Transcripts For CNBC Squawk Alley 20171114

Good tuesday morning, welcome to squawk alley, im Carl Quintanilla with Kayla Tausche here at post 9 of the new york stock exchange. John fortts on assignment upstairs and is going to join us in just a moment big hour today on squawk alley, as we said, an exclusive with oracle ceo mark hurd. Well get his take on ge, amazon, and a lot more well talk with House Majority leader Kevin Mccarthy later, that is a first on cnbc interview, and Roger Mcnamee sounding the alarm over facebook and google, calling them a Public Health crisis first up, shares of ge down another 6 today, down more than 42 of the year. John flannery joined us exclusively on squawk on the street this morning and made the case where he can turn things around. If you go back and look, this is very, very similar to what i experienced in health care i walked in, looked, this is fundamentally a very Good Business and theres some basic things around operating rigor, Capital Allocation that make a difference im feeling very much the same way again, but i recognize that its, as i said yesterday, its showme time for more lets bring in bill george, cnbc contributor, and our senior markets commentator mike santoli is here at post 9 good morning, guys good morning. Ill turn to you first and ask if youve got thoughts how investors got this wrong and how management was unable to get anywhere near a correct forecast for 2018 carl, you know, managements given us no signals to whats going on its just down, down, down 7 yesterday on the stock, 6 today. Ge has zero transparency, and i question how did what was the worlds Iconic Company for 100 years. This is americas leading company, how did it get in such bad shape, and where was the board during all this . Now they are going to turn over half of the board and they have strong Board Members they must have been misleading the board or else jeff immelt didnt know what was going on either i think its a tragedy for American Business to see a company like this that set the standard zach welch hit his numbers for 20 consecutive years, every quarter, and built a great company. Now were systemically dismantling. I dont see the connection, carl, between health care, power, and aviation. Three separate businesses, and jack drove things like sigma and tremendous leadership and all the things he did to build a company and add leadership i dont see that today at all. And it sounds like a fixit operation, but the problem with flannery is, hes got no vision where its going to go when allen blah came into ford, he gave us a vision. That was also during the financial crisis were in a different market, and investors are having to revalue from scratch how do you figure out where the bottom is . Thats the trick, kayla i do think that one virtue of being at this point in the cycle when, obviously, the Global Industrial economy is very strong, i think the street would have said, look, this might be a sellers market. If youre ge, realize the value of more businesses than this 20 billion of grab bag of assets you want to sell i do think the other advantage to that is, you know, everyone keeps saying the stock doesnt look cheap based what they said they are going to earn in 2018 thats true. Right now were 18 times the forward number, but were in a world Big Industrial companies trade 20 plus. You want to talk about a conglomerate with unrelated businesses, but take managements word for it, thats what the goal is over a long period of time also, bill, you make the argument theres a lack of connectivity in these units. If thats true today, what was it like back when they owned media and were heavy into finance, right were in an environment conglomerates are not highly valued sometimes carl, why didnt jeff deal with those things . That was obvious in 2001 when he became ceo, and the thing about welch, he took over everything jones had done, all bets were off. Jack totally transformed the company. Why did jeff have to wait ten years . Frankly, no ceo today gets 16 years. They dont get ten years, and the board was asleep because they didnt address these issues and heres ge having to call the president of the United States asking for a bailout to avoid kbru bankruptcy in 2008 im not sure they can cover their pension obligations today, so youve seen a balance sheet, cash is king overpaid for a lot of things, and they havent delivered on them at all. Theres all these promises, but nothing has come through so if i was an investor, id be very upset John Flannery is trying to argue he is at an Inflection Point and different time in the companys history and trying to be transparent take a listen to what he said about that ive been completely transparent in the time ive been in the job of what the issues are with the company and what im doing to fix them that is my perspective, thats where i am right now, thats how im Going Forward, thats what you would expect of me i think quite clear about where we have underperformed and how we fix it, so going back to the past is not productive for me. Im focused on Going Forward so, bill, do you not give him credit for being a new ceo coming into the job, trying to start with a blank slate and cleaning up perhaps some issues that his predecessors left for him . Then he better tell us how it got in such bad shape. I wrote an article in july for cnbc saying, how did it get so bad and he hadnt told us what business they were in. Just saying were a smaller collection of business and were going to spend the next two years spinning this off and hope we get a decent price in this market thats not a strategy, thats not a mission, thats not something were going to get inspired about yes, hes a straight forward man, give him credit for that, but we havent had transparency to this point. Hes been