Transcripts For CNBC Worldwide Exchange 20170104

Good morning. Welcome to Worldwide Exchange. Im sara eisen. Im wilfred frost. Good morning to you from me as well. Its the oneyear anniversary of Worldwide Exchange. Were celebrating with an outstanding lineup of guests. Hard to believe its only been a year. Mad money host and our friend jim cramer will join us a minute. At 5 15, jim mellon will dial in he was with us a lot during the brexit coverage. 5 30 a. M. , well speak with ken rogoff from harvard university. Do you think we were this relaxed and smiley this time a year ago . No. We were nervous. The amazing thing we pretty much were from day one. We were a bit nervous, and also markets were going crazy at the beginning of the year this time last year. This was very exciting. Very exciting. But a lot of down days. Worst start to a year ever. We thought we were jinxing markets. We wondered if that is how we would start 2017. But 2017 kicked off in positive tone. Lets look at futures. After yesterday we saw about 1 of gains for the nasdaq. 0. 7 for the dow. S p in between. It was a reignition of the traditional posttrump election victory reflation trade. Yesterday the dow gained 16 points, the s p and nasdaq also positive. Tenyear treasury notes, ticked up. Germany saw the tenyear move quite sharply. That sparked a bit of a push up in yields as well. So a slight tick up. But still below 2. 5 . That high around 3 1 2 weeks a i go was 2. 64. Lets start in asia. Japanese manufacturing pmi rising to 52. 4 in december. That topped estimates. The reading suggesting japans Manufacturing Sector seeing signs of improvement above that critical 50 expansion level. Japanese Prime Minister shinzo abe saying the recovery of the japanese economy will continue to be his top priority this year. He spoke at a News Conference today. Abe pledged to keep shooting the three arrows of monetary policy, fiscal policy and Growth Strategy in order to beat deflation and get growth. The nikkei for its part closed higher the first trading day of 2017 by 2. 5 . Better manufacturing, also that weaker yen. Four days in a row, continuing to push to 1. 18 against the dollar. Check out chinese currency, the yuan making moves overnight. The Chinese Central Bank setting a stronger than expected daily trading mid point. State banks selling dollars and buying rates for the offshore components of the yuan all rose. It suggests that state intervention is stemming the losses in the currency. Basically that china is intervening to prop its currency up, even with a strong u. S. Dollar. Controlling its currency and going against the narrative that china is intervening to weaken its currency. I think we cleared that up this time last year, that despite the political rhetoric from donald trump that they are weakening it, we know they are propping it up. Its always been a bit of a sort of confusing thing from donald trump and politiciapoliticians. Data out of europe to mention, eurozone december cpi rising 1. 1 from last year. Actually thats the fastest rate in more than three years. Eurozone services pmi showing businesses ended 2016 ramping up activity at fastest pace in 5 1 2 years. Better data out of europe. Trading action flat. German dax down about 0. 1 . Ftse 100 flat. Italy having a nice day. The Banking Sector getting a boost. Summing up all this data out of the world over the last couple of days, europe, yes, the pmis were good and inflation overall looked good, but different performances within the individual countries. German inflation strong. French not so strong. In terms of asia data, north asia doing well. Japan and china showing tepid growth. Growth albeit, but quite temporary led. Southeast asia still soft. Keep an eye on the different performers. But nothing to disrupt what has turned into a global rally. Yesterday markets were celebrating this date a for the year ahead. Lets look at other markets. Oil prices this time yesterday were up 2 . They ended down 2 . Inventory data showing a build up in the u. S. , that led to the selloff. Down 2 . Having hit an 18month high on oil prices. Still above 50 nicely. Dollar board that was particularly strong yesterday. Full 1 move higher in the broad dollar index. So quite marked move yesterday. Losing a bit of steam today. Nothing too significant. About a quarter percent against the euro. Gold prices to round things off this morning are a little higher by a third of a percent. The Auto Industry and the fed are in focus today. Auto members will report december sales. Another record year likely in 2016. Sales expected to possibly top 17. 5 million vehicles. Thats the number to look out for. Many analysts say rising Interest Rates, lower tradein values, tighter financing may put an end to that sales run. And at 2 00 p. M. , fed minutes will be released from last months fed meeting when the central bank raised rates for the first time in a year. Investors pulled 19. 