tv Squawk on the Street CNBC December 1, 2016 9:00am-11:01am EST
as fiscal policies takes the lead role in stimulating the economy. so i don't look at it as a disaster at all going in the bond market. i'm just glad i'm retired. >> there's all these retirees who might be exposed to the bond -- we're out of time. >> all right. good to see you. >> good to see you, man. >> make sure you join us tomorrow. thank you guys too. "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? markets are poised for a higher
open on the first trading day of the new month. president-elect donald trump making the rounds in his first public event since the election including a victory lap in indianapolis where carrier will keep roughly 1,000 jobs in the u.s. both wti and brent crossing the $50 line one day after that opec meeting. but first up, it was a november to remember from a presidential election to record highs for stocks, the dow leading the three major indices with a 5.4% gain, the russell beat them all though up 11% for its best monthly performance in five years. we've talked many times about why that was, jim, and whether that continues. >> well, look, i think that people are just saying that one of the reasons why those companies haven't done well is there's too much regulation. they've actually bought that. whether you think it's true or not, they have bought that notion that regulation is actually going to be stripped and these companies are going to make more. now, i think that we're a little ahead of ourselves with that, but that group's been held back because that group's been viewed as being whipping boys if the
democrats won. it's like, hey, the big guys always do better than the little guys. i don't know whether i want to view them all as one cohort, but those stocks have been undervalued and forgotten about. and that's money in. that's money flowing into the market. i don't know if it's enough money in to carry us through december. there's a ton of money coming in though. >> how much of it is lack of exposure to forex? >> i think it's a lot because forex -- at one point almost -- dollar very strong. 10-year 2.4, but i keep coming back to the notion of do we have enough money to keep everything going? i look at the oils today and i say, oh, man, what are they going to do? are they going to sell amazon in order to finance apache? there's not enough money to send up amazon and apache, not this much. apache being a classic permian and amazon being the retailer that's obviously winning if you have like x press blowing up
today, dollar general blowing up, so much retail not doing well. so i'm looking at a market that is struggling to find more money but sure did find it in november. sure did find it in november. look at the f.a.n.g. november. and then show diamondback, the real fang, the company that has like less than 100 employees, fang -- do you know fang? >> yes. >> no, no, diamondback energy fang. >> i know what you're talking about. yeah. >> that's the winning fang. >> right. that's the symbol f.a.n.g. >> that's like white fang, like soupy sales. >> you've taught me all about soupy sales. i'm fully aware. >> we struggle with other fill dell f -- philadelphians. >> we're going to come up with more to go to as opposed to soupy sales. a lot of people seem to be going to the 10-year treasury, or actually -- well -- >> going? >> going away, yes, the price is going down as the yield continues to go up. i don't know where we are this morning but they're backing up
again. >> 16-month highs. >> where is that money going if they're selling? i think it's going into equiti s equities, which are obviously much smaller, which is part of the reason why we can have this rally. i'm looking at these bank stocks versus say the oils and the bank stocks are so -- everyday they get worth more every day that the 10-year goes up in yield. every day they're worth more. look at those increases. >> yeah, a lot of that has taken place just in the last few weeks along with of course that big move in the 10-year as that price has dropped dramatically. >> how much is a reversal from believing that hillary clinton would win and elizabeth warren be the head of the senate? >> a good amount, i think a decent amount of that. you heard yesterday the treasury secretary nominee talking about rolling back certain parts of dodd/frank. no doubt that that's important. >> well, it makes you feel like not only can they make more money but the book value. citi has a $64 book value. should it be where it was during the great recession?
goldman sachs, we got a book value with or without gary ri, we'll get to that. a book value that is substantial and this stock is sold to 140% -- 150% book. we're reverting to where we were in 2004 or '05 for the banks. >> okay. so we have about two years before it all blows up. >> okay. >> okay. >> dance until the music stops. >> jamie dimon can boost that dividend if there's less regulation by a dramatic amount. >> in terms of capital return. though really do you think the federal reserve's going to ease up on those kinds of tests and on the -- that allow them to return capital? >> that's really -- i think that to get a bank of america to 25 you have to hear they have more faith. >> that's, you know, that's a regulatory regime that will remain. >> yeah, but when you talk to bankers off the desk, here's what they say. the new regulators are not going to come in and say, listen, you
let a guy with fico at 700, we want 720. it won't be as granule is what i'm being told. the regulators come in it won't be jack boot. that will change things. it will make people feel like -- make lenders feel like, you know what, i'm going to give that guy who has a first home with us, a second home. which by the way they don't want to do. they don't want to do that loan. >> understood. >> regulators don't want to see the second home loan. they want to go to another bank. i think that changes. >> politico quotes a bank official saying if you repeal dodd/frank, those rules don't actually necessarily go away. they had in many cases the authority to do those rules anyway, right? >> yes. >> so regulation as in the exercise of regs. >> it's who enforces the regs. if you had an epa guy who's from, i don't know, the old coal -- right? can you imagine that? >> yes. >> get an old guy from arch coal, is he going to tell us dominion and duke going to close
those coal plants. >> no. >> is that radical? >> yes. >> well, have you seen some radical things? >> i have. there is some going on. >> i had marathon pete on last night, refining, they think that trump may be the greatest thing that's ever happened for the fossil fuel industry. maybe the greatest change from one president to another. >> what does it really allow for that isn't being done in terms of what the marketplace is allowing? >> pipelines. you go from having a president that's -- even though he knows it's a clean way to go versus rail, to a president that says i want more pipelines. will you please build more pipelines? by the way, that is not fanciful. that is being said. >> stifel ups anadarko. that's important to watch. also touching on oil of course is foreign relations with russia. this is vladimir putin talking about u.s.-russia relations earlier this morning. >> translator: we are ready to
work together with the new american administration. it's important to normalize and expand relations that work both ways in the interests of both parties. when it comes to solving regional and global problems, it's in the interest of the entire world for russia and the u.s. to be able to work together. any attempts to break this strategic parody is very dangerous and could result in global catastrophe. >> so that's going to be interesting to watch as well as the school of neocons is replaced by we don't know what. >> it seems like yesterday when we had the unbelievable interview with mnuchin and wilbur ross, almost like kissinger. i think trump got together kissinger is at the top of his game by the way. >> 94 or 95, still got it. >> i'll take kissinger at 95 versus most people at 61. >> that's probably a good trade. >> oh, you are -- yeah, that's right. >> most. >> most. >> but i do think what these guys were talking about is pragmatism.
would it not be pragmatic to have a better relationship with russia if you're trump? >> depends on what you think their long term aspirations are. >> right. >> it does. >> merkel -- >> what's your commitment to nato is and to the long standing alliances that we've had. by the way in france there's an upcoming potential election where you may have a candidate elected who's also going to be considered closer to putin and russia and has been the case. >> it's worth monitoring if only just because that trump did speak a little more positively about putin than the obama/merkel alliance. angela merkel thinks putin obviously is a deadly menace to the west. i didn't get that sense. >> you're a student of history. and while there have been some wars, there has not been a major european war in a long time, has there? >> there's never really been a lot of love loss between the russians and the germans for what happened in the last 100 days of the war. >> which war? >> world war ii. >> there were a couple. >> yeah. >> i mean, not that -- look, i'm
not -- maybe you go look at that period. i'm just saying there's never been a true forgiveness between what happened in those countries. there's never been. and i don't think there ever will be as long as there's anybody alive from that period. >> meanwhile, the president-elect and the vice president elect are heading to indiana today. they're going to announce details of their agreement with carrier to keep nearly 1,000 jobs in the hoosier state. that's about half the jobs the company was planning to ship to mexico. we will have a live report from indianapolis later in the show. david, you've done a lot of work on this. now everybody's looking at other companies in the state that want similar discussions with the president-elect. and then also looking at the percentage of overall employment that this affects. tiny, tiny. >> very small. and, again, it's roughly half of the jobs slated to leave will be kept. there is an incentive being received from the state. it is small. not clear to me exactly what the number is that we're talking about. but it is said to be small but big enough it was mentioning carrier's press release, i noticed yesterday.
