Transcripts For CNBC Squawk Box 20171211

Looking quite strong, up over 1 this morning same thing with the shanghai composite. Then european equities right now are also in the green. The cac ass off, ftses off i spoke too soon i looked at the ftse beforehand. The ftse is up, the dax is up. Everything else is down just marginally well, here are the big stories were watching for you today. We are continuing to follow a developing story out of Southern California new evacuations have been ordered as a string of massive wildfires continue to grow the thomas fire, the biggest in the area, still on the move. Officials say the blaze is just 10 contained. Its already burned more than 360 square miles of land we will continue to follow this developing story, bring you any updates and developments as we get them. On this weeks economic agenda, tomorrow, look for the november Producer Price index. The fed also kicks off a twoday meeting. On wednesday well get cpi as well as the fed decision this latest Economic Forecast and Janet Yellens News Conference on thursday, retail sales and import prices, and then friday Industrial Production. On the earnings front, adobe systems, costco and oracle are all set to report on thursday. In political news, alabama voters head to the polls tomorrow to decide whether to elect republican candidate roy moore or Democrat Doug Jones to the senate the Moore Campaign releasing a robocall advertisement by President Trump, urging residents to get out and vote for roy moore. The president said we need that seat we need roy voting for us. Pollsters say this race is especially difficult to predict as poll respondents may not be truthful about supporting a candidate who has been accused of sexual misconduct. The newest way to bet on bitcoin has arrived. Today is the first full day that Bitcoin Futures trade on the cboe, and dom chu, bravely, as accepted this assignment this is not i mean, are you ready to move into the future . Is this something do you have a handle on this i dont so, i would admit this right now i, like many other americans and many other citizens globally, do not have a true handle on this, and that just speaks to the idea that this is a very i wouldnt say an infant market, because that implies things are just starting, but it is one where people dont have a lot of familiarity, and thats going to be a big deal for why. The futures trading idea has maybe lent a little bit of legitimacy to this idea that bitcoin could be an asset class, but theres still a healthy amount of skepticism out there, and this is also a market, by the way, as joe mentioned, that is at least for right now still trying to get its sea legs the two trading halts that we saw early on for Bitcoin Trading if you take a look at some of the prices, we did see some high swings up there. 17,500 was the last trade we saw for Bitcoin Futures on cboe, where one futures contract, unlike other futures market, is just one bitcoin so, if you look at its actually a very easy way to compare. This is a higher price than elsewhere in the market right now, the spot markets so to speak, where other exchanges that trade bitcoin are trading significantly lower than that 17,500 right now. This futures contract is also one that expires in january. As youve seen on these quotes, about 2,7002,800 contracts have traded so far. That is not exactly liquid, so were talking about 40 to 50 million in notional price, and thats in the first 12 hours of trading. There are three contracts so far that are listed. The front month being january, settlement for january prices. There are also some more thinly traded ones in february and march as well. But what it comes down to, guys, is a market has kicked off there were fireworks in terms of price appreciation but not in terms of Trading Volume yet. And so, what we can expect to see is, as more people get involved in it, whether those Trading Volumes really increase will maybe be more of a sentiment gauge about whether these futures markets are really going to be that robust. And of course, this is all ahead of the cme groups launch of Bitcoin Futures, which are slightly different because they use a different price reference to set their values, and also, the cme contracts may attract, arguably, more institutional interests because one for one, bitcoin for future for cboe, five bitcoins to one for the cme contract, so its a bigger contract. Whats the margin so, its 44 right now for the cboe ones, and its all going to depend on your broker, right . The person that youre actually going to trade these through is going to have requirements some brokers are going to let you have the ability to buy or sell, no matter what other brokers out there are going to say maybe were going to put restrictions on what you can do you cant take short positions yet. We dont know how its going to fluctuate, but theres logistics still being worked out. You cant sell the futures . Look at Interactive Brokers theyre not lettingo short them yet. 50 margin on interactive. Right i was wondering who would provide the other side you know, this is i dont know. I mean, since i traded all day long, i hope i do why cant i sell them you should be able to sell them thats what a futures market is all about, right i should be able to sell short if i want to i should be able to sell against my position if you put a margin up, i dont understand why you cant go the other way if you get the margin but it speaks to whether or not the brokers internal systems can monitor the margin effective lets formally introduce everybody. Sure. You just spoke without an introduction matthew getz, cofounder and ceo of blocktower capital. Brian kelly of Brian Kelly Capital and fast money contributors, also, sirats here let me start this way, sirat, we were just talking off camera when everybody calls you and says i need to be in this, isnt that like the high sign that youre supposed to run for the hills . It is, and its been happening over the last few weeks where friends will call and say how do i get part of bitcoin and you try to explain blockchain and they say everybodys making money in this, so how come im not in it . As we get into a liquid market, i think theres more potential for people to understand whats going on my question is, you have all these different systems going on, so will it be arbitrage or are they going to be playing this and its going to get more complicated . Yeah, it will be like any other asset class out there. Right now its incredibly inefficient. We have a young market, but bitcoins been around for eight, nine years now the trading markets are really just maturing. So it will get more complicated. More strategies will come in will we have options and all that this is the first day of futures trading. We havent had a lot but to your point about clients calling you and saying, hey, how do i get in, to me, thats a bullish sign were looking at Retail Investors in this, almost no Institutional Investors have really put any stake in this. And thats been a huge barrier, that Institutional Investors have a mandate where they cannot be in bitcoin. So you still have this potential of natural buyer or seller absolutely. But this is the reverse of what most people usually think happens, which is that somehow, the Institutional Investors leave the retail guys holding the bag, and this time, retail folks think theyre going to leave the big Institutions Holding the bag. Do you buy that i totally agree and dom put it well. Like, you have this building crescendo of volume only a few tens of millions of dollars so far. Bitcoin over the last 24 hours traded over 14 billion. So even when this starts to become shortable and people start doing that, its going to take a lot of risk capital to actually affect the market in a way thats meaningful, but we do expect this to continue to build and more liquidity to continue to come in one of the analogies that i really like is actually commodities. So, with commodities for a long time you had certain assets that werent easily held or people couldnt get exposure to it. If you wanted exposure to sugar or coffee, thats not something you can easily hold. It spoils. Theres seasonality, theres different elements to it there is no seasonality to bitcoin, but it is operationally complex and hard to hold and now people have a vehicle to do that. Can i buy it on one exchange and sell on another . Are people just doing that all day long you could. You could, but what so, the two contracts that we have, the one thats out right now for cboe and the one that comes out with the cme, are based on two different reference prices remember, a futures price like Wti Crude Oil futures are based on a certain price for crude at a certain time so if the gemini, which is the cboe price, is different than the one that the reference rate for the cme im not even trading futures here im just trading straight bitcoin in zimbabwe im saying coinbase is selling at one price and people will be doing that all day long. All day long, just do that. Thats arguably the next frontier for electronic trading and high frequency, the idea that you can move between jurisdictions. Whats the biggest arbitrage opportunity . Because there are certain exchanges where you wont be able to easily sell it if i wanted to buy in the u. S. And sell in zimbabwe because the spread is so huge, thats not really possible. Its not really possible, particularly with zimbabwe, because you have to pay a couple peoples off to get that done, so that doesnt pay off. Thats an example. But the korea u. S. Spread is usually pretty big because its really difficult once you get money into korea with capital controls to get that money back. So youll have that spread but intermarket, even between gemini and coinbase, you can see a couple percent spread, and there are major firms that are trading that arb right now. By the way, thats one of the reasons why arguably when you talk about volume driving things, the more volume comes in, the smaller those spreads arguably become. Right now theres a huge transaction cost even though they wont say it up front, about the commission side of things, there is a fairly widespread between where you can buy a bitcoin and where you can sell its been like 120 bucks overnight. And on certain exchanges, theres also a transaction fee on top of that so as you have these very fat, juicy steaks out there worth of spread, its going to attract more people into the marketplace. As more people go into the marketplace, you can see some of those transaction costs, perhaps becoming a little bit smaller because theres now competition, but you dont know whether or not it really lends the legitimacy to this idea that bitcoin and youre actually starting to see that already. So youll have arbitragers who bring together the futures and the underlying you have highfrequency traders, people using quant signals who couldnt before. You have almost a funny psychological moment where people feel like they have to be in, and now there is finally a vehicle where people can be. For those who have missed the train, and weve been using this analogy for the last year, because by the way, i missed the train on josephs trump rally, because it started at penn station. Its now in st. Barts, i think. Correct. Its turned into planes, trains, ships and made its way to sao paulo. The equator. The question i have is, to the extent you see a potential hiccup along the way or a pullback along the way for those of us who think maybe we want to be in this but maybe we dont want to be in this right now, is there some catalyst that would take you there yes. So, ill let brian comment, too. I think you havent missed any train. Its Something Like 1 of people in the world own this asset. And one good analogy that i know brian and we like to talk about, people say digital gold. We like the analogy of the offshore banking system, which is 20 trillion. Currently, all of cryptocurrency combined is a little over 400 billion. So, its still trivial relative to real fundamental demand that we can see in the world today. Wow, and it does the same thing. An order of magnitude better and cheaper. I mean, its i guess it allows you to do some things you cant always do well, its actually not well, of shore [ everyone talking at once ] listen, people have put money in switzerland theres nothing wrong with that. I just cant believe i think i heard you just say its like a buyandhold asset. Well, its hyper volatile, right . You talk about youre never going to issue gaap for it, inflate away the debt theres lots of issues with this as a true currency. But youre talking about it a currency right. I dont think anybody in the bitcoin world what is it . Its like gold. Its like digital gold. Remember, were going to have digital equities and digital commodities. This is just the tip of the spear. So we can talk about the technology, and its exciting, and the volatility, but theres more to this than just arguing whether or not this makes a good currency. We talk about bitcoin, bitcoin, bitcoin what about ethereum, ethereum classic, which they think is like the value play of these things light coin, z cash. Is there an investment thesis on buying ethereum on the basis, on the thinking that its going to be the next futures contract to be issued so, yes, weve already seen some private futures contracts being issued on that i think the relative value trade for ethereum is that this is the new internet this is a decentralized internet, and it is trading at roughly a tenth of the price, a tenth of the market cap or Network Value of bitcoin i would argue with the amount of stuff thats being built on top of it that it should be more valuable than bitcoin. Bitcoin gets a lot of headlines, but the reality is, how long is it going to take for someone to issue futures on ethereum not that long. Yeah. But its also about the size of these networks, right ethereum is a Blockchain Bitcoin has a blockchain its about how these things are used the more people who use these mechanisms, the more valuable the tokens issued off of them become. To your point, for investable, for a lot of, i think institutional and other Retail Investors, were looking at blockchain technology, the ledger technology. Doesnt matter whether its bitcoin or ethereum, and there are companies behind this, real, legitimate Companies Like microsoft, oracle, ibm, that are providing their consumers Real Technology and advice, and i think thats one way to play it without getting into the hypervolatile but thats going to be its not going to move the needle for them. Its not. So if you want to be exposed to this, thats not going to outweigh pc sales in the decline of microsoft but depending on your risk profile as to what you want to do. Right i have a practical question. Youre an investor in bitcoin through coinbase, which is i think most Retail Investors out there. Is there an arbitrage opportunity . Or what is the trade if you want to, for instance, a futures contract right now is based on gemini and the price difference between coinbases