Good monday morning, welcome to squawk alley, im Carl Quintanilla with john fortt, Courtney Reagan is with us for the hour lucky to have her on a busy market day dow up 238, s p up almost 12 off the highs of the morning, but, obviously, on the heels of tax reform optimism. House and Senate Working to get something to the president s desk before the end of the year. A number of dow components hit alltime highs today home depot, mcdonalds, jpmorgan, and 3m thats just a sampling John Leibovitz joins us. Guys, happy monday not exactly sell on the news not exactly i think a lot of expectations was it was going to be a buy the rumor, sell the news i think part of it might be we didnt get the plan until late friday night, early saturday morning, but that said, based on the rotation we saw within the market away from large, towards mid and small, away from growth towards value, its been a pleasant surprise things have continued to move today the way that they have david, would you advise investors this is a smart place to get in, or are valuations a little heated right now . Were in december. This is a very bullish month for stocks historically. Yes, seasonals are definitely on our side. Valuations are a bit of a concern at the current juncture. That said, you know, i think that high valuations confirm bull markets they dont necessarily tell you anything about when they are going to end, and, frankly, when we look at the market and the economy, we see continued economic growth, steady rise in Interest Rates and continued profit expansion with these three variables in place, we think theres good reason for the market to continue to push higher, but we are entertaining opportunities outside the u. S. Where valuations are a bit more favorable. You pointed out value stocks are doing well today and crowded trades are getting punished. At the same time, its an interesting list of tech names close to 52week highs some of them are values, cisco, fort net, net app. What do you think is going on in tech etsy is doing pretty well, perhaps on this renewed retail optimism in the shopping season. Yeah, its hard to generalize about all tech, but you can generalize about value versus growth by definition, value stocks have more earnings as a portion of their value. Thats why they are trading at lower multiples, so they are going to benefit more from tax cuts than the Growth Stocks that are trading at 30 and 40 times earnings so, we think its a very crowded trade, as you just said. The hedge funds have been long tech, long growth, short value retail, similar way. The Retail Investor wants to own amazon, google, and facebook, doesnt want to own the low pe stocks that we love. Common narrative, david, in some of the sell side, the macro strategist calls for 18 is this will usher in a new wave of optimism that somehow forces the market to top out in the first half, First Quarter of 18 do you agree i think theres one key piece to that argument that people are missing, which is we still dont know which year Corporate Tax reform is going to happen in if it happens in 2019, theres reasons to seethe market melt higher in 2018, but even if it does happen next year, for us 2018 is going to be a year of continued economic growth, profit growth, and a fed which adheres more to their forecasts as opposed to the expectations of the market. For us 2019 might be more of the pain point, assuming tax reform happens sooner than later, whereby you have a fed getting nervous about inflation. You would argue the timing of corporate is the most important part of this conference . Yes, i think that the timing of the Corporate Tax reform, you also have to Pay Attention with what happens with individual and the sunsets, but from a market standpoint you need to watch the 2018 versus 2019 issue charles, how much should we be thinking about the overall global picture in this because so many of the companies that were looking at, you now some of the value plays that you mention are benefiting somewhat from tail winds currencywise and were talking a lot about how domestic policy is going to affect them, but any sort of down draft in europe or asia is going to have a significant affect as you look forward to 2018, how stable or strong do those look globally they look pretty good thats one of the things weve got right now, weve got global growth, growth almost everywhere you look, so it is this is one situation where the international companies, the conglomerates that have more of their operations outside the u. S. Are going to get less benefit from the tax boost, but they are getting more benefit from the more growth outside the u. S. So, i do think everybodys winning here right now, but if you had to ask me, the people that are benefiting the most right now are the u. S. Based high tax paying companies, and those are overwhelmingly the value stocks and financials, which are trading at 13, 14 times earnings so it still looks like, charles, we dont have all the details of what the final tax reform would be. Of course, we talked about the timing a little bit earlier. There are fundamental differences between what were seeing right now with the house and the senate bills what are you most concerned about or