ceo, he actually was announced six months ago, five months ago, and stocks down 36 since then so hes not giving the market any sense of confidence where they are going you have to see light at the end of the tunnel. Why would i want to work there if i cant have hope for the future this is going to be really good. Its just cut, cut, cut, and thats not a strategy. I mean, i would argue that part of flannerys message today that i think will be well received is that, look, the playbook is pretty clear for us. Its about financial controls, its about efficiencies, its about running these core businesses better and, you know, thats something that just unfolds over time. Its not transformative, not something that says we can tweak pricing. Look at the businesses they are in amazingly long cycles, huge lead times, very big ticket, long order backlogs and service contracts. You cant turn those businesses all at once. How many times did he say cash or cash flow in this interview a lot. They are focused on that basic financial controls look, i think the company fell back on the ability to fudge numbers every quarter for many years and the fact that it was a aaa rated credit with a huge Financial Services arm they dont have any of those things right now im thinking back to the shame on them just a couple years ago the kids trying to explain they worked for a Software Company called ge. Seems were a million miles away, bill, from what the company was trying to rebrand itself as. Totally they are cutting 400 Million Software in power alone. Come on. Heres a company that is supposedly so well managed, the Iconic American Company of being well managed and you get the sense they are not managed at all and flannery comes in like hes starting all over, we have to learn how to manage the numbers. Hes, thats what welch excelled at like it or not, they hit their numbers every quarter, and, yeah, where was he and so flannery needs to give us a confidence and a vision. What business were in and where are we going whats the strategy . How are we going to win in Global Markets even in these three businesses and right now its just like a finance guy taking the place apart. It doesnt leave any confidence ge will ever be back bill, it sounds like youre not placing blame at the foot of the director is that just your natural director bias . Good question, carl no, where was the board . And, see, i dont know if this board has been horribly misled you have guys on the board, jim mulva and decker and you got some very strong people on this board. I cant believe they just sat there asleep at the switch, because these are not asleep at the switch people. I dont think anyone knew. I wonder if jeff didnt know what the numbers were. Thats management. This is lack of execution, lack of sound management. And its a tragedy its a tragedy for america, too, because we count on ge to set the standard for the next decade, two decades. Ge has always been ten years ahead of the rest of us. Now were trying to bail the company out. Dont they know about the pension obligations . Why is that a surprise thats easy to calculate i think flannerys got a long way to go, but after hes done with what hes doing, somebody is going to have to recreate ge with a vision and mission and strategy would you expect the board to want to stick around, bill, if you were on it now, would you want to stay carl, nine of them are leaving. I dont know if they are leaving voluntarily or involuntarily now he says were going to get expertise on the board any company ive been on the board weve had massive expertise. You dont think people exxon, Big Companies in the oil and gas business, of course. Why do they have to go out and find it now in health care and energy these are not new businesses they should have been doing this all along and they havent been doing it and, yeah, i think its like youre starting from scratch so, yeah, i would expect the board to be much better informed and force transparency under management, and i think they didnt do that board is way too big, carl never have an 18person board. Thats way too big ten, 12, thats much more like it bill, we always appreciate your straightshooting insight thanks so much, talking some ge with us. We do want to check on the markets. We were down 168 on the dow earlier today. The markets major averages had gone red for november, worst slide since labor day for a while. Markets had to absorb squalls of selling each day. So far its been okay, but there has been a defensive undertone to the market. Yesterday people talk about the utilities were at a new high and the rest of the market was back on its heels i dont know if it was much more than the fact that stocks got highly valued, people thought it was going to skate into year end. You look at the Merrill Lynch fund manager survey today, people well exposed to stocks thinking they are going to kind of ride the last bit of upside maybe its an adjustment of positioning and sentiment. Then i think the sense that maybe there is an imminent health you can bank on, not quite there. Now were getting word from dow jones that the white house is considering al arian for Federal Reserve vice chair, a post focusing on Monetary Policy experience interesting dynamic. Him and powell the report says that a broad range of candidates are under consideration, the previous conventional wisdom was perhaps youd have a pairing of jay powell with john taylor, and that would be the vice chair position, but seems they are casting a wider net than perhaps previously reported. Somewhat interesting if one of the kind of architects and theorists behind the new normal was somebody who came in under an administration who says thats nothing like normal we can get to 3. 