an odd sort of reference to it on the very end of the -- towards the end of the statement. the incentives offered by the state were in important consideration is what they had to say. and you have people of course including bernie sand who are are saying, listen, this is a quote from i think an op-ed today in "the washington post." instead of a damn tax, the company will be regawarded with damn tax cut. wow. how is that for standing up for corporate greed? we've reported many times the key was the ongoing relationship with the u.s. government any potential threat though may not have been made to continued defense contracts which are much more important to utx than are the gains it would have had by moving all of those workers to monterey, mexico. >> look. there was $6 billion in federal contracts. >> revenues derived roughly, yeah, various things. >> let's just be wall street analysts. you cut numbers per share. and now bernie sanders is not
looking at numbers per share. that's never been a focus for him. for me it is. united technologies numbers come down on this because the differential between a worker in indiana and a worker in monterey, you know, you're paying those people $2.50 an hour. >> i think it's $23 to $3 an hour. >> yes, since the peso deterioration, i could argue $2.75. >> right. >> minimal -- health care paid for by the state. >> we don't know the sum cost of the mexico facility that was set to go. >> but there's still that 1,000 jobs at place is happening, the other 1,000 hadn't been situated yet. i think the incentives are not even a tenth of a share -- not even a tenth of a penny. so you cut numbers united technology stock was up at the beginning of the day went down. when we come back a closer look at that and oil prices following yesterday's opec rally. continental's harold hamm will talk to us, reportedly a contender for energy secretary. got some data on the other side of this break. don't go away.
consensus from edmonds.com. helped in suv sales, lincoln division up 19%. so we're going to watch this closely as people are drawing more and more attention to delinquencies on subprime on the front page of the journal. >> this is a remarkable number for ford. a lot of people felt november would be a weaker month because some of the retail sales numbers. that f-150 a lot of people were concerned that had been peaking. i know the old alcoa, there's a new alcoa that is not the alcoa directly involved with 150. >> right. >> they were concerned that the f-150 sales might be weaker. this is obviously a very, very strong number. remarkable. the subprime stuff, i don't know, when you talk to the bankers behind the scenes, they continue to say, look, you need your car to go to work. and it's not going to be like a house where you leave the keys. we've heard it before. i think it's worth monitoring. i watch it throughout our nation. i watch it through carmax. they have the best call on it. so far they're not panicking.
>> meanwhile, people talk about gas prices. i saw downgrade of mcdonald's today at guggenheim, part of their reasoning is not just valuation but climbing gasoline prices. people go to drive-thrus a lot. >> all of those companies including mcdonald's steve easterbrook, refuse to make that correlation. cracker barrel obviously because you only see them on exits, but none of the companies really wanted to go there and say they were going to get a boost from lower gasoline. so, i don't know about downgrading mcdonald's. downgrade mcdonald's because of the strong dollar, downgrade mcdonald's because of difficult compares, but i don't know. mcdonald's if it comes down too much, i think you buy it. >> we struggled for a long time to figure out where the so-called dividend from lower gas prices was going, and we never really came up with it, did we? >> we thought it was going to dollar general and dollar tree. >> and it wasn't. we thought it might go into retail. we thought it might go into any number of places, and it's been the norm now for a year and a half, two years we've been having relatively low compared
to the previous years prior. >> well, credit card companies were saying it went to savings. they didn't see it. i come back to this ford, this is kind of blowing me away. gm stock has been really hot. see if that one breaks out. but, yeah, that correlation's being made now. let's step back for a second. there's so many downgrades right now. this is a market where the analysts they were kind of left behind. i mean, they were -- they had the election wrong, then the 10-year wrong, the dollar wrong and now they may have the stocks wrong. another series of downgrades in the banks today. the banks are nowhere versus where they were. look at key ten years ago. key's a much better bank now. >> yeah. interesting, guys, hedge funds also may have had it wrong. and the redemption numbers -- or the redemption requests are starting to come in the last day and i'm hearing they are pretty heavy. anecdotal, can't give you granular things, but generally speaking redemptions are heavier than hedge funds had expected. >> how short do you think these hedge funds were in the oils?
i mean, the consensus wisdom was the saudis would not give, the iranians would not give, that was the reversal that was the one thing everyone said couldn't happen that the saudis would cut big. no one thought putin, trump, putin, no one thought putin would be willing to do a cutback because they thought wanted a stronger ruble. engineered by some brilliant people in opec. brilliant. i'm not kidding. they short squeezed you. they did that. >> well, 51 on wti. >> it's not over. >> nope. you know, someone was asking me yesterday, jim, isn't it time to come in anadarko, apache, look, some of the oil service stocks are not up as much as i think they could be. but if you come in up 10% and a company does a secondary because they want to buy another company, you're coming up 10% and oil ticks down to 49, you're going to say why didn't i do that. so i'm not going to -- i'm going to put the stop sign up. anything up 10% yesterday, don't buy. >> well, where did marathon end
up? was it almost 20? >> sub 20. >> and ceo talked to you last night. >> this was the ceo of mpc, we had the refiner, they split up. laughing how much it was up -- listen to what marathon pete had to say. it's pretty interesting. >> the issues that we've had across the country with the keystone pipeline, now the dakota access pipeline which we are projected to be owner in the pipeline, it's stymied right now to finish construction. i'm very confident president-elect is very intelligent. he's put himself -- surrounding himself with a very intelligent people that understand the economics and the oil and gas industry. so i'm confident we're going to get the permits going. >> that's a change. >> yeah. i pressed him saying, listen, isn't this local? i mean, come on. local protests here and there. and he came back and he said, listen, you either want to have more pipelines, which trump really wants. or fewer. we were talking about the number of jobs created by doing
pipelines. the president favors fossil fuels, favors mining. he favors -- i didn't say i favored it. >> understood. >> i'm saying the president favored. >> you're right. >> and that means he can staff these agencies with people who speed the approvals. and we need a lot of pipelines to get natural gas from marseilles and utica, pennsylvania and ohio, down to the gulf because we're going to be a huge exporter. and marathon exports a lot of gasoline. need more pipelines to get gasoline. can't do it all by barge, david. >> no, you can't. you cannot. >> so you agree with me? >> i'm all about -- all about what the market needs. >> i went russia, germany, syria -- >> oh, yeah. >> but -- >> more or less. >> i feel better. >> are you feeling better now? >> you and i, mind meld. david, live long and prosper. >> thank you, you too. >> we're going to get cramer's mad dash, count down to the opening bell. a lot more still to come this morning. take a look at the premarket on
♪ this is the time of day when i figure out what day it is. it is thursday. and this is a mad dash again. we're going to dollar general. >> yeah, now it's really interesting, david. dollar tree reported pretty decent number. so a lot of people got in right here when dollar tree reported a lot of good number thinking dollar general had to be very good. very different animals. dollar tree doesn't have as much food as dollar general. the food pressure is immense at
dollar general. i was looking for 94 cents, they came in 84 cents, minus 0.1 same store sales, people looking for plus. wow. so this dollar tree by the way was plus 1.7. so major pressure here as people thought, you know, it's over. >> food deflation? >> food deflation. kroger had the same problem. they talked about it, you know, things went down so much they got caught. pvh, last night on "mad money" talking about how strong international is, by the way china the star there saying u.s. is pretty good. he was a little tepid about the possible forecast, but i'm just saying apparel at the department stores since the election very strong. >> all right. talking about strong, well, we've got u.s. dollar pretty strong, oil very strong and we've got rates now at 2.4 on the 10-year. what's all that going to mean for the market? we'll find out in a few minutes when we come back for the opening bell.