what do you think the market wants to see most of some of those differences, whether its that amt on the corporate side, or the differences in the brackets yeah, i dont want to be disagreeable on a monday morning meeting, but i dont really think there are big differences. I think they are very, very close. The one big issue that david pointed out is the oneyear delay. I, frankly, dont think thats going to happen. I think congress is going to win there and figure out a way to get that passed. It wouldnt be great to have this delayed for a year. Wouldnt be the end of the world, but wouldnt be great i think they are going to make it 2018. Well, were going to watch the hill, obviously, for the next couple of weeks very carefully. Charles, david, thank you guys see you soon thanks for having me. Were also watching the latest in broadcoms pursuit of Qualcomm Qualcomm says, these nominees are inherently conflicted, given broadcoms desire to acquire qualcomm. Qualcomm rejected broadcoms takeover bid last month. Taking a look at the stock, i think its a little bit curious what investors are making of this, because everybody seems to think if they are going to get qualcomm, they are going to have to bid more, and since the bid came out the stock has traded down around 64 at this hour just shy of that number were going to watch the slate obviously, big discussion with david and jim earlier this morning. When we return, the Amazon Health care threat and how successful aetna cvs might spell trouble for jeff bezos and company. And well talk to the ceo of groupon. Later on, Walter Isaacson weighs in on tax reform and a new messenger app from facebook designed specifically for kids when squawk alley comes back cvs agreeing to buy aetna for close to 70 billion in a move some say is designed to better compete with the likes of amazon if and when they decide to jump into this space. Both ceos appearing on squawk box earlier to talk about the tieup heres cvss health Ceo Larry Merlo on the value to potential customers. We have a tremendous opportunity to create value for consumers and payers, and, you know, when we talk about payers, that does include the federal government so well look forward to sitting down with the regulators, talking about how this comes to life in a meaningful way to see the benefits the consumers and payers can see from this transaction. For more on the impact this deal is likely to have on amazon, as well as the health care industry, were joined by lead internet analyst mark mahaney and michael baker. Welcome, good morning to both of you. Mark, i want to start with you so, when you look at deals like this, and the space and the Opportunity Technology has for disruption, perhaps for consumers to own their data and interact more directly with doctors. Is this likely to put pressure one way or the other on the likes of amazon to jump in sooner or later . I dont think so. Look, i think amazon getting into Retail Pharmaceuticals, i think, is almost a given id be surprised if amazon wasnt in the space in five to ten years. I think there are two bigger fish right now for amazon. First is tapping into the grocery market and working out synergies with whole foods, and second is their businesstobusiness opportunity within pharmaceuticals, business supplies, medical devices. I think thats the first or second area of priorities for amazon but if you think about the amount of spend that consumers have in Retail Pharmaceuticals, i think for amazon not to go into that would be odd in the grand scope, grand history of amazon expect them in that space, but not immediately. And michael, when you look at the likes of apple with the apple watch pushing further into, say, this heart health city that we were talking about last week, accessory makers getting more fda clearance for devices to connect to that, when you have bigger players in the space like a cvs, aetna, is that likely to accelerate innovation and investment yeah, i think one of the responses that were seeing here in health care is health cares been late to engage the consumer, and thats clearly some of the opportunity thats going to be had by a combination like this to provide, you know, lowercost options so its not always about, you know, amazon even unitedhealth is getting more into the provider and offering lowercost solutions and different ways to engage with the system. So, michael, i have a question when it comes to consumers and lower cost options. I think im a pretty informed consumer, but i dont always know what it costs when looking at different options for either a test or procedure or medications. Does a deal like this necessarily mean were going to have more pricing transparency as a consumer so i can make better choices about health care no, that remains a big issue. Transparency continues to be a big issue in health care were starting to see ways to make it kind of more convenient, so when you go and visit your doctor, your doctor will be able to see what the relative costs are to a medication, and instead of waiting for a prior authorization, you may be able to get it there. So when i talk about kind of cost differential, its really relative to the high cost hospital, and, certainly, youre