system and gemini is a couple thousand bucks. How do you take advantage of that is there a way you can take your coins from, lets just say you bought it or you have it on coinbase and geminis trading at a higher price. You can transfer your coins from coinbase to gemini and sell it there. Its because im not doing it myself it sounds very complicated. It is. It is no, im saying like on a daily basis, to be doing whatever youre doing and getting it from gemini to coinbase, back to i dont know where im just trying to understand what this is all about here. It is, again, this is early its deep end of the pool. Its not easy. Its hard. Its going to get better there are networks that are coming out like the cosmos network, thats going to allow you quickly to move things around. Where do you keep your bitcoin . In cold storage. Okay, see, this is where it gets complicated explain that. What is cold storage . It means its on a device thats not connected to the internet. So its effectively a thumb drive. Okay, so a thumb drive youre taking it off. And are you carrying it around do you have some on you right now . I do not. You put it in a safe . I put it in a safe. And you have duplicate copies i have triplicates in three different locations in disasterproof safes. And every day theyre copying the latest all my datas stored on the blockchain, which is essentially in the cloud so all i need is my private key. As soon as i plug my private key in, all my information pops up. I think its an important point to say that as investors, a lot of investors are used to being compensated for taking different types of risks, illiquidity risk or duration, whatever it is here you have operational complexity and you have quirkiness thats very real, but investors are well compensated do you keep your bitcoin under a bed . Ill echo what brian just said. Cold storage. Keeping it off of a laptop or negate all points of failure. Are you following this, joseph that was one of my questions, that if we get the big pulse, the ent, whatever it is that kim jonguns going to fry the server. And everything goes away, i thought id rather have gold and ammo, in a Zombie Apocalypse listen, there will be things more valuable than bitcoin if that happens, right . Yeah like ammo, right, absolutely but you know what, if you have any type of communication, any type of radio or satellite where theyre putting satellites up there, youre going to be able to get it. So you know, youre going to shave off a little bit of gold i dont think they have they have ive seen walkie talkies, but its very sparse, the communication. Right, right. But i mean, listen, you know, are you going to have your stocks are you going to shave off a little bit of your stocks to pay for food ets, or for any bad situation, im at the border trying to get out and im saying, i swear, i own this gold i do look, heres my statement exactly. It might be better to have the paper leafs. And listen, if youre comfortable with holding guns and ammo in your own cold storage, go for it its not cold, but its storage. Well, i mean, temperatures irrelevant, i think, right i mean, i dont know okay. You know, sometimes they say those do you keep it in a safe, like a fireproof safe . Mmhmm. They say moisture can get in those if you dont open it do you open it every two weeks . I do. There is a thirdparty cold Storage Solution that we use that uses goes back in. That would hold your bitcoin for you for institutions like us. I see theres a lot of infrastructure coming. My former employer, all sorts of people are focused on custody and prime brokage and stuff thats being built. I said earlier, all day long were talking about tax reform and bitcoin, and weve discovered a really Good Relationship between the two, why theyre happening. And i said we really havent, i said that was a joke, but now we really have, because no one knows how either one works or whats in either thing. A good friend of mine is an Investment Banking analyst at a Bulge Bracket Investment Bank and she texted me on friday, just saw your report on power lunch. By the way, it is the only thing our entire desk is talking about right now. This is an Investment Banking analyst at a Bulge Bracket Investment Bank. All that theyre talking about if you did a raise of hands on any wall street banks trading desk right now and you said at the beginning of the year versus now, how many people own bitcoin, its a majority right now, personally. Personally thats not to say its legitimate. The total size is 400 billion . Bitcoins about 270. Thats like an average size its a company. Its a company. But relative to assets, youre talking 100 trillion in investable assets. All you would need is 1 of those assets to be allocated to this and youve got a double in built coin. Right. So, its so early yeah. That seems like a lot to double. You havent missed the train yet, joe. Okay. Get on. Matthew, brian, well see you in the next half hour. Sarats hanging out for the rest of the hour. Tonight melissa and brian will be kicking off a bitcoin bonanza on fast money. They have some of the superstars of the cryptocurrency world all week long, starting at 5 00 p. M. You dont want to miss it. And tomorrow on squawk box, billionaire tech investor and bitcoin believer Chamath Palihapitiya will be our squawk guest host. Looked at . Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. The market. Redict 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. Ggp has rejected a 14 billion buyout offer from its biggest shareholder. Brookfield made a 23 a share offer for the 6 of gdp it doesnt already own. Brookfield is said to be considering a new offer for the massive mall operator. Were watching shares of hca. Hospital operateors Extension Health and providence are in merger talks a tie for the two Nonprofit Companies would deplothrone hca tech crunch apple will buy music recognition app shazam i love saying shazam sorry. For 400 million shazam. Who know who used to say that . He just passed jim neighbors. He is the guy who always says shazam, sergeant carter. The londonbased company used a database of more than 11 million acoustic fingerprints to identify music its playing near users. The app has been downloaded more than one billion times since 2009 the deal expected to be announced today. We should say i dont want to call it a takeunder but in terms of valuation this was a company that had a valuation of 1 billion 400 million would be a comedown a lot of other folks have Technology Like this the question is what does apple want with this one i imagine they would integrate with siri and all of that, but i assume its part of a branding situation. Other apple news the Company Announced that longtime executive johnny ive resumed day to day design role he stepped back from that role in 2015 in large part because he was spending a lot more time working on the design of the new headquarters and a whole other host of other projects but to see him back in the mix working on the could he vices themselves and not to say that he wasnt involved, but in terms of hands on so your friend ackman, he was totally out of this now. That was a brilliant no one else saw that was like bitcoin yeah. In terms of your kind of magnitude pennies, wasnt it . Yeah. Anyway, okay. All right experts in the field of hematology are gathering in atlanta for the annual ash conference meg terrell has a special guest. Good morning, meg. Good morning. Joining us now you guys had some of the probably most exciting data from analysts in wall street and medicines perspective here at the conference with your partner data with blue bird in multi multimyloma this is for patients that have gone through seven therapies already. These are patients who are heavily treated. In fact, theyve run out of options. The interesting thing about this technology is that it is the essence of personalized medicine patients own cells are extracted, theyre activated, and engineered to recognize a selfservice marker in myoloma the quality of responses is unbelievable we have almost 100 response rate, and at this meeting what was very different is that complete response, which is a marker for longterm outcomes like survival, is about half of all the patients treated thats unprecedented in myoloma. We use that word a lot, unprecedented, but in this case it really is another word that we dont use a lot in cancer is the word cure when do you start thinking about using that word for a disease like multimyoloma, despite the treatments, isnt curable. The immediate survival for myoloma was two years. All in now with the therapy added were going to see people live 20, 30 years without the disease. The issue is are they cured or in a chronic state of remission. This is an important meeting for you obviously from a medical stantd point, but also for an investor standpoint. You held an investor meeting last night some people have the stock is down 25 you lowered your 2020 guidance what are you doing to restore Investor Confidence . Yes thanks last night we had a very large investor event, and we outlined our hematology strategy, our therapeutic area leadership in myoloma, the establishment of a very large lymphoma opportunity. You mentioned bloomberg bio. We also have we outlined our plan for cc 122, et cetera also importantly is a diversification strategy remember, our drug ozanamod for ms will be submitted the nda will be submitted at the end of the year, and that is an opportunity for us to add neurosciences into the future. We outline seven medicines last night that we believe the opportunity has the opportunity to be approved by 2020 and be a strong growth driver for the next decade. Your biggest medicine is a blood cancer drug for multimyoloma. As you were going through the setbacks and the pipeline setback, you raised the price, an uncharacteristic third time this year by 9 . Its now 18,000 on a list price basis for 28 pills are you dependent on raising the price of that drug for growth . Thank you for that. We believe the value is representative at its current level. We are not dependent on price for our Business Model volume is the big its driver, and, again, in 2017 if one looks at the net impact on price to our business, its very modest Going Forward we think thats really priced into the drug, but there are three studies in lymphoma that were looking for levlimid then in relapse liymphoma later next year, and we still have a lot of data coming for the brand. We feel very good about its Growth Prospects without pricing. Just about out of time, but have so ask you about tax reform how important is that to celgene, and do you think it gets done . I think it does get done. For celgene it will put us in a position to use a lot of our off shore cash that right now, like a lot of multinational companies, is a little bit parked overseas and we dont have the flexibility we otherwise might. Its a good thing for america and its great for celgene all right, guys back to you. Meg, thank you, for that great conversation eli lilys stomach cancer drug met its main goal, but it failed its secondary target of improving overall survival rates. Take a look at ford stocks ford sales in china dropped 8 from a year ago. There was a 5 decline the prior month. The current Senior Vice President for nokia transformation as replacement. That stock unchanged at the moment pixars cocoa held on to the top spot at the Weekend Box Office the movie brought in more than 18 million in north american ticket sales Justice League brought in almost 10 million and was at the number two spot. It was a quiet week for new releases as major studios held off to avoid competing with star wars, which opens this week. Senator bill cassidy joins us on set after the break, and right now heres a look at last weeks s p there he is right there looking at Bitcoin Futures. Look at last weeks s p 500. Winners and losers thats when we come back and highdividend strategies. 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No one likes change particularly when you have folks that dislike trump so much that if they said close the window on a snowy day, they would say, oh, my gosh, we dont want to do it. When people open up their paycheck and they see that theres more in their paycheck, and not for everyone, but for most people, and in Corporate America thats now not competing against companies, which you have a 12 tax rate when they have a 35 arbitraging the difference there has to be something from that point of view. They havent always been antiCorporate Tax reform. In the past it seems like it was something that they could have worked on. Also and i understand the parting power likes deficits the party thats out of power suddenly hates deficits. I understand that all gets demagoguesed brks but a lot of the thing were seeing on resistance is just that resistance with hillary on the top, you see that i mean, they were sold out. You know, because i bought you bought all of this em i was giving those as gifts, obviously. It just there is a resist movement, but if you look back, theres a strong history of democrats, rightfully so, saying we have to have Corporate Tax reform. Every time you have a corporation invert, move to ireland and then come back and compete with a lower tax rate, it builds the case for Corporate Tax reform weve done it. Those companies are now not incentiveized to move overseas theyre incentiveized is there a single House Democrat that voted for it no, and there is a resist movement right now almost 500 total. I think theres a couple of questions, right one is you dont hate it that much, do you, the corporate side of things the corporate side of things i dont hate except for the cost of it, which is to say the individual. I think on the individual look, ive always said you could go down to zero if you wanted to factor ought your own new york residency in salt, but middle class its not a huge hike on middle class the middle class will do better with this, wont it, or you wont think so i think that the middle class broadly will do better on the margins. I think it will help on the margins increase wage growth i think on the margin on the margins. On a relative basis i think everyone sitting at this table will probably be the greater beneficiary and weve already seen it in terms of the in terms of your own assets youll be the winner by a long shot because you are going to see more buybacks all of that, you just have to i mean, prosperity even if it is you have to decide how you want to do it, and i do think and you may say this is selfish. I do think on the salt issue for many blue states it becomes very complicated very, very kbilk, and i think that sort of it does i wouldnt be surprised if theres movement on the salt issue. Obviously senator collins is concerned about that it has to get back through the senate her vote is critical theres republicans from states like new york, new jersey, california who have an investment in it mcconnell has indicated a willingness to move on it. I think there will be some movement on that going back to your point, yes, there is going to be things in the margin, but by definition if you have wage growth, its going to be on the margin. Its not going to be 40 its going to be 3 , 4 . Thats a lot better than weve had for the last eight years if you add to that the corporate growth that then translates into better jobs because theres more competition for workers, in louisiana i just toured a place a 5 billion project theres 60 billion in announced projects in southwest louisiana. Welders are having their wages jacked up because people are competing for a good welder to come to their site now, thats the kind of america we actually need you guys are going to do very well, i imagine, but those welders are the ones who have been hurt. Do you hear more from multinationals or companies more focused domestically . Theyre both going to win, but on the margin is there one that you hear from . I think domestic companies, if they have certainty will actually start spending. I agree with that, where i hear from both the corporates love it because they were thinking of inverting. The Small Businesses who are job growth engines, theyve loved trump since he got elected for them theres just been there has been certainty under the previous president , they just always felt like there was a gun to the head and they didnt know when it would go off. A modern day sort of democracy they just feel so comfortable now, and theyre making an investment we hear from both. You say movement on the salt issue. What do you mean what have you been hearing is it the 10,000 cap for property as well as income that weve been sort of hearing about, or what do you mean mcconnell mentioned that, and he said he was open to that, and i can imagine that theres some states relatively low and one high, and vice versa the other. New york is high in both you really go a long away there to offsetting that now you have to pay for it the president has said he is open to a higher Corporate Tax rate i dont know if thats the answer, but it could be. So the journal has a piece that the overall approval of President Trump is at lows, but that on the economy he is doing much better. Its still 42 approval. 