3 billion from blackrocks u. S. Based active funds moving to passive funds. The investment industry struggles to compete with lowcost vehicles. Blackrock did benefit from its etf business. It took in 140 billion into etfs during 2016 beating rivals and setting a new global record. Now to politics, president elect trump taking to twitter again to make announcements. He will be holding his first News Conference in over five months in one week. Thats january 11th in new york city. He mentioned that on twitter and he took a jab at the intelligence community. Last week he said he would be meeting with officials to be briefed on the alleged hacking of the u. S. Election, last night he took to twitter, the Intelligence Briefings on socalled russian hacking was delayed until friday. Perhaps more time needed to build a case. Very strange. No evidence of that. Something to watch as i suppose Intelligence Briefings as we move ahead are things i hope he doesnt tweet about quite so much. Tracking key trump appointments and nominations. Among the jobs important to business and investors, wall street lawyer jay clayton has emerged as a top candidate to be chairman of the s. E. C. Clayton has served clients including Goldman Sachs and barclays. Trump could make that announcement today he would succeed mary jo white. Clat seas and exxonmobil and president elect trumps pick for secretary of state, rex tillerson, agreeing to cut ties. If tillersons appointment. Is confirmed, the value of the 2 milli million shares he would have received will be transferred to an independently managed trust. Tillerson will also surrender entitlement to more than 4 million in cash bonuses and other benefits as he gears up for the Senate Confirmation hearings. Back to the markets. Joining us now on the cnbc news line, a special guest caller, jim cramer, host of mad money. Loyal Worldwide Exchange fan from the very beginning. Jim, you really have been a part of the show for us. Thank you for the last year. I dont think i missed you guys other than the couple days ive taken vacation. And you start my day. Im not kidding. We have a president elect who is up right before you guys and tweets, youre the first time i hear about what hes been saying. Its true. I want to congratulate you. I love both of you very much, both on and off the set. I regard you as my friends but i really regard you on the way i start my day. Congratulations on the first anniversary. Thank you. We take a lot of our content from the 6 00 p. M. Hour of mad money. Dont tell him that. That a block very critical, jim. The question this morning with the nice rally to kick off the beginning of the year is what do you do next . Does the trump rally have momentum going into the year . I think if youre in, dont sell anything. If you arent, i think youll be given there are a lot of days between now and when trump takes over. I think there are a lot of people who on theyll react to any media news which says that trump will not be able to get his agenda through. You wait for a day or two where some Senate Leader in the Republican Party says hes not sure or shes not sure about what trump wants to do, youll get a decline, thats your next best time to put money in. Overall, as i listen to your show, worldwide the economy is getting better. A lot of things are changing for the better, repatriation matters, corporations matter because you raise numbers. Im acutely aware if we dont get these things quickly, a strong dollar meanings earnings have to come down. Were almost at earnings season. I key on what the currencies are saying, thank you for doing so much on those and what the world is saying, versus what can happen here. Jim, i want to ask about the banks. They had a massive rally in the Fourth Quarter to turn them around from being disappointments in 2016 to the second best performing sector overall. Have they run too much too quickly . I noticed yesterday you were saying if you had to buy one of the banks from here, it would be jpmorgan. Why is that . Theres two components to the bank rally. One is there is no deregulation will help them. They have huge compliance costs. They have not been able to lend the way they would like. If you get rates going higher, four rate hikes equals 3 billion in profit for jpmorgan. The great thing about a rate hike for jpmorgan, they dont have to do anything. You can imagine the leverage, 3 billion, thats profit. Thats an extraordinary figure. Jpmorg jpmorgan in the dow, bank of america not in the dow. But this is a play not just on the election of trump but the fact well have to have more rate hikes if the economy picks up. Im a big believer that the economy will pick up. Jim, advice for someone who owns a stock that trump tweets about. It feels like this will be a regular occurrence. Until the president elect decides that theres that he should be attacking this issue more, lets say globally than just individually, people have to be worried that at any given moment for instance, with drug stocks. Those are not a trump stock. Not a trump stock on mad money. If you have a company thats in the cross hairs of what the president elect was saying during the campaign, then i think you have to have recognized there is much more risk. I also want to say before we break up, that its important for everyone to watch this show for one major reason. I switched in mad money and talked about the idea that trump could win and what to do if trump could win because of your coverage of brexit. Because of the doubts you