seeing the rise of more Urgent Care Centers and, obviously, cvs could position to not only address that, but also make it more convenient so you pick up your script there, as well mark, you were talking about what you think amazon is likely to do in five years or so. Thats an eternity in amazon time, but we were a decade plus ago google was pushing on health records, a space Silicon Valley was going to make big waves in whats your take on whats taken so long, perhaps whats impeded technology from having an impact in health its long wanted to thats a multibillion dollar question, john im not sure the answer to it. I know theres a lot of regulatory issues, but other companies have been able to work through that, and its maybe its just been a matter of priorities and trying to pick off the lower hanging fruit. When i think about amazon and Retail Pharmaceuticals, its a large market about 10 of Retail Pharmaceuticals is filled by general mass merchandise retailers, walmarts, costcos, safeways, krogers. And, by the way, i think this is one of the most interesting synergies, interesting new synergies for amazon whole foods. Whole foods doesnt do anything with pharmaceuticals for a lot of reasons, but i think it makes eminent sense. My guess is that was probably one of the rationales behind the deal, though it hasnt been discussed to date. No doubt. They are going to take a look at probably just about everything, knowing their ambitions. Thanks to both of you, mark and michael. Thank you thank you still to come this morning, shares of groupon have taken off this year, surging more than 70s well talk to Rich Williams about ecommerce, tax reform, and more dow is up 216. Squawk alley is back in a moment the rhythm of the world. But to us, its the pace of tomorrow. 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Well, retail was a surprise winner last week, posting its best week of the year, while tech was weak in over five months retail is largely higher today our next guest joining us here at post 9 and a cnbc exclusive is groupons ceo Rich Williams thanks so much for being here. We really appreciate it. About 149 million customers spending 120 per year on your app or website this is the big season for you whats going on so far here in the Holiday Season as you said, this is the super bowl of sorts for ecommerce, retail in general, and by a long shot my favorite time of year its just intense. What weve seen is something weve seen all year, just a healthy consumer where you have engaged audiences working, i think, increasingly in realtime. I think thats the biggest thing weve seen change over the last little stretch, and for groupon, you know, the fourday crazy period from black friday to cyber monday, we saw north of 80 of our business transacting on a mobile device, which is a really significant shift in a trend weve seen longer term from web to mobile, but a big change in a relatively short period of time, so its that engaged consumer, increasingly a realtime engaged consumer. On your Earnings Call you said friction is the enemy in years past groupon could be clunky with printing out the voucher, bringing it, so how far have you come in that progress, just recently in some of the changes youve made . Id say were really early in the process and some of that is just us, were hard on ourselves, were our biggest critics, but if i turn back the clock even a year, you have a very different groupon experience now we have almost 25,000 bookable deals on the site, things you can just set an appointment to, whether its a hair salon, nail salon, et cetera, so its becoming easier and easier that went from really a handful of things a year ago to now over 25,000 we talked a little bit ago about our groupon plus product, which is that cardlinked experience, which is just incredible you walk in, swipe your card, get cash back. Thats gone from really zero to thousands of offers in 23 cities around the country and now, you know, well north of a million enrolled folks with their credit cards and the programs so its starting to become a much bigger part of the groupon experience just be easy, fast, and fluid, and i think more importantly better than the original experience i have to imagine as far as the tax bill goes, if Small Business is able to keep more of their income, Marketing Budget goes up. That helps you it could. You know, i think, look, anything that puts more money in the pockets of Small Businesses for them to invest in growth we think is a good thing. You know, youve had Small Businesses, one of the Biggest Challenges is access to capital and access to reach, and weve provided historically a mix of both of those at groupon, where weve given them a cash flow opportunity through our product and also access to that 49 million customers that you mentioned. And having that, you know, be able to build on top of that, if they are able to save more money on the tax side, is generally, i think, good for everybody, not just groupon i remember ten years ago roughly local was the big thing in internet. Thats when groupon was getting hot, thats when yelp was, as well right now both of you guys have market caps in the 3 billion to 4 billion range not huge what