Transcripts For CNBC Squawk On The Street 20171204

Europe up more than 1 , benchmark yields relatively stable around 1. 29 futures point to a strong open as tax reform rolls through congress. We did get the meg amerger, cvs health is buying aetna it is the largest deal. Broadcom taking First Step Towards a hostile takeover of qualcomm 11 nominees to qualcomms board. Futures rallying after the Senate Tax Reform bill was passed Early Saturday Morning. Next up is conferencing the house and Senate Versions of that bill. Republicans expressing optimism, theyll get a final bill to the president s desk by christmas and a lot written over the weekend suggests theres more similarity than differences. I think where we were midday, the report that caused one the suspension of brian ross, and a belief that nothing could happen and the senate could fail, we got a classic tip down 350 points it turned out to be once again an amazing buy opportunity and now, a lot of analysts will be stuck raising numbers i say stuck because theres so much people who felt 2018, the market looked expensive. I know the people that think that will come up with a new reason why you shouldnt buy but the fact is there are a lot of companies, including comcast, our parent company, just now saying, you know what, this really does help our earnings profile. How many others can issue that i think the answer is a big part of the s p. Last week we saw the action in names such as comcast, our parent to use one example of what is largely domestic Tax Paying Company that is a beneficiary of the rate going lower as are others. That stock was up dramatically last week. Theres always a second wave of people that didnt understand and felt it wasnt going to pass. This is out of credit suisse. Tax bill winners, with a high effective tax rate, among them, humana, broadcom, amazon, aetna and cvs in the top 20. You do have this possibility of a second leg of a retail rally because are the ones that really win ive been focused on the macys by four points, at jmp, what matters is you get these stocks that have been written off well talk about vcs and they come back to life with cold weather and people just say, you know what, these things got overdone to the downside because of amazon. What do you think of goldman saying its going to eight three tenths to growth. Goldman has become eh about everything, im not in the eh camp. Although i think pretty much every economist who has been asked has said its not going to in any way, shape or form pay for itself and not going to add the Economic Growth needed to do that wouldnt seem as though they were an outlier in that. Its a bill for people who have capital, right, jim i said it may not be good for workers but boy is it good for the stock market its funny because the president tweets about the stock market and delivers a bill good for the stock market. And real estate of all kinds. Whats really amazing that i look at this thing and say, if i were not from one of these states that didnt vote for President Trump, i would be so happy today. You would be having a lot more potential income. Instead youre going to be in the reverse camp as we all will be youll have less possible income because state and local tax deductiblety goes away, a significant hit to residents of those blue states that have high taxes. Double whammy, weve got this and the eagles lost last night yeah, tough game. I dont any which one is worse. One may be short lived, which is this tax code. The other is the minnesota reservations i have may be premature. I think its a little early to know. Id say youre still in good positi position. Your taxes are going up. I know. This is its time for super bowl win to forget about that. We have move to texas major deal in the Health Care Industry, cvs agreeing to acquire aetna, about 69 billion. The ceos of both companies were on squawk this morning, and larry merlow said the timing is perfect. As we have discussions about how can we do things more strategically, it was clear cvs was getting closer to payers, mark had a similar strategy in terms of getting closer to the customer its really the perfect time to bring the two together to create a new platform that can be easier to use and less expensive for consumers and really create a new front door to health care in our country try beiing to bend the cost curve. In 2014 they changed their name to cvs health and kicked out tobacco. They been trying to go this way. Like disney, cvs has become a story which at any given time and i know we discussed this and meg discussed it on friday too, you have this threat of amazon you know what, now i look at cvs and has a an aisle with food, think thats a mistake it has many aisles that have cosmetics and then you have this higt care clinic i want to see what the Health Care Clinic will be like that you know, target has they have the minute clinics already. Not all of them by any means but its an effort under way at cvs. Now conceivably you would have from an aetna youll be able to offer a lot. They arent talking about having physicians in the clinics yet. But potentially doctors and drug store. Im a doctor seen see in walgreen, looks like a real doctor and seems like a real doctor. If they are serious and show they can bring down cost of health care, transparency, thats the other thing never have any idea what were paying for when it comes to health care xbl none at all. Was that a copay why didnt you tell me when my kid was going in that the noef vein would be 50 bucks and anesthesia 2,000 with a tooth removed. My mother told me i should be an anesthesiologist. Your insurance costs your insurance costs as a physician i remember these are jobs that you never really understand your bill. Do you ever look at your bill . Never. Thats got to stop. How about the details of the deal here and the degree to which theyll lever up a bit. Theyll lever up a bit. Of course 145 a share lets keep an eye on shares on cvs sentence that will impact the overall deal itself. Theres a couple of board seats that go along with this. But this is a cvs deal, they are buying aetna aetna tried and failed to buy humana, that was a horizontal merger and anthem failed in attempts to buy cigna. Any trust is going to been issue. We talked about it in the weeks leading to the announcement, would the fact that the doj has come after at t and time warner, vertical deal would ever get challenged does that mean this deal may face a higher degree of scrutiny well, one thing to watch out for early is who gets it the ftc or the doj so thats an issue right now in terms of the investors who follow takeovers closely they are going to be following that because if the doj does get it in the sense of its review, then you get to dell ra heel again and we know doesnt seem to like vertical mergers. Cvs went down the exact same amount when it bought caremark it was viewed as more than a drug store i think we cannot forgive a narrative which says that cvs i more than a drug store and if youre amazon, is your prime buying group as good as this one . I think this is really necessary for cvs. And for walgreens rnlgs they have been the worst of the retailers. All together, youve got your Health Insurer and pbm and drugstore all are you going to switch am i going to switch . If it means i can get away from Comcast Health insurance and figure out Something Else to save me money. Thats kind of personal, i was thinking you asked if i was going to switch. Doesnt take much to set him off and then hr calls. And then ive got to get call o carl to say, he didnt mean it, he loves thyou. Youre going to give me that . I love our parent company, love it. Now youre talking. Tax rate. Is the focus on some calls well get to the barclays downgrade of the cable sector. For the time being, futures suggest a very strong open, dow set to open up more than 200 points in this early part of december, which historically strongest most often month lets not goforget the financials are a major part. More squawk on the street from post nine in a moment win an uncertain world . K predictable income pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over 120 billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. Nominate 11 to the board quaulcom has ignored opportunities to engage in talks and annual Shareholder Meeting takes place in march you know in slate backwards and forward. We told people last week, going to go for the full board and they have. Which was interesting, you had three directors appointed by jana affiliated and they do say that they are happy to have those three added back but they go up for everybody here and interestingly, they are not recommending that steve mollen kof be reappointed the same way the other three directors p s potentially. I dont know if you had a chance to look at the slate itself and compare it with qualcomms directors who they say are world class, nine of whom are independent and four of whom added in the last four years i wouldnt go crazy over it. The interesting fellow, is steve gerski, a great analyst, but worked at gm i think a lot of these people are people who represent lets say institutions that are very that really have very little in telecom. Yes. Its not clear that the experience of those directors is broadly speaking telecom or specific to the business at hand but the key issues here are when is broadcom going to choose to raise its price. My understanding is its going to be a while. It paersz they a appears they are going to wait until after the nxp deal comes to fruition. The approvals are most