37 disapproval. Im wondering if we were to have a continuation of this 3 gdp growth and if we were to see the stock market maintain these gaenz and do better, i still think theres i mean, there is a ceiling based on tweets or other issues that have nothing to do with the economy i guess thats the other question now that i have made that point whats going to happen whats going to happen in the Republican Party he is ahead again, i think, theoretically, and theyre saying he may even be ahead more because people wont admit theyre voting for him will he be seated, and whats the ethics the poll says he has to be seated the constitution the polls say he is going to win the constitution says he has to be seated. If im President Trump running in four years, i would say are you better off now than you were when i was elected i have heard that question. Its a good bun. Its a great question i saw one of the articles. An africanamerican woman who had been a strong democrat, but she said i have to admit, im doing a lot better since President Trump took office. Now, thats a powerful statement, and theres a lot of folks out there who under the previous eight years felt like their job was always on the chopping block and now on the margin but definitely theyre making more money. If were you there for senator frankens speech no, i watched it, but i wasnt there so if roy moore gets collected e elected, and he will be seed, does al franken follow . I dont understand why he didnt resign that day. Its like things could change, right . Is it is he going to resign i cant get inside al frankens mind, but clearly he was drummed out. He did not have to quit. He was probably told by chuck schumer, youre going to lose your committee asiepment it gives them a platform to attack trump on and tell him to resign i saw cory booker said it on friday he said, look, senator franken has done the right thing when is trump resigning . Then almost like it was coordinated. It might be i cant get inside their mind. I do think it was drummed out. There was no due process whatever you think about it, you have to have due process in our country. You cant have kangaroo courts you have to allow people to be presented with evidence and to refute it. Thanks. I didnt ask you about your bitcoin, so i did respect your privacy. Thank you all right great to see you thank you coming up when we return, the ceo of party city here to talk Holiday Retail and Consumer Spending then were going to talk tax reform with Carlos Gutierrez then we will find out where blackrock has spent billions of dollars of assets to work. Stay tuned youre watching squawk box here on cnbc back in a minute lets take a check of what will be a big day for stocks Dow Jones Industrial average looking at 47 at the open. S p looking to be up four. Nasdaq looking to add about five here at the open of course, all the talk of the town, wall street that is, Bitcoin Futures. The first contract traded 6 00 p. M. Sunday night. Opened at 15,000. It is now 17, 500, a rise of 13. 2 . Coming up, the squawk ceo call is in session jim harrison from party city is here to talk about the health of the consumer and Holiday Retail. As we head to break, a quick check of whats happening in european markets right now a wealth of information. A wealth of perspective. A wealth of opportunities. Thats the clarity you get from fidelity Wealth Management. Straightforward advice, tailored recommendations, taxefficient investing strategies, and a dedicated advisor to help you grow and protect your wealth. Fidelity Wealth Management. 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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. You may know party city for its Halloween Costumes, but the retailer wants to defy the down trend, investing in its in store experience all year. Shares of party city down more than 25 in the last year. Lets bring in the ceo, jim harrison jim, welcome good morning to you. Good morning to you as well what have you been noticing of late . Have you seen a pickup . I would imagine Fourth Quarter could be a very big quarter for party city it is Fourth Quarter includes halloween, which is our biggest season i think what we see is in our business we see a consumer thats changing. Our consumer wants the experienceal celebration years ago the focus was on decorating the room, decorating the table. Now its doing those things plus decorating yourselves. The biggest change in our business really has been the development of wearables by virtue of our virtual model you mean costumes head boppers, tshirts, ugly sweaters by virtue of our vertical model where we manufacture roughly 30 much storz and about 40 of our total line is our Consumer Products business on a standalone basis is as big as our retail business, we are seeing that consumer really want to get pictures of themselves celebration doing a celebration. Oftentimes its on cruise ships. Its in theme parks. Its in zoos its in chuck e. Cheese. Its virtually anywhere you can get a gathering and create an experience im sure where your own boys you see that they want to go to the play centers. They want to go places and wear stuff this is true some people decorating the house you have been wearing ugly sweaters how ahead were you on the ugly sweater trend i have been ugly sweaters since you didnt really until just now. You remember the squawk ugly sweaters not the sweater not the sorkin sweater lets bring out the sweaters christmas week thats next week have you thought about it i just figured, you know, i had. Do we have the animation ready . Sweater of the month sweater of the month. We need to do a sweater of the month club swert of tater of a month clb you get a box, and you get a sweater every month. I believe am all for it. How much would you charge for the box . 25 what kind of sweater is that . Acryl acrylic. A really ugly sweater something that you probably will like dont get near a candle with that thing you mentioned cruise ships and chuck e. Cheese and all sorts of outlets like that is your consumer all individual consumers, or have they also been companies both. We have whats the breakdown . So if i said to you were all do 400 million this year. What percentage of our do you think comes from Retail Stores on a standalone basis everybody else points to the score, right 20. 25 75 of our profitability actually comes from our vertical model and our b to b business. Is there a margin there varied. Were doing white label for other folks and shipping to their consumer, its good margin we have a 60 plus market share in metallic balloons which we manufacture in minnesota its an extraordinariably profitable business. The 25 that is the consumer like us, like we go sbo you are stort and buy an ugly sweater, streamers, et cetera, how much pressure is that side of the business under right now i would imagine a lot of people going alzblon and type of streamers and have party hats and buy from amazon. Our category party good category because its such low adr and there are coordinating schemes, it really is pretty much has a moat around it with respect to ecommerce prices cant be much lower . Its a very difficult business to manage it coordinates when you go tore for a babys first birthday or baby shower, the icon drives the buy, and the icon drives all the associated product that you buy and builds the basket managing that inventory and because we do manufacturer and because we do source, we have over 500 people in asia on the sourcing departments its a very difficult category to be in most of the party goods, Halloween Costumes are a little different. Hall even costume is an item last year andrew bought his monkey suit on amazon. To this day i still hold that against you, just sow know so you know. We broke out the monkey suit this weekend, as it happens. I have a monkey suit myself yourself . Yeah. My son was Walking Around in the monkey you mean like a tux no, like a furry big literally a monkey. Yeah. You know what, i got a picture of it. Ill show you during the commercial break we should make it a graphic to show the world. I dont know about that jim harrison, thank you very much my pleasure huh. Party city. Thanks, of course, to saarat for joining us well see you. Coming up, Bitcoin Futures launching on the cboe last night, leaping by as much as 21 . More details straighahd. T ea sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Hello there friend hi hey there. Im an Imaginary Friend of a kid just like you. Youre going through a lot right now and i know youre scared. But youre stronger than you know. But look, well get through this together. And remember. We at the Imaginary Friends society always have your back Bitcoin Futures surging the highly anticipated debut were digging in on the crypto currencys latest bounce to try and at least figure it out a little bit plus, the worlds large its Money Management firm joins us to discuss where they plan on making money in 2018 black rocks global chief Investment Officer richard colonel is here. And then you may remember him as the iconic bully scud farcas from the holiday classic christmas story. Remember that movie now . Actor zach ward is running the worlds first sports Stock Exchange he is here to tell us about it as the second hour of squawk box begins right now. [ laughing ] scott farcas where. What a rotten name. We were trapped. There he stood between us and the alley. With his yellow eyes he had yellow eyes so help me, yellow eyes. Live from the beating heart of business, new york city this is squawk box. Good morning. Welcome back to squawk box here on cnbc worry live at the Nasdaq Market tooit in times square. Im Andrew Ross Sorkin along with melissa lee becky has the day off. Joe kernan also with us, of course take a look at whats going on in the futures this morning. We do have some green arrows dow looks like it would open up higher about 44 points higher right now. S p 500 looking to open about 3. 5 points higher. The nasdaq up about four points. A number of headlines to tell you about. Today the socalled green monday store with the Biggest Online shopping day of december ebay first coined that term. Its traditionally the day they need to order gifts in order to get them in time tore christmas. I dont know about you around the table. Is everybody on board with that . No in terms of getting gifts on time are you on time yes, hopefully, yeah. Joes ever i only have one person i worry about, and i havent decided what i want yet. No, no yeah you know, youre the same way, arent you yes then she handles everything else, doesnt she . The boss. Yes the boss. We got to the thing is, though, that it gets if you are using jewelry, you got christmas, valentines day, anniversary, birthday. I gave her a nice vacuum once exercise bicycle thats not thats why imauto not sure about the bitcoin stick with the jewelry. Jewelry always safe mine likes shoes too. Thats hard harder. A Gift Certificate for shoes maybe. I dont think people use Gift Certificates anymore you cant pick out shoes, can you . No. Look at his sweaters. He wouldnt be picking out shoes. Thank you very little thank you very little. In Corporate News mall operator ggp has rejected a 4. 8 billion buyout offer from its biggest shareholder Brookfield Property partners brook fooed made a 23 per share offer for the 66 ggp already owned. It is said to be considering the new offer, and we had mentioned earlier blackfield does not own any ggp for him. That was probably one of his biggest wins ever. Also, acention health in talks about a merger the journal reporting tie between the two catholic nonprofits will create the largest u. S. Hospital chain. Hch health care holds that title currently. Its just one of the big pieces of Health Care Transactions weve been seeing over the past couple of weeks and months were continuing to follow that developing story out of california Southern California in this case new evacuations at the border as a string of massive wildfires continues to grow. The blaze is just 10 contained. Its already burned more than 360 square miles of land that will continue to follow the story and bring you any updates as we get them well, Bitcoin Futures went live last night. The crypto currency moving higher this morning along with futures contract dom chu has the very latest. We are watching the prices move higher right now. The issue is whether or not we are seeing the volume backing up you take a look at the chart for bitcoin prices they have seen very steady moves higher over the course of the trading session. Weve seen two halts in trading in the early hours of that particular trade where bit coin futures on the cboe. We did go as high, and im looking on the cnbc website right now because you can go and see those prices for futures on there. 