Transcripts For CNBC Squawk On The Street 20171211

Mixed, kind of nothing actually. Isnt that funny. All minimal moves. Lets call it a complex more or less in europe flat at this point. 10year note yield, we had the big employment number on friday. Didnt really see that Much Movement though, did we . Its funny, i spent a lot of time talking about the bonds on friday on mad money, the old days what it would have been been like and it would have been selffulfilling and were we have a great economy so you know rates have to go up immediately. It did not occur and its a different pattern but weve seen for the past 30 years. Lets get to our road map this morning, well get back to the bond market in a bit breaking news in new york city, an explosion near the Port Authority bus terminal during the morning rush hour. There is one suspect now in custody. Plus, the bitcoin boom, the futures on their first day of trading, they are surging. And well also have an update on qualcomm and broadcom and importantly shots fired from elliott this morning yes. When it comes to their belief in terms of what nxpi is worth to qualcomm. New york officials confirming an explosion near rush hour near the bus terminal the new York Police Department saying one male suspect is in custody. Lets go to Bertha Coombs, live in that area bertha reporter david, the Port Authority bus terminal is about one block to the west of times square, part of this whole times square area. The explosion happened this morning, between 7 15, 7 30, commuters on the trains, all of a sudden police started to divert all of the subways going in and out of times square, out of that area the Port Authority is a big commuter hub, thats where all of the buses come in from the suburbs in new jersey to have this on lockdown makes it a very, very difficult morning for commuters. The suspect according to former Police Commissioner bill bratton tells nbc, it appears to be a man in his 20s and he according to former commissioner bratton apparently the man had exploded the improvised device in the name of isis its unclear whether it went off prematurely, despite the fact that we have a number of ambulances here. It appears only the suspect was the only one injured, which is somewhere near miraculous on a very busy morning and very busy subway area. Weve seen a number of ambulances here. The emts standing around, moving their equipment back to their ambulances so that is the one bright side this morning the Investigation Continues and entire times square area is somewhere on lockdown. Back to you. Thank you, bertha that i can tell you on my own subway trip, of course, the train did not stop at times square this morning. And they changed it very quickly. Were on our way down, i guess around 7 15, 7 20 maybe but did not had already closed the times square subway station. Lets get a little bit more on the story right now. Joining us on the phone, former commissioner saver, whats the protocol from here what can we expect is occurring . Hes not there. Yeah, we may have lost commissioner safir the good news is doesnt appear there were any injuries of any significance other than perhaps to the would be bomber himself. Right. And you know, as new yorkers of course, we sort of are in a way unfortunately you come to expect this is part of the landscape. Yeah. When i did my thankfully, again, nothing of significance in terms of injuries. When i did my World Trade Center piece, there was a the show there was a kind of a lets say a forgiveness that on World Trade Center that you can go there and that youll forgive that anything will happen. Its a new ball game and theyll go after other areas here we are. Certainly not World Trade Center and he was Port Authority. Which is what a lot of people predicted. If theres going to be a terrorist attack, it will not be back to where it was. Lets move on with Business News this morning. A few things were covering, one of which weve been continuing to cover, the soon to be joined baltle between qualcomm and shareholders of nxp, a company jim and i talked about many times. In fact, think we were the first to really discuss the possibility that qualcomm would have to pay more than the 110 a share deal its agreed to in terms of acquiring nxp the end of the year is coming as are all approvals to complete this deal and so shareholders who own significant amounts of the stock and 80 tendered under the dutch law. This is a dutch company, nxp to acquire the company are starting to make noise. This morning its elliott which comes out and some would say surprisingly low ask maybe at 135 thats what they say is the stand alone price of nxp, we can keep an eye on shares as you see up a little over 1 . Nobody i spoke to believes elliott would hold out for 135 but they are a tough bunch over there and importantly with their 6 ownership, they are also joined by other significant shareholders, i pointed out many times. Pentwater, de shaw, number of other significant holders, all of whom could add up to just about enough if you throw in other long onlies mutual funds to prevent qualcomm from buying this company at 110. The question is what will the clearing number be and what are they willing to pay . Its interesting what they are saying and ive got their release here, if you look at where other other than semis in their same cohort, those are up rather dramatically versus where this one is ultimately going out if qualcomm were to get it you know, they are using prices that are saying its 60 below when i read it and know that Semiconductor Industry group, i am surprised this has been able to stay and theres been absolutely no attempt to even appease these disgruntled shareholders and the proof is in the price. The price is nowhere near where they want it to be, 110. I dont know how they get it to 110 given the fact that the company is doing well and the group is doing well. So ive never seen a stock just drop down to 110 on the weakness that maybe there will be no higher bid. As weve said all along, it is not as though they are hoping theres a bidder going to pay more it is simply the belief on a lot of these shareholders that the Intrinsic Value would be higher than 110. 