. oil prices were above $50 as far as wti goes. still are. up 1.5% after a big gain yesterday. and then we've got ice brent all the way up to $53 this morning. a key economic report is due within the hour. the weekly jobless claims. expected to climb slightly to 250,000. they've been at a low level for months. we're also tracking the automakers today. they're -- 17.7 million units last november. that's up by a 2.7% on the year. but down from the 18.3 million units, that was a big eyebrow raiser. speaking of jobs, manufacturing and the economy, donald trump will kick off his thank you tour today at a carrier plant in indianapolis. he's expected to tout a deal to keep 1,000 jobs from moving to mexico. united technologies which owns carrier says it's receiving state financial incentives and a pledge from the incoming administration to create a more competitive u.s. business climate. one employee at the plant talked about how he found out about the deal. >> it was on local news, but it was not on national news at that point. except for cnbc. they had -- that was where i got most of the information about the -- what i knew about the carrier deal. >> and credit, of course, to david faber for first breaking that story. the deal will save about half of the 2100 jobs it said earlier it would cut by closing those two indiana plants. as we were discussing with phil lebeau this morning, they already built the plant in mexico. the question now is what they'll do with it. >> yeah. >> i think people are still losing their jobs. there were 2,000 people. only going to have 1,000 or something staying there. i don't know. we'll get more details. another wall street name could be headed to washington. goldman sachs president and chief operating officer gary cohn is reportedly considering leaving. cohn could be a contender to head the office of management and budget. he's seen as a likely discusser to goldman ceo blankfein. >> well, if he's going to be at the head of that firm, you know -- >> and he has said he has no plans in the foreseeable future to retire, that he loves his job. it's what gets him up in the morning. >> he's early middle age. 61? >> i like that. early middle age. >> are you early middle age? >> i will be in a couple years. begin a new month of trading today. we talk about the huge post election rally. check out these numbers. the dow up 5.4%. it says 4.7% there. the s&p now up 3.4%. it says 3.2% there. the nasdaq up nearly 2.6%. just might check before we throw up. the russell 2000 might finish with a gain of 11%. yesterday on "squawk box" we did talk with president-elect trump's treasury secretary pick and here's what steven mnuchin told us about economic growth and plans for tax changes. >> our most important priority is sustained economic growth. and i think we can absolutely get to sustained 3% to 4% gdp. that is absolutely critical for the country. to get there, our number one priority is tax reform. this will be the largest tax change since reagan. we've talked about this during the campaign. wilbur and i have worked very closely together on the campaign. we're going to cut corporate taxes which will bring huge amounts of jobs back to the united states. >> the interview's on the front page of just about every major paper this morning. nice to see cnbc is all over the place. although -- >> carrier news. >> yeah. but it's on newspapers which no one really reads anymore anyway. >> so you can frame it and put it in your office. >> that's a good idea. >> i subscribe to three or four. >> what if i don't have an office? >> yeah. hang them back here behind you. >> then you'd be fooling a lot of people. >> markets usually have a joyful ride in the final months of trading, but will the trump rally outshine this december? our guest host paul mcculley is still with us at this hour. so, mark, what do you think here? stocks a good bet at record highs? >> i still think so. obviously we're due for a pause. if you annualize these gains, you're talking between 50% and 100% predicated on which index you're looking at? we know that certain subsectors like the semiconductors are up some 20% above their long-term trend lines which is unsustainable. i'd be prepared for a pause, a pullback of some sort. i think it needs to be bought. and of course we're in a timely period of the year where the seasonality typically being a strong month with a santa claus rally suggests you don't want to be out of this market. i think there's more gains to be had. >> actually it would be between 50% and 250%. >> even better, joe. >> on the russell. the 11% in a month if you do 12 months compounded it's 250%. if you're speaking to, like, your broker and everything, just -- 50% to 100% sounds good. but it's actually 50% to 250%. >> i underestimated. you're right. that's fabulous. >> you know what's really weird? and paul mcculley may be the only guy smart enough to explain this. 250% is three and a half times your money. that's weird. isn't it? >> that's the way the arrhythitc works. i actually have a question for you from the standpoint of independent of whether the market goes up or doesn't go up this month, what are your thoughts on valuation? obviously the market has been