lickkely going to come through late this year, next 26 days or so or early next year. Thats when qualcomm will make the decision what it wants to try to pay for nxp, still trading above the 110 price they agreed to. As for broadcom, this going to have to raise if it ever wants to get anywhere here but the question is to what level and when its not paying for any financing commitments right now but can probably get financing never went hell or high water on antitrust, meaning saying we will take any antirutrust risk that comes our way well vote in the new Board Members and give them the keys to the company essentially, have them sell the company at a price they deem is acceptable then accept the Regulatory Risk whil the thing is reviewed. And interestingly in the statement today, they did not offer the 12month language they previously had they simply say they remain confident they can get this thing done on an antitrust level. David, would this possibly be one of these brilliant things by hock tan, brilliant, where qualcomm loses to apple. This stock goes down badly and youre saying, thank heavens ive got an 80 bid from hock tan . Maybe i dont think the apple litigation will come to any sort of conclusion prior to this meeting in march where shareholders will have to make a decision as to who they want to represent them on the oard. Isnt this a brilliant stall tactic while youre waiting . Yeah, but youre not going to get any decision on apple. How do you know . I dont i dont believe any of these cases are expected to be decided between now and march. No, but lets say its not march. Lets say its a year from now you always should know theres a put out there. Its kind of interesting. Thats true, it gives shareholders Downside Protection whatever may come if broadcom has a deal to buy though is your point. Pretty clear that apple is unhappy with qualcomm and could come up with Something Else for the 2018 needs. I do dropped another company over the weekend. I would say one final thing here well talk about this in the months ahead, its going to get nastier is my guess and it will be interesting to see how hock tan and broadcom and importantly its partner silver lake, giving them 5 billion in financing for this deal, how they are going to handle what may begin to be a more negative on slaugt as this thing looking into the things hock tan has done. Exactly looking into what hock tan has done and silver lakes name as its partner, one reason they dont want to do a tender. Its unclear want to get some more specificity on whether they can start the regulatory clock without a tender but i believe they can. Its really interesting i predict this will be discussed multiple times and we should get some of these Board Members to talk. Okay. Youve got it. Probably get them first. I will. Im all over these people. Like this one. I love that suit. Weve got to go. Cramers mad dash and count down to the opening bell which will happen in a few moments look at the premarket on this monday were back in a mome [vo] progress is an unstoppable force. The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. They cahow many of em . E, sir we dont know. Dozens. All right lets teach these freaks some manners good luck out there, captain thanks but i dont need luck, i have skills. I dont have my keys. on intercom all hands. We are looking for the captains keys again. They are on a silver carabiner. Oh, this is bad. As long as people misplace their keys, you can count on geico saving folks money. Fifteen minutes could save you fifteen percent or more on car insurance. [ mouse clicks, keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Little joe jackson to start the week here. Where do you want to go on the mad dash not the usual kind of cable. I want to talk about what i regard as being a metaphor for our times, general cable ha bought by a company for 30 a share. There was a time we would come in on monday and talk about this kind of deal the deals are so big now, that they you want to you forget theres hundreds of Companies Like a general cable that are out there this is just a company that actually makes the cable that you pull i think we have to stay focused on the idea that you may have thought the markets overvalued but you come in and this thing is 33 higher. And who owns general cable there will be some firm that has a series of smaller cap stocks i want to keep an eye on the fact when you have a deal the size of an aetna, when you have a deal the size of a broadcom and these are complicated deals. Theres deals where this is like, boom, its done and people making a lot of money on the smaller deals. So lets not forget that youll have things like time warner that may be under scrutiny then youve got deals like this. And these are happening every day, 3 billion, 5 billion these used to be important they still are if you own th stock. I do think its important to point out theres deals happening every day. Without a doubt and i think between now and end of the year well seen see a few more. Exactly. Is the feeling im getting. Hopefully im get them but before that weve got an opening bell this morning about seven minutes until we get there. Rehe with us on squawk on t stet qu we have a lot more to cover. 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Let out your inner child at the lexus december to remember sales event. Lease the 2018 es 350 for 319 a month for 36 months. Experience amazing at your lexus dealer. Live from the Financial Capital of the world, offing bell in three and a half minutes. Busy week with first chance to respond to the Senate Tax Bill passing Early Saturday Morning a lot of discussion what conference will be like and thats going to be up for congress to work out over the next ten days or so. But its pretty obvious that a lot of people are getting very excited. I look at certain stocks that had a hard time getting through certain levels, like caterpillar, they are really Great American company should it benefit from this, maybe gets a repatriation but goes up a couple, boeing going up a couple. Winning industrials seem to be have a clear path towards the end of the year when you see Something Like this. And i think that it is important to remember these are what people own they are big cap stocks they are. I dont know how many multiple points should be added here . Wow, you know what, as many as were told they wouldnt i guess the bottom the denominator is going up, earnings number is going up so but thats you dont get pe expansion, you get a multiple times a new number if it was pe expansion, i would be very concerned, just paying the same amount for the same number this is something that a lot of people on wall street were betting wouldnt occur and therefore made the market look much more expensive. Now they will find a new reason not to like the market theyll come up with something were running out of straws here. Whats left santoli has been writing how the market is overfed. Overfed the hard data, macro data has been good. Maybe the markets believe it. I dont know i dont think you can overfeed a mashl market you had a big rally but a lot of people didnt think this could happen. Its entirely possible we just have a good moment in stocks we had a good moment for a while now. I think a lot of people are saying i couldnt find a strategist who thought 2018 wouldnt stretch the valuations. Can we really have can we have some of thestrategists come on and say this is a good thing and valuations may not be stretched or come up with something that says that mueller is going to indict i dont know, james comey is all over the place with tweets. Hes responding to the president s taking shots at the fbi. Hes tweeting too whos not tweet sng. There are people out there. Speaking of defense, boeing will help lead the dow at the open defense is the largest beneficiary of a lower u. S. Corporate rate. Unbelievable. Bulk of the sector is domestic revenue 76 , average for the sector. Really . Wow lets get to the opening bell its metroatlanta chamber, Atlanta Sports Council and her shell walker highlighting the cha championship held in atlanta doesnt he do 500 situps a day . Over at the nasdaq, it is groupon doing the honors and well talk to the ceo in squawk alley. Pnc, wells fargo, you with me so far morgan, bank of america and city ive been trying racking my brain from fang equivalent but cant come up with one for the banks. But they are on fire. You can take pwnbc and rubics cube it. You cant use that. Thats not a fang youre not going to get its up 230 and a lot are s p, 2620 jm morgan is the best dow stock. You said 100 by christmas, its now 108. Really funny, at what point do you say jp morgan, made the 100 call, thanks for nothing, thank you for putting a gun to her head not only are we taking a gun away from their head but weve got a celebration going on over there. Jp morgan. Celebration. They will theyll be celebrating, the deficits youre like mr. Long term. The older i guess the less i have to be. You can sell jp morgan and now you have money to pay your new york state taxes, okay i dont own any jp morgan but i do own some comcast, 3. 