happened . Did facebook and google rush into this with advertising and have a bigger impact than people thought, or is there another leg that you think is coming i think, look, local was early, its exciting because its a really big marketspace, you know, we would measure our Addressable Market in the trillions of dollars just as im sure yelp and others and whether thats facebook looking at the space with big opportunity, so theres, i think that went in early, just the size of the market and the acceleration of a handful of these businesses, but the reality is, its a very big marketspace. Its not like an established space like retail thats been around for decades and decades and decades. This is something thats transitioning just really now and changing User Behavior at a scale thats powerful. Did mobile and location turn the ad market into the local ad market at the same time . Now google and facebook can see where people are, so they can target that way. Look, local is location, its where you are. Its not what you neighborhoods are a big part of that, cities are a big part of that, but its really about you and where the user is. Thats where we see as weve invested in mobile a big advantage for anyone who has real scale there for us, we at well north of 150 million downloads of our app, as i mentioned north of 80 of our business was on that device, so were just really entering the stage where local is starting to come of age, mobile and location are a huge piece of that what percentage of consumers do you think when asked by their phone can we access your location say yes a significant percentage of them really . Yes you can understand the reticence, right of course, of course. I think the hurdle is high, and that hurdle is about value are you going to give that user a reason to hit that allow button and, you know, i think a lot of folks took that for granted because it was easy as an app developer to throw that up, but like everything else, the consumer is savvy, people are very, very smart and increasingly valuing their data at a higher level, which is good for everybody. Because it raises the bar for us as retailers thanks so much for joining us a couple analysts say that could be a game changer. Thank you so much. Make sure to check back in with us perfect straight ahead, facebook today unveiling a messenger app specifically designed for kids too young to use facebook, but some are none too pleased. Plus, the dow surging this morning on tax reform optimism, but off session highs. Were going to hear what Walter Isaacson has to say about that when squawk alley returns. You cant predict the market. But through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. 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. Hi there, im Contessa Brewer heres your cnbc news update at this hour. A video allegedly shows the slain body of the countrys former leader. Officials from various sides have confirmed the video they say he was trying to flee to saudi arabia. The United States and south korea are launching large scale joint aerial drills. The exercises come a week after north korea said it had tested its most advanced ballistic missile. Those exercises run until friday, and theyve been condemned by pyongyang as provocative. This years flu season has gotten off to a fast start four states have widespread flu activity, according to the cdc last year there were none at this time and the dominant strain this year is more severe. The aclu of Southern California honored Colin Kaepernick last night. The crowd, in fact, gave him a standing ovation after he surprised them by showing up at the annual bill of rights dinner and spoke briefly before a supportive crowd thats our cnbc news update at this hour. Lets get back to squawk alley now and carl contessa, thank you very much lets get to dominic chu and the european close dom . Carl, european stocks rallying to begin the week on optimism surrounding that push for tax reform in the United States this after coming off their third negative week in the past four a big day, though, for the german dax you can see there up by about 1. 5 the index is experiencing its best oneday performance since april as it tries to recover november losses. The dax is now up 13 so far year to date european banks are among the biggest gainers, including commerce bank, barclays, and deutsche bank. Fiatchrysler rising in italian trading, renault, bmw, daimler also in the green. Moving to the plane side of things, airbus saying it still expects to deliver a Record Number of aircraft to customers this year. A different story for dialogue semiconductor. The apple supplier tumbling of a it said the iphone maker could be working on its own Power Management chips dialogue added it saw no impact on its business next year. Finally, the pound pulling back from its highs of the session after the uk and eu both fail to strike an agreement on brexit talks during a meeting in brussels now, moments ago at a joint News Conference with uk Prime Minister theresa may, European Commission president junker said despite progress, it was not possible to reach a complete deal today the uk Prime Minister said discussions will resume before the end of the week. She