15,420 was the low of the day so far. 18,850 was the high. Now, albeit, theres only around 2800, 2900 contracts of this overall right now. Were not talking a deeper liquid market. Still, its about 50 million worth of notional. On the cboe its one bitcoin versus one future. This is for january expiration at a future date and price thats where the market at least stands right now the issue really comes down to whether or not we will see any more participation in this market because there is now an Exchange Traded mechanism beyond the decentralized spot market for bitcoin. Now that the cboe is launching theirs last night and then we see cme launching theirs this week as well, its going to be a real dynamic change. Is it going to be retail focused traders or thats the wreen e reason why everybody cares right now. The price has been pretty severe albeit on low volumes. The house of bitcoin here on squawk for more on bitcoins wild ride is marcus from the wall street journal. Money beat blog, and host of the daily money beat Program Author of the age of crypto currency how bitcoin and digital money are challenging Global Economic border in the new book on the truth machine, which is out in february here brian kelly of Brian Kelly Capital First Investment and contributor talking about bitcoin all morning. Im just going to ask you the same question that we asked in the last hour, which is theres a lot of people who want to jump into this. Everybody thinks that were in a bubble or theres some kind of what would be the trigger, the Tipping Point that would tip it back the opposite way to the extent you mean. In terms of price if you Say Something is going on here, i want to wait it out. Im not saying thats the right move, and im curious if it is, but what everyone is curious if it is. Whats the down side story . The down side story is probably that you now have more money coming in, but not much changing with bitcoin fundamentally. People still not really using it, and, again, brian, im seeing heres the down side story, brian weve earned the health side story. I mean, the down side story would be that people arent really using it for anything other than speculating its not really becoming a part of the day to day economy. That maybe isnt really built for this moment. Okay. So, you know, im not saying that will happen i dont know do you think there are other currencies about built for this moment the way that bitcoin isnt . You mean etherium. They all want to scale up and become bigger morrow bust currencies something that people can use. It is impossible to say whether or not any of that will really happen bitcoin very well could work im not saying its not going to thats the down side you hear about robberies or thefts or hacks or something that could clearly send these things into a spiral wrrn. Yeah. Those are the risks, right people dont understand that piece of it, though. How does that when people see that bitcoin has been where theres been theft, we just had a report about that last week. What does that really mean it what is on the chain . Right if youre scoring your we talked about private keys, and the private key is the way if you hold your private key, that is your bearer at et you own the asset if you hold that if you put your private key in a Cloud Storage, whether it is in an exchange or ear other Cloud Storage device and that third party gets hacked and they steal your private keys its gone then its gone its gone. This is a selfsovereign asset, meaning you hold it, its a bearer instrument. There are regulations, but what percentage if its gone, its gone. What percentage of retail ireier that are playing this have their key living up in the cloud relative to living on some other i would say most of them. There is something called coin base vault, and thats much safer. There is a commission for that, but its worth it. What are the to get in and out of this . Theyre high. 4 on the way in. 4 on the way out. This is not stock trading at 7. 95 for unlimited there is a lot to it there is operational complexity. Theres the storage aspect of it i think theyre about 1 or so if i remember. I would also point out this is such an early stage for this market for transacting we talk about the exchange of bitcoin and the exchange of cold story. I can give melissa or you Something Else using just bar codes, and we can send them through a retailer the transaction costs are actually pretty high not just theres a huge spread between bit between where you can buy and sell them, and then theres transaction fees on either end on top of that you are talking about a market where a lot of people are in it because they can make a decent amount of spread for the transaction. Is there anything historical anything that you could look back on . I mean, bitcoin is dwrofl any other kind of currency or something where you look and say theres a parallel here . In terms of when people were investing in it relative to when he were this using it as a currency or at a stored goal or however you want to its certainly like a currency, like a but its not really like that i mean, i was thinking about it. Its what you were talking about at the beginning you look at this, and the market is something weve had grown up in markets that look normal to us, right, and you see it mover in a short amount of time. Theres no way that this bitcoin isnt really something weve seen it really is a new thing this is really what were going to be when it grows up it really is kind of hard to say, oh, yeah, this is just like that thing back then well, people like compare it to just because of the skyrocketing price thats sort of i think where again, thats the mania aspect of it does it does it parallel the asset itself thats what im saying. In terms of would there be a better parallel with gold in the days of the gold rush, and here we are in those days where things are very early. Its difficult to mine everybody wants in on it, but then if you extrapolate farther out its a store value, but its not bring a bar gold to a store to buy a pair of shoes i think its very much like gold and the commodities thats how i looked at it. I mean, my background is a global macrotrader. I looked at this and said, you know what, this is like commodities. People didnt understand it. It was hard to store gold coming out of the brenton woods, and now all of a sudden its free trading. That was wide spreads, and it was the wild west when people said you use it for crazy things heres my followon question. As gold became more easily tradeable, some would argue that with the coming of the gld and different ways of trading it, there was more pressure on the price because it was more easily tradeable and more liquid. Is that are we on the edge of that with bitcoin and crypto currencies with futures coming, the po teshlglytentially etfs r cryptocurrencies as well you can look at it like the 1980s when futures really took off on all these commodities, and you start to see some of the volatility come down, which is a good thing, and may get us to be able to use more of the currency i think youll see that. I also think youll see the marketplace mature, and youll have a lot of different option strategies and future strategies being traded here. Youll have a lot more to do here its, again i would say look at the 80s and futures and what people did there and where they are today, and thats what were doing thats the point in time were at. Last question, just in terms of the way people are planning to use this. The u. S. The people have their own issues, but i feel like were not having an International Conversation about people that are actually using this and thinking about it in not a speculative way, but thinking about this in a way which is to say i dont trust my own currency what percentage of people out there in the past couple of weeks do you think are those people, or do you really think thats it, im talking thats a misnomer if you look at that as well in zimbabwe and in china to some extent i think its probably my guess would be less than 5 , but i would say many of the people are based in new york and california no. Actually, japan and korea. Japan and korea asia. It is being used its starting to be used in the supply chain i have heard of people selling iron ore from brazil into china, and instead of waiting a week and get a letter of credit for a bank to settle that contract, theyre using bitcoin. In the past week that would be a good deal yeah. They do it instantly, right . Then theyre theyll turn it from real to bitcoin and bitcoin to there was a time when Richard Branson was accepting bitcoin for Virgin Galactic flights. He was accepting the bitcoin, and ten seconds later turning it into dollars of course but this is think of it as eye new type of Financial System, right . An upgraded Financial System weve had 600 years of a centralized Financial System from when they would hold the ledger now we have it automated now its software. Thats whats going on my dry cleeaner still wont take it. Everyone is focused on the price right now. It feels fun, and people want to get in, but what brian is talking about, this is a real promising thing. Its a technology. You look at it its a technology. To the extent it allows people to do that on a much larger scale globally like youre talking about, thats whats really interesting do you own some no. No. I still own my 5, which turned into 100 programming note melissa and brian will have some of the superstars of the crypto currency world all weeklong. You dont want to many it. Tomorrow on squawk box billionaire tech investor and bitcoin believer Chamath Palihapitiya, author of the warriors and former guest host Carlos Gutierrez discusses tax and trade policy right after this the break, and later the 2018 outlook for stocks. Global chief investment strategist joins us. You may remember him as the bully in the traditional holiday movie the christmas story. E rszach ward heads thfit Stock Exchange you are watching squawk box on cnbc i think we should do that meeting tomorrow. Well wait. What did you think about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. A lot of answers. Efforts to renagt nafta may be approaching a breaking point joining us now for more on trade talks carl yoets gutierrez, Albright Stonebridge group chair and a former Congress Secretary under president bush 41 or 43 w. Exactly. Weve had this has been episodic not individual appearances about nafta. In the past weve spoken to you, and you have raised a little bit of concern about what the outcome could be has it been moving in a way that you think is favorable to the United States . Its going a lot worse than anyone thought worse than before yeah. Two months ago i think most people would have said this would be a tough negotiation, but theres no way that nafta would go away. Yes i wouldnt say that today all it is signs are that the u. S. Is willing to walk away people feel that the demands on the table are so strong, and the u. S. Wants to walk away. Theyre going very badly i mean, this is something that were not paying a lot of attention to, but nafta could go away what were telling clients is have a plan b. At the end its the president who will milwaukee the call, and theres something motivational perhaps to him to be able to say that i was the man who did it. I was the only president who had the guts to get rid of nafta is there a way that this is still tough negotiations that results in something thats positive for the United States that we well, of course of course. There is an ecommerce chapter theres a lot to update on nafta and a lot that can benefit the u. S. What wont benefit the u. S. Is getting rid of nafta you know, thats the thing what worries me is were so focused on trade deficits and bringing back manufacturing. Bringing back manufacturing of industries that, you know, in ten years may not be growth industries, but were not talking about new industries we have kind of a 1980s trade agenda, and everyone else you go to korea i was just in japan, singapore recently. Everyone is investing in robotics, a. I. I mean, theyre getting ready for the future theyre getting ready for the jobs of the future were bringing back steel. You know, its a concern i would just say that the United States in terms of watching free markets and having a vibrant economy and still have a great educational system, i would think that some of the concerns would take care of themselves im sure well at the forefront of a lot of those industries i think because we have such a vibrant private sector, because our culture is one of taking risk, entrepreneurialism, you know, fail, try again. Thats the u. S. Culture. This is the only country in the world where if you call someone competitive, its a compliment then at the same time we want to cut high skilled immigration in half you know, these things in isolation are they dont connect. Does plan b involve setting aside capital that you maybe use today in order to prepare for the plan b plan b would be dismantling supply chains, taking huge writeoffs, figuring out where you are going to manufacture probably take price increases. It would be a disruption that i dont believe the market has really priced in weve had our minds on other things it would be tremendously disruptive what in your view would be the plan b i would say today ill play it safe and be 5050 50. I wouldnt have said 5050 i mean, 5050 is a max, but what it says to me is that its possible its possible we would leave nafta, and the president has to withdraw the period, and that would give maximum leverage in the negotiation in a sixmonth period the mexicans have said were not coming to the table if you trigger the six months its getting worse its bad the world esalargest Money Management firm, the global chief strategist of blackrock jienz us after the break this is not a cloud. This is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for business. Yours. Directv has been rated number one in Customer Satisfaction over cable for 17 years running. But some people still like cable. Just like some people like wet grocery bags. Getting a bad haircut. Overcrowded trains. Turnstiles that dont turn. And spilling coffee on themselves. But for everyone else, theres directv. For 1 rated Customer Satisfaction over cable, switch to directv. And for a limited time get a 100 reward card. Call 1800directv were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. 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. 