celebrating increased expectations for growth because going to stimulate the agate demand. of growth and interest rates and go the other direction. what is your take on the net net between the positive growth and the negative interest rate expectations with respect to what constitutes fair valuation? >> well, paul, i mean, that's a great point. that's one of the concerns that at least at the moment the market seems to be overlooking. but the fact of the matter is we are trading rather fully in relation to what are being pencilled in at the moment for 2017. now, the good news is we've been getting the economic validation of recent. we've been seeing better than comparable numbers on the economy. we know the citigroup has moved higher again. the good news is the underpinnings for economic activity for corporate profit growth is pretty good. posted a positive earnings growth. if we build on that, then i think obviously stocks can advance. however, the advance in the stock market is more likely going to be dependent upon that earnings growth picture. which under a scenario like perhaps our secretary of the treasury is expecting, that's a sound return for stocks. in the absence thereof, i don't see how market multiples will continue to support the stock market in the absence of a follow through in either the underlying fundamentals economically or corporate profit gains. >> can corporate profits in perpetuity grow faster than the economy, what does that imply about share of gdp and corporate profits if you're always forecasting growth and profits faster than growth in the economy? just as a matter of arrhythmita >> you're right. the fact of the matter is you're talking about corporate inequality relative to the benefits that have fallen to the shareholders and the stake holders opposed to labor. and that's widened massively. it is unsustainable. the fact is profit margins have been shrinking. we've seen labor get this gains in form of wage increases that will continue to work counterproductively to the benefit of profit margins. i don't suspect that's a sustainable outcome. >> can profits go up with profit margins going down but absolute profits can go up. >> you've got three variables. overall growth in the economy -- >> but you can have profit continue to rise at cooperations and you can have margins shrinking so that wage gains are greater than shareholder gains. but you can still see profits rising. >> you would be rising at less than gdp in that context, right? >> i don't know. would it? not necessarily. i mean, if -- >> the economy is growing at "x" and if labor's getting a bigger share of "x," then arithmetically you're -- >> therefore profits go up. as ma gins come down and we're at 4.9%, people start getting wage gains from market -- >> right. >> because there's a tight labor market. maybe profit margins aren't where they were. profit margins might not be as high as they were. but can go up. >> can you just say arithmetic one more time? >> arithmetic doesn't work. by definition, if corporate profit as a share of gdp are shrinking, then corporate profits are growing less than gdp. that's arithmetic, joe. >> i'm talking about that margins -- we don't need to stay at all-time highs in margins to have it go up. wage gains can grow, you can have better wage gains and still do 10% a year profit growth. right? >> arithmetic is a tyranny. >> i'm not talking as a percentage of gdp. i'm talking you can still have higher absolute profits based on -- >> you actually can and an important factor is that larger -- >> it'll be good if profits go up. and wages will go up as well. >> you can square the circle by saying that large companies in america don't make profits just from u.s. gdp. but global gdp. and therefore you can do it from global growth. the dollars are negative, obviously, in that equation. so actually you can get there. but i want to point out the simple arithmetic that if labor is going to get a bigger share of gdp, capital gets a smaller share. that's arithmetic. >> we've argued how walmart has done. the stock has gone from $20 to $130. have workers not gotten increases? do all the shareholders need to be disenriched. i can see how maybe you -- but you don't do it necessarily by the government stepping in and setting price controls or wage controls. you do it with growth which causes, you know, workers to be more -- >> you absolutely do it with growth and do it on the demand side of the economy. this economy's got plenty of supply. it needs more demand. it needs a bigger budget deficit. >> you're going to be here until the end of the hour. but if we still have mark with us -- do we still have mark? mark, what would cause you to take a contrarian view? there's so much pervasive bullishness in this market. we were talking about eight year high, it was 2008, the precipice of the financial crisis. obviously we're nowhere close to that. but i'm just wondering with bullishness at the level it is, what would you say maybe it pays to be skeptical? >> well, there's a couple of things. obviously we haven't discussed the worries that are more to the united states. and that is the strength of the dollar could undermine the emerging market economy