expressed confidence the outcome will be positive john back over to you guys. All right, thank you, dom meanwhile, major rally under way. The dow is up more than 1 the nasdaq remains in the red, though lets get to bob pisani on the floor. Bob . Hello, john we are seeing some major rotation going on in the market. I know it looks like everything is up, the major indexes are, but youll see some changes. Let me show you the big indexes right now. Theres the transports look at that, just taking off here the russell 2000 is also on the upside, and notice the s p 500 is lagging here. Remember the transports and the russell small caps have lagged the s p 500 the entire year, but things are changing very fast. Ever since about last tuesday, this started when the tax cuts started getting very, very real. Things took off. Look, theres the transportation, thats the white line this is the last week and the bottom line, the s p 500 look at that, transports are up almost 9 , s p is up maybe 2 or so you can see the outperformance, so things are changing here as underperforming groups start doing better the other major thing you can notice is value versus growth. This is sometimes nebulous to define, but this is the vanguard growth versus value, you can buy these in etfs now. This is last week, the vanguard value on the top there, and thats growth on the bottom. You can see dramatic outperformance up about 4 on the value and growth is down slightly in the last week. What does this mean, these words value versus growth . In the context were talking about, value means mostly bank stocks and thats why the bank stocks have been doing so well recently and again today, jpmorgan, bank of america, means some consumer names like proctor and gamble, telecom like verizon and many oil names, not always, but does, exxon would be considered a value spot right now and thats also spot what is Growth Growth is mostly technology names, so your fang stocks, apples, amazons, facebook, netflix, googles all down today, but it could also include Financial Technology names, so mastercard is starting to roll over a bit, as well. Visa is also starting to show topeeness. If you look at the Tech Exchange funds, smh has been weak for several days, carl, and etfs associated with Technology Like robotics etfs, social media etfs, cybersecurity, thats hack on the bottom there, all weak today. This is quite noticeable, this rotation well talk more about it in the next few hours carl, back to you. Thank you very much, bob pisani as we said, optimism helping drive todays rally. The senates plan could bolster shares of apple, microsoft, and alphabet for more, ceo, former managing editor of time magazine, Walter Isaacson. Great to see you, good morning good morning, carl, great to see you. Discussion about what this is doing for equities, the degree it will impact job growth and competitiveness. Where are you on what this bill finally said well, obviously, its great for corporations and youre seeing that in the equity market the question will be twofold for me one, does it really help a working class thats stagnated in their wages, and you can argue either way, may be huge business and corporate growth will help boost the middle class and working class. Secondly, does it add to our longterm deficit. Theres a lot of things sunsetting, expiring, so theres some gimmicks played with that, some estimates it adds a trillion dollars to the deficit. That could be a problem, as well its interesting that donald trump could have played it either way he could have gone very populist, done a big tax cut for the working class and, you know, raised Corporate Taxes even or kept Corporate Taxes the way they were. Instead he opted to go for the Corporate Tax cut as the core of Something Like this. So well see how it plays politically. I would think it would be useful, and i thought maybe it should have been done before to have an infrastructure bill, as well, because then you can really put people back to work if you decide that everything from our air Traffic Control to our highways, and that would do something that would help bring the parties together a little bit better than this bill, which has one of its major downsides, that its a party line vote. Right well wait to see if he tries to tackle that after this, which he has suggested would be one of the things that might be next. To what degree will you be watching, walter, for public displays by companies of efforts to higher or raise wages or invest in Capital Equipment here and attribute it directly to this bill . I think we have to avoid being swayed by anecdotal things, i. E. Press conferences of companies that say were going to add 5,000 or 50,000, 500 new jobs i think you really have to be data driven, look at the numbers, see does it help wage growth i mean, wage growth is stagnated, but at themoment with unemployment low, with a big stimulus like this happening, we should see wage growth, including at the lower income, at the minimum wage level, have it be done naturally. I will try to ignore those press conferences and look at the numbers. Do you think this is the kind of two step . We had tom steyer on i think in the last hour, the Hedge Fund Billionaire