18 times earnings, instead of 15 now were in the heart of it, elliott has got a website set up for this and they are going to get galvanize the opposition to those considering at 110, thing in Management Team is on their way out. If you have an independent economy i told the people who follow in the club for action alerts, please dont tender and that was because i happen to like the group of sky works and think that group would would have prevailed so far and that the nxpi sold at the lower part of the cycle. Yeah. Like, at the time i remembered we were also grateful its not like qualcomm was trying to steal the company or trying to do a bad job its just that apple was a stronger cycle, all traded apple. Apple prices. Broadcom this morning did file plareliminary proxy, did b 916,000 shares in october 30th, right below what they would have needed to trigger hsr. Really . They own 70 million worth of stock. We have a lot more on that lets get to bitcoin, what would a morning be without having our typical conversation about bitcoin. This currency, cryptocurrency, whatever you want to call it, higher after futures launched last night with a gain more than 20 . The futures are on the cboe and triggered two trading halts with the surge in prices i was hoping we would get price discovery if this is the price discovery, it can head much higher, how much did they really trade last night but there are so many people, david, and some retail and institutional who truly want bitcoin to go higher they were overwhelmed any short interest, short attempts to drive it down. This is a very big victory for bitcoin last night and i think a lot of people felt it would be inconceivable that somebody would come in i do think that bitcoin is now and vinkle vi have decided and made a stand this weekend it will replace gold as repository. And they can do that in part because of block chain and in part because it is so easy to translate. But that helped it mightily, that those gentlemen who came across it first, gold will be replaced gold as traded down traded down so terribly, that it was a nice con flewance for bit kcoin i did spend time this weekend trying to understand the platform and bitcoin and what it actually means to mine for bitcoin. Im still working on it. I think look, theres a cabal that will be incredibly smart, a lot of us were colored in something jamie dimon said, that it was a fraud, throwaway comment. And the word fraud, i dont know if hes gone back on that or not you talk about a bubble or mania, not a fraud. I thought if it came down it was monopoly money, if it went up, it truly may have staying power and it is funny to look at the relationship with gold and realize that theres 1 new growth in gold around the globe and it looks i cant figure out how much new really new bitcoin and edge theer yum hit the market every year. Gold is so hard to find and so much to dig. A lot to mine bitcoin too. Yes, it does. Enormous electricity uses. I know that when you talk to the various Companies Like amd, they are trying not necessarily to make it a Bitcoin Company but trying amds case want it to be gaming and pc and data center. And when we talk to talk to nvid nvidia, they too dont want to emphasize it square emphasized it heavily square is a small to medium size business and those are the ones you would least expect trying to make money on bitcoin but its hard to accept bitcoin as a currency we talked about it at my bar this weekend did we lose money or make money on the beer sale we dont know. Okay, my colleague here may be a little morose this morning, you may have noticed it because of carson wentz and that knee. Wish him the best shlgs he was a terrific guy quite a competitor. We have a lot more to talk about this morning and the movers this week or the week ahead well give you another look at futures here a lot more stqsquawk on the street after this music plays throughout new york officials confirming an explosion this morning during rush hour near the Port Authority bus terminal. One male suspect is in custody, joining us now on the phone, former new york city Police Commissioner safir, weve got you back here. Thank you. What is the nypd do now . What is involved in the investigation from this point forward . Well, the fortunate thing about this we have the suspect alive, we know where he lives or has been living. Right now nypd investigators and joint terrorist task force people are spreading out all over brooklyn looking to find out as much information about this individual is as possible the First Response was to mitigate the situation to preserve life as i understand it now and four injuries to civilians and injury to the bomber we have to find out what his background is, who hes associated with and what exactly he was