showed about the ability to predict events, i was able to have enough ideas in my show, mad money and also squawk on the street which said heres what to do. Thank you very much for that compliment. We were shaken by brexit. We were shaken by brexit. As y one very quick final question, jim, for a stock that you cover a lot. Not related to brexit or trump, what you are doing with apple . I think you should hold apple. Sells at eight times earnings. Samsung had a major setback. They are the king of repatriation. You can repatriate those assets from overseas, 40 in cash per share from overseas. Its hard to hate that stock given its such a huge winner under the trump regime. Thank you very much for getting up early for us. Though i know you didnt get up specially for us. This is a man who doesnt sleep. Exactly. Thank you, jim. Make sure everyone watches mad money every single day. You have to watch cnbc full time aroundtheclock. Still to come, the brexit vote was arguably one of the biggest stories of 2016. Certainly from our eyes it was. It will likely continue to dominate Global Market conversation this year. We will talk to a top investor who backed the decision, called it right and made money off of it. He has strong views on where europe goes in 2017. Jim mellon joins us after the break. R ninibrwetralosthnt es. Welcome back to Worldwide Exchange. Looking back on one of the biggest market events was the uk decision to leave the European Union and lots on the political agenda for europe in 2017. Our next guest pbacked brexit, jim mellon joins us. Thanks for joining us. Happy new year. We had brexit last year. That means the worst is behind us for europe and from here on its a rosy outlook. Is that right . Quite the contrary. Congratulations to both of you on your firstyear anniversary. Thank you very much. As we know, i think the euro is toast in the next one to five years. But i might be a buyer of the euro because i think the dollar is too high, and the british pound is too low against the dollar. The situation in europe is pretty d pretty diabolical. France and germany could be in some ways be in line with the brexit vote. We already had the italian referendum which went against the elite establishments. And i think well get powerful voices being echoed in the three main elections including holland later this year in europe. It will be a bumpy ride in europe and the situation is not particularly good here. It will break up. The eurozone will break up. And i think britain is better off outside it. Interesting on when well see that eurozone breakup. Do we have to see the likes of le pen or afd in germany win the elections this year . Do we have to expect that the pulses are yet again wrong if predicting those elections or just a significant showing from them in those elections enough to start the ball rolling over the next few years for the eurozone to break up . Great question. I dont think that the afd is going to do, for instance, better than 20 in the election in germany. I very much doubt that Marine Le Pen will win. Weve been proven wrong in the case of donald trump in the last year. So who knows. What i would say is that no one will make an announcement about the date they leave the euro. They wont be negotiating ala brexit, they will just do it unilaterally. I would say italy first or gree greece. As you know, weve been reporting on this for years, this is not the first time someone called for the break up of europe, this is coming, greece, cyprus, portugal, spain, italy. Weve been through this before. Why do you think it will be different over the next one to five years as you predict . Its a question of timing, as you say. I think that basically people have had enough in southern europe. I live in spain half the year, people have had enough of the young generation being 50 unemployed, zero growth, erosion of living standards. This particularly applies to italy where there has been no gdp growth since 2000 and no industrial growth since 2004. People realize the reason for that is the imposition of the euro on these countries, they cant devalue and be competitive again. Whatever happens, Marine Le Pen will probably get into the second round and do much better than her dad did, 15, 16 years ago. So i think those voices will be heard. In my opinion,s a soon as theres an effective government in italy, and who knows when that will be, they will start planning for leaving the youeu. Just to round things off for us, despite this bearish outlook longer term for europe, you said in the shortterm that the euro and pound are undervalued. What is your call on those in the shortterm . You have to believe the trump rally is going to come to an end. U. S. Companies are getting badly hurt by the incredible strength of the dollar, which is as high as it has been since 1984. That will put a damper on u. S. Gdp growth. My expectation is the euro will go to 107 or 108, and the pound up to the 120, 130 level in the next few months. Thats a good trading opportunity for those who are nimble. We dont know if it will be a hard euro or soft eurozone, so make it a shortterm trade, not a longterm bet. Jim mellon, thank you for joining us. You have already paid for your Upcoming Trip to london, havent you . I locked into that pound when it plunged to 118 i think. On the flash crash day. Now we can go to europe. Despite a shortterm rally to come if jim is right. Coming up, a round up of the stocks to watch. First, todays National Weather forecast from the weather channels ray stagich. Good wednesday morning. Congratulations on one year of Worldwide Exchange. Were going to exchange milder weather for Colder Weather in the northeast and new england. Its heading towards new york city. 49 today. The snow with our next winter storm coming into the west. Well pile it up and maybe multiple feet of snow in some spots. Looks like denver you could see delays near the airport. 