whos very antitrump, by the way, saying that this is the first step in really shrinking government and Cutting Services once the revenues arent there anymore. Does this smell like that to you . Oh, absolutely, and its intentional, and you can have a philosophy either way, that government should be shrunk radically, or that we as a nation should be building more infrastructure and for that matter helping people with their health care. Those are the two great philosophies in america, and this one is directly aimed at cutting Government Spending at all levels im here in chicago, illinois, at the moment, and places like illinois, new york, california, in which there are, you know, higher sales income taxes to pay for infrastructure those states are going to get hammered in this bill because of the reduction and the deductibility of state and local. So not only does it cut federal spending and federal spending on things Like Research and Student Loans and, you know, education, but also state and local spending walter, the other topic today involves facebook unveiling this messaging app designed for kids. Its called messenger kids the app allows kids under 13 to send messages, videos, photos, and stickers to other children with permission. Facebook said it worked with hundreds of parents and child advocate groups when developing the app. Given the pressure theyve been under, alter, for how they treat data, is this politically tone deaf or not . No. I think its good they are not going to gather the data of the people under 13. I think Mark Zuckerberg has started to reflect a lot on what hes built, and this is part of a larger, i hope, trend in which well have a safer and more authenticated internet that people can choose to go to this is just for kids 13 and under, but i do think that whether its twitter, facebook, google, or whatever, you should have more control and you should have a right to authenticate the people youre dealing with, and this dangerous internet that we have now with so much anonymity and scams and hacking and, you know, the type of things that went on in the political process, thats fine we need a wild, wild anonymous internet for those that want it, but we also need a more authenticated, Safer Internet for people like me or our kids and grandkids who might want it. Even though its authenticated, you have to get parental permission and theres oversight from parents i just have a hard time believing this is a good thing for kids why do you think kids need a Facebook Messaging app if they are under 13 why does a 7 year old need this . Oh, i think that most media consumed by kids under 13 tends to be passive. Certainly, when i was growing up, even when you were growing up, it tended to be just sitting in front of a tv now on the internet its somewhat passive if you dont have the interactive tool. I think its a very good thing for 6 year olds, 8 year olds, 10 year olds to be able to be more interactive and network with people, to be more communicative, to express themselves rather than just passively consume content. Yeah. Walter, i can see a couple different sides to this. Im all for my boys, who are ones almost 7, one is 9, playing minecraft because its interactive, but i dont want them communicating with other people digitally yet, because they are just learning to communicate with people in real life teaching them the handshake, looking people in the eye. I dont want them figuring out digital protocols just yet maybe youre right and youre a parent and you have that right under this new facebook thing. I agree, but i do think to be very good in, you know, when they grow up, they are going to have to know how to communicate face to face, and also communicate digitally. This gives you a lot of control over that, and i get where youre coming from, but in some ways i would rather have a safe place for my kids to learn how to communicate digitally yeah, theres a difference, i think, probably between a messenger app, right, and having giving them access to newsfeed for kids. That would be maybe a little thats what we never had this sort of training wheels, so to speak i thought you were going to say the bad thing is for, you know, im a parent, too. I think maybe we hover too much, always what are you on, you know, controlling what my daughter got to see on the internet and do. I think a lot of 12 and 13 year olds are going to say, hey, i dont want my parents knowing everybody im communicating with, but thats the joy of turning 15 and 16, you can start to spread your wings walter, i loved your piece about why you left washington and went back to new orleans of course, dont forget walters most recent book leonardo da vinci, number one New York Times best seller. Talk to you soon, thanks thank you very much thanks for joining us as always as we head to the break, keeping an eye on the markets with todays tripledigit rally leading the dow. Jpmorgan, disney, boeing, lots of retail highs. Squawk alley back after this the moment a fish is pulled out from the water, its a race against time. And keeping it in the right conditions is the best way to get that fish to your plate safely. Bacteria can multiply to high enough levels that even cooking it