trying to do. It sounds like it was some kind of pipe bomb not a suicide vest but we wont know that until the authorities tell us. But this is unfortunately the new normal in new york yeah go ahead. Thats what we live every day. I take the subway two or three times a day, was on it this morning. We bypassed times square on my way downtown was this in the subway is that your understanding its my understanding it was in the connecting corridor between subway tracks where there were not a lot of people fortunately. And this device malfunctioned and who knows, he was probably looking to go on a crowded subway train to explode this device not much that is the nypd, new york Fire Department, amazing but not much you can do to protect these kinds of targets, is there, commissioner . You cant especially with the way people are wearing heavy clothing, unless you see somebody acting really weird and then of course then you should Say Something. Most people dont remember but in 1999, when i was commissioner, the nypd stopped three Young Palestinian men with back pack bombs going on the subway and fortunate, we got we stopped them. But the successes were having overseas with isis calling for a worldwide jihad against america, its unfortunately something we have to be aware of and well have to live with. Jim cramer, thank you so much for calling in im always amazed, sir, how incredible the antiterrorism squad is here the new York City Police its almost as if they have infiltrated where the guys are and bad guys are they always seem to be one step ahead of the posse but ive come convinced that so often the people who do these things were investigated by the fbi and somehow they all got a pass or huge number. Are the new York City Police i know they work closely with the fbi, not asking for them to be out of school are they ever surprised so many of the people that commit these incidents were under investigation by the fbi and the fbi gave them a pass well, you know, unfortunately we live in a democracy where unless somebody commits a crime, if you think about the thousands of people who are radicalized in this country, theres not enough nypd or fbi agents to keep them all in check weve been very fortunate. Remember, the territory has to be has to be right 100 of the time it is a daunting task. Well have to find out what the motivation is and is it related to President Trump and his announcement is it an isis inspired individual or some nut thats all going to play out in next day or so. Commissioner, we appreciate your giving us your insight this morning, of course, as we continue to follow this story and very thankful that the injuries were minimal to say the least. Commissioner howard safir, thank you. Up next, were going to get jims mad dash and counting down to the opening bell and give you another look at futures here ten minutes from the open of trading for this full week next week is not a full week, this one is. Another day of work. Why do you do it . Its not just a pay check, you actually like what you do. Even love it. And today, you can do things you never could before. Youre developing ai applications on the cloud. Finding insights hidden in decades of medical documents. And securing millions of iot sensors. So get back to it. And do the best work of your life. And do the best work of your life. Its a like, a dagger . A worm a tiny sword . Bread. Breadstick . A matchstick a lamppost coin slot no . Uhhh. 10 seconds. A stick a Walking Stick eiffel tower, Mount Kilimanjaro ding time sorry, its a tandem bicycle. What . What . as long as sloths are slow, you can count on geico saving folks money. Fifteen minutes could save you fifteen percent or more on car insurance. [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. All right seven minutes before trading on this monday. Next week is a full week as well i was jumping ahead of myself, next week is when we get time off. You want to talk a little c celgene, the stars of this ash, anticancer conference, i should say, celgene regarded as being a partener with bluebird this is some of the most aggressive forms of blood cancer good hope here youll see bluebird, a lot of Companies Come out there and spark, which is another one that did not have good look biomarin good look on heel feel ya when you see the immune know therapy drugs do well, it gives people hope theres something very new about the technology. Its a Fabulous Technology company. A connection or simply a beneficiary of yes, theyve been partners but i think whats most important, is that there are some real breakthroughs, not just kind of like wow, that works but i mean, like doctors will shift toward bluebird if they can and its just great to give its not false hope is what im saying. The news on bluebird so Everybody Knows it is about the most aggressive forms of blood cancer that have typically been fatal theyve had some luck with and that obviously in terms of the data. Right, paper they produce American Society of heel toelg, offer t often been the benchmark of what happens after. Theres fabulous things with cancer, not that they can solve but making your own cells attack cancer its a technology thats working. One of the few things in biotech that i think is really taking off here its great for not false hope good hope. Yeah, excellent outcomes, well keep 30 gain for bluebird well keep an eye on other news for you after the be cin llomg llomg up my name is Cynthia Haynes llomg up and i am a senior Public Safety specialist for pg e. My job is to help educate our First Responders on how to deal with natural gas and electric emergencies. Everyday when we go to work we want everyone to work safely and come home safely. 