5 forever would be a little surface irony on that. Well watch those developments mike, thanks good discussion with bill george when we come back, why Roger Mcnamee says facebook and google are bad for your health and democracy. Well track shares of roku this morning. By far the best performing major ipo of the year. Later, the robot dog that might have en sklomu shaking in his boots. The video you have to see when squawk alley comes back. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Our next guest was an early investor in facebook, google, and others hes out with a new oped about growing user addiction to the same social platforms, saying in todays battle for your attention, companies arent fighting fair. A point sean parker made in an interview with axios last week its a social validation feedback loop. Its exactly the kind of thing that a hacker like myself would come up with, because youre exploiting a vulnerability in human psychology and i just think the inventors, creators, you know, its me, its mark, its the, you know, kevin sister on instagram, all of these people understood this consciously and we did it anyway joining us at post 9, Roger Mcnamee, whos calling on the government to step up regulation of some of these social media platforms. Good to have you back. Always a pleasure its in line what you said prior to this. Whats new, though to me, the notion that the original president of facebook is both admitting that they thought about addiction as a basis for a Business Model is a big change i mean, its one thing for me to say, its quite another for sean parker to say it, and the reality of this is, they department do it because they wanted to blow up democracy. I dont think anybody ever thought they were going to be as successful a company as they are. The reality is, they have been that successful and as a consequence they have an obligation to try to address some of the negative consequences and the one that i feel is most important is to contact each and every person touched by the russian manipulations. They are now admitting there are 126 Million People 150 million, they raised it indeed, so the number keeping going up, from the first 100,000 they found. Lets say 126, 150 million, whatever the numbers, those people have all been sucked, right . Theyve had their brains altered and come to believe things that werent true, and i want facebook to contact every one of them with a message that says, hey, we, meaning facebook and you, have been manipulated by the russians this really happened and here is all the evidence and this stuff is all bologna and its really important that you understand weve all been manipulated its not your fault. This was really cleverly done, we were fooled, too, but they have to do that, because otherwise people just arent going to believe it. Their product is called a newsfeed, right . Which is part of the problem, right, the idea this feed of information youre getting is, quote, news. You think they are actually going to undo those labels i dont think the label is the key problem. The problem is the algorithms that drive it. And the algorithms are all about getting maximum attention. And on a smartphone, the thing so different about facebook and google is that they have personal data on every adult and most young people. And they have smartphones, which people are on somewhere between 12 and 16 hours a day, and that combination means they are going straight into the brains of 2 billion people and we dont have defenses for that. We have not any evolutionary defenses for filter bubbles or the kind of stuff should this be something Companies Self police, should there be outside policemen you write that they lost sight of this in the quest for profits, but we live in a capitalistic world if its profitable, why shouldnt they do it youre so right i dont think theres any way we can expect them to undermine their profits. Were going to have to give them an incentive to do so and i dont think our government is ready to step up, although it looks better today than it did, say, three months ago, but i do think consumers have a huge voice here and i do think its really important that Congress Asks the ceos of these companies to come in and talk about this in public, because when the general counsels were there last week, the general counsel of facebook was exposed by senator kennedy of saying something factually incorrect, which is they dont have this personal information, cant look at it for each person of course, they can, and thats the danger but roger, isnt all of Silicon Valley come poliplicit . Facebook and google just did it better than everyone else, but this was all opt in. Many of knew what we were signing up for when we told them who we are, who our friends are, et cetera, et cetera did you sign up in the beginning to have them use your information for the rest of your life, to sell it to people for uses other than facebook and for them to look for pictures of you everywhere they can find them and identify everything youre doing . Do you even know, you know, does any of us know whats in the user license agreement if there are pictures on the internet, largely its because i put them there oddly enough, you have not given permission for that. I think one of the protections that has to happen here is much greater clarity on what the relationship is. I believe consumers should own their own data i think the notion that facebook owns your personal data, thats an assertion they made, which they got away with when they were small, but at the current scale were going to reassess that would you be making this argument exrussia, so to speak . I dont know if i would have seen it if not for the russian thing. Only weird things going on in the election that i noticed something was weird. But my partner made this point that the issue of people being zucked, having