whose fiscal about is commodity laden countries that are going to suffer under falling commodity prices. obviously we could have an emerging market crisis renewed again like in the beginning of this year. china's economy is slowing as well. so at what point does it stop decelerating and destabilize? i think the worry would be all the things that the market has pulled forward into this trump advance, this rally on the back of the election. and the single party system that would enact everything on the campaign trail suddenly stalled. and we don't start to see some of the policy put forward. regulatory relief, infrastructure, some other form of fiscal spending. if all these things either get delayed and pushed out deeper into 2017 or 2018 or get watered down by way of some kind of a gridlock in washington that obviously the market isn't anticipating at the moment, that could undermine this rally. i'm not suggesting it's a cause for a bear market, but it would certainly, you know, certainly take back, if you will, much of the gain ifs not even more that we've had since the election. >> we'll hang our hat on some of this data we'll get in the meantime before the administration gets under way. but mark, we'll see you soon. >> thank you. a few of the stocks on the move this morning that we're watching, dollar general missing the mark on the top and bottom lines. results were hurt by slower customer traffic and a challenging retail environment. stock is down close to 8%. a mixed quarter for the apparel retailer reporting a larger than expected quarterly loss. but revenue exceeded forecasts. same-store sales dropping more than 14%. a result the company calls disappointing but still that stock up 7%. the ft reporting that a joint bid by china's state-owned investment firm and u.s. private equity firm carlyle is now in the lead to buy mcdonald's china operations. that's a sale that analysts say could be worth as much as $3 billion. and parker hannifin is buying clarcor for cash and assumed debt. the deal valued at about $83 per share. when we last shoed you the stocks, they were unchanged but currently you're seeing up about 16%. walt disney raising its semiannual dividend by 10% to 78 cents per share. that brings the total dividend to 149 per share. pure storage posting a smaller than expected loss. the data storage company's revenue beat forecasts benefitting from the addition of new customers. joe? coming up, we will be talking to this gentleman who president-elect donald trump -- we're talking about what he is going to do. and this man is senator james lankford. you're watching "squawk box" on cnbc. make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growunities for our clients: to advance the future of medicine with digital, and improve the quality of lives. ♪ we're plotting back here. welcome back to "squawk box." we're also counting down to the november jobs report due in a little more than 24 hours. that'll be tomorrow morning. yesterday on "squawk box," president-elect trump's pick for commerce secretary wilbur ross flagged one of the biggest problems with jobs in america. >> it's also not true that all jobs are created equal. a guy who used to work in a steel mill now flipping hamburgers, he knows it's not the same. so it's the quality of jobs as well as the quantity. and one of the problems with the recovery is when the newly created jobs are not nearly as remunerative as were the jobs that were lost. that's a big structural problem. >> our next guest says that one of president-elect trump's biggest priorities should be tackling government waste. joining us now senator james lankford. he released his second report on government waste this week. so many ways and viewpoints on how to deal with debt. senator, is it possible to get growth going and not be quite as concerned near term with austerity? maybe get growth going and see how that works and then maybe start addressing it more stridently? >> we really have to do both. that sounds like that may be odd, but if we don't have it and -- we'll never get on top of the debt and deficit issues. just half a trillion dollars just this year in over spending. obviously that's not sustainable. when the debt has doubled in the last eight years, it can't keep going like that. when interest rates pick up and you and i both know that interest rates will tick up in the next eight years forecast to spend more interest than on national defense. that is not long-term sustainable. we have to pay attention to both. >> i guess with the way that we're able with the strength of the dollar, the way that we're able to sort of basically do what we want -- hopefully what we always can, but king dollar does allow us a lot of leeway with doing things like this. and maybe the dollar comes down a little. but do you think we've already hit the tipping point on from the point of no return? because other countries have come back from much worse than this, i guess, but not without some pain. >> that is correct. not without some pain. if we were to balance the budget in the next ten years, it would take a focused effort not to have overspending in any one year. if we were to balance our budget and have a $50 billion