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. Among the stories front and center apple is reportedly buying music recognition app shazam for 400 million. The londonbased company uses the datesa base of more than 1 1 million acoustic fingerprints to identify music thats playing near users diz in i and pixars coco holding on to the top spot at the Weekend Box Office, and we bring in more than 18 Million Dollars in north american ticket sales, according to comscore. Saudi arabia announcing movie theaters will open in the kingdom next year. This will be the first time in more than 35 years that cinemas will be allowed. The first theaters are expected to welcome customers in march. Its really hard to know how that plays out for one thing, i dont think individual vefrz with individual stocks harvesting tax losses are as big a part of the market as they used to be, and were waiting to see what 2018 tax stream will be whats interesting is we had this little bump at the beginning of december in the indexes. It went totally away you look at the last four days of last week it was completely the 2017 pattern reemerging. Small daily gains. Tech and industrials leading very low volatility. We have the volatility index down below ten again in 2017 thats where it belongs because its basically been the calmest year on record were not even going to have a 3 pullback from a high to a low on a closing basis all year it looks like, so it this week the last chance for fireworks in terms of volatility . Fed meeting, European Central bank meeting obviously, a little bit of suspense on tax cut details. I doubt its a great bet to say that volatility will take off right now. The interesting thing is what it might mean for the 2018 utlook thats i think all the strategists say kind of more of the same, but nobody is very aggressive about their targets at all nobody thinks its going to be necessarily big up side, and the surprise could be, guys, that how long the good news can stay good for the markets because i think thats what were puzzling out, right if we get a little built of a rush of Capital Spending or a little bit of shareholder friendly action from the tax cuts, does that stay a good news about story or does it start to run too hot . Its hard to harvest losses this year. Well, heres thats where ge would be so if you owned some of that, it would be so great. Theres no doubt about it theres a lot of actually, i think one in four stocks in the s p 500 is down yeartodate, and thats a sign of how you basically had well, its not so much narrow, but its selective its not been this universal all boats rising how do you think that might be impacting individuals its not necessarily harvesting gains. Not just harvesting losses, but its also harvesting gains, correct . You have to have kind of gains to set against the losses, right . If you wanted to sell apple, for instance, and you owned apple over time for ten years well, what you have is an enormous amount of gains you probably dont have the losses to offset honestly, i think investors are just hoping that it doesnt actually get put into law. Therefore, lets not act on it before that point. Mike, thanks. Mike san totoli joining us now the managing director of global chief investment strategist at blackrock. Richard, great to have you with us good to be here thank you. Whats your outlook for 2018 for the u. S. Equities . Weve still got a positive outlook for next year. One of the key themes, we think, will be droifg markets is just how much room there is to run, and that apologize both to the economy, both the u. S. And global economy, but also to the markets themselves were seeing very broadbased global growth. Were seeing stable growth particularly in the u. S. Were seeing none of the signs of the economy moving into late cycles to us that implies potentially the cycle that has years to run. For investors we still recommend a longterm view, and that longterm view in implies investing in the ssets, which still have material up side, and that means equities. Within equities, it implies International Stocks and particularly emerging markets. Snoo in terms of the 2018 outlook, im just curious, do you factor in the possibility of tax reform and does that present up side to your 2018 outlook where does infrastructure stand, for instance there are these legislative measures that could potentially put fuel on this rally although International Stocks to the u. S. , we still see lots of areas in the u. S. Equity market that look very attractive to us. Those include Technology Stocks and financial stocks its clear that some tax cuts are already in the price in the u. S. Thats part of the reason why the u. S. Market trades at a higher valuation than other stocks any significant tax cut thats already priced in could provide a shortterm boost for the market Going Forward, although what we think the market is really going to be focussing on is earnings Going Forward. Youve had really very significant earnings surprises this year in many sectors. I think they are going to become more scarce. Thats where we think technology and financials looks we see earnings upside in both those sectors. Im curious what your outlook was for u. S. Equities a year ago. Thats really been the focus on almost perfect environment this year for investing, and the growth is surprised on the upside inflation and rates have typically surprised on the down side many of the risks that markets were focused on at the beginning of this year failed to materialize, so we saw this big lift in assets over the course of the year. Now, were clearly starting or going into 2018 with higher valuations, so theres more in the price. There are some different risks i think we need to think about it Going Forward in particular, trade risks focus on nafta being one particular area chineseu. S. Trade being another. The potential for some slowdown in some parts of the world, notably china, coming through. Finally, we as we get Interest Rates normalizing in the u. S. , i think the implications of the fed starting to reduce its Balance Sheet are still uncertain. I think theres a number of reasons to be a little bit more cautious Going Forward compared to the spectacular returns we had this year, but that still leaves us favoring equities and particularly equities over credit for 2018. All right richard, great to speak with you. Thank you for your time. Coming up, he played scud farcas, the bully in the 1983 perennial holiday movie a christmas story. Now zach ward is taking his talent to the world of investing. The actor and ceo of Global Sports Financial Exchange will join us right after the break. Squawk returns in a moment retail. Is can real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. What we do every night is like something out of a strange dream. Except that the next morning. It all makes sense. Fedex powers Global Commerce with vast, farreaching networks. Deep knowledge of industries. And, yes. Maybe a little magic. Its now a way to mix money and sports without betting the Global Sports Financial Exchange is the worlds first market for trading pro teams users buy and sell teams like they would on a Public Market and profit off of dividends if they win joining us now is zack ward, ceo of Global Sports Financial Exchange he looks familiar from the iconic christmas story with what is the little kids name . Ralphy. Ralphy. Ralphy and Aaron Mcgavin was in it, and you were just incorrigibe encourageab encourageable. I was the bully skip farcas i stayed locked in my basement for the last 34 years you are still trotting the hat out, which we love you have an icon on your head and its kind of awesome andrew would normally put that on. Thats not a real dead animal. Oh, no. This is a recycled fox a friend of mine made it turned into a hat. They took old furs from the 1920s and turned it into a hat this is you got a good start from scratch with how this works. So you pick maybe hopefully not just your Favorite Team if i picked the bengals i would be bankrupt any time in all four leagues. You buy shares in that team. This if they win that team, then the share goes up, and you get paid dividends if they lose that game, then the shar shares go down, but you still own all the shares then they play their next game, and the shares go up and down. Up and down and up and down. So its not actually betting. No. You dont need certain regulatory approval. Thats the whole thing that were going through now is that were going to move into regulated market thats been the whole process. Weve been up for about three years with the beta in the pilot market, and were at a market cap of 1. 2 billion right now thats a combined learning market, so thats all not real money. You go on, and you can sort of understanding and investing right now. Like simulated sort of. Yeah. The pilot market is actually real money, but for people who love sports and are intimidated by the idea of the stock market, they can take that knowledge and use that on this exchange and see how it benefits them and their family do the shares go up and down because there are buyers and sellers, or there are exactly is there enough liquidity to have that happen yeah. The liquidity exchanging as we have more people coming on board. You can actually short as well and its not just winning games, right if theres a draft pick or something. What else can make it it can affect the way people interact with that team. Its just like samsung or iphone you know, you start hearing, oh, the batteries are exploding on planes people have a discussion about it stock goes down. Draft picks what happened to the eagles yesterday . They won, but carson wentz might be out exactly i dont know the market is going to make the decision on how those shares change value thats the nice thing. You decide just like the new york Stock Exchange does what you are willing to pay for the share and what you are willing to sell it for you can only put so much money in, right . Yeah. Especially right now because as the pilot market, the cap is 2,500 if you go to the learning markets, you join up, and you get 2,500 in learning capital its not real money. If you go to pilot market, you can put up to 2,500 per year. So i could short the bengals. And still make money. And still be supporting them emotionally. He has given up on them now im trying to just even twist the knife even yeah just so frustrating. Okay you have one individual that actually has dividend income, right . He is so good at it pays dividends at the end of every he has made 100,000 . It pays dividends at the end of every single quarter. You can make very good money at it right now, like i said, weve been going for about three years, and were moving to go towards the regulatory process everything is 100 transparent how are the share prices determined for a company if theres market capitalization, theres a public process. How in the beginning now for these beta, its the ipos start with us. Whether its the learning market or its the pilot market, if were launching the eagles, whatever team it is, ipo, then that money Purchase Price goes to the exchange. Thats put out a whole four dividends in the real world most of that would be going to the actual teams then parts of it would be held for the dividends and parts of it would be held for the exchange to pay out. Thats how the ipo has started when we started i think it was three years ago we are at it 100 million market cap. Again, its part of that that is a learning currency. Its been around for 150 years. Then theres a lot of games a lot of games. A lot of games so for companies out there who, you know, would like to be in the Sports Betting game but because of regulatory reasons cannot, whatsoever moat do you have around you or is there a risk that a competing Stock Exchange lets say you are the nyse and a nasdaq could pop up we have roughly about 178 patents in 140 countries weve gone through a whole bunch of regulatory process with taking technology to the sec and cftc and having them look at what weve made and signing off on it. If anyone ever does score a goal, actually pay a dividend everybody starts instead of all 00, that could be a big payoff. Yeah. Absolutely people get so mad i always needle them about the or, you know what, the way those guys act when they get hurt, but then theyre playing get that that should be worth. I love there was one guy that grabbed the other guys hand and smacked himself in the face and fell on the ground. Funny. Thank you hey, my pleasure. Guys, we have some news we just want to bring you right now, and its actually right near here. New york city officials confirming an explosion near 42nd street and eighth avenue. We should tell you right now we are on two blocks away Seventh Avenue here ask just one block over multiple ambulances have been requested. We did hear that too. We heard it. Its not known right now if its gas, something nor nepharious or Something Else well bring you the news as we get more of it in the meantime, coming up, stocks you need to watch ahead of the open on wall street, and plus, you are looking at bitcoin. After futures went live last night. This is the priets of bitcoin on the bit Stamp Exchange its up 11 . 16, 302. Much more on the crypto rrcycuen coming up in the next hour squawk box will be right back. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Buried just under the surface, the answer to it all. We want to need each other. I thyou never got the brakes looked at . L. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. Welcome back we had breaking news for you an explosion at 42nd street and eighth avenue. Thats right where the Port Authority is well show you live images of whats taking place right now. We are still trying to get word of exactly whats happened, but there has been requests for ambulances of course, police making their way to that scene. Youre seeing as we said, live images there we should tell you that our studio right here at the nasdaq is just a block and a half away from that location were right near on 43rd and between seventh and broadway there, and this is just a block over the Port Authority, of course, tens if not hundreds of thousands of travellers coming through commuters at this time. Every morning on their way to work we are going to watch this of course, there has been no word on exactly the explosion itself or whether theres gas or other kind of nefarious things taking place of course, concerning for everybody. We will bring you more as we learn it we have some interesting things coming up that we can talk about in about six minutes. In the meantime, though, stocks to up away today ggp, general growth, is reportedly rejecting a 14. 8 billion buyout from its biggest shareholder, Brookfield Property partners brookfield made a 23 a share offer for the 66 of gdp it doesnt already own. Brookfield said to be considering a new offer for the mall operator. Nokias chief operating officer is leaving the company the Telecom Network equipment maker naming its current Senior Vice President for nokia transformation as the replacement. On this weeks economic agenda, tomorrow you got to look for november Producer Price index. The fed also kicking off a twoday meeting. Then on wednesday we get cpi as well as the fed decision its the latest Economic Forecast Janet Yellens News Conference on thursday. Retail sales and import prices and then on friday Industrial Production on the earnings front, adobe systems, costco, and oracle all set to report on thursday. Just want to bring you one other piece of news we talked about that explosion just moments ago. Trains have now been stopped and evacuated for the ac and e lines. For those of you commuting this morning, a, keep an eye on that, and, b, were going to watch and try to understand what is taking place this morning with this very scary news. When we return, we will bring you more of that news. Plus, we have a first on cnbc interview. Nfl commissioner Roger Goodell will join us along with verizon ceo Lowell Mcadams theyre hanging out right there in the greenroom right now take a quick look at futures we have been in the green all morning. We come down a little bit there on the dow dow took it open about 30 points higher nasdaq up 7. 