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90 seconds. we kick off the month of december this morning eurozone manufacturing pmi the best since january of '14. we're going to get a look at our own in about half an hour. >> it's pretty amazing to hear ceo of pvh say what's the strongest market besides china, this is for tom mmy hilfiger an europe. said all i can tell you is retail sales are incredibly strong, germany, britain incredibly strong. kind of not what we were thinking. >> december the last couple of years hasn't been good actually. >> no. >> and januarys have followed with more weakness. what is their reason to think this is different? >> we had fed rate hike last year and now it seems like you better bring it on or bank of america goes back to 16. what a different world we're in. wow. >> history, it doesn't repeat but it rhymes, that's for sure. let's get the opening bell here and look at the s&p at the bottom of your screen.
at the big board this morning horace man educator corporation celebrating 25th listing anniversary. at the nasdaq, a provider of renewable packaging and paper based in finland, so i guess we'll watch currencies but oil's rally continues to build this morning, jim. >> at a certain point we don't want that. at a certain point you start feeling like it's the summer of where iraq invade kuwait. oil stocks up, on the third day they peak, they go down, but the money didn't come back into the rest of the stocks. it's not sustainable now the market led by oil, led by the oil stocks. that's not sustainable. it's too small part of the s&p. bank stocks, yes, sure. but not oil. that cannot be the leader here. so just be aware zaps money right out of the nasdaq like it did yesterday. >> meanwhile, general motors in with their numbers, they match ford in a better than expected november.
gm november u.s. sales up 10.2. analyst -- >> 10.2? >> analysts were looking for 8.4. >> wow. >> chevy, buick, gmc brand best november in well over a decade and toyota out with a 4.3 number just shy of a 4.4 estimate. >> what can i say? gm's been going up. it's been one of the best performers of that group. it's gone up around 31 to 35. let's see if it breaks out here. i think the stock can really go for a run. absolutely go for a run. that's a great number. >> it's taken awhile, right? >> it's been a value trap. we've talked a lot about it. we've talked about it with david about how gm was going to be this return cash situation. it never got off the ground. believe it or not now it is. >> i know. although i do still wonder when you start to discount back cash flows in a world of autonomous cars, where do you get in terms of a terminal value here? what are you starting with for gm? you've got to start thinking about that. maybe it's ten years out, but that still figures into some people's models. >> i think for a lot of people it's the mainframe versus the
pc. you didn't know it was going to come as fast as it did, right? >> right. >> i remember when bob noise who started intel said, look, the computing power of a mainframe has got to be the size of this and people say you can't charge $2 million for this. he goes, no, charge $200 for it. that's what could happen. there could be a radical price change in how much you buy these cars for. >> the thinking is, you know, is you'll have fleets of cars that can then be much more efficient and therefore people who typically would buy a car will not have to own one and overall demand will come down for automobiles in an autonomous driving world. >> well, could we say that that's why it's at 34 and not -- >> maybe. maybe that's already played itself out and the multiple will be forever lower than it might otherwise be. >> yeah, i mean, look, i just think if it's always good to keep one eye on what could happen five years from now. and i think five years is pretty realistic actually. but it's also remind you at a certain point this company's going to suffer cash in five years. if it doesn't move. i mean, the company's just a
cash flow generator. that's only u.s. sales. but if china sales are up, and we're getting some good -- pvh said china's good. macaw, don't line at wynn. tiffany said china up double digits. if china sales good for gm, you're going to pay $38 for that stock. >> it's hard, i mean, you look at the winners today. they're almost all oil related except for a pvh, under armour, vf, rl, lb, something's going on. do you believe the consumer's going to respond to any kind of stimulus? is that it? >> manny said post election the sales of power really fabulous. if it's fabulous for them, it will be fabulous for all these other guys. i think we really have to worry about this cohort that's the facebook cohort. it seems like it's become the biggest source of funds out there. and remember that reported great quarter. and it can't get any traction. biotech's getting traction. but not facebook.
>> from a value perspective facebook is growing far faster than its multiple. right? i don't know what it's been trading at 20 something times. >> maybe a $6 billion buyback. >> yeah. how -- at some point that's got to be -- i mean i know it's hard to hang on especially if you're a hedge fund and you own this thing. >> my travel trust sold some, here, but want to own the rest. but this market likes a rockwell collins where there's an insurgent pushing for the sale and company cheap on the earnings. >> it's actually worth mentioning, i'm glad you did, rockwell. you're right. the deal with beav. >> down, david, that was the figure. >> is now in doubt. it requires a vote of rockwell holders. starboard has now surfaced. there are others in that stock. there's been questions about that deal from the beginning and many who were saying we'd rather see the company sold as opposed to going through with a deal that will make it less likely it
will be of interest to another potential buyer. >> boy is that interesting, especially on a day when parker han fen buys -- this is filtration, metal bend, there's been needing consolidation in that particular industry. david, others behind starboard? >> there are others. >> so they're not going to be able to get the vote? >> that's the question. the question is whether they get the vote they need of their own shareholder base at rockwell. >> and just to be clear -- >> that will be more of the story as we get closer to the vote. >> they fit so well. >> i know. but the vote will be taken as a sign of this is a vote not just on this deal but on whether you should sell yours. that's what the activists will try and do. >> geez, so -- >> to use these votes -- >> i thought it was a done deal. i took it off my screen. that was wrong. >> no. >> keep it back on your screen. >> yes, keep it on. >> netflix up a percentage point. bernstein with a note today saying basically how we're
surprisingly open to a disney buying netflix scenario going deep into the debate on whether it's smarter to buy or build. >> read the piece, thought it would have been more important if bob iger had said he'd been open minded than the analyst, but netflix is one that's had a lot of good news. and it's stalled. maybe today it catches a bid. but i just -- the money is going into these resource stocks. and it's got to stop. i just got to tell you it's got to stop. >> if you're a disney and you're really ever thinking about doing a netflix, you do need to get your investor base ready. and these kinds of notes help. right? >> right. >> they kind of help get everybody thinking about it, so if it actually were to ever happen. >> you're saying -- >> it would be so dilutive that you want to know your shareholder base is ready for it because they understand the benefits that would accrue even though you're going to be paying a big number and suffering delusion given the multiple disparity between these two companies. i have no idea if they'd ever
get to that. it's hard to imagine in some ways. >> but david, think about what you said. you earlier had said a couple weeks ago that they may have been open minded to twitter. >> yes. they were definitely interested in and pursuing twitter at a point there where twitter was for sale. >> by the way, and now -- >> and then backed away. >> -- doing some unique streaming content for twitter, disney in conjunction with the "moana" release this week. >> geez, i guess, i don't know. i had thought -- i still felt disney had a good quarter and didn't need to necessarily do anything. they've got some great openings coming up. a great movie slate in 2017. >> they do. >> really terrific. i talked to one of the largest owners of movie theaters and think disney could drive 2017. so i don't know. surprised he has to do something. >> well, i don't know that he's sweating. >> no? >> no. >> all right. >> but it doesn't mean he won't
consider things. you need to consider things. you always need to consider things. i'm sure that the erosion of subs at espn despite the fact mr. iger feels more positive it would seem based on his comments in the last conference call. >> i don't know. >> you know, world's changing. >> that is for certain. >> fast. >> geez. i know. and the winners are being subsidized by companies like, you know, the strong dollar, losers like a j&j, just goes down kind of drifts into that -- coca-cola, a lot of people ask me about that one and hedged by the euro in the end but doesn't matter. just sources of funds, sources of funds, every day. to go buy chevron. >> so is there no new money coming into the marketplace? >> i think november exhausted the money. and now new money has to come in order to sustain what's been going higher. >> it's funny you mentioned that. j.p. morgan has a note out this morning in which they basically say all this hope trade can't go on without legislative specificity, right? we need to start seeing where the rubber's going to meet the
road. >> i think it could go on if it rotated in some other stocks that came down, but i'm not going to disagree with that. you know, we saw united technologies, what else have we seen? right? i mean, there's a lot of stuff in the papers today about how things won't get done that we thought would get done. papers are very negative right now. i just care about funds coming in because when i see these big cap stocks like an exxon or chevron, it takes a lot of capital to move those stocks. you can't just buy those stocks and not have to sell something else. and that's what they're doing. >> right. i mean, listen, we've been waiting a long time for this kind of spike in yields. >> yes. >> if you're in a bond fund, maybe not the best of times. >> no. and those bond funds -- >> are you going to look at that and go, oh, time to get out of bonds and into equities. oftentimes people make the move at the exact wrong time. >> right. but i think like carl said december's been a tough month. you need better distribution of where the money's going. that's all i'm saying. you can't just take up anadarko