their minds manipulated, that that issue has been there for children, if you look at Something Like youtube kids, children are completely defenseless and that is a huge problem totally separate from the russia manipulation. I think i would have eventually gotten there, but the russian thing was what got my attention. I want to quickly ask you about this tax package and some of the concerns, i guess, in Silicon Valley about the way in which employeebased comp is taxed. Everyone is freaked out. Is that true they should be freaked out. If you believe the following concept. Do you believe that all of the profits in a company should go to the capitalists, or should some go to the employees you believe some should go to employees, you do not want to tax these things until they are liquid and people have the cash to pay them. Otherwise youre going to get rid of Stock Options for employees. I dont see why thats good. If youre doing that in order to give yet another tax break to billionaires, that strikes me as probably a really bad idea for the economy. We want to encourage people to start new companies. We want them to own stock, and if the company is successful or not, we would like the janitor to get rich. How often, too, do some of these options become liquid or in the money but are not actually exercised and employees are still taxed on them and they cant pay it the tax code is a mess, and when you try to make tax policy overnight in the dark without any open hearings, youre going to get situations like this. And to me, you know, were in this really weird place, because we are harming the productive engine of the economy in order to give tax breaks to people who dont need them and im one of those people, right . Im sitting there going you got to be kidding. Youre going to give me a tax break and youre going to deny these hard working people, these entrepreneurs, youre going to give them nothing . I dont see that as a good trade. Come back soon . I hope so see you next week. Still to come on squawk alley, cnbc exclusive with oracle ceo mark hurd his take on ge, the cloud, and much more. Plus, were watching retail and shares of tjx off the lows of the session, but still down about 4 under pressure after reporting flat samestore sales in the most recent quarter well keep an eye on that. Quk le wl rht back shares of roku worth watching today better than expected first reported as a public company, shares, obviously, almost doubled we spoke to anthony wood, the ceo a while ago about the growth of streaming and advertising we are in a tectonic shift in the world of television and advertisement and movie streaming. Roku has, you know, 40 , 16. 7 million active accounts, but theres a lot more households in the United States and the world and everyone over time is going to be streaming and importantly, Television Ad business, which today is still predominantly still in your tv, is moving to streaming as they follow their viewers and thats a big change, as well. Couple points here. Anthony is officially a figure of the three comma club, the other is to what degree is it a short kweez at play or are we watching investors come to a realizization about error. That particular technical asset, but i think roku is also kind of a cautionary tale for those who think that the giants can do no wrong. Apple, amazon, google. Roku is one thats trying to be switzerland in the midst of all of those 30 , thats a sizable amount, but perhaps another reason for the jump is m a interests. It is a very Small Company compared to the giants that are in this space, and you never know but thats the thing. The m a interests shouldnt be much different today than it was a month or two ago or a year ago, right ifyou believed what roku was selling. The fact that investors took this long to wake up to it and were surprised by these earnings should tell you something about not believing that the big guys are the only ones that can do something. For every pandora, perhaps, theres a roku were definitely going to watch and see if levels hold over the next several months quite a speak seema mody with the european close. Good morning weakness in european equities really across the board, but its a twopart story. The data on growth exceeded expectations the best growth rate in a decade, and the biggest driver, germany, fuelled by a surge in exports. A tighter labor market is helping and the good news to italy, which posted 0. 5 growth in the Third Quarter now strong reaction in the euro to this upbeat data rallying to a threeweek high as data suggests the ecb could get more hawkish in the coming months the euro moving higher, pushing pressure on european exporters meantime, Deutsche Bank is downgrading german equities from overweight to underweight. Analysts say the dax looks slightly expensive, especially in light of a stronger euro. Keep in mind the index is up 14 so far this year meantime, four Major Central Bank leaders gather in frankfort for a ecb conference they discuss how they communicate future policy moves to investors draghi said Forward Guidance has become a fullfledged Monetary Policy instrument that has proved to be effective some good headlines from that conference at the same time, carney at that meeting said the bank of england will stretch out the horizon over which it plans to rein in on uk inflation, as it adjusts to the brexit. This comes as british inflation held steady in october the annual rate basically unchanged from that 5 1 2 year high the pound at 131 at this moment. Guys, back to you at the new york stock exchange. Thanks so much, seema we want to get to sue herera with a news update sue . Good morning, kayla good morning, everyone heres whats happening at this hour the death toll from sundays earthquake on the iraniraq border rising now to 530 iranian