7 , touching 40 a share as a result of the same thing propelling jp morgan shares this morning. What happened to cord cutting . You dont have to worry about that our taxes are going down. Dont have to worry about cord cutting because disney could be buying fox and i dont care about espn other than i hope they help me with fantasy on sunday morning. What do you think of that i thirvnk you have to worry about espn regardless if theres a deal. I disagree. I think they are not going to be that important, when we do bam tech and by fox disney buys fox weve reported this for weeks and weeks, they are talking, disney and fox, the journal over the weekend decided to say somehow that he reingauged theyve been engaged well see whether they can reach a deal weve also described the deal to you in the past in terms of the structure but well come back to it another time when we have more to say. Mike kavanaugh talking at the ubs conference this morning says they like their assets, doesnt see a strategic gap but adds were always asking are there things out there we could add that would create value for shareholders i think if they are going to add over 1. 1 million broadband subscribers, that doesnt sound like Court Cutting to me its directly related to channels but i love my wifi dont you dare take my wifi. Its as important as water. As water . Or electricity. The barclays downgrade of cable to neutral this morning, talks about slowdown in broadband growth, more uncertainly in m and a this is right in the face comcast cfo is right in the face in the downgrade. It is by the way, comcast still has interest in the fox assets, the problem for comcast is its hard to match a deal under which cox cast would not get extraordinary scrutiny, disney in a better position from an antitrust position which is not unimportant and youre fox and considering doing that sale, you may feel you have a better chance of it getting to the finish line with disney in terms of antitrust review. Cord cutting keeps going in ten years, nobody will have a cable package but thats not the issue for comcast, charter is a Broadband Company and altice tried to say its a Broadband Company. Thats what they lead with and what they are. That is where they are going to make almost all of their money over time. Great profit margin on that. A question into whether they get into wireless. Does 5g represent a true threat in terms of bringing a broadband product into the hand. Verizon would like you to believe thats a possibility, the test they are doing for the potential rollout of 5g services next year in 19 will dictate that to some extent. I dont know you know, put a plant in a certain spot and you wouldnt get your signal. Youve got to be careful. Charter is up philadelphia. The banks are just extraordinary. Anything involved with construction in this country or anything domestic, this is quite a rally andits a rally based on im sorry, but 2018 may be bad, but were going to party down to the end of it. Party down okay. You know whats interesting, the long list of stocks even 2 or 3 . Yes, now youre talking uniform, give me a basket of x, macys, gap, targtd, united rentals. They were up 5. Its unbelievable. Im seeing some ofthese retailers that i had written off for dead, amazon, remember they were going to come after home depot. Guess what home depot is flying they were going to destroy costco what happened there . What happened to the death star . It looks like its damaged and force fields were down and rebel forces got to the death star, being home depot and macys. They found their rebel planet and they are all okay now. Its Robinson Caruso on mars. The death star has not been taken out of commission . Its going after walgreens, look at this. On friday we discussed the fact, amazon does not appear poised to enter the Drug Distribution market as much as its interested in being able to sell devices, medical devices. Yeah. We know that. Boy, is that small time . Have you seen these transports, speaking of amazon unb. Ups i mean, im telling you, everyone is speaking about what it takes to get to your house. Well, ive got to tell you, i thought this ups upgrade is another one that amazon plus i dont know if you are taking it as an amazon holiday, i get the links now, you get the links . What your kids want . The links to amazon. Thats it, they sends you the link. They send me the links. I think this is a remarkable rally and its under this is based on the fact that the president is not about to be well, lets say the abc report and we did leave here. You know, i was working until very late on friday. I dont know what you were up to and you know, we were holding the stock the show back for fear that there would be no senate decision. You come in and its like, holy cow. Is there any chance the Conference Goes badly or the thing takes a turn thats unexpected and were going to be revisiting those votes in the house or maybe those loose state republicans who voted in favor and now looking at the tax bill, middle class constituents going up it does look like the white house has kept the corporate rate sweetener in their pocket, give you 22, that might keep defectors from siphoning off. I think its important for people to try to stir that story up if youre shot, do not not try to say the only people short here . Its not impossible. Its not impossible and certainly we have to include it but i also see the retail rally and this is one of the rallies that was unexpected. Inventories are very lean there will be no its a promotional no, its not that promotional. Its not apron, blue apron being upgraded. Its time its time thats big barclays goes to equal weight an aprn and could be stabilization point. Stabilization point, yeah, sure sure, sure hows stitch fix doing people like that . How is it doing i dont know. That marked a particular amount of negativity in the market because we kind of had a feeling and know we dont have maybe get ipos this week but look at the market, will you . I am looking at it. Jp morgan is not a small cap stock. Jamie dimon must feel pretty get. He has a bit coin on his own remember he didnt like bit coin he liked jaxt p morgan say again. Jamie dime on had some suboptimal things about bit coin what he was sub limb nol nally telling you, buy it at 92. I think he had a good call jamie dimon, good call. Bought a lot of stock a lot lower. Almost 100 gain now. Yeah, good time to have bought when jamie bought. He never impressed me as being a dumb man he impressed me as being a smart man. Thats a fair statement. If you swapped out of bitcoin at 11,000 and bought jp morgan, youre looking pretty darn good today. Yes, you are. Thanks you. I wish i bought bitcoin in 2011, that would be worth 11 million. The vinkle vi did that we dont know how they fared, how their net worth shapes up to say zuckerberg i dont know, they are nice guys how about the dollar store thats another thing, walmart, the Dollar Store Dollar general its oof ff to t races. People who theres more shopping going on at the dollar tree and Dollar General for the holidays because theyve upgraded a lot of things that you see at the dollar tree dollar tree is more you can fool everybody with presents from dollar tree. No kidding. Im going to get faux ray bans at dollar tree give them to the kids they wont know. Faux thats faux. You can walk up to canal street if you want to do that. Those dont hold up. No . No. We should look at cvs shares since we wrap up looking at our stocks, down 4 . Its not as though there hasnt been plenty of times to weigh the merits of the deal it was reported a couple months back as a possibility and updates since then you can see the market ace response it does contain a significant component of stock as well as 145 a share. How do you hedge that. How do you hedge what you short one, go long the other. Like a ratio . Yeah. Whats your point are you going to say . I have no point whatsoever. Is that the old why is it your stock down . I brought it up for no reason there was a moment where i Russell Wilson i obviously its a difficult thing to hedge. It might be, yeah it might be somewhat difficult to hedge i dont know i feel like jack parr remember dates me, right. Giant broad based rally in media, in financials, retail. Records for the dow and s p, lets get to bob pisani. Telecom the only sector having trouble oil is down a little bit very broad based and its all about banks to a certain extent and some of the industrials, getting new highs on all of the major banks but not just the big banks, not the Money Center Banks but the regionals and super regional banks and everything across the board, fifth, third, key corp, zion, sun trust, huntington, pnc, it doesnt matter if youre a fairly large regional bank, youre hitting at least a 52week high, many cases multiyear highs, we have many industrials also doing well today. Some would be big under the tax cuts, caterpillar, deere, 3m, dover, some of the transports, ch robinson, logistics space, also hitting 52week highs as well defense and aerospace doing well they have been beneficiary for many months now. Most of just shy of new highs but essentially lets not quibble with a point or so they are also knocking on the door one thing that is lagging a little bit, technology stocks. Some of the big names that had moves up earlier, a little bit weaker today, advance microapplied materials and my kron, lam research to the downside the rally is continuing here and obviously this is largely on the tax cuts, corporate cuts, repatriation of capital equipment. And i would also add that i think abc issuing a correction on the report on mike flynn is also a factor. That was a factor in the drop on friday and i think its a factor in the rise today. More generically, global Economic Growth and numbers are pretty good overall. Also seeing record earnings and fed staying accommodative well hear more about that from the fed next week. President weighed in on the rally weve been having today saying with the great