every day. come on. i mean come on. >> okay, i'm coming. i'm with you. >> just barges. >> dow's up 38. 10-year's up to 2.44. let's get to bob pisani. bob. >> good morning, guys. december is starting very much like november looked, and that is the leadership groups are bank stocks and some of the industrial names. take a look at some of the sectors here. energy obviously the leader right now, but we're also seeing banks, materials, industrials lead. looks a lot like november and lagging of course the consumer staples, some tech names again lagging as well, interest rate sensitive. there's two new high groups here, only two, energy and banks. we did this yesterday. it looks exactly the same way. there you go, new highs, a whole slew of the oil stocks. oil is $45 yesterday morning. folks, it's $51 today. that's a breathtaking -- that's a 15% move in the number one trading commodity in the world. truly breathtaking. the other group, you know about the banks, yesterday were hitting new highs, every single
money center bank is at new highs. citi group's at a new high as well. most of the big regionals also are sitting at 52-week highs. folks, that's basically it. that's your new high chart. maybe a couple of industrials, but other than that banks and energy right now. retail sales numbers very interesting numbers. we don't get as much as we used to, but we did get some numbers. costco first half of november sluggish, second half better. maybe the election did play things up. 1% about in line. l brands comps 4% better than expected overall. victoria's secret up 5%, that was pretty good. promotional environments are the margins are going to probably be down. jimmy was talking about dollar general, that was a real shocker. 0.1% on comps. that's the first negative comp i have fourth quarter of 2005, 11 years they haven't had a negative comp. they talked about slower customer traffic. so besides all this talk about heavy promotions, another factor was deflation. jimmy mentioned that. let me show you what he's talking about here. this is costco on tv sales. so unit sales, how many tvs they
sold in the mid teens, but dollar value of the tvs they sold only in the low single digits. it means tvs are getting cheaper. they also talked about deflation in food as well as the tvs. very interesting trend there. stocks are expensive. we had a huge debate about this on the floor yesterday, talked about it a little bit. the multiple that the s&p trades on is high, and it's getting higher. it was 16 at the end of october. it's almost 17 now. the historical average is between 14 and 15, so stocks getting more expensivexpensive. are they worth it? the most determinant of stock prices in the value is whether or not be worth it. the revenue, top line is definitely getting better. we finally turned the quarter in third quarter in revenue growth. we're going to see revenues of 2% or 3% in the fourth quarter. put up the next full screen, you'll see that. the revenue growth is really the most important thing. the problem is the analysts are not moving their numbers because they can't model. just tax cuts, we can't model
lower reduced regulation, fiscal stimulus, how do you do that? they don't have any numbers so they're not changing. finally, guys, first marijuana ipo down here on the floor of the new york stock exchange. we're waiting for that to open, 4 million shares of $20. they cut the size it was 8.8 million at $20. give you news as soon as that opens. dow up 34 points. carl, back to you. >> first time for everything, bob. thanks for that, bob pisani. let's get to the bond pits. rick santelli at the cme group in chicago. good morning, rick. >> good morning. remember that old car commercial, zoom, zoom, zoom? that's kind of the long end of the treasury market. now, granted, you know, zooming still under 2.5% is big when you start in the 1.30s, but historically maybe not so much. if you look at a 2-year -- two-day of 10-year you can see we are in the mid 2.40s on the high intradays. that takes out intraday stabs in the low 2.40s. current high yield closes yesterday around 2.38. sometimes it's best to take a step back. let's look at a two-year note on
a basis for last time it traded in the zone. this is the short end. of course steve liesman talked about it this morning. you're talking about tax time 2010 since we were closing in the low 1-teens. but if you take a 10-year look, notice how much room we could have? also notice something else. wla what's the highest yield on 10-year chart? little over 5%. now let's look at a 10-year chart of 10-year, you know what the high yield is? little over 5%. so what that tells me is the long end is definitely moving more aggressively, but you want to watch the short end. i know the fed has much more pull on the short end, but the short end's looking at the long end looking at what's going on in equities, looking out of runway for most central bankers. the curve could have some real wiggles over the next couple of quarters. now, the long end in the term of 30-year is really where some of the action's at today. just consider we're up four basis points on a two based on yesterday's settlement, up six on a 10, up 7 on a 30-year.
look at one-week of the 30-year, it's really climbing. last time we were here was around thanksgiving of 2010. and finally, a one-week of the euro versus the dollar, we've been looking at those macro charts every morning, 1.05 is important. we've distanced ourself a bit, you have mario draghi, a lot of issues with cross currents. while that's firming up a bit, i doubt if the dollar index will climb much above the 101.50 pivot traders are talking about. k carl, back to you. >> thank you very much, rick santelli. as we said president-elect heading to indiana following the deal with carrier to keep jobs from moving to mexico. a live report on that. and also exclusive with merck's ken net frazier, future on drugmakers and where the upcoming trump presidency fits in. dow up 50, 10-year at 2.45 is now the highest since july of 2015.
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in indiana today after striking a deal with air conditioner manufacturer carrier to keep jobs from moving to mexico. our phil lebeau joins us from indianapolis with more. good morning, phil. >> reporter: good morning, carl. this is a victory lap for president-elect donald trump and vice president-elect mike pence who remains governor of indiana. and played a role in his deal to keep the carrier plant here in indianapolis. here's the deal as we know it, and there's still a number of details that need to be determined. first of all, we're talking about two plants, they're both staying open. well, we know for sure this one here in indianapolis is staying open. there's one not far away, some debate about whether or not that will close and those jobs will ship to mexico. more than 1,000 jobs have been saved. those workers will stay here in indiana. $700,000 in incentives from the state of indiana. by the way, there are reports that incentive package not a whole lot different than what mike pence when he was governor of indiana was offering carrier earlier this year when they rejected that deal. he did broker this deal to keep the plant here in indianapolis.
but keep in mind this time along utx is dealing with a federal government that is also supplying them with $6.7 billion in defense contracts. so it's not hard to imagine that they it's -- >> it was on local news, but it was not on national news at that point, except for cnbc. they had -- that was where i had got most of the information about the -- what i knew about the carrier deal. >> as you take a look at shares of united technologies, the president-elect will be here this afternoon around 2:15, 2:30 is when we expect to hear him talk with some of the employees here at this carrier air-conditioning plant. guys, coming up next hour on
"squawk on the street," we're going to talk about another plant not far from here that's also moving to mexico. 300 jobs going down that way. the head of the union for those workers says he wants to talk to the president about keeping that plant here in the united states. we'll talk about that next hour. back to you. >> phil, thank you very much. raises the question, can we do that th at scale? are we going to try to do this at scale? >> geez, i don't know. i mean, everyone's under pressure who's making those moves right now. they don't want that phone call. >> i know, but can you really do that all over the place and then what about a company that really doesn't have large -- i mean, you just -- >> you can't do it all over the place. i think you try to say, okay, look, this is what -- think twice about it. >> you do it through lower corporate taxes. >> right. >> you do it through more favorable workplace rules for the employer. >> but the high-tech -- i want to know how high-tech or low-tech the jobs are. it's not like united technologies is taking the
high-tech jobs away. >> we've talked many days and we will many more about the -- the real threat, and what you can't do anything about, which is progress. >> yep. >> absolutely. >> and a.i. >> but you can sell tech. >> robotics. >> you can sell tech. all right. we'll get stump trading with jim in just a moment. dow up a little bit more, 71 points. don't go away. huddles,bright lights, competition and games played. at td ameritrade we believe the best investments are the ones that matter most to you.
time for kramer and stop trading. >> we're getting interesting diversions, which is, if you watch the dow, which is old line stocks, it's been terrific. if you watch the nasdaq, it's been dreadful. the nasdaq is represented by the video. you can't get any footing. you get any of the industrials and they've got great footing. i keep thinking about the old days when gm would have been in the dow. take a look at that or deere not in the dow but you're seeing those stocks, caterpillar being this quintessential trump stock. there's too much money in nasdaq. just be a little careful. i don't want a market that is
given up on -- and the vidius that did well. >> even after 100 whatever percent gain this year? >> i want to see them stabilize. i don't like a rotation that is peter to pay paul. i like a rotation that there's some of the stocks go down but just a little bit. i like -- you sell envidia and you buy pacific, you can't keep doing that. i just want to see some stabilization in the nasdaq. i would feel better. >> what's on "mad" tonight? >> we have a quintessential, you need to go to the dentist no matter what and cbre and is a gigantic sales team. i want to find out about real estate. i think that may be the next thing that does well if trump advances his agenda. >> higher rates, though, hurt it? >> i don't think they kill it. >> mortgage rate reductions. >> well, more commercial. i think this guy -- i need to
know whether there's small business. if you get that russell up, that's supposed to be small business. are they moving into medium sized business? they need to take real estate with cbre. >> see you tonight. we got a lot in. >> don't want that nasdaq to roll over big. just don't. >> mad money tonight, 6:00 p.m., when we come back, pharma in the trump era. plus the ceo of adidas, dow is up 45 points. don't go away. world ugly and messy. they are the natural born enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful. approaching medicare eligibility?