5 points s p 500 up two points. Were back with those interviews and, of course, this news on 42nd and eighth avenue this morning. That knows the weather down to the square block. This is a diamond tracked on a blockchain protected against fraud, theft and trafficking. This is a financial Transaction Secure from hacks and threats others cant see. This is a patients medical history made secure while Still Available to their doctor at their fingertips. This is an asteroid livestreamed to millions of viewers from 220 miles above earth. This is ai trained by experts in 20 industries. Your industry. Hello. This is not the cloud you know. This is the ibm cloud. Designed for your data. Ai ready. Secure to the core. The ibm cloud is the cloud for business. Yours. Good morning. Welcome back to squawk box. Were live from the Nasdaq Market site in times square. Im joe kernan along with Andrew Ross Sorkin and melissa lee, and we are in times square, which happens to be located to the big story that we have we have reporters on the way to the scene right now. We should tell you ambulances have been requested and are en route along with police. Youre seeing those images right now. We want to bring in jeff lanza, former fbi agents. Always early at this point to describe what has happened here, but your first thought about these things, sadly, is oftentimes terrorism jeff yeah. That would be the first conclusion that you might make a lot of investigation, of course, has to be done the first thing that First Responders do in a case like this is get aid to the people that might be injured and try to clear the area to make sure theres no other explosive devices or maybe an ambulance situation. They have to make sure that theyre safe as well going into wherever the explosion occurred. Thats the first thing help the wounded make sure theres no other danger, and then conduct the investigation and see what caused the explosion, who may be claiming responsibility for it big piece of the puzzle is going to be any kind of video cameras that are there at the scene that may be used for Surveillance Video that may determine who is there, who may be behind whatever exploded at that site help us understand this at this moment clearly everybody is rushing to this particular scene, but if you are inside the nypd and the fbi, are you looking at other locations in new york city on a morning like this well, absolutely. I mean, just because, you know, there may be other really you would have to look at and see if theres someone responsible pour this, number one. If theyre a threat to put it in those places absolutely i mean, just because theres you got one side doesnt mean there might be other sides as well the key is you really have to immediately get the Surveillance Video. Immediately talk to what this is, and that might be who is responsible for it, and then you can look and see if theres other places that may have also placed explosive devices jeff, we obviously dont know what has happened at this hour just yet, but there are hundreds of thousands, if not a Million People on their way to work this morning inside new york city if you were leaving your home right now, would you be . Well, yeah. I mean, you cant new york is a big city i mean, you cant just stop the whole machinery of new york city because of this event. Unless theres some sort of evidence or some sort of information that there might be additional devices i mean, you know, what are you going to do . You got to get to the heart of the investigation. Thats what authorities are trying to do right now, but you cant stop new york city at the same time, jeff, we are hearing already that a subway line has closed the ace train. Thats a very difficult thing to do in a place like new york city, whereas andrew mentioned, a lot of commuters are on their way to work or in midcommute at this point what do you anticipate will unfold over the next half hour or so in new york as we try and get a handle on, a, whats going on and, b, how to protect other incidents that may be in the works from happening the police have to determine along with the fbi, other agencies that might be involved, this is an isolated incident or if theres additional threats. If thats the case, they have to figure out what used to be closed, but we cant jump to those conclusions yet and shut down anything unless theres some kind of evidence that there might be additional devices planted. We cant go there yet, but we do have to determine who was involved they can pull those Surveillance Videos pretty quick, and they can figure something out and determine if there are additional threats around the city short of that, theyre not going to be closing additional subways unless theres some kind of evidence that there might be a threat in those areas. All right jeff, thanks for being available to us on such short notice we appreciate it jeff lanza, former fbi agent lets bring in Bertha Coombs what can you tell us from where you are . From where i am at the moment, its i can tell you that i have seen a number of ambulances when i have seen a number of the emt workers work back with their equipment on their stretchers it doesnt appear as though they were needed in terms of people injured. I will tell you that i was on the subway and the announcement came over that basically all of the lines in times square are closed both in, coming uptown, coming downtown, coming out from the outer boroughs as well this is a major transportation hub. You have the Port Authority bus station that is there. That right now is impacted the entire corner, just a block from where you are, is shut down at the moment. At in point i cant see if you are familiar with new york city and times square, this is just to the west of the heart of times square where the nasdaq is its where the Port Authority bus station is the New York Times is just right on that corner as well there are a couple of big movie theaters its an area where you have a lot of hotels. The weston is right here you do have a lot of tourists in this area, and a lot of commuters coming in and out. It is becoming very much a difficult scene for commuters as police send traffic elsewhere away from this corner. Okay. So we are seeing that there is a suspect in the Port Authority incident, and theyre in custody at this point according to reuters. Multiple yeetd outlets a suspect in the incident is in custody, so that seems to rule out a gas explosion at this point. We should also note that wawbc news is siting a few injuries reported in the incident at new yorks Port Authority. A few injuries right now well hope that stays adds low as it sounds bertha is reporting and its indicated to some extent, good if we can just take a quick check. We are seeing a reaction in the markets on this. Okay. We saw the futures pair exchange the s p00 indicating an open up four its hacked off a touch. You can see the movement in the dollar the dollar hitting a low against the yen. A bid for safety in terms of the currency markets and as far as bonds go, we are seeing a reach for bonds with a tenyear yield dipping a bit. Okay. Were going to follow this closely, but in the meantime, new this morning, the nfl is teaming up with verizon for a new digital streaming deal joining us first on cnbc, Roger Goodell, the commissioner of the National Football league, Lowell Mcadams, chairman and ceo of verizon. The way i understand it, on the nfl app, commissioner, we used to be able to watch nfl games. This extends the availability of that to be on verizon. Im trying to figure out if this is good for you, lowell, or not. Now at t and t mobile can now have access to this, but its certainly the distribution for nfl is greatly increased from this well, joe, i guess i start, first, with our thoughts and prayers for everyone over at times square, but for this relationship, i think why its so great, its great for our consumers, for our fans because the game the nfl game are going to be much more accessible on mobile devices. Thats something that we think our fans will really enjoy we see more and more of our fans moving to new devices. Particularly their phones to get content. We are going to Work Together to not only stream games, but also bring other content across a number of great Media Properties that lowell is creating his assets across the yahoo brands and across go 90 another great opportunities for our fans to be able to enjoy nfl football well, theres a tall, handsome gentleman over here videoing some of this. He looks familiar. Tim armstrong. This is going to be through some of your properties that tim might have something to do with. All of our properties, joe. Weve been partners with the nfl since 2010, and its been great for the verizon shareholder and for our customers. What this does is it expands that across all the verizon properties as you know, weve been moving very heavily into digital through our oath properties, yahoo and aol, and to go to yahoo sports now via your mobile device and to be able to watch any game preseason, regular season, playoff, super bowl, is something nobody else offers weve got the number one reach to millennials over mobile now through those properties lets exhaust what we need to know about this because this is so am i going to be able to watch im want even going to say the bengals lets say i have adopted, i dont know, the eagles or the patriots or im afraid fair weather friend i gave them 30 years. I mean, lets say i want to watch can i watch any game i want on my phone yeah. Its in market, and thats some of the differences you can see it will be in market as well as out of market and literally every game you know, roger said this. It will not just be the game well have highlights. Well have original content. Well have behind the scenes all of that on yahoo sports. This is the first step for us, joe, on building this is a sports pillar. Were going to be expanding this, but the nfl is our co cornersto cornerstone. Can any of this compete with so many of your other Network Partners, and how do they feel about it you know, andrew, thats a big part of this we retained our mobile rights and our negotiations and our networks, and we want to make sure that whatever we do is complimentary with the Network Partners we think this is reaching consumers that arent actually watching on television theyre looking to watch onner on devices we want to make sure that were there. Thats part of the changing Television Landscape and media landscape that we need to be in those places if im broadcasting the game on linear and he is broadcast ing how is that going to affect my thats happening regardless, andrew you see the linear model this gives them access to the nfl. I think were very complimentary. When we see viewership in week ten for the nfl down 18 , which brings the whole year to a decline of 7 , according to jp morgan, is that as lowell says, a secular decline . Have we seen the best days for nfl ratings when it comes to linear viewing, and is this i think lets take a step back and talk about whats happening to ratings overall the nfls ratings are 25 out of 30 in the top rated shows in sports in all of entertainment. I dont take your premise at all. I would say that fans are going to different devices to consume media. You have to be on those devices. Legal ask it this way in terms of worrying about saturation, and i have talked to you for years about this youve got this precious thing, and too much of agood thing, too little of a good thing some people said, you know, thursday maybe you shouldnt do thursday maybe thats over saturation this doesnt sound like over saturation this sounds like more people being able to watch whats already happening. Ure not really expanding the number of games. You are just i dont think that would i think it makes sense in terms of are there too many games on too many days . We always our season is shorter than any other season in professional sports by a long shot. I think every one of our games means something. We make them events. Thursday night is now the number two show in all of entertainment. Right for us we dont think its reached an oversaturation point, but were conscious of that, and were going to make sure that when we do something, we do it well, and we do it as an event there are parts of society that, i dont know, theyre mad about the kneeling, so you are going to see pictures on certain news sites of stadiums that appear to be empty, and i saw a long list of them. Again, theyre not got, but theres a lot of open seats. What do you how do you explain whats happening and say is attendance down and whats it do to our attendance is off 1 . We have two teams that are going through major transitions. Los angeles playing in two different stadiums we have a team thats moving to las vegas. Were very pleased where our attendance are we always want to see those numbers go up, but were at 98 of capacity. So the seats what are those pictures you always go et that when you get that late in the season, particularly if the team isnt in the running, and you get that the other thing we see an awful lot of that our stadiums are so good that fans are going back inside and enjoying the premium aspect of it, and you see a lot of empty seats there thats another challenge for us. There are reports that Colin Kaepernick was invited to meet with you, and then he said i want to do that, and then i the want to bring a mediator with us whats the state of play with these kind of conversations and where you stand on all of this well, its a little more complicated. Weve always invited colin to come over. He is welcome to come over and meet at any point in time. We had an open door on that. There were some meetings set up with the Players Coalition, and they were invited by the Players Coalition. My understanding is they extended the invitations in that circumstance he is always welcome to join that, and the Players Coalition is an entity that weve been working very closely with, and, frankly, weve had unprecedented dialogue do you think he should be playing . You look at the other quarterbacks in the league i think thats each and every club has to make those decisions, andrew i mean, they make those decisions based on a lot of factors that are based on their Football Team, and thats whats in the best interesting youve seen lebron james and other people outside of football say he is being blackballed. What do you think about that i dont agree with that again, i think our teams are making the best decisions for what they need as a Football Team ive gone back and