vote on cutting taxes this could be a big day for the stock market, and this was earlier this morning. One problem here is the president very casually mentioned on saturday that he might, might be willing to support a tax cut of Corporate Tax cut of 22 instead of 0 this is a bit of a problem because i had drawn a line in the sand on that, vept mike pence had also drawn lines and Vice President gave a speech a couple of weeks ago, they would cut the Corporate Tax rate to 20 and not a penny more theres your line in the sand. They repeated this many times. The issue as we discussed last week, many of the models for Earnings Growth are based on the 20 , not a 22 or 25 we talked about this last week, without the tax cuts analysts are projecting earnings for 2018 to be up about 8 . But with tax cuts modeled around 20 , depending on who you ask, youre getting Earnings Growth of 11 to 15 that is substantial. This is the reason the market advances on tax cuts, not just global check growth. At the margins this does matter for the market but at 22 or 23 or 25 , it would matter much less that number would be much smaller an that would be an issue. The market is expensive now. Were almost 19 times forward earnings you bring it down to 20 rate and get 11 to 15 next year. Now were talking about mid17, low 18 numbers, still high but much more reasonable defensible when youre talking about continued global growth. This is not an issue thats going to go away and i think the president does need to issue an clarification and congressional leaders about the potential 22 Corporate Tax rate nonetheless, right now were at new highs for the morning, 240 points upside on the dow carl, back to you. Thank you very much lets also check in with Rick Santelli and get a picture of the bond pits in chicago good morning. Good morning, carl. Lets do twoday charts. I think its interesting to see how the markets have survived beyond the ross route and the news that proved not to be true and how much traders faded anyway thinking that the real issue was taxes not flynn and they were well rewarded. Twoyear where we were before the ross and twoday of 10 year and the bunds are interesting. Even though they bounced off 30 basis points and they also moved right at the same time, they are still to the downside than ours which means the spread continues to widen a bit across our 10year. Something to Pay Attention to. Maybe thats first sign that correlations are start beinging to change. Which i think is going to be a big driver on 2018 the dollar index, not only is as high as it was before that story hit, its actually a bit higher. All except for one currency, which still continues to do well but its underrated in terms of percentages and how the dollar index is calculated and that is the pound. There you see one week of the pound dollar, it continues to hold as a matter of fact, year to date chart shows its about ready to break out and if we think break out, look at the july 1st chart of the pound versus the euro. That 114 and quarter area is huge, its knocked at the door several times and it several looks like it has the ammo to break through. Back to you. Rick, thank you very much Rick Santelli, well stay on top of the market rally. S p up almost 20 points as the rally is widespread. Were back in a min its all yours. Wow record time. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. Im an outdoorsman. So ive asked chase sapphire reserve cardmembers to find my next vacation. Chile, whats going on . Im at the el tatio geysers. Geezer. Geyser. Geezer. Geyser. Enough. Geezer. Whoaa, wooooo. Dude, be careful. I think you should come camping. Why would i camp in the atacama desert . Oh. 3x points on travel and restaurants on every continent. Sapphire reserve, from chase. Make more of whats yours. Im living that yacht life, life, life top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany, gany, gany, gany watch this dont get mad bell mnemonic get e trade and get invested big broadbased rally for the markets. Record highs for the dow and s p on the back of the Senate Advancing that tax bill. Some weakness in semis, which were watching this morning. Well get stop trading with jim in a minute. Lets get to jim and stop trading. Okay, ksu has added why is this important . Ksu is most involved in nafta. Its the biggest loser if you change nafta a lot the rails have been on fire all of the transports have been on fire this is emblematic of how powerful this rally is its overcoming even naflta and the idea we would be pulling out or something so its very, very strong rally. Very norfolk, record high. Unp, record high as far as i can tell here this morning. Yeah, tech obviously has real issues because tech is not a beneficiary to speak of. Unless youre one of the titans yes yes. Now what i do see is some of the big oil Companies Like a chevron are up, but most of the oils are down off oil oil not a winner and foreign tech, tech that has a preponderance overseas not a winner whats on mad tonight i have a Company Called yext, which reported a quarter many felt was not great, but this is a company thats a new york tech company. Im trying to celebrate some new york tech. Howard is a Big Personality yes, he is. I didnt know you knew i enjoy him. Great guy well see you tonight. Well see you mad money, 6 00 p. M. Eastern time a lot more to come on the record rally. Tax reform, the cvs aetna deal dow up 252 back after a break [ keyboard clacking ] [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Talk to one today and see why were bullish on the future. Feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Im not really a, i thought wall street guy. Ns. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Welcome back to squawk on the street. Im Carl Quintanilla with david faber. Michelle carusocabrera is here. Big rally to start off the week. Dow at 257 record highs on the dow and s p as the Senate Passed the tax bill Early Saturday Morning. Progress on capitol hill plus, a massive deal in, well, pharmaceuticals to some extent and health insurance. Cvs announcing it will buy aetna. The years largest deal, one that will reshape the industry as we know it. Coming up, the billionaire behind calls for trumps impeachment. Tom steyer joins us to talk tax reform and the state of washington politics. Big morning for macro as well rick well, thank you, carl we have some october data for factory orders we were expecting the october to be down. 4 its down. 1 but we did get a nice revision last months 1. 4 now stands at 1. 7. If we take out transportation, the number dramatically improves, which is a good thing. Up. 8, and a 0. 4 positive revision last month. Lets get to the biggy, shall we durable goods orders, final october. We take the early october and toss it. This number is down 0. 8. The last number we had, the midmonth, was down 0. 5. It gets worse, and its only the second final minus number of the year in this category. Excuse me, i take that back. Im looking at nondefense aircraft down 0. 8 capital goods orders, this is a number i was referring to, and it was down 0. 5, its now up 0. 3. That is a good thing and theres only one negative number for 2017 that was in june, down 0. 1 the durable goods orders is good x transportation jumps up 0. 9, so the data most likely shouldnt affect this rally. As a matter of fact, were seeing even newer highs made on the equity side, and watching fixed income to see if we get close to the 245 settlementyearold for tens, where we closed last year, of course thank you very much Rick Santelli. Now the dow is up almost 280 heres a look at the dow 30 this morning. Both the dow and s p scaling new highs on investor optimism about the passage of that tax bill once it goes to conference, just a couple, three components in the red. Jeffrey is chief Global Investments strategist at Charles Schwab jim, how does this weekend reshape the playbook i dont know, carl, how high this thing will go, but im getting a little more anxious, thinking as we head into next year that you might want to start, if people want this so badly, maybe give them some of their favorites. And i wouldnt exit the market necessarily, but i might move into more defensive positions. Those capital goods numbers this morning that were just announced, i think thats where i would kind of look to go shopping, is in some of the capital goods sectors, including materials, industrials, and energy i would still buy financials with rates, i think, headed higher i would give a little of the favorite technology, i think, feed that into the marketplace jeff, your take, and if this rally is based on an expansion of earnings and not the multiple, why is that more suspect . Well, i think it is more about earnings than sales. Things like tax reform, politics in a form of tax reform or trade protections, any of those things nudge the markets one way or another from day to day, even week to week, but the trend month to month has been driven by better Earnings Growth. Thats whats sporting the markets. Expect that to continue in 2018. Its getting late in the business cycle, but thats when the party is heating up. We may have a hangover in 2019 or 2020, but next year, expect to hear more of this stocks at new highs, we expect the rally to continue in 18 and just to underline what carls question was, the e, theoretically, because of tax reform, gets bigger, right so the market can go up because the e is going up, the pe stays the same do you think the market deserves multiple expansion because of more growth in addition to the e going