surplus the next year. if we had a $50 billion surplus a year, we would pay off our debt in years. we're not adding more to the debt every year and get to a point where we can manage our debt as a ratio of debt to gdp. but to deal with just the sheer size of our debt approaching the total economy, that is the part i think everyone needs to be able to pay attention to. especially when interest rates go up and those interest rates take up much of our discretionary spending. >> what if you include entitlements? we might as well kill ourselves, right? what does that come out to? >> no, we're at the same spot. if we look at about $3.7 trillion in total spending. everything from entitlements -- >> but what's the unfunded obligations we have? >> it's over $100 trillion, that's correct. >> what's a hundred trillion? that does sound like real money, paul. >> it does sound like real money and it's part of my concern that during the debates it didn't seem to be a lot of the conversation. >> wants to blow out the debt like you can't believe. and is this guy off base? >> i have a simple question. you are looking at the government sector. we the people as if it was a household sector. why do you not look at the government as different than a household sector that the government is perpetual. why do we have to contemplate paying off the debt? why can't we roll it forever? >> we can roll it forever, but the interest would take the spending. the first payment is always to our interest and our interest right now is about $225 billion. almost exactly the same as what it was ten years ago. but we have twice as much debt. when interest payments go up and we're at $800 billion a year in interest payments alone, then we literally don't have money to be able to do on so many other areas of investments we need to do. then we are in the perpetual cycle. the it's as if i'm paying my grandparents' minimum payments on their credit cards and my parents and mine. you don't have enough discretionary income to do anything else. >> why are you so bearish on interest rates? what is your forecast on interest rates for the next five to ten years? >> i look at the cbo scoring to not try to guess on what that would be. i don't have any anticipation that rates stay at the same level for the next ten years. i haven't seen anyone else step in and say we're going to have historically low rates into the foreseeable future. >> hey, senator, it's sort of water cooler topic, do you have any companies in oklahoma eyeing a factory move to mexico? and are they rethinking it? what do you think of that? >> so far we've not seen companies in oklahoma eyeing a move to mexico. a lot of them do have production around the world and they should be able to participate around the world. that's a good thing for us as a global economy to participate everywhere. but so far we don't have a big move to be able to relocate out of oklahoma. who would ever want to leave oklahoma? >> oklahoma is okay. but what about -- are you saying then that the government shouldn't be in the business of threatening or cajoling companies to stay here and keeping jobs here? what are you saying? >> i say every state including indiana and every other state always competes for business and always competes to be able to bring jobs to their state. that's the right thing to do. oklahoma competes and we have jobs that have come to oklahoma from other places because we competed and won those jobs based on a really great process on our workers' comp. we should engage as a nation to take care of our tax policy. we punish them with a corporate tax rate. we tried for the last couple years the stick approach to say if you leave, we're going to whack you. we need to move to the approach to say we're going to fix some of the corporate tax code to encourage people to go. i don't see a lot of companies that want to leave and go international. i see shareholders and others saying they require to because it's better for the bottom line. we need to fix that part of it. that's a large scale tax reform proposal. >> i want you to come back to trump tower and get on that. you've got some good ideas here. have you been back yet? you want to go up there? >> i have not been to trump tower. i'm going to keep my day job the oklahomans gave me. >> all right. just thinking you're an impressive young man. what's wrong? you don't think i should be offering out cabinet jobs? >> have you been to trump tower? >> no, i haven't. but i definitely need to keep my day job. anyway, senator, thank you. appreciate it. >> thank you. coming up, breaking economic news. a key read on jobs ahead of tomorrow's employment data. plus sweet news for chocolate lovers. nestle is trying to make you feel a little less guilty about indulging in your favorite treat. "squawk box" will be right back. . this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. there goes my sensitive bladder. sound familiar? then you'll love this. incredible protection in a pad this thin. i didn't think it would work, but it does. it's called always discreet watch this. this super absorbent core turns liquid to gel, for incredible protection that's surprisingly thin. so i know i'm wearing it, but