forth on the chicken and egg thing. Without the fans, you dont have football without the Football Players that i mean, there would be no fans. Its a chicken and egg thing, but you have gotten criticism probably that you are kolgdsing the players, you are kolgdsing the owners you have to take the long game, i would imagine. You have some negotiations coming up down the road with the players. You dont want you dont want the players to feel like theyre something other than important i mean, the owners arent going to tell the players exactly what they have to do because we have freedom of speech and everything else, but is there a way to walk that line where you register a protest. Just not during the anthem thats sort of what some teams have come up with, but you cant can you actually say dont do it during the anthem, and then thats going to say there are going to be people that chaffe under that we respect our players, and weve had an incredible amount of dialogue between the league and the owners, the players. Whether we weve tried to create a new platform, and thats what you are seeing unfold over the last several weeks. It will give us an opportunity and height the important work in the community to make their communities better we think that is what the players really want. These are issues that we want to address in these communities, and we want the nfl support. Theyre still yeeling yesterday, quite a few very limited number we think that were going to be able to address that at some point. Eventually there will be we hope to get we want all the players but it will never be an edict that says no kneeling during the or you must stand during the anthem i think from our standpoint were going to be able to address this effectively i got one important question for lowell and one final important question for roger lowell, time warnerat t, disneyfox your take on both . Well, you know, you and i have talked about this at sun valley i would have bet that the at ttime warner deal would get approv approved now its all up in the air i think that shadow is cast over any media merger here until thats resolved. I dont think you can bet on whether a disneyfox or anything else will be approved. Does that change your own calculus in terms of deal make sng. Weve been digitally focused for a while, and theres no overlap, doesnt impact the linear moelgddel, and its the easier path, but its the one we would be on regardless from a competitive standpoint and then from an industry standpoint, do you hope that deal goes through . You know, i dont think it matters, ton matters, to be honest. They think it will provide competent tiff advantage to them, but from an overall industry perspective, i dont think it matters it doesnt matter if it goes through or not so time heals i just wonder, if it will ever be possible you cant say all the people all the time. It seems like there will be certain fans that are just mad that, for example, i saw the armynavy game and something got refwroo retweeted about no one is kneeling for the armynavy game. There are going to be players that if theyre not allowed to express themselves about what they see are societys ills theyll never be satisfied its not going to be a perfect i do not envy you i do, actually but it is very difficult to find a middle ground that satisfies everybody, isnt it . I think thats true, and i think what you have to do particularly when you have 200 million fans, thank you know, people have to respect that our players have different perspectives and owners have different perspectives what we have been able to demonstrate here, though, is that theres a need for respect and understanding one another, and really truly understanding the underlying issues so that we can help address those collectively and hopefully avoid these kind of situations thats our hope. We want all our players standing we want all our personnel standing have you spoken to jerry jones . You guys okay . Yes oh, sure they want to know about the was the plane request real thats what they want to know. What plane request . You go ahead. Im looking at the the report about a plane for life. I want the plane for life too, by the way anything ill have as far as access toen aairplane i pay for. Yeah. I tried to yuundercut you i said ill do it for 20 plus a turbo prop i had no takers, though, either. Actually, yesterday did you watch the poor giants jerry jones team looked pretty good. You dont play favorites, though you know, listen, it was a great day of football yesterday. It was good i saw a lot. I sat from the fist game all the way through. Not for the jets. Not for the jets well, you know, everyone is going to lose on a sunday, but half of the teams are going to lose on sunday. Could be ties great season. All right. Very good. Thank you, both really appreciate it youll be setting for a lot of that. Its all good. I have a good partner here. Thanks for coming on,ing too. Thank you, guys im on the verizon phone today so ill check this out. Stay safe today especially we do want to recap the breaking news from right here near times square. Police have confirmed an explosion at 42nd street and eighth avenue in new york city thats about a block and a half away from where were sitting right now. A senior nypd official saying one person sustained a minor injury and that person is in custody. The white house saying that President Trump has been briefed at the situation joining us on the squawk newsline, the remember forrer aib fbi director thanks a lot for phoning in on such short notice. From the Law Enforcement perspective, what are the next steps right now with one suspect in custody i think right now its the nypd if with the capabilities and with all the Port Authority folks, with federal authorities pretty well have that under control right now. It appears its probably just the money rule the bottom line is they cant say its oh. They have to look at all the Communication Centers for the transportation sisters throughout manhattan ist going to impact us on the subways and the bus terminals, Rail Terminals if. Every place is going to gets an additional work to make sure that it sent more than one individual up to thb nonsense. We have very limited nfgts at this point why do you say you feel like its a one individual sort of event . Well, i think thats probably what theyre looking at right now. The individual, it appears this certainly has to be looked at in detail it appears that the individual involved has been injured and that perhaps it might have been a premature detonation at the bus terminal. Theyre going to have to look at everything its new york, and its very difficult to cover everything. You cantstop everybody coming in and out of the Port Authority. You cant screen everybody its not a viable way to do business its very difficult right now. I think with all the authorities they probably have this pretty well under control the good news is that there are limited injuries the bad news, at least from my perspective, i just wonder, if is the dynamic now officially changed . Is up until this moment, at least in my memory, there had not been a serious effort inside the new york city subways that involved at least alleged terrorism. As ive been preaching for probably three years now, its a matter of time with the railways and with the subways and the bus terminals. Its just that the other target of opportunity and how well are people ekwiptd quipped to get at target its not an easy target, but its not the most difficult one in the world either. All right bill, thanks a lot for your time thanks for phoning in. Bill gavin, the former fbi assistant director squawk box will be right back. 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. 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. Breaking news right here in Times Square Police have confirmed an explosion at 42nd street and eighth avenue in new york. A senior nypd official telling nbc news that one person sustained a minor injury and that actually is the person that is in custody. Joepgs now detective bi ivive ga were here at the nasdaq detective alba, and we have a Satellite Office of the nypd, and on any given day even when we get in here at 5 00 a. M. Or 5 15 a. M. , theres a very Large Police Presence where we are is anything, do you think, different right now . Whats going on behind the scenes for when you have an event like this with the nypd . Well, i could just tell you by looking at just watching the demeanor of both of them, the Police Officers were there, and the fire department. This is in the nilgds of new york city on the rush hour on a monday when, you know, everything is going moving and people are coming from new jersey from connecticut, from all basically all over. I think as new york city, theyre kind of used to this, and i would surmise that in about two hours the incident would be cleaned up and things would be normal back to normal its the holidays, obviously. Times square is just well known to be a place that might be a location of interest whenever you see any of the stuff on the internet it always includes times square or the eiffel tower. This might be one of the safer places around. What do you think, gil theres so many people there, and so many tourists coming from all over its packed. Especially now it is not hard to carry like Something Like this, a pipe bomb in your coat, when its wintertime the Port Authority where all the buses come in and subways and all that is they have hundreds of cameras in there, and all over the place, and, you know, Something Like this still happens. I really dont know the motive behind this thing. Its obviously one person so far. I dont even think he hurt himself that much. They kind of know that after speaking to him they kind of know the situation already anything could happen, and, you know, being in new york, my wife took the train there and is working down on 42nd street. Nervous about everything were always aware of something that could happen right away in new york city were always aware. However, after something happens, it goes right back to being normal, and were kind of used to this, but as long as nobody gets hurt, nobody gets killed, or, you know, the response is so quick and nypd is so used to it that its not the police dont always respond to one place they look at everything in the city and where else this could happen were talking about the service in new york city, which is our First Responders and then its a lot, and then you have other units. Former detective of nypd, detective gil alba youre very welcome its a big week. Moving on. We normally talk about big week for tax reform negotiations. Joining us now senator Chuck Grassley he serves on the finance committee, and we had senator cassidy on earlier, and you probably didnt get to see that, senator, but everybody is sort of feeling around to surmise what the final product is going to look like do you have any insight into what the bill will finally look like some problems have come up very definitely with the corporation amt and even with the individual one from the standpoint of the individual one. You want to simplify the tax code, and the alternative minimum tax thats been around for 30 or 35 years has very much complicated it for a good share of our tax holders taxpayers. Then in regard to the alternative minimum tax, theres some people that fall between 200,000 a year income and 500,000 a year income for some reason or other and getting hit a lot harder than people that are over a Million Dollars getting hit by the alternative minimum tax. You kind of wonder how those things can be worked out, but in the house bill, they did away with it, and then as the bill came out of our committee, we did away with the attilternative minimum tax, and then at the last minute to get the votes necessary, there had to be some adjustment in some of the provisions of the law and that costs money, so then they went back to the alternative minimum tax to offset that those are the things that i know are problems the other one would be state and local taxes. I think theres some compromise that has to be worked out there even beyond what we did at the last minute in the senate to have the property tax up to 10,000 be an exemption. So if you went to 22 on the corporate rate, can you do all these things i think that you are talking about 22 would be 200 million, and it seems to me that for the changes that we made in the last few hours in the United States senate to that brought about these problems we just talked about, i think that that would cover it i think its quite a major jump to go back up to 2 22 when the rest of the world is already at 22 and their countries are going lower like Great Britain going down to 17 . Ireland is already down to 12 these other industrialized nations are moving down from the worldwide average of 22. Its going to make america still less competitive obviously, more competitive than we are now at 35 , but less competitive than we would be at 20 so as of friday i think eric cohen said there is Good Progress being made. Do you know anything about this morning in terms of the timeline you got its 11 days from now, right its the 22nd where, are they working already . Its 8 33. You think theyre crunching some numbers now . Well, i dont have any update for you, but your question about are they working well, of course. Theyre working all over the weekend. Well be working all this week into next weekend. Then probably the earliest would be a week from today, and i hope we do have it a week from today so the house can get it done and get it to the president before we adjourn on december 22nd for the holidays what about the various thing you can see the salt issue being resolved youre talking about the state and local yeah. Yes there seems to be some sense that there could be some movement, but nobody really understands what that movement could look like. Well, i think the only thing that i have heard now is that you would not allow the complete deduction of state and local taxes, but for the states of new york, connecticut, new jersey, maryland, and california where higher income people are not getting a tax reduction besides just having the property tax deducted up to 10,000, it could be property tax plus income tax, but with a limit of 10,000 per taxpayer okay. I guess we could ask you quickly. What do you think is going to happen in alabama . Do you have a prediction well, you know, im a person that watches polls quite a bit, and if you go back a month, obviously, it looked like there was a sure victory for the democrat now it looks like moore is creeping back up i think theres an expectation that moore would win, but when you have such a low turnout like there was 16 and 18 in the previous primaries and the runoff, you know, its very difficult to predict when you have such a low turnout. I think that you do find people at least as i go from what ive been following it on television or reading about it, it seems like the people of alabama are resenting people on the outside trying to pick their candidate but does the keeping the vote in the republican you know, keeping it at gop safe vote, does is that more important or does that offset the reputational hit that the gop would get from it . Do you think there would be a reputational hit from that certainly there will be those that want to talk about this a lot. Im going to have to answer your question two ways number one, i didnt have to withdraw my endorsement of moore because i didnt endorse him in the first place. Okay. Secondly, youre asking me a question and only the people of alabama can answer i better not be ahead of them on this thats what theyre resenting anyway it could be the people all over the country, though, if he does if he is elected and seated, then i just wonder whether that would you know, someone said the hood ornament of the Republican Party or something. Well, thats a possibilities, but i think that theres already speculation. One thing we in government shouldnt speculate, but you ask me to speculate. Okay. Lets say he wins if seems to me that there would be immediately some investigation by the Ethics Committee and people will be under oath there there wont be all this business of somebody telling the truth or not telling the truth if you are under oath you assume youre going to tell the truth or if you are caught lying, you are going to go to jail okay, great all right, senator thanks for your time this morning. Appreciate it. Hope to see you again soon thank you. Glad to be with you we have much more on the breaking news of the morning an explosive here in times square well have want update as we get them this morning. Take a look at u. S. Equity futures. We have come off a little bit, but actually eeking back d endow looks like it woulop up 33 points were back in just a moment. Ark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Some moments can change everything. You cant always predict them, but you can game plan for them. For 150 years, generations of families have chosen pacific life for retirement and Life Insurance solutions to help them reach their goals. Being ready for wherever life leads. Thats the power of pacific. Ask a Financial Advisor about pacific life. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Welcome back to squawk box. We have breaking news here in Times Square Police have now confirmed an explosion thats taking place at 42nd street and Second Street and eighth avenue in new york. Senior nypd official telling nbc news that one person sustained a minor injury, and that a person is also in custody nypd just tweeted that the explosion was in the subway. One male subject is in custody no injuries other than that suspect at the time. They are also saying to avoid the area joining us right now on the squawk newsline is nbc news terrorism analyst evan coleman now a senior partner at flashpoint good morning to you. Help us try to understand what to make of this. You know, when you see as many police and ambulances head towards 42nd and you hear these type of headlines, it makes you very nervous, but then at the same time it seems at least from some of what weve heard from the nypd that maybe it has been a limited situation. Yeah. Look, i think particularly after the incident that happened out in the west side highway bike path just now a few weeks ago nypd and other emergency officials here are taking these things very seriously. I think what you are seeing its likely an abundance of caution that being said, you know, it does look like some kind of explosion took place there is discussion that its a pipe bomb. Casualties seem so far fairly limited, but there are no telling that there arent other individuals out there right now or theres not another device, and until that could be confirmed, yeah, again, an abundance of caution this doesnt look like it was a device, it was very sophisticated, and it doesnt look like a lot of people were hurt by it thats the good news the bad news is that protecting against these kind of attacks, if it was a terrorist attack, it is almost impossible if it is, is it any type of game changer we were discussing earlier that i dont believe in any recent memory or my memory at all that weve had an attack with the word Terrorism Associated related to the subway system in new york, which, of course, millions of travellers on a daily basis. Possible that some disgruntled individual carried this out so far what were looking at, if this was terrorism, if this was a terrorist attack, so far what were looking at definitely is within the capability of a Single Person or two people. You know, it underscores part of the problem here the new york city subware system is huge. Its open. Anyone can come in theres not a huge amount of security there what that means is that its a very vulnerable target without being without being alarmist about it, people worried about coordinated attack on a morning lining this if you are still at home thinking of either heading to the office or coming in elsewhere, what away you be doing look, i this i its good advice in general. Even if there are even if this is not terrorism, even if this has nothing do with that, even if there isnt a secondary device, the area around the Port Authority or the subway station is a mess. If you can avoid it, if you can go around it, thats highly recommended for any number of divlt reasons. If there are any ways to ai had voluntary the areas, it would be highly recommended, period okay. We are going to leave the conversation there we appreciate you jumping on the newsline with us especially given the hour and this quickly thank you. Thank you in the meantime, were going to talk a little media we had just heard from verizon ceo loul mcadam. Striking a deal with the nfl joining us right now columnist did you really weigh in on it i did really . Well, we how do we know . Did you make that up . I was where was it . Those of us watching saw it did you hear . I did hear it you heard it. You said it made no difference because you said it, but i didnt see lets talk. Jim is our resident expert in all things media he did say it i swear he did we talked about at t and time warner, and what that is doing to the landscape we want to talk about that in a second i think the bigger deal, at least of the moment, is the expectation that later this week we are going to hear about a foxdisney transaction, which seems to be edging closer to reality. Right looks pretty likely what do you think is driving this does it make sense to you . Well, in a sense it does. I mean, were going to see a consolidation in this area the big disrupter is netflix, amazon theyre had not going away theyre getting bigger where, stock market loves them. The established industry has got to respond i think coming together isone way theyre going to do that i mean, cnbc broke the news of these talks some time ago, and immediately everybody figured even though they were supposedly off, fox media assets were in play all of a sudden i think all the smaller studios, you know, viacom, paramount studios, sony, theyre going to have to figure out a strategy here the key is to bulk up the content so you can develop your own over the top service i think thats driving disney. How much is this about hulu do you expect disney to take hulu, which fox controls, and effectively turn that into their ott platform with all the things theyve been talking about and throw behind it the piece thats powers their ott service, or the service theyre planning on providing . Or do you think theyll remain separate . There is a lot of speculation that hulu is playing a large part of this deal. First of all, these kinds of joint ventures, at least in my experience, never really work all that well. The whole point of hulu was to combine the content. There would be a Critical Mass that consumers would have. It would make certain sense for disney look at disney theyve got the sports franchise in espn. Theyve got the children and the disney brand they need the main stream presence to kind of fill out that hulu could do whether. Heres the thing. In network owns time warner owns 10 theres 40 of the folks who are basically going to be i dont want to say free riders, but theyre going to be riding along on this train. Well, okay. Do you want to negotiate this deal youre bob eiger, and you sit down and say, i now have a controlling interest here. Do you want to sell to me at a reasonable price, or do you want to just let us run it and to our advantage or let it lange wiuish what does it say about the murdoc murdochs we hear that James Murdoch may get a role either running the International Operations of there or maybe wants that role what do you know about that . Well have to see what the deal is, but certainly theres a lot of talk that as a result of this deal, the murdoch fox interest will be the largest shareholder in disney at this point. That is a if its a stock deal, partly a stock, thats a big thing. Ive been told that they dont see disney doesnt see a board seat for them, but certainly they are going to you know, youre not going to abc their calls. Is he really positioning to take over from eiger in a few years i mean, i think its a little early, but there could be an interim person or something and then maybe he is in a strong position, but, yes, there is a lot of speculation that this is a brilliant strategic move on the murdochs to greatly expand their control of media lets say disneyfox goes through. Who is under the greatest pressure at that point to do a deal is it comcast . I dont think so. Comcast is in a fairly good shape. Im not saying that because were sitting in a comcast asset here, but i think the biggest pressure is going to be on the small studios. I dont know what they do. Again, i think one reason this is a smart move for the murdochs is that fox, too, is in the same situation. The first mover is going to get an advantage here. Who is going to buy these of the two . What even netflix and amazon need to move into the space . It will be interesting to see. It has struck me that amazon and net flick, they didnt buy any studios. They didnt have any franchises. They just came in and created fresh product. I mean, thats pretty remarkable what does that say, though, by the way, about the barriers to entry people used to think that having this ecosystem really matter and what i think weve learned is if you have a blank checkbook that that may matter more absolutely. Again, i think there is some puzzlement as to why disney even wants the sort of physical assets of the studio in hollywood because the barriers to entry are so low, and you just go rent that stuff. If you are a shareholder, you want to own the stub of what turns out to be twenty First Century fox. That means youll other than the fox network and the fox news youll own some sports theres a question mark about what that it would be a big cash flow business does that get taken private and merge with news corp in todays world its hard too believe it stands alone for long and then in that sense maybe you do want to be in there because there will be some strategic combination with that. Okay. Jim stewart, thank you, sir. Thank you. When we return, jim cramer will join us live from the new york Stock Exchange and much more on the breaking news and explosion here in times square well bring you updates as we get them here are the futures right now, briefly dipped after word of what were just alluding to and then close to the highs fothr is session. Up 41 on the dow well be right back. Take a deeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Liberate your spine. Aflac and reach, toes blossoming. Not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. So he had your back . Yup in just one day, we process, approve and pay. One day pay. Only from aflac a man detonated in sort of improvised explosive device right here in manhattan this morning. Bertha coombs joins us now with the very latest. Bertha reporter good morning, yes, that device had gone off in times square, stretching to the Port Authority bus station, about a block from the nasdaq. All of the train station is pretty much in lockdown at the moment all of the trains in and out of this area are bypassing the station. Port Authority Bus station also a very important commuter hub for suburbanite comes in from new jersey that has been for the most part blocked off. Were seeing a number of tourists and number of commuters Walking Around this area police blocked things off this morning. It happened shortly before 7 30. Those of us who were on the train suddenly heard that all trains were bypassing the times square station in both directions because of Police Activity at this point things continue to locked down, back to you lets get down thank you lets get down to the new york Stock Exchange, jim cramer joins us now jim, you know, looks like at this point we know a little bit more about everything that happened and i guess well find out much more. So far i guess were thankful just one injury and it was the perpetrator, apparently. Yeah. I think these are always things that when you first hear about it your worst fears are this was a huge loss of life, not that we should be thrilled that maybe Nothing Happened but does remind us of how vulnerable we are and we are going to be a subject of i guess forever these kinds of attacks and we all have to be vigilant and see and say thats the only way to make it so we can get by but someone i think is obviously were a target and lets just hope that things stay lets just say we hope the bad guys fail. Yep, yep. Switching completely, we had Roger Goodell and talking nfl and also had jim, a gentleman where you can bet on not really bet but own shares of a team i asked him the question, what happened to the eagles stock yesterday . Does it go up because they won or does it go down because of the mvp probably of the league do you know whats the latest . My understanding is its most likely that it is an acl and hes done for the season nick fols once did for us and i hope it happens again. Im a fan so im eternally hopeful but this was rough because it reminds me of derrick karr last year lets hope for the best. He seems like a really terrific guy. Youve got to hope for the best. Watching yesterday, you can see that guy put the 54 yarder through and the other one was straight, exactly 6 feet exactly down the middle. Anyway, thanks, jim. Exactly right thank you, guys. Squawk box will be right back agrfeed 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. I thwell wait. What did you meetthink about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. Quick final checks on the market dow 45 points higher it moved around after news of the explosion on 42nd street and 8th. It doesnt seem like it is as bad as we first feared make sure you join us tomorrow squawk on the street begins right now. Good morning, im dave faber along with jim cramer. Carl quintanilla has the day off. The opening bell a half hour from now were headed for a higher open it would appear at this point. European markets have largely also been well