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good thursday morning. welcome back to "squawk on the street," i'm carl with sara and david at the new york stock exchange. market once again on the upside, 64 points, s&p just a shade below 2200. >> and we've got more economic data. crossing the tape, rick has the manufacturing numbers for us. rick? >> absolutely. construction spending for the month of october up exactly 0.5%, up 5/10. listen, we've had a couple of 0.5, but to go higher, you'd have to go back to june when we
were up 0.9. more realtime, shall we? november ism, 52.3 on the headline sequentially following 51.9d, it's definitely about a point better than the expectations of 52 and change and 53.2 is, well, you'd have to go to -- 53.2 is pretty darn good. you'd have to go all the way back to february of 2015 to find a better number and it's only by 0.1. so this usurps and equals 53.2 from june this year, but to find a higher, like i said, you have to go to last year. if we look at employment, and this is the week to look at it, 52.3, a bit off from 52.9, and if we look at prices paid, which all of a sudden is taking on so much more significance with inflation watch, a little more watchful, 54.5 exactly matching our last look. everybody's looking at the long end. 3s are now trading at 3.12.
30s, i'm sorry. and 10s, 2.45, so we continue to monitor thousand long end continues to get new high closes based on comps going back over a year. carl, back to you. >> rick, thank you very much. rick santelli. president-elect donald trump heads to cincinnati and indianapolis. let's get outside trump tower with an update. good morning. >> good morning, carl. president-elect donald trump is going to be leaving here, trump tower, a little bit later this morning and heading to indiana, where he's going to have that event at the carrier plant, announcing they're going to be able to keep about 1,000 jobs at that plant, even though the company had announced it was going to move about 2,000 jobs to mexico. one point to make on all this, a lot has been made of the fact that carrier is owned by utc, which is a $56 billion company and it does about 10% of its business with the federal government, particularly the pentagon. a lot of folks have speculated that those federal contracts
could be a point of leverage here for the trump administration to negotiate with utc and with carrier, but i've been talking with federal procurement experts at the harvard kennedy school of government who say that actually, you can't really do that. here's what he had to say in an interview with me earlier today. he said, you cannot award or fail to award a contract to united technologies based on -- on the basis of any factor that's not mentioned specifically in writing in the original solicitation or the contract it. that is, if they didn't put the idea of keeping jobs in the united states in the contract to begin with, they can't negotiate on that basis now. so, that's one thing to bear in mind as you talk about trump's negotiating power here. also, meanwhile, we see vladimir putin in moscow making his annual state of the nation address. here's what he had to say about bilateral relationship between the united states and russia. >> translator: we are ready to work together with the new american administration. it's important to normalize and expand relations that work both
ways in the interests of both parties. when it comes to solving regional and global problems, it's in the interest of the entire world for russia and the u.s. to be able to work together. any attempts to break the strategic parity is very dangerous and could result in global ka it is a trophy. >> so carl, we'll keep an eye out for trump's departure and arrival in ohio later this evening, they'll be ending the evening with a rally in cincinnati at about 6:00. >> a volatile and historic month of november, of course, ended with the record highs for the markets. december is also starting off in the green as the president-elect continues to shape his administration and cut deals with companies. what potential risks, though, lie ahead. this morning, we're joined by terry hanes, david, guys, good morning to you both. >> good morning.
>> terry, the carrier story is a big win for trump, optically, but is it a template for slowing the tide of outsourcing to mexico and other countries? >> well, it sends a very clear sign as to the president-elect's priorities. eamon in his report a minute ago pointed out the restrictiveness of this sort of thing and he's right to do that. and -- but clearly, it shows, between that and the interviews that you all had with secretary designates yesterday, that the administration is going to take a very close look at this, and do more than take a close look. they're actually going to try to take some action as aggressively as they can. >> how many times can they do it? if other companies like manitoac or anybody else wants to have a similar conversation, do they get it? >> anybody else? do they get a conversation? sure, they get a conversation. and if they want to voluntarily agree that they can make these kinds of arrangements, they can certainly do that. you know, and it's as much as
anything else, the tone that president-elect and his top appointees are setting to try to make people understand that the way that economic growth is going to look in this country in the next few years, through the tax code and other things, is going to be very different. >> david, jpm has a note out this morning on the hope tail wind that has driven equities for the past few week bus but t add it may begin to abate. what do we need to see? >> more concrete details on what president-elect trump's policies are actually going to look like going forward. right now, you have a stock market that's pricing in, and you have a bond market that's generating higher inflation and causing the fed to mike a little bit faster than expected. the bottom line is that policy uncertainty remains extremely elevated and as investors we should base on investments on the facts, not what people say
before pen has really hit paper. >> no, it is a big change from what we've had in washington. terry, you mentioned our interview, particularly, he said top priority cutting taxes, top priority rolling back parts of dodd-frank. what are some of the market implications from what we heard? >> this starts to flesh out the sorts of views that we've had for months, that trump was going to benefit legacy industries, financials, energy, going to benefit a variety of different sectors, telecom and others. and you know, i'd expect that to continue, frankly. it will take a few months before what you see out of washington becomes serious, not just pen to paper, but really when we get down to the short strokes on what tax reform is going to look like, what these major policies are going to look like, but that's lightning speed, politically, even though it's a little slower than the markets
would like. >> david, is that why we've seen the underperformance on big cap technology, based on what terry just said, and would you be a buyer? nasdaq down again. >> you know, i think that part of the reason we've seen weakness in technology is that has been a source of funding for the trade and financials for the trade and the more cyclical parts of the market. so, you know, as valuation there become more attractive, we are looking at them more closely. we think that in the long run, the outlook for economic growth hasn't really changed. yes, we may pull forward some growth over the next couple years but in the long run, it's the companies that are able to jernlt stronger revenues, stronger cash flows, so on and so forth that are going to be the best part of an investor's portfolio so as tech gets cheaper, we're putting on our glasses and taking a nice hard look. >> finally, terry, again, mentioning our interview yesterday, front page of the journal is trump's treasury pick hedges on taxes. what is the general view in d.c. about whether or not the wealthy are truly aiming to get a cut on
taxes or not? >> well, i think fundamentally, what treasury secretary designate was trying to say is, they're going to prioritize the middle class in their own prochs. frankly, as a -- as the biggest stimulant to economic growth. i think the jury's out on exactly what the top rates might look like, but it's clear that the administration is going to push forward on middle class tax cuts, and both politically and as a policy matter, they probably should. >> yeah. we're starting to see some priorities at least come to the fore. terry and david, thank you guys. good to see you both. >> likewise. >> thanks for having me. >> coming up on the show, we've got a big interview for you, an exclusive with the brand-new ke of adidas. this is his first television interview since taking the job. find out what he has to say on president-elect's plans on trade, taxes, competition and more. and then later, the man whose
name may be floated as a possible energy secretary, harold hamm will be with us. we'll get his take on forming the new administration and potential energy policies under trump and yesterday's opec deal, which has crude and brent soaring. we're going to talk to harold hamm about that. look at that. breaking above $50 a barrel. brent, 53.44, much more on "squawk on the street." stay with us. american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com.