president rouhani traveling to the region saying the government will do all it could to help those who are suffering. Hundreds of protesters marched through the streets of manila denouncing the ongoing asean meetings that are taking place in the philippines they burned a giant mockup of the American Flag and chanted fight the fascist u. S. Dauterte regime isis claiming responsibility for a car bombing in the southern port of aiden, killing six, injuring scores of others officials believe the death toll is going to rise and it is a sad and somber mood hanging over italy as italians awoke to the news that their countrys soccer team will not take part in the world cup for the First Time Since 1958. A 00 draw at home against sweden ended the fourtime world champions hope of playing in the tournament thats the news update this hour lets get back downtown to squawk alley. John, back to you. Thank you, sue. And when we come back, an exclusive with oracle ceo mark hurd his take on ge, Artificial Intelligence, and more and then how one new york city highrise could be signaling a top in the foreign fuel high end condo boom squawk alley is ba ia mentckn family, not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. I just wrapped up a discussion with oracle ceo mark hurd here at the nyse. We talked about everything from Cloud Technology and security, to ge. Here he is on ge in the context of the internet of things. Take a listen. Whatevers going on at ge, this, obviously, has deep roots. All i know is sort of what i read about it, but at the end of the day, they are in some very Good Businesses. I mean, some of those businesses are darn Good Businesses that have the opportunity to provide lots of information, lots of data, and they can modernize those businesses when you go i can go into each of their businesses, and they are a big customer of ours, and i think they have a tremendous opportunity to monetize those data sets i think this is the question of how Silicon Valley and the tech world reacts to the turmoil at ge. A lot of these businesses, where ge has expertise and data, are the very areas where all of these iot investments, intel, microsoft, qualcomm, they need to partnership with the likes of a ge to get their sensors into those products so with ge in turmoil, what do they do . Makes you wonder how systemic the fallout from ge might actually be in Silicon Valley, as these companies have become intertwined. He mentioned the adjective big about ge, they are a big customer, big businesses, and a big player in at lot of these spaces, so if they are reinfrastructuring, whats oracle feel of that. We also talked about the growth of Artificial Intelligence in Silicon Valley and the death of the term big data. Everybody in the valleys saying they are in a. I. Or somebody getting up here saying, hey, were in Artificial Intelligence because somebody will trade their stock higher today, and most of the time its just nonsense. But i think if you went back to at the end of the day by the way, do you hear the term big data anymore . That died. Now its a. I if you said my ability now to look at certain devices, industrial pieces of machinery, that can now give me data that can change the level of service, can change the way that we work, to change the way we live, is that a reality hell yeah, i think its a reality. He also said that security no longer a drag on cloud adoption. It might actually be accelerating it. People dont want that responsibility i dont really hear big data anymore, but perhaps thats because i moved to washington. Im sure you hear it quite a bit. Yes when we come back, a first on cnbc interview with House Speaker Kevin Mccarthy, but first, rick santelli, whats on your mind . You know, equity markets havent had a really good time as of late what were going to talk about is something important that happened exactly one week ago today. Youll hear about it, of course, after the break. Lets get to the cme group this morning and get the santelli exchange. Good morning, rick good morning, carl. You know, something very interesting happened a week ago. Theres a lot of different charts people look at. As a matter of fact, many investors dont necessarily look at the same amount of charts they may have looked at or their counterparts in history ten or 15 years ago, because so much is automated. So much trading is done by a machine versus a person, but if youre one of the investors or just hobbyists that likes to look at markets, bar charts are an interesting way to go bar charts are different than line charts, because looking at a bar chart you see a slash for the opening price and the range high to low and then a slash for the close, and its that formation that gave us something important exactly one week ago today, tuesday, november 11th. Lets go to the board, shall we . The dax and the ftse 100, the uk stock market on the 7th, tuesday, had what we call a key outside day reversal what does that mean . In simple terms it means on the 7th it made the high the high of that bar is the high for the dax, the dow, the ftse 100. Opened close to the highs, closed pretty darn close to the lows, but the real key point here is it closed below the previous days low that dynamic is pure as it gets for what many technicians will call a pattern reversal. If we look at other markets, the dow, s p, nasdaq, the 7th was indeed their high, but they didnt have the same pattern, the same intensity on the key reversal, especially the notion of closing below the previous days low virtually on the low now, if we look at the french stock market, it did have a key reversal, just wasnt the day the market made a tie. The nikkei didnt cooperate on any level. Nothing about november 7th was as important to the nikkei now lets go to another area that ive discussed