no one else will. always discreet for bladder leaks we are just seconds away from weekly jobless claims. look where futures are. they're giving up a little steam following through on some selling into the close yesterday. the s&p 500 has just turned positive. it would have an implied open of less than one point. the dow gaining a little bit of strength. can take a look at where the 10-year note is because the yield currently sitting at 2.41%. seeing some sharp strength. some reports say $1.7 trillion came out of the bond market in november. we'll see what flows look like. take a look at gold priceoil pr. wti could rise through $60 a barrel. steve leisman is here now with some breaking news. and we'll dive through those numbers first with rick santelli standing by in chicago. rick? >> well, up 17,000 from 251,000 which was not changed from its original release last week to 268,000. continuing claims, they moved higher from a little over 2.04 million to just a whisker over 2.08 million. kayla, you're right. 2.4% is the yield on the 10. so we're up over a hundred base points since that second of the double bottom. and indeed many out there. they may point to higher rates. but it is really the speed at which they move higher. and the continued notion that we haven't had many setbacks even in the equity markets. you want to pay attention to that. this area is very technically significant. >> steve leisman is also here. a bit of an increase in claims. >> yeah. not good. the market has generally thought that 275,000 is a number you still worry about it. 268,000 seems to be consistent with the jobs number that could be around the 170,000 range. it's been unusually low. employment rate the percentage of those who are unemployed -- who are covered but unemployment insurance has reached multidecade lows. some people have rolled off. that doesn't come into that number. still could be unemployed. but in general the job market looks healthy of the big adp number. i want to turn my attention. you guys have the 2-year up. that 1.13% i have as a high since 2010. almost a six-year high. i want to talk about what a recent dilemma the market move. let me go through the whole list here of the trump effect. here we go. stocks, rates, and the dollar are all higher. but nothing has actually happened yet. perhaps to underlie that. in terms of actual policy changes. it may not for months, and what actually happens could be dramatically different from what the market expects. the fed has to make a choice. all of those things in the first line add up to tighter or looser financial conditions than they expected? raising the fourth question here, does the fed in the december meeting, does it raise its growth outlook? does it raise its rate outlook? inflation outlook? based on line two where nothing has happened yet. so that suddenly makes this december meeting which was going to be we're going to raise a quarter, no big deal, very interesting. because we get these forecasts from the federal reserve and those forecasts help set the market outlook. what i see right now in the fed's rate outlook in the market is i see a june hike. and they're kind of starting to flirt with -- in the market. and then a december hike. so it looks like two are priced in. should you start to price in three or four and to the skepticism on joe's face right now -- doesn't matter. doesn't matter. because the market's already there. >> no. my look is that for you to say the fed might have a problem with orchestrating higher asset prices without anything fundamentally changing in the economy, that's their whole m.o. for the last five years for qe. through low rate. they were trying to instill animal spirits and -- >> they were. and now it -- >> now they have a problem with animal -- >> i didn't say negative. i said dilemma. it could be good or bad. you could meet a beautiful woman and decide should i marry that person. it's a dilemma. >> dilemma if you're married. >> if you're not married, it's another question. if you're having a good time as a single person. but can i just ask paul mcculley who is a person who has been mentioned as a possible fed governor in many places, what would you do in this situation? would you let it go? would you say it's not real yet until it's real? >> i think the first thing you do is go ahead and hike because the market is slowly prepared for that and all the rhetoric -- >> yeah, we got ta. >> and actually i wouldn't change up all that much at all the growth forecast. because you don't need to do that to justify hiking in december. so essentially maintain basically where you were with respect to the forecast and the plot. and that itself is a big change. because, remember, the dot plot has been coming down every quarter. so actually you have the option of not taking it down any more, leaving it where it is. hiking rates and saying i'll be back to you in three months. that seems to me the obvious choice. with the message being that this pattern of bringing down particularly that long-term dot from four down to three. to effectively stabilize the dot plot not keep bringing it down. hike and try to say nothing eloquently at the press conference. >> there's no press