one of the most high-profile stories we've been covering all year in corporate america, adidas' resurgence here in the u.s., seeing double digit sales increases and new collaborations, also continuing its expansion just this morning. opening its largest store in the world on new york's 5th avenue and it's all coming as the company welcomes a new ceo and joining us in his first ever television interview as the brand-new ceo of adidas, kasper, welcome. we talked no to you as the ceo of hengal and now here you are at adidas. you're coming in at quite a high point for the company, the stock has surged this year, more than 50%. raised the outlook four times. does that add a lot of pressure to an incoming ceo replace ago ceo who's been there 15 years? >> no we have a great year, it's going to be the best year in the company and we're growing 30% in the u.s. i don't think it adds any
pressure because i think there's plenty to go, particularly in the u.s. we are having a great year but i feel very confident there is much more to be gotten out of our stock and also out of the performance. >> if you look at a stock chart, it's pretty stark to see adidas shoot higher, 50% as i mentioned, nike is down, under armour is down, the weak euro has been your friend, i think. what else do you attribute that to? >> i think we have really hot products and we're performing in all markets in the world. asia continues to be exceptionally strong. i was in china two weeks ago, no slow down in asia and we have a great comeback in the u.s. in the last two years, growth up 30% this year and econ up 100%. >> are those kind of numbers sustainable for north america into next year? >> i think what we'll see in north america will be very strong growth numbers. i have no doubt that we'll continue to see an exceptionally strong north america also in the
year to come because our brand is super hot and we have great products. >> there is an excitement. you feel it in the markets, here on the floor, we're seeing it in some consumer stocks post-election, trump win, sort of feeling that the animal spirits have come back. are you seeing that in the early holiday spending numbers in this country? >> we saw also the holiday period very strong spending so we're seeing very little in our sales pattern, we have seen very little change in the last four and if any changes, then for the better. >> for the better? >> for the better. >> versus last year? >> versus last year and also the current trajectory, so not seeing any slow down at all, very strong holiday sales here and if you go to the other side of the planet, 11/11 which is singles day in china, we had huge uptake also last year so dramatic growth. >> what does a trump presidency mean for you, a german company that does a lot of production in asia, but competes with big american companies and does a lot of business in america? >> so, i'm confident that, you
know, trump will continue to provide a good business climate and we're not concerned about the change in leadership in the u.s. i think the important part as the ceo is, we need to deal in whichever economic and political environment that we have in all the countries so we have -- so, right now, we're not losing sleep over any change in the u.s. >> how do you rethink trade, post-brexit, post-trump win, there's some head winds. >> since 2008, there's been challenges every single year and i think that's the new normal. i took over in 2008. i've never experienced a normal year so i'm not overly concerned. we need to deal with it but we also need to expect we're not going to have a stable economic and political climate moving forward, irrespective of where you are. >> sara asked you about continued success in the u.s. and you said our brand is hot and we have great products but to somebody who has not been following this story day-to-day, what does that mean? why is your brand hot? what is it about your products
that is succeeding versus reebok -- >> he owns reebok. >> sorry, under armour and nike. >> i think one of the big differences for us is that we've moved a lot of our innovation for the u.s. to the u.s., so we're becoming much more relevant with a u.s. consumer or the young athlete with a fashion person. whereas before, it was probably more european view, so that is one, and then, you know, secondly, i think we've been more brave, we've taken more chances, using new materials, new designs and that's resonating with the consumer, which we can see so the biggest criticism i get from our partners like foot locker or dick's sporting goods is that we are out of stock, which is a great problem to have as the ceo. >> high class problem as we say. >> what about reebok? you made one of your first strategic moves sort of restructuring it. why not just spin it off? >> i think that's an easy solution and i think we can create more share of the value by turning it around. we have grown our reebok business outside the u.s. right now, we've created a team
that the only thing they live is die with is reebok and i'm convinced we're going to be able to turn it around and get it back to a growth scenario like we've done outside the u.s. >> where are we in terms of athlete procurement, the cost of getting athletes to endorse a product? is that still inflationary? >> i think it is. but at a much slower pace, and i think it is, you know, grown dramatically in the last couple of years. i think over time, it will continue to grow, but it will be more with less and that is really the trend you are seeing. you're seeing much more spending with the top athletes, with the top teams, so you'll continue to see an increase with those, i think the overall, you know, bucket is going to have a more normalized growth in the future. >> is it about getting athletes to switch or finding the fresh, young athlete who hasn't endorsed anybody big yet? >> i think it's both. it's either go in and do the right picks with the rookies, which is more difficult but of course also get the big athletes
to pick our products, which they're doing and today, as we are opening, we're also launching an exclusive with james t new shoe with adidas. >> what's going on with tailor made? i know you want to sell this brand. >> that is exactly what's going on. we are in the process of selling it and we are confident that over the next weeks or months, we'll make the announcement that we'll have a transaction. >> there's this feeling that athleisure has peaked as a trend. are you seeing that at all? >> we're seeing a, you know, a slight slow down but not something that really we're worrying about. we actually are seeing that the overall athleisure category will continue to grow, particularly outside the u.s. and if you go to a european airport, you can see very clearly, the business people still dress very formal so we believe there's a long way ahead of us. >> you mentioned 11/11, of course singles day in china, how would you character demand in china overall at this point, given your experience there in the past? >> so, if you look upon it,
there's no doubt that the overall chinese growth has slowed down, particularly in the manufacturing side. that is, you know, that's a fact. what we are seeing is we've seen no slow down on the consumer spend. so, in our categories, we actually continue to see very strong double digit growth, but the overall chinese economy, driven by manufacturing, is slowing down, and the move to a more service-driven economy is taking longer than anticipated. fortunately, not in our categories. >> to the coolness factor, that david asked about, a big part of the story has been kanye west. how's he doing? do you know anything about his health right now? is he having a mental breakdown? >> he's been a great, great business partner for us and we launched our latest version of the yeezy so from a business standpoint, we're extremely happy with the relationship. to his health, i think you need to speak to his manager. >> isn't it a risk for you? he was notoriously difficult to work with for nike and has been a big part of your strategy. >> i don't think we've ever said that he's been difficult to work
with. i think he's brought a lot of innovation into our products and i think that the line in front of the store has proven the value he's provided to our relationship. so we haven't seen it that way. >> the app crashes every time. >> that's because the demand is so high. it's a great problem to so v. >> kasper, thank you so much. kasper rorsted is the new ceo of adidas here for the new york opening. fifth avenue flagship store. thank you for joining us. >> great to be here. thank you very much. >> when we come back, president-elect trump going to indiana to make an announcement on the that agreement with with carrier, keeping jobs from shifting to mexico. we're going to go live to indianapolis, take a look at where stocks are trading right now, dow at 60 points, s&p still below 2200. back in a moment. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80%
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if you're going to wish, mommy, yourwish bigme true! at the lexus december to remember sales event. get up to $2,500 customer cash on select 2016 and 2017 models for these terms. see your lexus dealer. president-elect donald trump and vice president-elect mike pence in indiana today after striking a deal with the air conditioner manufacturer carrier that will keep about 1,000 jobs in that state instead of moving them to mexico. our phil lebeau is in indianapolis and he has more on the story. phil. >> david, we have a few more details regarding this deal between the trump administration
and united technologies, the parent of carrier air-conditioning. here's the story. you had two plants here in this area that were scheduled to close. one of those two plants will be staying open. it's the plant behind me, it is a gas furnace plant. a second plant -- and that altogether will keep more than 1,000 workers here. there is a second plant in nearby huntington, indiana, also owned by carrier, about 700 jobs there that are being eliminated. that plant is still closing as scheduled, and the question has come up, what kind of incentives dird the state of indiana come up for united technologies, according to politico, it's about $700,000 in incentives in order to make this deal. and this also brings up the question, will we see president-elect trump talking with other companies? we bring this up because of this company, rxn, which is rex nord bearings, they have a plant not far that from here in indianapolis, that is likely to move its production to mexico, about 295 workers have been told
that the plant is under consideration for being closed. we reached out to rexnord yesterday. here is the president of the local steel workers union talking about the carrier deal and the fight to keep these plants open here in indiana. >> i don't think it can stop here. we god rexnord and other places throughout this country that are losing their livelihood due to no fault of their own, so you know, i don't think it can stop with carrier. i think it needs to move forward on everybody. >> and again, we have reached out to executives from rexnord. we have not had our calls returned. david, you guys talked about this last hour. how many companies now will be turning to the white house and saying, hey, our plant is going down to mexico or somewhere else overseas, we want you to step in and help us save these jobs and keep them here. again, president-elect trump coming here at about 2:00 this afternoon. guys, back to you. >> yeah, phil, you know, such an interesting point you raise, of course. can you don't to do this over
and over for other companies because while 1,000 jobs are certainly important, it is but a pittance of all the jobs that are continuing to be lost as manufacturing moves to lower cost places. you know, hard to imagine. i mean, this case, as you pointed out and as i did in my original reporting, the broad relationship utx has with the u.s. government certainly played a role. >> yes. >> even if it's just psychological without there actually being a specific threat. it's unclear whether that will be the case with so many other companies. >> and what leverage does the government have over a company like rexnord. if rexnord doesn't have any federal contracts, what leverage do they have? i'm just speaking out of conjecture here. i'm certain that the state of indiana probably will go to rexnord or has already and said, what can we do in terms of incentives to help you keep this plant here. at some point, if you are a company and you look at the dallas and cents and you say, look, it makes more sense to build a particular product in mexico, we're going to make that move. so it all speaks to what you're
talking about, which is how much leverage can the federal government have on different companies to keep these plants open. >> yeah. and of course, the states do play a role in that already, trying to keep businesses in their states and in this case, of course, it certainly might have been luck, but governor pence is still the governor of indiana, at least for a little longer. >> yes. >> and had dealt with this issue. phil, thank you. we'll of course see you later as well. phil lebeau. >> coming up, $3 billion in just three hours. that's how much billionaire oil tycoon harold hamm made after a deal was reached at yesterday's opec meeting. not bad. he'll be joining us next, give us his take on that agreement. president-elect donald trump, he's a very close adviser, and potential candidate for cabinet position. we'll be right back.