today with my guest from Morgan Stanley today, caron what he said was correlations are so positive that its going to be a real problem to have any diversification. Well, not technically speaking, though, because even though the dax and the ftse had this, all markets reversed since then. Same mentality, if youre a correlation observer, just by the nature of the way the markets have traded, its given many more sellers into the marketplace a pattern to Pay Attention to carl, back to you. All right, rick at the whiteboard, rick, thank you very much when we come back this morning, a first on cnbc interview with House Majority leader mccarthy. Well get his take on tax reform and the state of current negotiations when squawk alley comes back dows down 65. whoo woman class, lets turn to page 136, recessive traits skip generations. molly i reprogrammed the robots to do the inspection. Its running much faster now. See . Its amazing, molly. Thank you. we continue to watch shares of ge this morning for the week today. Its down about 13 . Just to put that in perspective, the worst of the financial crisis, may of 09 it was down not that much more, about 17 in a week, but clearly below 18 lta squawk alley in a moment. Wel lk to leader mccarthy, as well, about the tax package in a moment. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, on november 25th get up, get out, and shop small. Has become synonymous with the northern fuel highend condo boom and now it may be a sign of the bust as well our robert frank is back at hq hey, robert. Good morning, carl. Last week unit 79 of the skyscraper known as 157 became the biggest foreclosure sale of auctioned off for 36 million. It had sold three years earlier for 51 million the owner was cola aluka, a billionaire charged with Money Laundering and fraud real estate boosters said it was an outlier and the market is strong an analysis of sales at 157 shows that every apartment that has traded since it opened in 2014 has declined in value, all of them by double digits Jonathan Miller of miller, samuel appraisals ran the numbers for us a unit on the 62nd floor was purchased for over 31 million two years later it sold for 23. 5, a 26 decline. A unit on the 65th floor was bought for 29 million and sold for 22 million the past april. Prices for new condo developments across manhattan have fallen 27 . The average sale price is still 4. 3 million or 2,500 a square foot, but there are now 16 apartments listed for sale at 157 today. The most expensive of those, 70 million, so we veal to see what those end up trading for guys all right, robert row frank back at headquarters, robert, thank you. Thank you. In washington, Senate Republicans began marking up their tax reform plan this week. The house is expected to vote on its version on thursday. The gop hoping to send a final bill to the president by the end of the year. There are reports today that top Silicon Valley investors and companies are already mobilizing against the senate plan, but our next guest who knows a little bit of something about the house bill says its different and spurs innovation by strengthening the idea of Stock Options for private companies. Joining us now, first on cnbc, House Majority leader Kevin Mccarthy leader mccarthy, great to see you from this perch. Good morning. Good morning. Thanks for having me were going to talk a little bit about the differences between the house and the senate package, but, first, the president is going to be visiting the house gop members on thursday. What would you like him to say to solidify support among the conference well, most importantly i want him to say that, up, were united Going Forward, that were giving tax cuts and creating jobs were making america more competitive, but more importantly that well go to conference with the senate bill as well because there will be some differences in the senate bill as many of your viewers know because the house bill wants to make sure we stay innovative you look at were extended the r d tax credit which is so important, and also when it defers the Stock Options, so those employees, those that are taking a stock option instead of getting the salary, that they can own part of the company, that they are not hit with a tax without even having the stock yet, that they get to defer that further forward. That creates more innovation and more startups and makes america more competitive. Hour last guest praised that the idea, that you have written opeds about in the ft and elsewhere but said you should have had a hearing to make sure that that proposal is ironclad and understand the value in it why not . Weve had hearings. I passed this portion of the tax bill off the floor half year i chair and created an Innovation Initiative caucus, one of the elements of it. It had gotten stopped in the senate, so weve held that in the past we know that its good policy, so we put it into the tax bill congressman eric paulson on ways and means has been one of those individuals, part of the innovation caucus, thats been working with me on it. Its part of his bill that hes being able to put into the tax bill i have to be honest, ive never heard traders on the floor ever mention the byrd rule before but thats something thats become thats something thats become, you know, normal vernacular around here has people are watching the stock market there were 355 amendments just put forward yesterday in front of senate finance. I mean, how long is conference going to take . Can you reasonably get a bill on president s desk by the end of the year yes, we will. Think about this weve moved through, and the reason why the house starts first is the constitution. Article i, section 7 of the constitution says all tax reform will start in the house, so we started the bill a while back. We had markup in ways and Means Committee all week long. It came out of ways and means, and then you noticed the Senate Version, its still riding to the same wryly you that you talk about, 1. 