51 for atlanta for the high. Looking at numbers, for the daytime high, bismarck, zero. 50s and 60s, 70s, 80s down near south florida miami had a record high tied yesterday at 87 degrees. More coming up after the break. . Cor scscer oilededatloa1pie . Inrd scscer oilededatloa1pie llood . Ds. Meatg uvkaundumo io dy,g n. Owowgsyorht ®seportde . De wea w ecl piokotst, bacs,y,g n. Owowgsyorht eayked cadoou exas shlicu noble. Tellorme. Na lfin surnhing. Bugpmbkotst, bacs,y,g n. Owowgsyorht eayked cadoou exas good morning. Welcome back to Worldwide Exchange. Stocks to watch today. To sheeb shiba shares falling o reports that the s. E. C. Is probing the company for allegedly inflating profits between 2012 and 2014. A japanese newspaper says two ceos in charge during the period were involved in the alleged scheme. Tesla delivered more than 70,000 cars last year, but that was short of the goal of 80,000. There were production issues as it retooled its autopilot feature which delayed some shipments. Shares of takata surging 17 in asian trade today. The stock is up more than 60 in the past week on the possibility that the company is nearing a settlement with the Justice Department over its faulty air bags. Very nice run. When we come back, the top stories and a complete round up of Global Markets. And we will talk fed, the Global Economy, and much more. Stay tuned, youre watching Worldwide Exchange, one year old today on cnbc. Good morning. A Global Market rally. The dow is once again within striking distance of 20,000. Harvard professor ken rogoff is our special guest. Behind the wheel. The nations automakers rolling out monthly sales. And 2017 resolutions. Well tell you what facebooks Ceo Mark Zuckerberg plans to do this year. Its wednesday, january 4, 2017, youre watching Worldwide Exchange on cnbc. Good morning. Welcome back to Worldwide Exchange on cnbc. Im sara eisen. Im wilfred frost. Good morning to you from me as well. See that big smile . I just got grief from her during the break that ive been grumpy this morning. I thought you would be more excited about our oneyear birthday for our baby, Worldwide Exchange. Its like poor performance on a oneyear anniversary. Where are my flowers . She has a good point. Forgot. Global market performance, lets look at the futures board after yesterday we started the year on a positive note. That global reflation trade kicked off in earnest once again affleck luster final couple of weeks to 2016. We started yesterday with a percent of gains for the nasdaq. About 0. 7 for the dow. S p between that. Positive start for the year, positive start expected to continue today but in more muted fashion, 16 points higher for the dow, 3 for the s p, and 5 for the nasdaq. European trade this morning, decent start to the year in europe yesterday, more like a third of a percent here. And this morning a bit mixed. Negative trade in germany, france and the uk. Positive trade in italy and spain. Decent data in terms of pmis out of europe and in terms of inflation. Important to note the divergence of performance within the individual countries, something highlighted by the 2016 equity performance as well. The likes of germany, france and uk doing well. Italy and spain in the red. Asian trade this morning, japan surging after data out of japanese manufacturing pmi rising for the fastest pace in a year. That led to the nikkei up 2 . Hong kong slightly negative. Best day for the s p in about a month. As for the Broader Market picture, show you whats happening with oil after a steep selloff yesterday. Thanks in part to the stronger u. S. Dollar. Reversing a bit this morning. Oil prices up less than half percent. 52. 56. Brent, 55. 71. As for the tenyear treasury note yield, 2017 kicked off much in the way that 2016 ended, selling of bonds, pushing yields higher. We continue to see that this morning. Thats helping lift the dollar as well. As for the u. S. Dollar, a strong day yesterday, percent move. Were giving back a bit this morning with the euro stronger at 104. 37. Dollar yen a bit weaker. 117. 58 and even the pound getting a boost at 1. 2271. Gold on the flip side of that dollar trade, its stronger again on the back of weakness in the dollar. Its up 0. 4 . The auto enduindustry and t fed are in focus this afternoon. The auto Sales Numbers are out today, landon dowdy has the key things to watch in that report. Good morning. Good morning. The final snapshot on the Auto Industry in 2016 with the december sales data here are three things to watch. First, the numbers. It will be close, but the industry is expected to set another record forecasters expect 2016 sales to hit 17. 