up, jeff yeah, thanks for the clarity, michelle right, certainly the earnings going higher is the key support to the market, although i think it may be the sales line that is more important now yes, we may see a bit of a boost to the bottom line tied to lower taxes, but look, most of the companies around the world have already been cutting taxes in recent years Corporate Taxes, that is the u. S. Is just beginning to catch up to that yes, the top line is going to be important. Continue to accelerate next year probably whats been the best global Economic Growth in at least more than half a decade, helping to lift earnings thats the key support to the stock market rather than just mere optimism around political or policy changes. Jim paulson, a lot written over the weekend about what happens when you give an economy this late in the cycle a dose of stimulus, which arguably this tax bill is, and whether or not that becomes inflationary. Do yields really suggest that today . They dont right now, carl, but i think that is where were heading. Im kind of nervous about how many things are right on the cusp of some eyecatching levels the Unemployment Rate is. 2 away from a 50year low the cboe announced last quarter we closed the u. S. Output gap for the first time this recovery and only the fourth time since 1980 the wage number is very close to heading to an 8 1 2year high, and i think well breach 3 next year the tenyear treasury sits 20 basis points from a 3 1 2year high crude oil, 3 from a threeyear high the dollar, about a point and a half from a threeyear low Inflation Expectations are close to breaking 2 my point about it is, it doesnt take much, small changes in a number of different indicators, very small, but it could change the entire look of this thing. You know, one point i would like to throw out, this bull is predicated on bad news on fear, on climbing a wall of worry. And i still think at full employment, with inflation pressures around, we now get an outbreak of optimism and everything is good, including earnings to me, that destroys whats driven this bull higher. And i think it would be poetic justice that the first time we get the good news and everyone feels comfortable, the water gets unsafe. Right finally, jeff. That means that were all going to be watching this wage number on friday, are we not . It certainly is an important number but remember, prices are really set globally increasingly for wages as well were not seeing the same tightness we have in the u. S. Market overseas in europe where the Unemployment Rate has crossed down below the average rate of unemployment for the last 20 years. Theres still loose labor elsewhere in the world that should keep a lid on the increase in wages, though we may see more of it in the u. S. Inflation is coming back but in a soft way to allow the fed to still take a fairly relaxed approach, a slow approach, and not kill off this expansion as they have been known to do in the past do either of you think, just as a final point on this bill, do either of you think that conference is an event risk or not . Jeff possibly. You know, this is not a done deal yet we think well know eventually come up with something, but certainly, conference is going to be challenging, as they bring both sides together. Our folks in washington are still watching this very closely. We havent decided this thing is over just yet. And finally, jim, what do you say . I think its going to get passed, but i think it will be more watered down. Maybe a higher Corporate Tax rate than whats out there now, for example. But my feeling is this feels a lot like buy the roomer and sell the news when it actually gets passed, you might want to be selling on that news. Jim paulson, jeffrey kleintop, appreciate it. Its going to be a wizzy week. Cvs is buying aetna, a 69 billion deal it does shake up the Health Care Industry both ceos appeared on squawk box earlier this morning to talk about the tieup. Heres cvss ceo on the timing behind the deal. As mark and i continue to have discussions in terms of how can we do things more strategically, it was clear at cvs health, moving to become more of a Health Care Company and getting closer to payers, mark had a similar strategy in terms of getting closer to the consistmer its really the perfect time to bring these two companies together, to create a new Health Care Platform nat can be easier to use and less expensive for consumers and really create a new front door to health care in our country. For more now, were joined by former medtronnics ceo bill george does it make sense to you . Yes, it makes tremendous sense to me. I think far beyond the cvs aetna merger, david, larry merlo is triggering a wave of consolidation health care and dramatic change. We tried for 25 years to change primary care, and nothing has happened hospital costs continue to rise. And this is going to move health care from the hospital setting into the store setting, a communitybased retail and i think having aetna there will bring in with the artificial intelligence, going to bring in a whole wave of data and opportunities to work directly with employers and Medicare Advantage to lower Overall Health care costs. I think were going to see its going to trigger the disintermediation of all these middle men, the mckessons and express scripts and everybody else taking a chunk. I think well see direct shipment of drugs. So this is a big deal. And it goes far beyond the cvs aetna merger and its going to transform what doctors do, what nurses do, and i think where Health Care Takes place, to get it into a lower cost communitybased setting. Wow youre really putting a lot on this deal. I mean, its going to take time. Its going to, i guess then, bill, force others to also change their strategy . No doubt. By the way, the market is saying this being driven by amazon. I actually dont think that. I think amazon has to run hard to catch up. I think the real issue is United Health theyre a powerhouse with care mark, with optum, service over 170 Million People through optum. I think youre going to see theyre the ones causing a lot of change. Did a deal with mayo, on the mayo board about five years ago, to create optum labs, and this through artificial intelligence, big data, but looking down to individuals. What they need i think youll see big changes there as well. So as consumers stop thinking, gee, i have to get an appointment with my doctor and i only get seven minutes theyre going to go into cvs and have an awful lot of things done theyll see a nurse. I think with the minute clinics, they may put a doc in the box and change the setting at a much lower cost, but people can get cared for and they dont have to stand in like and wait forever and only get to see a doctor for seven minutes. Its almost insulting. Theyll get much better care this morning on squawk box, bill, for sure, when they talked about improving service, just on so many fronts lets assume for now that this gets through the antitrust process. Which im not convinced about, basically, because of at t and time warner, but if it does, when do these guys start buying hospitals . I wouldnt buy a hospital ill tell you, now, i will say united is buying up primary care practices. They have got 30,000 of them, could go over 100,000, 200,000 im not sure i would do that i would just, like i say, i might have a doc in the box in my retail stores, in the bigger ones certainly, but nurses can do 70 to 80 of what primary care doctors do. They can follow patients with chronic Heart Disease and cancer and diabetes theres no reason to have the highcost hospitals. So hospitals have really not transformed themselves i will say this. The hospitals focus on Specialty Care and surgery thats not going to affect them at all the higher end and the more complex cases. But on the basic stuff, not just strepthroat, but if you have more basic, you dont have to go to the hospital because you have a virus or a really bad cold that hasnt gone away for six weeks, may have strep throat you could have that done at cvs and get your flu shot. You may even be able to get a physical there, and maybe Infusion Services and they might take over dialysis watch out. Theres a lot of dissatisfaction about service in hospitals, and maybe theyre taking them over might actually improve that can we talk about antitrust are you worried the ftc in theory does pharmacy deals and the doj does insurance deals who is going to decide here . If the doj ends up being the body that decides, are you worried this is going to suffer the same questions of vertical merger like were seeing with at t and time warner im not worried at the bigger level theyll blow up the deal they need a pound of flesh theyre going to go to larry merlo and his colleagues and extract something, but it wont harm the basic core deal because theyre not really overlapping this integration is needed and so is this chain of everyone taking a chunk and adding a chunk to the generic cost. We need to get products to people at lower cost we need transparency amazon may force that with cvs cvs is going to have to run fast along with walgreens to get their loirn systems up and running. But still, people want to have that personal care so i think youll see a mix of the two. Drivein services, all these kinds of things. Im not worried about antitrusz i do think that a lot of other people need to be worried in health care about how they have to change their strategiestrates thats a good thing for this country, to get better care for patients at lower cost and more Immediate Care yeah. If we can get there, that would be a great thing bill, thank you for your time and your insight, as always, appreciate it. Bill george. When we come back this morning, todays big market driver, optimism about tax reform well talk to billionaire democratic donor tom steyer with his take squawk on the street will continue with the dow up 277 ronoh really . Gs going on at schwab. Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. Based on the massive tax cuts that were very much in the process of getting approved, but based on the vote we had last week, the stock market has been reacting unbelievably well so far, hes right. Stocks seeing another major rally on signs of tax reform progress on capitol hill today the house is back in session, a day early, following the senates passage of the republican tax reform bill Early Saturday Morning shall we say late friday night joining us now from d. C. On what to expect, ylan, off to conference now, right . Thats recognize. A factoid for you here more than 90 of bills that go to conference end up getting signed into law. The chances of tax reform getting to the president s desk are pretty good. Now, that said, there are some major differences between the house and the Senate Versions of the bill individual rates is one. The house has four rates the senate has seven and those expire after 2025. The corporate rate is another one. The house cuts it to 20 right away the senate waits until 2019. The senate also repeals the individual mandate the house doesnt, and it is still unclear how moderates are going to feel about that approach then there are a bunch of smaller issues that could wind up becoming bigger battles down the road the one causing the most heartburn appears to be the senate keeping the corporate amt as is. Now, that generates 40 billion in tax revenue over the decade and it helped pay for some of those concessions that Senate Leadership had to make to get this bill passed companies are worried that could undermine the benefits they receive from the tax bill. House majority leader kevin mckartm mccarthy was on cnbc earlier this morning and said this has got to go in conference. I think that has to be eliminated because that would destroy r d, especially when you look at california, the engine that creates from entrepreneurs and others, that should be eliminated for sure. The next step in the process is that Conference Committee the house will vote on members for the committee today. The senate should follow suit soon and most of that process will happen behind the scenes, though republicans are expecting to stay in session right up to christmas to get it passed back over to you guys. All right thank you, ylan. Lets dive deeper into the winners and losers of the republican tax reform plan cnbcs senior economics reporter Steve Liesman joins us with a look at the broader economic effects of the plan. What are they, steve a lot of estimating going on. Economists spending the weekend looking at the impact of tax cuts on overall growth they find positive but modest effects. Heres are some of the numbers that have come out a survey of 51 economists found a 0. 2 effect on gdp over the next year and two. Goldman sachs has it at 0. 3 in 18 and 19. Rdq says 0. 3 . Its numbers are different, they see a permanent upward shift to growth, where Goldman Sachs is more on the temporary side and sees it waning over time heres what the supporters are saying it would increase Capital Spending, boost productivity, leading to higher wages and jobs, causing countries to repatriate some of the foreign cash and by lowering taxing, youre reducing inefficiencies in the economy. Those who oppose it say its going to increase the deficit to 1 trillion to 1. 5 trillion tighter fed, well talk more about that in a second it will raise inequality with most of the gains going to the wealthy. Theres a lot of skepticism on the job and wage effect. Here are two commentaries. John writing over at rdq, we estimate half the estimated increase in gdp comes from higher employment, leaving the other half to come from the Capital Stock or an increase in Capital Spending joe at natixis says republicans have argued lower Corporate Tax rates will stimulate the economy through a step up in investment outlays. Unfortunately for advocates of Corporate Tax cuts, theres no historical efz to support this thesis and joe has a chart shows as you have changed the Corporate Tax, Capital Spending hasnt changed much chances for fed rate hikes have increased along with passage of these tax cuts in the senate a 96 chance of a rate hike in december a 63 chance for another hike in march, and 50 chance now for a second hike in september back to you, carl. Steve, thank you very much. Our next guest calls the gop plan a thinly veiled reverse robin hood billionaire democratic donor tom steyer is the founder and president of next gen america. Good to have you back. Good morning good morning. A lot of supporters say this bill is going to unleash a lot of Economic Activity how are they wrong well, theyre just making that up. I mean, we just heard the numbers that this will have a very modest impact at best on the overall economy. But what we do know for sure is that this will dramatically exacerbate inequality in the United States because it will take a gigantic amount of money and hand it to the rich people in the United States, and overtime, 87 million americans will have their taxes actually go up as a result of this. This is absolutely reverse robin hood it has been painted by opponents as a break, a tax break for the wealthy. And yet, everyone on our show this morning, ken langone, we had a discussion with jim cramer this morning, saying the wealthy are going to pay more. How does that work listen, ken langone and jim cramer happen to be the wealthy. If you go and take a look, these are huge tax breaks for the biggest corporations thats the first thing theyre doing. Okay the biggest corporations are owned by the wealthy thats who actually owns those shares and secondly, if you look, theyre changing a lot of specific things to give chances for people to get lower tax breaks by changing their tax status so in fact, what were really going to see here is a dramatic pushing of money out of the government, into the pockets of rich people, and then the second question is going to be, how is the government going to deliver the kind of health care services, the kind of education, the kind of job training, that they traditionally have. The answer is, theyre going to cut all those things thats the second step people are going to have worse services because we cant afford them because of the deficit. When it comes to ordinary income and individual tax rates, though, for the majority of americans, its lower for longer, right . When you have a high ordinary income, you will definitely be paying more in taxes under this bill the way this is going to work is everybody is looking just separately at the tax plan and the tax plan delivers the vast bulk of it to rich people the vast bulk of the savings goes to the very top end of the income distribution. But you cant look at this tax because theyre not being taxed on ordinary income, right . Because youre talking yes but what i said was factually correct about ordinary income, correct . But the point here is they keep trying to get you to look at only very specific small slices, ordinary income instead of how everybody actually gets taxed across the board they try to separate the impact of the tax plan on health care, the impact of the tax plan on spending in fact, if you look, if they do what theyre talking about in health care, there will be an immediate 25 billion cut to medicare there will be 13 Million People who dont have health insurance. Middleclass families will pay 2,000 more in health care per year so you cant just look at this tax plan and look at the tax rate on ordinary income and draw any conclusions. Its part of a much broader picture, and that broader picture is an absolutely terrible one for working americans and it delivers massive benefits to the richest americans which is why this tax bill is getting passed tom, not to the richest americans who have a w2 filed in california where you are or new york or new jersey or other hightax states. Im curious im aware, in addition hold on let me finish. The lack of deductibility of state and local income taxes, which i have talked about a lot here what impact do you think thats going to have on states like the one youre in and their ability to attract workers keep workers, businesses, and overall, continue what has been a more generous social welfare policy in these states look, theyre obviously hitting taxpayers in states that have high income taxes income tax rates thats deliberate because those tend to be blue states, predominantly democratic states. Which are absolutely the targets of this Republican Congress. But what we already see in those states is those states subsidize the red states already so what were seeing, this is an absolutely unfair attack on the hightax states. There are 14 Republican Congress people from california alone i dont know how many there are from new york and new jersey, which are the other two states which are dramatically targeted. If those people vote for it, theyre voting directly against their constituents theyre voting for their constituents to have higher taxes, Lower Health Care, and in general, a much tougher life the Lower Health Care that you keep talking about, thats because of the repeal for the mandate, right that would be people who simply choose not to buy health insurance, correct as they are currently made to do it will also raise the cost of health care for middleclass families who are buying health care in addition, you cant look at a trillion to 1. 