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this hour. the suspect in a fating shooting of a police officer has been shot and killed by police after a lengthy barricade situation. that suspect refused to surrender during negotiations and was using two children as human shields. the children were unharmed. in baltimore, police say a man with a gun walked up to a crowd of people standing outside a carryout restaurant the and shot six people. the search for that suspect continues. hazardous runway incidents increased for a third year in a row, climbing 25% overall from a year ago. the "wall street journal" citing preliminary government data that hasn't yet been widely distributed. and entertainer dolly parten is making a generous donation to victims of the tennessee wild fires. she has pledged to donate $1,000 per month for six months to each family in sevier county who lost their home in that wild fire. and that is the cnbc news update this hour. let's send it over to jackie for
the eia inventory report. >> good morning to you, sue. that's right. the department of energy telling us that last week we saw a withdrawal of 50 billion cubic feet in net gas. that was actually exactly in line with expectations of what analysts were expecting here. last year, we saw withdrawal of 35. the five-year average is 44 so this is definitely a bullish number that and that gas was moving higher on the session. this didn't really move the needle that much more, but wow, what a stealth move for nat gas. up 10% in a week, the last three months, a 25% move and it's a two-bronged analysis here. the first piece of it is we're heading into the colder weather, especially in the mid kes, these temperatures have come down and demand has boosted so we're expecting that seasonal factor here but the second piece of news is the fact that plats has been reporting in the month of november the u.s. actually went from a net importer to a net exporter. that tends to drive these prices up and in fact, expectations are that will be the third largest
exporter in the next three years so shipping some of that shale product abroad and that could certainly move prices. so watch this trade. back over to you guys. >> thank you very much, jackie. after opec reached that deal to limit production yesterday, oil prices surged as much as 8%. as you can see, currently trading just a shade below 51. we're joined this morning by a first cnbc interview, the founder and ceo of continental resources, harold hamm. good morning to you. >> you get. good morning. glad to be here. >> were you surprised that the cut came through and how do we know if this is going to hold? >> well, actually, i wasn't surprised. you know, i've been predicting that it would happen. and i've predicted it would happen about the time that we saw equilibrium occur between supply and demand and certainly that happened. i think it's a wise thing that opec members did, and other non-opec members that have also joined in to, you know, slash their production as well.
so, yeah, it -- it was something that needed to happen. i think it will be good, long-term, for consumers and producers alike. >> lot of people writing, you know, opec blinked, the saudis blinked, russia blinked. does this reflect any change in their own long-term view of how the market should behave? >> well, it's been about 2 1/2 years, you know, since they started flooding the market with oil, and a lot of us felt like that was the wrong thing to do. certainly, it was intended to put a lot of us out of business. that didn't happen. we've got a lot more efficient, you know, we're twice as efficient with our dollars today at continental as we was in 2014. so, made a great deal of progress in this country and, you know, so it didn't work. their intention -- they added a
million barrels and basically we had to cut a million barrels a day of production in this country, but you know, overall, the deal didn't work for them. but anyway, i think it's wise that they came to the table. over the last several weeks and held oil, you know, to a artificially low price for where it should be today. >> i'm thinking back earlier in the year, when you were on our morning show, when things were much darker, i think you said 60 was your target. is that still reasonable? >> yes. you know, i predict that by year-end and all the supply and demand fundamentals suggest that that's where it should be. you know, like i say, they had to punish some of their members to get them in the fold, you
know, with an artificially low prices over the last few weeks and months so that's occurred, and now they've brought them to the table, made the deal, and like i say, i think it's a wise thing going forward. you know, we have the -- we have the ability in this country to oversupply the market, and i'm talking about produce herrs her the u.s. we basically double production from 5 to 10 million barrels a day, we could take it from 10 to 20. the key here is not to, you know, get too much production coming back in, over supply the market, or prices collapse and that's not a good deal for everybody. so, taking this up and down, chopping us out of the market going forward probably would serve opec's interest, strictly the saudi's interest, as well as consumers and producers interest in this country. >> mr. hamm, you know, when you talk about productivity and
efficiency, right now, i'm sort of curious. which is better from your point of view, the backen or the stack in oklahoma? >> well, certainly the backen is a very large resource base and it's a -- it's all oil, you know? we're 87.5% oil up there, in their production, and it's the best oil in the world. it's no sulphur, very high quality, good gravity oil. and -- but, you know, this lag for continental, this downtime up there has worked well for us. we've got a lot of uncomplete wells that, you know, we have started completing as supply and demand fundamentals came together. and the second quarter of 2016, and so we've begun that process. so, we've gotten a lot of that to harvest. certainly, you know, we've got a
huge investment in those wells, and over the next -- by the end of 2017, we hope to be back to about a normal amount of uncompleted wells up there. but here in oklahoma, we brought a couple very, very exciting plays in, the over pressure stack is one of those. you know, we're an expiration company. that's what we do. team of geologists here. this is our 50th year, and -- find oil and gas, and it's been a great thing. >> harold, i know you've been advising the president-elect very closely on his energy policies. he's talked about empowering u.s. oil companies, approving the keystone xl pipeline. what do you think are the first policies we're going to get from him on energy? >> well, you know, let's talk about keystone xl pipeline. we've got a problem in this country with lack of refining capacity. and bringing another 1 million
barrels a day, and what are you going to do with it if you can't get it refined? so, that's an issue that has to be overcome. 30% of our refineries are owned by foreign entities, foreign governments, foreign countries, and foreign companies. so, that's a -- that's a big deal. first of all, we need to stop the sale of these strategically important facilities to foreigners. i mean, that's huge problem. they buy the refinery, and they use only their oil in it. you know, cut out everybody else's. that's not a good deal for making jobs in the u.s. so, those things have to be worked through. so -- before that's a done deal, i think, going forward. >> lot of people wonder if you're interested in a job in the cabinet. specifically in energy. congressman kramer of north
dakota said, i believe harold hamm has earned the right of first refusal. >> well, you know, perhaps, but you know, kevin's a great guy, and he would be a perfect candidate as well. i've put his name forward, you know, for d.o.e. and other things. he would be a perfect candidate for that job. he's a regulator in north dakota, did a tremendous job. he's been a tremendous trump supporter, and kevin's just a wonderful person. so, he would certainly do a better job in that post than me. >> does that mean you're not interest snd. >> i have a full-time job here and i need to keep doing what i'm doing. we want this president and this country to be tremendously successful, and we started off, even though he's not in office yet, he's -- it's already happening. you know? with the trump rally, the trump bump, you know, it's occurring, and everybody wants him to be
tremendously successful, and i'll help him every way i can, but i need to keep doing what i'm doing here. >> you know, the president-elect has talked a lot, mr. hamm, about more pipelines. do we need more pipelines, even specifically to the oklahoma stack, which i mentioned earlier, in terms of midstream take away, i guess, there. does more need to be built? >> pipelines are important. i mean, it's just like dakota access pipeline. they went through three years of permitting and building that pipeline, $3.8 billion project. i don't have any investment in it at all. but let me tell you, when -- when somebody comes in and stops that and doesn't respect the rule of law in this country, we've got a huge problem. you know, quickly, and we've seen it with third world countries, if government doesn't respect the rule of law, you know, what's going to happen to its people? falls into chaos very quickly. so that's what we're dealing with here. we've got a rule of law situation with dakota access
pipeline. yes, pipelines are the safest way to move product, you know, crude oil, all the products, and you know, it -- they definitely need to be built. >> finally, harold, i wonder if you think we're going to start having more discussions about higher gas prices over the long-term and whether or not we need to start asking about the effect on the consumer? >> well, you know, horizontal drilling, you know, is -- has been a tremendous boon for this country. you know, we've taken natural gas. everybody thought we was running out back in 2000, 2005, and you know, we've got 200-year supply. you know, as i said, we can double again the production of oil in america. we need to slowly over time. it serves the consumer. >> double? >> yes. >> before i let you go, you've said double. i just want -- 20 million -- we're going to get to 20
million? we can really do that? >> certainly you could. we have that potential in this country. so, that's what's available here. and yes, it needs to be done in a very systematic way. >> that's the key, as you said. harold, it's good to see you. we hope you'll come back. thanks again. >> thanks. good to be with you. >> harold hamm, and as we were talking, brent just hit its one-year high. >> and i think that was a no thank you on the job to be energy secretary. said that he's happy with his own job running continental resources. when we come back -- that was the energy story. next, we'll talk about the future of health care in the trump era, breaking down drug prices, obamacare, and much more with the ceo of merck, kenneth frazier. stay with us. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average.