5 million, which would edge past 2015s record sales by a small margin. Second, while the industry is on pace for another record year there could be speed bumps ahead. A glut of new and preowned models hitting dealer showrooms is causing a backup of inventory and forcing all utomakers to ra up sales. And gm Sales Forecast to rise 3 from a year ago. Toyota and ford will fall about 1 year over year. Happy oneyear anniversary. And to you as well. Youve been with us the entire ride. La joining us on the cmbc news line, ken rogoff, Public Policy professor from harvard university. Good morning. Good to talk to you. Good to talk to you, wilfred and sara. I want to congratulate you on your oneyear anniversary. Its a big deal for us and especially to have voices like yours this morning helps with our Global Market coverage. Larry somers warning yesterday that the market is not scared enough of donald trump and is underpricing some risks. Do you agree with that . Its hard to understand how theyre pricing the risks. Clearly well have more volatility and unpredictability. On the other hand the economy is doing well. And some things that change, is that will take place, while not necessarily, you know, good in the broader sense, are probably going to be good for the economy. The reducing regulation, stimulus policies that maybe president obama would have wanted to do if he could get passed. The tax cut, i dont know if thats a good thing in the long run for inequality and all that, but doing a lot for business confidence. I suspect well see a pick up in Business Investment over the next couple years. Of course there are a lot to of risks. I would think there would be a bigger risk built in to Interest Rates than weve seen. In terms of the balance between whether inflation and rising rates is a good thing or bad thing, clearly they can be a positive thing, they can be a negative thing. Weve seen a sudden sharp rise in the Fourth Quarter in terms of inflationary expectations and in terms of Interest Rates. Where do you stand on that balance, whether thats a good thing for the economy or a bad thing. First of all, there could be a lot more to come. To the extent were seeing risk, not a good thing. But i think that its clearly a good thing to have reflation. I dont think its a big problem if we overshoot for a while given how inflation has been undershooting for so long. On balance i certainly see this rise in Interest Rates as a good thing. I have to agree with my friend, larry, that there are risks out there that the market doesnt seem to be worried about. That could turn fast. Is one of those risks trade . If feels like nearly every day we get another signal from a cabinet appointment or a tweet that there will be a rising protectionist stance. America first, he said it loud and clear what does that mean for the markets and the Global Economy . I tend to think that the trade is going to be more bark than bite that fundamentally donald trump wants the economy to do well. And is not going to overshoot. He has to play to his base. The biggest risk if the biggest risk was trade, i wouldnt be that worried. I would think it would go away. The biggest risk is unpredictable policy. We probably are going to see a lot of adjustments in policy back and forth. Much as in the early days of the roosevelt administration. We see that in Donald Trumps thinking. I suspect when he becomes president well see it in his policies. What about the picture around the rest of the world. We had decent shortterm data out of china over the last 24 hours. Is china a tail risk for 2017 that perhaps the markets are ignoring at the market . Of course china is a tail risk for 2017. If we didnt have this unpredictable administration in the united states, i might say thats the number one risk any way. Of course theyre coming to the end of their creditfueled growth cycle. They have to worry about how much longer they can live off trade. They are going through historic political consolidations. I dont see how its possible to run china at the growth speed that theyve been doing for so long now. While so centralizing power and paralyzing decisionmaking in so many places. And on your new book, which gets a lot of attention on cash and the death of cash and the the fact that we need to change into a cashless society, ken, is 2017 going to be a turning point . What do you see on that front . First of all, sara, thank you for having me on the show earlier to talk about it. Im for less cash, not cashless. I think we need Paper Currency forever, just not the mountains of it that we have in large denomination notes. I was surprised by some developments in 2016, of course australia is talking about phasing out its 100 bill, most spectacularly what india did which was incompetent. I dont know what else to say. My book recommends phasing out large bills slowly over 5 to 7 years. Mody did that overnight and they had not printed the new cash to replace the old cash. So, that was pretty paralyzing. I dont think its an ideal policy for developing economies in general. I dont know that this is something that will move overnight. But