5 trillion increase to the deficit and think that will have no impact on spending going forward. Of course it will. This is all part of a much broader picture of cut taxes, cut services, smaller government, keep all the money with the rich, and deliver nothing to working families. You cant look at this tax bill just by itself this is just part of a total program to try to revamp our government and to do have a much less fair, just america, and basically to take it out of the hides of working families across the country tom, a lot of viewers writing in listening to what youre saying and to your argument that it benefits owners of capital or stocks, that makes sense but they say, hey, im a guy in oklahoma i own a lot of stocks. This is going to make me more wealthy. I mean, how do you square that argument that the number of people with 401 k s are going to benefit if the white house lets the economy run warm look, thats absolutely youre just describing somebody who it actually is going to be good for if youre in a low income tax state and you have a lot of money and own a bunch of stock, absolutely this is good for you, but you cant take 1 trillion to 1. 5 trillion away from the federal government and think nobody gets hurt thats just not true the fact of the matter is, youre delivering money to one group of people, which is large corporations and rich people, and youre taking money away from the government, and therefore, youre taking the money away from the services that are being delivered to the American People. Thats just whats going on here and Everything Else that people talk about to try to keep you on this smallest, narrowest way of looking at this, is just a distraction from that very distinct, straightforward proposition which is were going to deliver money to the rich people who own the big corporations and to a bunch of tax gimmicks and were going to take money away from the government and make it unable to serve the American People and to invest in the American People, and to make us prosperous and effective going forward. Its a very straightforward proposition. Its as undemocratic and antiamerican as anything i have ever seen. One last thing, tom on your efforts to get a petition going to raise support for impeachment of the president , democrats like David Axelrod have called it a vanity project. Others have asked why not just take the money youre spending on the effort, put it to a candidate you like at what point would you give up . Well, actually, what we have seen in response to this petition is a massive response, much greater than we expected. And we have seen over 3 Million People sign on we have seen people who are very disturbed by this president and the threat he poses to the American People. And it frankly doesnt surprise me that all of these political insiders find it a threat to, you know, their power. So the fact of the matter is what were doing is trying to give a voice to the American People so they can speak up together and demand some sanity from washington, d. C representative jim himes has gone further he says it actually hurts the democrats ability to take more house seats at the midterms. You know, thats amazing because its overwhelmingly supported by democrats so the fact of the matter is what you see is a bunch of people from inside washington, d. C. Who find this threatening but the American People absolutely love it so i think thats the distinction you have to understand, is theyre the people inside the beltway, and then the human beings who are american citizens, and the distinction is very clear. Tom, we have to run look forward to talking to you again soon thanks for the time. Great to talk to you. Tom steyer, talking mostly about the tax bill today we want to get to Contessa Brewer for a news update hi, there lets get you up to date on whats happening right now President Trump is giving us reaction to the guilty plea from the former National Security adviser here, michael flynn. The president was onboard marine one, leaving for a trip to utah. I feel badly for general flynn. I feel very badly. Hes led a very strong life, and i feel very badly, john. I will say this. Hillary clinton lied many times to the fbi Nothing Happened to her. Flynn lied and they destroyed his life defense secretary jim mattis met with the pakistani Prime Minister in islamabad. Hes seeking Common Ground in the counterterrorism fight amid the administrations call for islamabad to move more aggressively with afghanistan. Ford is recalling more than 200,0002016 model f150 pickup trucks and explorer suvs equipped with power front seats. The cushions can come loose and fail to properly hold people in a crash. Not hearing any reports of injuries thats cnbc news update for this hour ill send it back to you, david. Thank you, contessa when we come back with the market sitting at record highs, time to lock it in or let it ride cnbcs Senior Market commentator joins us with his latest column. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. 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Certain borrowers cut their credit card Interest Rates 42 and increased Credit Scores 17 points on average. Borrow up to 100,000 with low rates and no hidden fees. Find your rate in just two minutes, and take on your debt at sofi. Com. As december gets under way, stocks hit record highs. Is it time to lock it in or led it ride. Mike san tolly is here you did say the other day let it ride had been winning out lately i think thats where the weight of the evidence takes you, at least in the short term. If you look at other years that have acted anything like or most similar to 2017 through the first 11 months, december has tended to be strong. Another tidbit, december has never been the worst month of any calendar year in history the worst month this year was march. You were down. 004 the market up 19 without dividends. I think people are pretty loaded up with exposure to equities whether you look at hedge funds or individuals at this point i think this process of repricing stocks based on the tax cut expectations is interesting, because it doesnt seem as if obviously its going to be an all boats lifted. Its going to be a lot of winners and losers, a lot of friction along the way, and a legitimate question as to what happens to the markets multiple into next year as the market looks through this onetime benefit of earnings going up all these things are feeding in. And where i come down on it is you have to expect a little more choppiness going into 2018 because its been an unusually calm year, but usually the first severe pullback, whether its 5 , whether its 7 , usually isnt the mark of the big one. You give the market the benefit of the doubt, trim around the edges of the exposure if youre nervous about it right now, its more about the rotation and whos going to win out. Right now, value stocks are up, gross stocks are down. Nasdaq is getting hit. And also, the composition of earnings for the s p 500 is dominated by these low tax companies. Right . So if youre looking at whos benefitting, retailers, media, theyre not the fast growers the quality of the business doesnt get improvuove because y pay less in taxes. The Big Technology companies, many have transferred their ip to lower Tax Jurisdictions they do pile up a lot of cash there and they will be able to bring it back at a much lower rate thats a positive. Tremendously shareholder friendly basically, if you own stocks, theres more ways youre enriched than not. But what happens when youre a big tech company, and as these bills are written right now, they say we deem that you have brought your money back to the United States. Its a deemed repatriation you owe us taxes on all the cash you have over there. Do something with it if you want they dont have to physically move it first . It will not physically move anywhere at least thats the way its written now. Theyre saying from now on, you have a lower Corporate Tax rate along with everyone else, but this onetime charge on the tax you have piled up for years is going to happen. So its, i think its noisy in terms of how it all plays out. Meanwhile, goldman has this note out saying the bull market, the average valuation in equities and credit and bonds is high, and the solution will be slow pain or fast pain yeah. In the medium term. What seems more likely in the immediate term, i dont know that you have to have the pain if you get this further overshoot, roright, and the mart gets to Something Like a 20 times multiple on higher earnings next year and the s p is at 3200, youre going to have hard pain. I think at that point, because the market, you could say, oh low returns are emplied by valuations that doesnt mean it goes up 4 a year or goes up 2 and then down 2 . Usually its down 20 , up 15 , down 5 , up 30 . Thats how you kind of get to your low returns thank you, mike lets talk more about the Market Impact to tax reform lets brin in terry haynes, head of political analysis, and lanhee chen, former policy adviser to mitt romney let me start with a little process before we talk impact. Ylan had a pretty good data point, which is 90 of bills that end up going to conference end up going to the president s desk to get signed into law. Do you have any doubts about what emerges here in the coming days or weeks . And whats the final