will not destroy all of them. Its definitely the most important thing in my business. How fresh is the fish . Where it comes from . How it gets here. The more i know, the better. Sometimes the product arrives and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. We took our world Class Network and we developed devices to track environmental conditions. This device allows people to understand whats happening not only with the location of that asset, but also if its too hot, if its too cold, if its been dropped. Its completely unique. We ship fish, beef, poultry, vaccines, insulin. This is about monitoring and protecting everything we ship. I catch all this amazing, beautiful fish and then once its out of my hands, i have no control over what happens to it. If you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. Its really all about the network. You are looking at trillions of transactions a year. Not too Many Companies in the world can even scale to that type of volume. Who knew a tiny sensor could help keep the food chain safe . Food has to be fresh. Its that simple. Im scott walker coming up today on the Halftime Report at the top of the hour, great rotation well debate why tech continues to roll over and why the best trade of 2017 is dead or just on hold plus, has blue apron finally bottomed that stock is up huge today after one analyst makes a bold call is now finally your opportunity to get in . And is Sports Betting about to be legalized outside of las vegas . We will have the very latest as the Supreme Court hears a landmark case. As i said, 15 minutes away, top of the hour. Courtney, see you in just a bit. Thank you very much, scott, well be watching. Very interesting on the sports case, too. Cvs agreeing to buy aetna in a move designed to create onestop shopping for basic health care needs, but will it work Bertha Coombs is at the nasdaq to get us started. A lot of questions, indeed. Cvs is a big pharmacy, now analysts are asking by rolling up aetna, whats going to be the real driver of this combined firm will it be a pharmacy with Health Benefits on the side, or a benefits firm with retail on the side in a cnbc exclusive this morning on squawk box, cvs Ceo Larry Merlo and aetnas chief say they are going to leverage the 9700 cvs stores to create a new kind of hybrid, onestop shopping for simple medical care, prescriptions, and health coaching, making it simpler and cheaper for consumers. Its really the perfect time to bring these two companies together to create a new Health Care Platform that can be easier to use and less expensive for consumers. We can make the insurance the back room of the operation we can waive prior authorizations and copays as people use the system in a way thats more effective. They say this will be great particularly for medicare patients, who are also confused about how their benefits work, but to finance this 369 billion deal, cvs is borrowing 45 billion, promising investors it will be able to pay that down and bring it to more comfortable levels within the next few years. Still s p this morning putting cvs on credit watch negative, saying that the leverage will weaken cvss financial risk profile and they believe there are risks to execution given the size of the deal nonetheless, carl, they did maintain the Investment Grade rating, and thats going to be important when their bankers go out to try to sell this debt to finance this deal. Your twitter feed has been fire today, bertha, as people try to learn more about this thank you so much, Bertha Coombs record setting rallies under way. Obviously, the dow is off session highs, up 2 2. Lets get to Rick Santelli and get the santelli exchange. Hey, rick. Good morning and thanks carl. Id like to welcome my guest, david, thanks for taking the time good to be here you know, i think even when theres erroneous news stories that move the market or ultimately the vote that the senate had that passed their portion as it sits of tax policy, the markets seem to be chugging ahead through it all. What did you learn from the way the market acted friday and the way its trading today i think fridays activity is just a perfect example of trading politics, trading headlines, and having a kneejerk reaction oh, theyve stalled on the vote, but i think today is probably the more, lets say, realistic or more directional play were getting this tax bill done, and i think that the markets are responding the way they are going to continue to respond, at least for a little while, and friday to me is kind of a blip on the screen, a reaction to a headline got ya. Now, with regard to 2018, theres so many questions. We know that our fed, for example, is going to be not buying all of its runoff, even though some of it will still be purchased, but theres a whole notion and a special preoccupation these days with t bills, and i understand we have a looming debt issue most likely to be resolved but seems that issuance in 2018 may include post money market reform, more shortterm instruments your thoughts . Well, i think you are going to see much more shortterm issuance this tax bill aside in whatever its going to do to the deficit aside, the deficit was going to rise in 2018 and 19 and 20 and