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Which we have not discussed at the top of the show we talked about the Broader Market we havent done that yet theres a remarkable piece by morgan stanley, bullish on fang, aa, but theres but what are the risks and what i think this is a piece that at the end of the year, where really they are starting to say not all of these are outrageously valued and not all produced the kind of growth that is so impactful what i want to dovetail that with, its really the industrials and insurers and some degree the banks that have been responsible for this rally. The insurers, have been consistent, banks to a large degree are the belief that tax reform is very good. Industrials because the world is stronger so we dont need fang as much as we did and fang is not been the straw that stirs the drink so to speak. Well, right, its sort of been off and on a bit. Yes, versus say caterpillar, which is just been on. Yes its going to get loud here as it always does. But the employment report response, relatively muted in the market. I found it amazing because you know, david, that we do have robust employment and you know what, Janet Yellens swan song, take a bow, no inflation theres the opening bell for this monday morning. Keeping an eye on the s p. Back at hq at the big board, bank corps south celebrating the 20th listing anniversary at the nasdaq, Andrea Bocelli organization, doing the honors right there. Whats catching your eye the nxpi, you have a very good, very aggressive activist insurgent who is pressing button on qualcomm. And this Qualcomm Broadcom nxpi, david, we cant lose sight of it because it is the largest potential takeover in the history of tech. Broadcom just filed the preliminary proxy materials in connection with qualcomms annual meeting. Ive got have it handed to me right now i do want to look through that whats important here to a certain extent with these materials is that it is started the antitrust broadcom, qualcomm, coming back to now, remember, one of the republicans hanging over this potential deal where broadcom is offering 70 bucks a share, 10 in its stock right now is going after the entire board of directors as we told you already and now the case has been can they get antitrust approval bringing the two companies together what willingness does broadcom have to potentially sell assets . Would they go hell or high water . When would they start the antitrust clock . Theyve done that here in asking for premerger notification with the u. S. Department of Justice Antitrust Division and ftc so that at least is the very, very beginning of that process by which they will seek antitrust. Of course, when march comes along and shareholders are going to have to decide whos on the board of directors and how many of potentially or any of broadcoms nominees they elect, theyll have to make an antitrust decision then and thats hard to do when you dont have the facts. Whats most interesting to me, my charitable trust, i tell members stick with broadcom. They acted terribly after a really remarkable quarter with more than a 740 dividend boost and just a gigantic leap in forecast the stock was up 10 and proceeded to pier o et and be one of the worst performers as people realize, it doesnt matter what broadcom does right now in its actual financial, all that matters this takeover its worth talking about because its really the guts of whats in your devices, all up for grab, broadcom being in a large position with apple. Qualcomm, large position with apple. The subtext is what will apple do and what will qualcomm down in the lawsuit with apple . I pointed this out and it bears repeating, all of the litigation with apple will almost assuredly be concluded, jim, prior to broadcom knowing whether it could have the antitrust approval it needs to acquire qualcomm start the clock today, youre still not going to know. Youll know the answer to the litigation before youll know the answer from either doj or ftc. Should we put things on hold if youre following qualcomm, stop it, right its now up to this. Lets hit a few other things this morning i dont know what you spent if you spent time on tax reform over the weekend. I did. Trying to understand what may or may not be in the final conference version of the bill that is still being worked on. Wont be voted on this week according to mccarthy and the house, not likely to see a vote this week. But people still trying to figure it out. Will we see more of an impact in the market once we get clear definitions . I think i had tri point, a very large home builder with substantial their warehouses own land in california, they are insisting that matters in california is a shortage of land and the desire to continue to go there. I think its new york and new jersey, with the void of republicans to be in their fighting, even though gary cohn told us over the weekend, there would be some sort of discussion so far it looks like the states that voted against trump are still losers. Blue states weve talked about so often, largely though, california, new york, new jersey, to a lesser extent, illinois, connecticut, you can go through the high tax states but the point jim is making here is will those economies suffer as a result of no longer being