the problems with us and i suspect there will be more development in 2017. As bitcoin scales 1,000. Ken, thank you. The book is the curse of cash. A good one for the new year. Ken rogoff, thank you for joining us and being a loyal voice on Worldwide Exchange. I like the big notes. Not often you get your hands on them. Particularly the british 50 pound note. Red in color. Theyre pretty. Time for top trending stories. Mark zuckerberg revealing his resolution for 2017. Turns out the facebook founder makes it his personal challenge of the year to visit and meet people in every u. S. State. Zuckerberg writes after a tumultuous year my hope for this challenge is to get out and talk to mr. People about how theyre living, working and thinking about the future. Im with him on this. I dont expect to hit that many states. You should. I want to do more than hit los angeles and new york and miami. That is good. You have to go to ohio. Somewhere south maybe not ohio. The heartland. If i do ill eat the ice cream you like. I want to get out there. Maybe you should hitch a ride with him. That would be great. Next trending story, Janet Jackson giving birth to a baby boy at the age of 50. Jackson and her husband welcoming their first child named eissa yesterday. Doctors say janet had a stre stressfree and healthy delivery. Apple stores in china are going out to celebrate the chinese new year. On friday, the company will hand out beats wireless headsets for free with the purchase of a mac or iphone. The headphones sell for nearly 300 bucks here in the u. S. Customers in china, singapore and taiwan are eligible. Thats a good little promotion. Big promotion. I wonder how long it will take them to sell out. The best thing about that video, the arsenal wearing shopper. Arsenal shirt. Only you would notice such a thing. Of course. Still to come, the must reads. First, check out european markets this morning. Mixed picture after a slightly positive start to 2017. Were back in a couple minutes. Ultu÷tin mbmb scsc an cseiman eusy,ta kaedwiexseow b atkaor cluddnge,cinasum cerolole welcome back to Worldwide Exchange. Good morning. Its time for our must read stories. My pick from the wall street journal, stand up for obamacare, ceos, by a venture capitalist who invests in healthcare companies, and also by ezekiel emanuel. Hes defending it in the journal today as the republicans talk about repealing it and replacing it. He says it has been good for business. One argument here as they say is investments in medicine under obamacare has boomed between 2011 and 2015, venture funding for healthcare totaled approximately 62 billion, according to figures from pitchbook. They say new companies are working to improve everything from primary care to home care to management of mental health. These innovations are now beginning to realize cost savings. Just thought it was an interesting defense beyond the fact that it isis insuring many who were previously uninsured. S my pick is the risks that threaten Global Growth from the financial times. Martin wolf, his starting point is he expects Global Growth to go to the upside and is looking at some risks to that point of view. He cites innovation and catch up of emerging markets. Three sorts of shocks he says seems to destabilize the economy, significant wars, inflation shocks and financial crises. He goes through all of those, and some of them like soaring inflation, china eurozone financial crisis, theyre all conceivable but not 2017 events, and hes upbeat on the year ahead. A good assessment of what could doom and gloom. No. Positive. He goes through the risks and says and says well kick the can down the road for a bit. That kind of thing. His starting point is he think growth will surprise. Were approaching the top of the hour. The team is getting ready for squawk box. Melissa lee joins us with a look at whats coming up. Good morning. Good morning. Happy new year to you. You missed the fanfare yesterday with the unfailing of the new set of squawk box. Came on a great day since the dow rallied yesterday. We have blackstones chairman with ten predictions for 2017, what he got right and wrong in 2016. And we have Holman Jenkins on what president elect trump may do with the putin situation, and Richard Bernstein as guest host. So a loaded show for the second trading session. Im excited to see that. Wilfred will be here to experience the new set himself. Looking forward to it greatly. Well see you in about 40 minutes. Everyone else will see you in 12 minutes for the start of squawk box. Still to come on Worldwide Exchange, the march to dow 20,000. Could we be back close to that again . Well get insight on the markets and outlook for the year when art hogan joins us next. Lyfers ÷ welcome back to Worldwide Exchange. A positive start to 2017. We got a percent of gains yesterday. Called higher again today. Much more muted fashion. About 11 points for the dow. Joining us now is art hogan, chief Market Strategist from wund wunderlich securities. Thanks for having me. Thanks for having me on your anniversary show. Everybody watches you guys, youve been doing a fantastic job. Youre kind to say so. Lets get your view for the key themes of 2017. Last year a year of