conference in january though. you have congress getting sworn in january 3rd. inauguration january 20th. the fed meets through february 1st. >> not then. a window then. let me point out the market has done a much better job of predicting where the fed would go than the fed has done. >> no kidding. >> we chronicled the fed funds rate predicted by the market was lower than the fed. it came down to the market. now the market has shifted and gone up. we'll see if the fed now shifts to the market. >> you g'd get a hair cut to ben the fed. >> why? >> i could do that. >> you have a better chance probably. >> i have no idea, joe. >> all right. coming up, we're going to talk to kroger cfo about the company's latest quarter. plus you might call the supermarket a trump bump is what's happening with kroger. we're going to explain when "squawk box" comes right back. > results matching estimates with quarterly profit of 41 cents a share. revenue was above street forecast. kroger, whole foods, supervalue also all getting what we're calling a trump bump after the election. joining us now michael schlotman cfo of kroger. he's also a member of cnbc's global cfo counsel. i don't understand the trump bump. do you sell crow to all the people that were coming on cnbc saying that the market would go down 5,000 and trump couldn't possibly get elected? so your crow sales are up? >> well, our job is just to feed people regardless of their political affiliation. that's what we try to do a better job of every day. >> why is there a trump -- why are we saying there's a trump bump? >> well, i don't think it's just our stock. if you look at the stock overall, it's been there. i think some of it is certainly the sentiment out there that policy changes could be favorable for businesses. there's been a lot of of a report for instance if there's a lower corporate tax rate. we're 100% domestic. would stand to have more free cash flow if there is a lower corporate tax rate which would help us build more stores. >> so we actually in the results that you're reporting you can't attribute anything to probably negative. i don't know. i've heard that people didn't go to restaurants because of the election or something. would that mean they were staying at home cooking their own meals. could you tie anything in your results to this unbelievable year we've all been through in this highly partisan age? >> yeah, the quarter ended almost right before the election. so there's not a lot of the election in there. if there's any effect from what happened those couple three weeks that a lot of retailers are talking about, it would have been early in our fourth quarter, not third quarter results. there continues to be consistent deflation in categories. in fact in the third quarter got about 20 basis points worse without pharmacy. which certainly has a bit of a headwind to the top line. >> but then i guess aren't margins a little better -- it's a good and bad for a supermarket? or is deflation always bad? >> it depends where it is and how persistent it is. and the toughest time of inflation and deflation is the transitional period when you're going from inflation to deflation. then a lot of the -- three big commodities for us. everything but eggs starting to firm up a little bit. >> it like walmart or pea pod whatever? direct. what is it you need to worry about in terms of the future? who's your biggest threat? >> we look at our market share in our traditional industry but also more broadly. it's a market that we operate in. we're over a hundred billion dollars. so the opportunity there is huge. we try to make sure through that analytics relationship that we understand where it's going. it's interesting a couple bit ago came out with an article on the rust belt cities. a lot of that was cultural and food activity that's going on that we try to stay aware of and offer that in our stores. markets we have stores in. it's important. we stay in touch with what's happening with food away from home so we can offer those in the stores as well. >> you going over to the rally today? the thank you rally? >> i am not going over to the rally today. it's a busy day today with earnings. we have our conference call at 10:00 then i have one-on-one calls with the analysts the afternoon. >> so you're busy. you can't really -- you don't have time. i'm sure you'd be there. anyway, michael schlotman, thank you. we appreciate it. right from god's country, cincinnati. salt of the earth. >> absolutely. >> and someone else we know. coming up, an entrepreneur's success story. we'll speak to joe malone about doing business in america and what it takes to go from the kitchen to the department store. stay tuned. ♪ we're 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 don't. 