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welcome back to "squawk on the street." the utility sector lagging early trading so far. this is the ten-year yield soared to its highest level since july 2015. you got aes, ever source, pge. the utilities the worst performing sector in november but that could turn around this month. seasonally, over the last 20 years, utilities have been a winning trade, 85% of the time, gaining about 2.5%. guys. back over to you, sara. >> not so appealing when you see yield move up. thank you. and on that note, let's get out to the cne group. rick santelli as the santelli exchange. >> good morning. thank you. i'd like to welcome my gdp square guest, of course that's gdp paired with productivity. thanks for take the time, tim. >> good to see you, rick.
thank you. >> the ongoing debate for the president-elect, still not sworn in, is the notion of getting 3% to 4% gdp growth. many are debating whether it's possible. so let's discuss it. can we get a lot more horsepower out of gdp and of course that would have to come with a commensurate rise in productivity to really boost it? what are your thoughts? >> well, short answer, because this is tv, is yes. of course. what i'm concerned about is that we get the formula right, and the first formula that we need to address is this inflation target from the fed. if you have an inflation target, you're diminishing the value of the currency, of the money. and that leads into productivity. productivity, as you and i know, we've talked about this, is your money goes farther and if the fed is undermining that, and it takes people and money, labor and capital, to make stuff, and the money diminishes in value, then it takes more money to make stuff, leaving less to pay wages at the same time that the price of goods increases, and that's
what weighs on gdp. so i hope what we get right is we get rid of the fed's inflation target. >> all right. now, real quickly. let me just isolate you. last i looked, even though the dollar index had a low of around 92, on a year to date basis, it's up. around 1.28 right now, it's up almost 5%. at least according to many inflation gauges, both those are higher than inflation. so you're not worried about now. you're worried about some point in the future, correct? >> exactly. you'll recall, rick, that last year the dollar was at this level and what happened to corporate earnings in the following two quarters? then the fed dramatically depreciates the dollar to stop the stock market from falling and now consequently, we have improved corporate earnings but where is the dollar again. so it's always a harbinger of what is coming. >> excellent. tim, it's a bit confusing so we're trying to make viewers
easy because in the end, a stronger dollar is what tim wants with controlled inflation, multinational corporations aren't so pleased about that. thanks for taking the time, tim. david, back to you. >> thank you very much, mr. santelli. when we come we're going to speak with the ceo of merck, kenneth frazier, get his take on the future of the aca, drug prices and a whole lot more. stay with us.
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we have been watching the mexican peso weaken in the wake of the u.s. election. more news on that front today, michelle caruso-cabrera has more. >> augustine karstens is leaving his position to run the international bake bank of settlements in switzerland. when the news first broke he was leaving it sent the peso sharply lower, lower than it had traded. we learned why he was leaving and when he would be leavings, didn't appear to be under duress so we have seen the peso improve.
cars he wanted to run to make it more inclusive. augustin carstens leaving the central bank and heading to the bank of international settlements in switzerland effective july. we'll see how the peso trades and if they're concerned about his custodianship of the central bank coming to an end. back to you. >> seeing it off about three-quarters of a percent. >> it had moved 1.5% so, yeah. >> what's the latest feeling on the mexican economy in the wake of the trump victory? he hasn't said that much in terms of the tough talk we got during the campaign, though he did looks like prevent carrier from moving jobs there. >> i've spoke within a number of mexican executives in the last week in the wake of the election and all are concerned about the renegotiation of nafta, about the possibility of terrorists. many of them export auto parts,
chemicals, et cetera to the united states, and they're concerned that as a result of his election those things are going to change or the conditions under which nafta and the ben if i wants they get are going to change dramatically. and so that is the discussion there. we talked to a number of them and you can imagine based on the rhetoric they are concerned. >> absolutely. i guess the only silver lining is they are getting that weaker currency, which helps their economy and their exports. >> bag offset for sure. >> michelle, thank you. let's get over the fifth annual forbes health care summit right here in new york. look at the election impact on health care. meg has a special guest. >> hi, sara. thank you so much. joining us is ken frazier, the ceo of merck. thanks for joining us. >> always a pleasure. >> i want to start by talking about the election. there has been something of a rally in pharma stocks with folks thinking the pricing pressure will be off. brent saunders says anybody who thinks that is fooling themselves. what do you think about it? >> i agree with brent.
i think drug pricing is an important issue, but the most important thing is we not look at drug pricing in isolation. we have to look at it as the overall health care spending we have in our society and how can we allocate resources to get the most out of our health care spending. >> what you've heard from trump has been not much about drug pricing and that's why people seem to be pretty happy about his election at least from an investment standpoint. what he has said is he would repeal and replace the affordable care act. what impact would that have on your business? >> i think it depends on how they go about it. much too early in the process to speculate. the great thing about the affordable care act is obviously we've have 20e million americans who have coverage who didn't before. i think everybody agrees there are ways we can strengthen and improve how that coverage provided. >> one thing trump has expressed support from in the past is reimportation of drugs from other countries where they're priced more cheaply. if that's made possible, how does that affect your industry? >> i don't think it will be made
possible. you have tom price now being asked to be head of hhs, i think when the trump administration takes a step back they will realize, if they haven't already, that this concept of bringing drugs in from outside the united states is actually a dangerous concept because we won't be able to guarantee the safety of those drugs. every time we've tried to do that, no fda commissioner has ever been willing to certify the safety of those drugs. >> another issue that's been in the news recently has been alzheimer's disease with eli lily's disappointing trial results last week. you have a big stake in alzheimer's, going after a similar target, amyloid, removing the plaques in the brain. how does lilly's result affect how full steam ahead you're going here? >> our drug is a base inhibitor and it works by preventing plaque, not removing it. it's a different mechanism. we think based on the human genetics data and the early clinical data we see this is a legitimate test of the amyloid hypothesis. we have two large scale studies,
one in people who have mild to moderate which we'll read out in next year and another in pre-alzheimer's patients we'll read out in 2019. we're very hopeful. obviously the world needs a disease modifying agent for this horrible disease. >> a lot of people have said maybe we're not putting enough attention on other approaches to alzheimer's. is that something merck is looking at and/or do you think the government will have enough support to do the basic research in alzheimer's that we need to move this forward? >> i think the world needs companies that are working on multiple targets and merck is working on multiple targets. i think obviously we're in the very early stages of understanding the brain and i know that we will make progress in the next few years. we have to. >> of course just yesterday passing through the house, the 21st century, what is the expectation of the bill if it gets signed into law? >> that's a great thing. continuing to support the work of nih, which has not been sum ported financially as well as a country should have done that in the last few years, is a good
thing. we need to support basic research, but i also think that certain approaches to speed approvals, and by the way i must say the fda has done a fabulous job. they've gotten certain drugs to patients quickly. anything that helps us speed those drugs while maintaining the safety of new drugs and treatments is a good thing. >> just about out of time but can't leave it without asking you about cancer. you said we're in the early stages of treating cannes we are immunotherapy, similar to where we were at the early stages of hiv. where would you say we'll be in ten years with controlling cancer, make it into a chronic disease? i hope that's the case. we are just beginning to understand the checkpoint inhibitors. we have 400 clinical studies under way, more drugs in the pipeline that affect the t-cells. i hope we'll be able to sit here in ten years and say about cannes exactly what we say about hiv. >> thanks for joining us. >> thank you for having me. >> meg turrell with ken frazier at merck.
it is 11:00 a.m. at a now famous carrier plant in indianapolis. 11:00 a.m. on wall street and "squawk alley" is live. ♪ welcome to "squawk alley." jon fortt has the morning off. our top story today, of course all eyes on donald trump's latest cab knelt nominations as the president-elect prepares for his first public address since securing the presidency in november. our eamon javers is outside trump tow we are the latest. hey, eamon.