various surprises with political events. But the market shrugged them off. Is that encouraging and suggests that we can continue higher from here . It is encouraging. Last year we had the worst start to the year ever. Ended up 13 on the dow, 9 on the s p, 7 on the nasdaq. Whats more important is not just shrugging off surprises like brexit and the u. S. Electi election results, the Fourth Quarter earnings are setting up to be better than third quarter. We had a quiet preannouncement season. Thats imperative. The bumps the road that well see Going Forward is the slow implementation of some policies presented regardless of whether the republicans dominate the house and senate and white house, things take time in washington. But also the things to think about are the strong dollar. At some point in time we have to juxtapose the strong dollar against the gains weve seen. I think we have a lot of runway in front of us. The most important theme is people getting out of bonds and into stocks. That really comes to fruition this year. Three reasons when asked about a trump rally, deregulation, lower corporate taxes and fiscal stimulus or infrastructure spending. How much is realistic and baked into the Market Expectations at this point . Thats youre stealing from landonlandon dowdys threes to watch for. All things will happen, its order of mag tut. When we see deregulation, there will be easier things to peel back. Its going to be a process thats evolution, not revolution. In terms of tax policy, thats probably the first thing on the agenda. I think the problem with that is the devil is in the details. A lot of great things to do, repatriation of taxes is imperative. I think there will be some modulation to the process. I think thats normal. The most important thing to remember is while this is happening, we have an economy thats slowly improving domestically and globally. So the back drop looks good fundamentally. Lets see how much we can get done. As far as infrastructure, probably half gets done, and thats okay. Netnet, if you tally all of this and we get half of what we want to get done in terms of proposals, you add 25, 50 pay sis points to gdp growth rate which was increasing to begin with. Coming up to q4 earnings. I suppose theres one big difference coming into this compared to the last three or four earnings seasons, thats the tone of expectations has changed. The last few quarters we have come in with low expectations and have been able to beat them. Given the change of sentiment in markets, is that harder to do this quarter. I dont think it is. We have still anniversarying some terrible comps in energy and industrial. I think our estimates are conservative for the Fourth Quarter. I think we have a meet and beat thats on average. The tone to your point is going to be much more constructive Going Forward. Theres just a higher level of confidence, whether its in the suite of Corporate America or in the u. S. Consumer. U. S. Investor. So i think the tone of Conference Calls post Earnings Results will be much more positive. You mentioned retail would be wary of retail with border adjustment tax. Cramer mentioned drug stocks dont look like trumps friend. Equally important to the trump rally is knowing which stocks to stay away from which could be targets of populism or the different tax changes. Where else would you recommend investors keep away from . The other thing to keep away from in a rising Interest Rate environment is the dividend darlings of the utility staples, telecoms, et cetera. Theyve will a fantastic run over the last three years, but for obvious reasons, theyve replaced bonds and been the place you went to for yield. Weve seen a pull back, but theres more to go. If theres something to avoid, thats something to cycle out of. Art, great stuff. Thanks for joining us this morning. Only about a minute left. What are you watching today . I think whether yields can tick up again a bit further. Yesterday it was interesting to see that as part of the this reflation trade. We saw the dollar particularly strong. I think the yield picture is something to keep an eye on. Dow 20,000, and fed minutes coming out this afternoon. This is the minutes where they raised rates. Well see if theres a change in tone from the fed members. Does it match the dot plots of three hikes next year. Squawk box is coming up next. E d dnns. Good morning. Dow 20,000, not yet. Talking about it again. The blue chips are within striking distance. Yesterday we got about half of what we needed. We needed 238, we got 119. Will the fed minutes push the index over the top . Behind the wheel, tesla shares under pressure. Well tell you why. And the trump transition. The president elect set to announce more appointments. Squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Good morning. Welcome to squawk box on cnbc. Live from the Nasdaq Market site in times square. Yesterday was a banner day. The trump rally continuing. Today that continues. It looks like were looking at about 8 points on the dow jones average which means wed be 110 points away from dow 20,000. S p adding about 2. S p about 1. 5. Yesterday was the best day in three weeks. In asia, japans first session back from a holiday. Shares