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. for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20. ♪ may not always be clear. but at t. rowe price, we can help guide your retirement savings. so wherever your retirement journey takes you, we can help you reach your goals. call us or your advisor t. rowe price. invest with confidence. they are the natural borns enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful. we are bringing you the story of an entrepreneur today. our next zbes a fragrance industry icon who honed her scent making skills in her home kitchen. jo malone is author of the new book "jo malone: my story." it is such a treat to have you here in studio. >> thank you for having us. >> tell us in a couple sentences how you got your start, how you knew that your business would be successful. >> i didn't. i don't think anybody -- any entrepreneur starts out thinking i'm going to be successful. you just put one step in front of the other and you do the best you can. but i started out -- i mean, my family background was tough to say the least. i was the sole breadwinner from about the age of 11 years old. i found out my nose was something special. it was like a blood hound. i would smell anything. and i could create cosmetics. it was those cosmetics that suddenly went out and everyone wanted to buy them. and hence a business was born. >> why not be a truffle hunter or something else with that nose? what drew you to fragrance? >> i love wine, so i could do that. >> talk about your first business. and transitioning from starting one business that carries your name even to this day, moving over and finding a new identity. >> well, i've never had a problem with my identity. i've always known who i am. and i've known what the ability of and the creativity of the things that i can do. so starting out for the first time was great. but this little business grew so rapidly that it started to backfire on us as my husband and i owned 100%. we knew we'd need a partner. in growing the business and selling it to estee lauder, they had deep pockets and a huge heart for entrepreneurs. so it was a great marriage. >> what lessons would you draw from that experience for people who might -- you know, we talk about this with a lot of the new companies in silicon valleys or entrepreneurs all the time. when do you sell? should you sell? >> it depends on you. it depends what you want from your life. it depends if you're happy. great collaborations and great partnerships are definitely -- they can get you to your destination faster. but i think selling a business has all kind of implications that staying on your own as a business also has them. you have to weigh them out which is right for you. >> it's amazing to be so successful and to think back where you came from, you mentioned you were the sole breadwinner. but you dropped out of high school. you were severely dyslexic. >> i am. >> tell people the red dot story. >> i'm very dyslexic so i couldn't read a graph. but i'm very -- i can see color and understand the direction. and when i approve a product, i normally sort of red dot it so i take little stick it dots and pop a little red dot on them. my team know they can package it or market it or pr it. and when i was looking for my second identity in jo loves, i was thinking what can i do, what's my nike swoosh, what's my apple? and i was sitting there at my desk one day with a bottle of nail varnish and i was sitting there playing with some labels and i looked and i thought i've just spent 100,000 pounds with a company to try to find my nike swoosh and it's right there in front of me. so the little red dot costs absolutely nothing but a bottle of nail varnish, but it's authentic and real. the little red dot does signify i've created the product. >> let that be a lesson nothing can ever hold people back. >> never. >> now the products in jo mal e malone, they're upscale experiences for sure, what makes the cost worth it? a $70 candle, is there 24 karat gold or wings of an angel in there? >> a lot is the creativity, it's what goes into something. i can't speak for jo malone anymore, but it's the quality of those ingredients. candles for instance are the most notoriously difficult thing to do. and if you don't get the right fragrance, it won't burn properly, the wick goes really strange, all kinds of complications. so i think candles are really worth it with the level of fragrance and the quality that goes into it. >> well, it is a fascinating story. your book, if you could hold it up. >> thank you. i'm really proud about it. >> "jo malone: my story." thank you for coming in, appreciate it. >> thank you. up next, we're going to head down to the new york stock exchange. jim cramer will join us live with his take on today's top stories. and as we head to break check out the s&p bank etf, that super charged trump trade, well, how about 18% higher since the election, trading higher 13 out of the last 15 sessions. november now in the books as the best month ever for that etf. we'll be right back. ♪ ♪ is it a force of nature? 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"squawk on the street" is next. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. first day of the final month of the year. the dow within a hair of its first double digit gains since 2013. futures are steady on some decent manufacturing pmis all around the world. europe's was the strongest in almost three years. oil continues its run this morning after wednesday's opec cut. our road map begins with that november rally. could it extend into december?

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