for the next ten years, and now with this bill its probably going to get even higher, so theres certainly going to be an increase in overall issuance, and theyve told us treasury wants to keep the average maturity where it is now, roughly 71 months. I dont think theyll be able to do that, by the way. I dont think theyll be able to sustain but youve got a combination of more shortterm issuance there are going to be more bills and twos and threes and the whole litany, and the fed probably hiking, and it seems to me that this fed wants to be, you know, somewhat more aggressive than they have been in the last, you know, say year or certainly one or two years, so i think thats going to create a risk of a significantly flatter yield curve. Now you nailed it we only have half a minute left. You know, ive had many debates with traders about the real significance of the flattening curve considering how many securities all the Central Banks open, but in your final thought it certainly seems though the notion of buying bills or putting more out in issuance really fits the flattening curve psychology finish up with that thought, sir . You know, i think we need to look at the yield curve and say is it predicting a recession i dont think its predicting recession, not yet but youve got the issuance side and a fed adhering to at least its view of the phillips curve, and so youve got the supply considerations and the fed and low inflation so, yes, at the not the end of next year but certainly throughout the course of the year i think the curve is going to get very, very flat indeed if you get fed funds for 2 , 2. 25 , i think that were talking about a yield curve 2s, 10s, 25 to 30 basis points. Wow, awful close to an inversion possibility. Thank you so much, david jon fortt, back to you. As we head to break, the techheavy nasdaq still heavy on the day. Paypal and adobe and nvidia each down more than 4 . Squawk alley is back after this cnbc caught up with some big names in hollywood in Silicon Valley last night at the breakthrough prize awards in mountianview, california, where harassment was, of course, a major topic of conversation. Heres what a few of them told us while i recognize theres problems all over, i think that the best thing that we can actually do for change is try to actually be a leader in implementing that change. Im very happy that this is happening now so that women dont have to go through the unnecessary anguish and pain thats been going on for decades. Well, i mean, i work and live in in los angeles, but its not the only industry that its happening to, and its really unfortunate. I mean, im its really unfortunate. I wouldnt know how to add to the discussion time will add to the discussion, i think, fair enough, and weve talked about the impact on immediate crashing journalism, hollywood, politics and finance, who knows there hasnt been the highprofile cases that weve seen in other industries. Not yet, but i cant imagine that its not going to come out over time, and in fact i hope it changes all industries i think we all do. Im happy were all talking about it now as uncomfortable as it can be. I think its good to bring awareness to the issue as Arianna Huffington was saying there. As crazy as it may sound. Maybe tech has something productwise, ways to anonymously report you talk about uses for block chain and the ledger allow people to report incidents that concern them anonymously and be alerted when other people report on the same person. I know, give power into the hands of the people being harassed here. Get honest, Silicon Valley. Squawk alley will be back in a minute. Dow is up 223. They came out of nowhere, sir how many of em . 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. Major indices up, obviously not as high as they were earlier today. Tow is up 223, but whats interesting in the price action is the number of issues, at least on the s p, that are up say more than 4 . Yeah. At least 30 names on the s p, up more than 4 , and from all kinds of industries, media, retail, among them. Yeah. Meanwhile, in the upside down, right, there are a number of tech stocks that are just having a horrible day. Vm wear is down 7 strong earnings last week and amd down 5. 5 whats going on there . The tax reform, just not getting the benefits of what the other sectors are getting there, a rotational play . I have no idea. Its weird. Bitcoin is the other one to watch, of course, made the cover of barrons over the weekend hit 11,8 and reports that futures may begin as early as next week. Back on the 12th of november, less than a month ago, it was at 5,868 so just about doubled since then. Wow, unbelievable action. Lets get back to the judge, headquarters and the half. And welcome to the Halftime Report. Im scott wapner our top trade this hour, rally and rotation stocks surging led by the banks, but its what is falling that continues to be a big story for your money today tech is down again raising some serious questions now about whether that sector is firmly out of favor with us for the hour today, joe terranova, josh brown, Jim Lebenthal and kevin oleary is back with us today stocks surging higher following the tax vote however, josh, its the rotation