Corporate Tax number going to be, do you think . I have no real doubts that this process finishes up i moved my number from 75 likely to 90 likely friday after senator mcconnell said he had the votes. Ill give you 5 for lightning striking and 5 unforeseen happens. Thats about it. My view is this is going to happen i think the conference takes the next couple of weeks or more i think you heard that reflected from majority leader mccarthy this morning, among other things these things dont go you know, lightning speed in the political world is a little different than lightning speed in the market world. This is going to take a couple weeks to true up and finally, to your question, i still am very strongly of the view that the final number on Corporate Tax is 20 and that its effective in 2018. You dont go out either in policy or political terms, you dont go out and tell everybody youre jump starting the economy and say an important component of it will start in 2019 got it. What do you think . Is 20 the number, and what is the impact on the economy and the stock market well, i think 20 is the most likely number, but the president , as you know, over the weekend did tweet out he could take 22 , which suggests to me that there could be some opportunity for negotiation here on some of the more difficult points where revenue is required lets say, for example, they want to do a little more on s. A. L. T. Or come closer to the house version on some of these other provisions its possible we could see flexibility there. I do think there will be pretty significant effects in 2018 if they choose to start the Corporate Tax rate cut in 2018 my sense is that all of the growth effects are largely loaded up towards the front side of the tax bill with potentially diminishing returning over the long run it works in politics that you see immediate gains, particularly when theres an election coming up in 2018, and any potential price being paid down the road. Immediate returns, when is a reasonable period in which to judge the impact of this bill . Whether its job growth or, i dont know, maybe it is dividend hikes. Maybe its buybacks. When should we start to see that well, in my mind, i think the media, and i think observers are going to want to start to see impact starting within the first couple months of 2018. Whether thats realistic or not, i think that is going to be the viewpoint out there. In terms of when we can reasonably see impact, i think were probably looking closer to the Third Quarter of 2018 or perhaps the last quarter of 2018 a lot of this is going to be judged not by actual economic reality but by the reality of politics and the reality of the fact that we have an election. One of the biggest referendums of the tax bill should it go through will be in november of 2018 when theres a Midterm Election well see what happens there that will end up being one of the biggest sort of tells about the impact of the tax bill what about, i dont know if you saw Steve Liesman earlier today. He was saying the estimates coming out of a lot of the wall street houses are for gains of. 3 ,. 2 for the economy next year does that sound right to you sounds low yeah, i mean, i think. 3,. 4, thats probably about right. Now, again, if we believe that some of these gains are going to be front loaded, then we might see that number a little higher to start and then dipping down in 2019 and 2020 but again, this is all premised on the likelihood that that Corporate Tax rate cut begins in 2018 if for some reason they offset to 2019, thats going to affect what happens in 2018 well see smaller growth numbers. If this is going to be a politically good thing for republicans or assist the democrats, its probably going to come down to whether or not this trickles down to wage growth, right . I think thats absolutely one of the metrics, sure but i also think that it has to do with investment and the markets generally. One thing that tends to get forgotten in this entire debate is just how invested the middle america, you know, the folks out there and what tends to get flyover country in the east and west coasts, are invested in the markets. If they see appreciable gains in their own portfolios, thats really going to help Pension Funds invested in the stock market, of course, as a lot of widespread effect thank you, guys. Thank you, terry, thank you, lanhee as we go to break, continuing to follow bitcoin this morning, soaring to a record high over the weekend. Hit 11. 8 or so a recovery from the 20 plunge last week. We have news about the timing of the beginning of those futures trading. More squawk on the street. Well be right back. Another day at the office. Why do you put up with it . Believe it or not you actually like what you do. Even love it. And today, you can do things you never could before. Youre working in millions of places at once with iot sensors. Analyzing social data on the cloud to create new designs. And using blockchain to help prevent fraud. So get back to it and do the best work of your life. Jeremy siegel predicted dow 24k, and he has a bolder call for the market catch our interview on tradingnation. Cnbc. Com more squawk on the street coming up. Lets get to the cme, check in with Rick Santelli and get the santelli exchange. Rick good morning, carl. You know, correlations correlations are the big deal, and i think its going to be an even bigger deal in 2018 why . I think weve learned a lot of lessons. First of all, if you look at a twoday chart, just to pick a random dpafrm, there were new stories on friday that were not true you see the markets recovered and moved. Do you see any difference in the twoday boon of course, not, but its bigger than the ross route story friday its the notion that we see boon yields drifting and having a hard time getting above 40 and drifting back towards 30 the tenyear note yield, on the other hand, keeps making a beeline towards higher yields. Were now around 205 and, granted, it isnt a huge move, but it may be the beginning of something to Pay Attention to. You want to see another example . Lets look at stocks lets look at a stock chart of the dow jones starting september 1st, and we all know its been a historic run here as we go through these handles, 22, 23,000, 24,000 25,000 is not all that far away, but look at the difference with the dax. This is the premier european stock market it, indeed, is the german economy, which is the best and most powerful economy in the euro zone. And we could see that it had a reversal, key reversal several weeks ago, where it made its contract high, alltime high, and closed below the previous days lows something to Pay Attention to. Now, granted, it stabilized and theres just a spread relationship there between where we are in our highs and how theyve come down, but all these things should be taken together and viewed over the bigger picture, because we all know its a slowmoving train on the fed normalizing, but its a train that isnt moving at all with regard with whats going on with the bank of japan, and it is moving a little bit with mario draghi, but not to the extent here. Ultimately the breakdown of markets moving the same is going to be a huge dynamic better to get in front of it now. David, back to you okay, thank you very much, mr. Santelli lets send it over now to john fortt and get a look at whats coming up on squawk alley. John well, david, cvs, aetna, its a big deal were going to check in on the impact, particularly on amazon, cinupn quk saw alley zar one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. Win an uncertain world . K predictable income pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over 120 billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. Dow coming off session highs, up 230 right now. A lot of alltime highs among the blue chips you can look anywhere, ups, fedex, cat, boeing, travelers, j. P. And mcdonalds the only real wrinkle is the weakness in tech and semis, really that getting a lot of notice and people questioning is that a signal of something to come, the leader to tell us maybe were going to get a sell on the news when it comes to the tax bill finally getting through, or is it just merely rotation into different sectors of the market that maybe havent benefited as much tech should benefit. They have all this money overseas, then all this talk about what are they going to do with it. Does that mean big acquisitions from Companies Like microsoft or apple, because they have the money thats tax competitive were going to talk about that when squawk alley starts in just a minute well, its earnings season once again. Yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from Td Ameritrade. Im here to talk to you about how at t gives you more. And so am i. Like how when you buy the amazing new iphone 8 you get another one on us. See we give you more phones and more spokespeople. Are you guys doing a spokesperson thing right now . Yes. Awesome, can i be in it . Well, its kind of like a twophone deal. So two spokespeople. Got it. K. Thanks. At t its time for more. Its time for more. Buy the amazing iphone 8 at at t and get a second one to gift, on us. Welcome back to squawk on the street, im dominic chu markets rallying after the Senate Passed the tax bill over the weekend. Among the big leaders so far, macys, kohls, disney, and 21st century fox all around 3 or so. That does it for squawk on the street. Back down the street to squawk alley. Back to you. Its 8 00 a. M. At facebook headquarters in menlo park, 11 00 a. M. On wall street, and squawk alley is live