5 trillion so theres a lot of similar parameters based upon it, but inside there are some differences the phasing in the corporate rate, to the corporate rate, reinstantaneously go to 20 the senate will mark it up this week while we pass it off the floor. They will come back after thanksgiving, pass it and then well go to conference i do not think it will take long until we come back with that final version, move that to the president s desk in december speaking of the senate side, leader mccarthy, rand paul this morning says hell seek an amendment looking to repeal the individual mandate, something the president has also said wouldnt that be nice. How seriously should we take that i mean, you can take it serious. Not in the house version, but if it does go into the Senate Version, it could go into conference and thats another element because when you look at if you did that on the individual mandate, it would free up a lot of individuals from paying a tax, so thats about 300 billion, a little more than that that gets scored, that you could spend on this tax bill as well, so when youre in conference, it would give you a lot more flexibility to be able to do more things of what youre looking more to make america more competitive as you adjust this bill, leader mccarthy, where does the whip count shake out, because i understand that thats something thats happening early this week as some of the details on state and local Tax Deductions are settled with chairman brady saying that he wont accept a full repeal of that. I mean, you win but where is the whip count right now we never talk about the whip count. Were moving forward members know where the bill is at in the house version, because when you look at state and local Tax Deductions, we keep the mortgage deduction what we did was we added 10,000 for a property Tax Deduction the National Average that somebody pays is 2,500 that was to help those states, much as california, new york and new jersey there are other elements that we can go through and work on, but i think that would be more during the conference after it comes out of the house and out of the senate that we can work on those el president , but i do not believe the Senate Version could pass the house without some working and reflection upon those s. A. L. T. States as well that gives a lot of credit to the s. A. L. T. States by trying to find a solution and making sure their constituents get job a one tax and more job creation in their states when you eliminate the alternative minimum tax, if you take an individual like california, maybe they have a little higher s. A. L. T. And are paying somewhere around 17,000, but they may be paying the amt about 5,600. That 5,600 is really worth more than 20,000, so when you look at the entirety of the bill, the end of the day, majority of people will be keeping money. We dont talk a lot of elements on politics on this particular channel im talking about roy moore in this case but suddenly hes part of the discussion, leader, about whether or not his vote could or could not make a difference on the senate side on the margin. Whats being said where you are about that possibility well, thats on the senate side, and thats a special election coming forward, but the question about roy moore is about whats coming forward with him. I have real questions about i think he ought to do the right thing and pull back and have somebody else run, but when i look at this bill, i mean, there are some things that are happening that people arent talking about. You know, by lowering the corporate rate, you look at a company like broadcom who has already announced that they are going to move back to america. They started in america, they domiciled into singaporebecaus our tax code was too burdensome for them to compete globally now they are coming back for so long how many stories have you had on your show of companies leaving just because of the tax code to be able to compete . Now were hearing stories of coming back. Broadcom, 20 billion a year, 6 billion they invest in manufacturing. 3 billion in just r d. Thats the type of store its we want to hear about america and i think thats where our tax code lets us be more competitive and then no one has really talked about what were doing with repatriation and going to a territorial tax that youll never be taxed again on that and it will be coming back into america and investing into American Companies or paying out pretty good dividends to american Share Holders perhaps, they will be using some of that money to reattempt to a big takeover of qualcomm, but that story is not finished quite yet. For now majority leader, Kevin Mccarthy, appreciate your time and you joining us on squawk alley. Thanks for having me. Appreciate it. Going to be something to watch, even as gary cohn today talks about infrastructure potentially being added to the calendar once this is all taken care of. But the president wants to do health care in january and february, so theres a lot that has to happen after tax reform and a lot that still has to happen in tax reform good to have you back. Good to be back. Our Kayla Tausche lets get over to the judge and the half. And welcome to half thetime report. Im scott wapner our top trade this hour h. Sentiment shift. The stunning new survey showing investors are now the least bullish they have been in more than 16 years. What it means for the direction of stocks in the months ahead. With us for the hour, joe terranova, stephanie link, surat najig and pete narngian. Stocks off the lowest level and now more insight into where investors think they could go from h