able to deduct state and local income taxes will they see an outflow of people or will they perhaps not see nearly as much business coming as might otherwise have been the case or some businesses choosing to leave as a result of being higher not just higher tax but overall higher than anybody else because our taxes go up whereas other peoples are coming down. I had u. S. Concrete on last week, mr. Sandbrook and most of the large headquarters coming other than the ones that have to be in california, facebook, they are really debating right now texas if many people are not old enough to remember, when chevron uprooted themselves from white plains to texas, and then jc penny uprooted itself to texas i do believe that toyota building big headquarters in texas, with the tax situation in texas, they are the winner of this whole thing and they obviously are very important state for republicans. Without a doubt yes, more to come on that, do you buy the argument on housing or should there be concern amongst these builders in these states i believe that california has its own very big land shortdage so people will have to pay because the companies are growing, i believe the new York New Jersey area will be puchb h i punished and those that went to a School District you knew you paid high taxes but got the deduction, that kind of plan that families make, is going to be i think changed dont have much of an update for viewers at this point on the continuing talks between disney and fox and comcast and fox, the two sides continue to work aggressively towards a potential announcement of this deal as soon as later this week. Lets go to a preconference beig assemblinged there, led by mayor de blasio approximately 7 20 this morning we had a terror related incident in the subway in the passage way between 42nd and 8th and 42nd and 7th governor will speak mayor will speak. Dan will talk about the minor injuries and joe will talk about Subway Service governor thank you good morning to everyone the first news disturbing when you hear about a bomb in the subway station which is in many ways one of the Worst Nightmare s better than the initial expectation and fear the agencies that did a fantastic job, and nypd, the papd and Port Authority police and mta police, you see behind us, representatives of all agencies coordinated, the assistant director of the fbi, bill sweeney is here so everyone worked together and there was an explosion the Police Commissioner will go over the details, it was a minor it was an effectively low tech device. There were several injuries we hope minor it was handled extraordinarily well, there was a disruption in Train Service and bus service. While a sweep was being done, thats all being restored now as youll hear from joe loda, the Subway Service except at 42nd street is being restored Port Authority bus terminal is reopened buses will be running once again. This is new york the realty is that we are a target by many who would like to make a statement against democracy, against freedom we are the statue of liberty in our harbor and that makes us an International Target we understand that with the internet now anyone can go on the internet and download garbage and vileness on how to put together a amateur level explosive device and that is the reality that we live with, the counter reality, is that this is new york, and we all pitch together and we are a savory people and we keep our eyes open. Thats what see something, Say Something is all about and we have the best Law Enforcement on the globe and were all working together extraordinarily well i want to thank the mayor and Mayors Office for doing a great job this morning and we will go that is new york state governor andrew cuomo, discussing of course this mornings thankfully minor explosion in which only a handful of people were injured, thankfully again, jim. And reminding everybody that this is the state of affairs as we know it in todays world, people can do horrible things with relative ease but thankfully in new york, we just keep going. I really want to emphasize, the commissioner safir sold short the new york police. I know people in the tactical section who have done such a fabulous job, its not publicized and why should it be if the more you publicize it the less effective you are lets give new yorks police some credit here theyve been remarkable. Back to markets and business, jim ive got to bring it up and you sigh every time, General Electric though, right near a new low for the year is there a tax related things that may go on here that pressure these stocks that are down i think thats yes. Not participating in this other rally that youve discussed amongst the industrials or and slash or jim immelt talked about it doesnt matter which way they would go, they would win either way. The last acquisition, power and baker hughes shifted the narrative to one that it is oil and gas. While there are some good signs in oil and gas, its not the part that General Electric has been went to and this is one where i keep coming back to the board this is a story unlike other stories, it really is. A Great Company and then a start over i think that mr. Flannery by the day discovers what handy really thought. I feel sorry for him i think hes a very good man who did not realize how poorly planned the Power Division was for the major shift in fossil fuels and baker hughes, i dont want to den great them too much, youve got halliburton and youve gotslumberger and then the inability by ge to be able to really state what they own because they dont know. Because the obscure nature which mr. Immelt presented to the board whats going on, coupled with the speed of decline of power has left very little ammo to keep the dollar, 1 05 which is the estimate. I do believe theres a core company there. I also believe look, if i were the fec, how could you have misled so many people . They will come back and say we misled no one, its your fault, you allowed us to have such latitude whoever criticizes ge is immediately considered to be someone who is not on the team i have no desire to be on the team the team im on is the team of our viewers and they have been crushed. I like that team thats the team i like to play for. I dont like to play for the ge team i had ge stock so what . That Means Nothing my responsibility is to the viewers of cnbc. If thats the case, i can only do my best to tell the truth what went on here. Poor management, board that let everybody down do i care if they come after me . Ad 35918, thats the mother you can reach her, shes the only one that can get to me at this point. Lets head over to bob. Technology seem to have a little bit to it. Retail as well, its been a mixed open lets look at the sectors, retail xrt started strong, was down a little bit but its open at the highest level since february health care okay materials fractionally upside and banks have been negative slightly ever since the open Consumer Staples the real laggard, colgate, kimberlyclark to the downside. Lets move on to what everybody wants to talk about, bitcoin the important thing is that you are up about 15 this is from the friday auction, the bitcoin future started trading late last night, it is trading to a premium the gem night price is 16,700 or so right now trading at 1,000 premium. Thats 7 or 8 premium what we call the carry cost. The contract expires january 17th trading at the modest premium here i want to point out while i think this is a successful open, were dealing with small numbers here roughly 3,000 contracts have traded right now the notional value is probably 50 million. To give a sense how it compares with other contract, the gold contract, futures gold contract trade sometimes 400,000 contracts, were talking about a single contract, maybe 125,000 right now. Very, very small numbers by the way, you see gold going down, down 2. 5 last week. Worst week since may bitcoin may be taking something away from that bear in mind as we get all excited about bitcoin, how small it is. The whole market is maybe 300, 350 billion gold is a 6 trillion market the u. S. Stock market is a 25 trillion market. Bond market is roughly 38 trillion market. Just keep everything in mind as we all talk every day about what bitcoin is doing some people think its going to get a lot more expensive seema modi got in touch with Cameron Winklevos and said long term its a multitrillion dollar asset, may be Wishful Thinking we have a very, very long way to go for that to happen. Still, you have to think the cbo is happy im waiting for them to issue a statement but weve got a new product launch, two halts but built into it. There was nothing that happened that was unexpected. The website went down briefly but overall you have to think they are happy heres the next step, theyve got to figure out, its day three, four and five and six that matter. We want more people long and short. You need to narrow the bid and ask 20 to several hundred dollars, thats fairly wide. When you get more active trading that bid ask should narrow interesting day, bottom line, cme will be starting next monday, maybe get more volume there. The dow up three points right now. Back to you. Thank you, bob. Now to the bond pits we go joined by Rick Santelli. Good morning. Good morning, david real quickly on bitcoin, ive seen a lot of new contracts open since the latd 70s and futures, not many rise to the type of success of a gold future Foreign Exchange or interest rates, but one thing is for sure, the first couple of days is always fascination. You want to watch the volume and open interest figures after a month to see what turns from fascination to dedication and its all about those day traders and speculators that find the contract fascinating well get a glimpse of how deep that is. One week of tens as you see on the screen, they are pretty much side ways and tight range. If you open to a onemonth chart, 2. 32 to 2. 40 on a closing basis. Oversees theres a difference. One week of bunds has a much more downward sloped line there in terms of the way its trading. The slope and if you look at a june 15th so mid june of bunds, toying with levels that havent closed since that period of time and 29 seems to be the boundary. Lets flip it to the dollar index, shall we . Many talk about what the dollar has done this year and how its trying to bounce i want to show you this, year to date chart of the dollar index you know how many days it spent in positive territory . Two, they were in the first week of the year. Two days in positive territory lets zoom that down towards the beginning of october of this year, and you can clearly see, theres a head and shoulders formtation, dealing with the right shoulder, 94 you want to Pay Attention to last chart, pound versus euro, its a little bit more defined on righthand side as it starts to give up ground. But the pound euro still very much a fight, the area you want to pay closest attention to 1. 1420 which does make a difference in the outlook of the chart should it sustain the price action back to you. Thank you, mr. Santelli new evacuations have been ordered in Southern California this is as wildfires continue to spread jane wells brings us the latest. Jane reporter hey, good morning this is now the fifth largest fire in modern california history and i cannot recall ever covering a fire in Southern California where youve had sustained santa anas for a week and after one week a fire is still forcing evacuations and threatening thousands of homes im here below these hills and carpinteria, as it moves closer. The latest stats the thomas fire has burned 235,000 acres. Thats well over 300 square miles. Thats larger than all five new york city boroughs put together. Thats larger than boston and chicago put together containment has fallen to 10 . Nearly 800 structures destroyed, nearly 200 damages thousands threatens, thousands of new evacuations and one death, cause unknown if you look at this video from yesterday, heres what happened. It looked like the fire situation might be calming down when suddenly the santa anas kicked in ferociously, sending the fire further south and west into Santa Barbara county and into montecito where there are very wealthy estates old money lives there, new money lives there. Ellen degeneres lives there. She tweeted out a couple things yesterday. Our house is under threat of being burned we just had to evacuate our pets im praying for everyone in our community and thankful to all the incredible firefighters. That was followed by, everyone in the montecito is checking up on everyone. Im proud to be part of this community. Sending lots of love and gratitude to the Fire Department the winds have died down this morning. Its hoped they will be calmer today. And guys, no cause yet on this fire back to you. Thank you, jane jane wells coming up, tech investor dan niles is going to give us his views on the Technology Sector and of course, cant exclude bitcoin. Got to talk about that as well squawk on the street will be right back i think that shes a very nice girl. You never got the brakes 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. news anchor downtown traffic is still bad. Expect massive delays. radio channel changing news anchor 2 all lanes on highway 50 remain closed at this hour. news anchor 3 the stats are in and this city leads with some of the worst traffic, with the average driver sitting in gridlock the equivalent of three days a year. For every hour that youre idling in your car, youre sending about half a gallon of gasoline up in the air. That amounts, over the course of the week, to about 10 pounds of carbon dioxide. Growth is good, but when it starts impacting our quality of air and quality of life, thats a problem. So forwardthinking cities like sacramento are investing in streets that are smarter and greener. The solution was right under our feet. Asphalt. Or to be more precise, intelligent asphalt. By embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to study and analyze the flow of traffic. Then, we will take all of that data and we use it to optimize the timing of lights, so that traffic flows easier and travel times are shorter. And sacramento is just the beginning. With advances in cameras, sensors, and network speeds, we have the ability to make cities smarter, and happier. What excites me about this technology is that were using some of the most cuttingedge machinelearning, and ai, to help solve the most fundamental challenges that cities face around the world. Who knew asphalt could help save the environment . lani and the possibilities are endless. In addition to the squawk on the street family to tell you about, our sara eisen and her husband matt welcomed a baby boy over the weekend his name is Samuel Harrison levine mom and baby are doing well. Already, of course, monitoring, as you might expect, the currency markets i wonder if they bought him any bitcoin. A lot richer already. True birthday doing great, way up on bitco bitcoin. A cutie thats great, just great love it. Cant wait to have sara back miss her. Nothing more important than this all right, my man, lets get to stop trading. 3m holds a meeting tomorrow i know steve was out reiterating his sell hes reiterated his sell multiple times sometimes youre goded on by that i think theyre going to tell a remarkable story 3m was down friday buy it buy it why why because i think inga has been remarkable in reinventing the company, and there are many, many irons in the fire that he tends to talk about at the meeting, and i think its a Good Opportunity to buy some and then if it comes down, buy more as much as i like steves work on ge, where i wish the board had talked to him and brought him in right i think hes going to be wrong on 3m. You pointed that out last week i feel like i have more conviction after doing work over the weekend about 3m what have we got on mad money tonight i have a company thats a private company, but i really think its really surprising people which is topgolf you keep hearing that topgolf is back and that golf is back and you know what. I have to find out because david, golf used to be, if you remember the running callaway years ago, golf used to be quite a sport when it came to the stock market can topgolf come public one day . Remember callaway people actually cared and things like that. And the big bertha. Stock would move on that. We covered it every day it was kind of like bitcoin. Kind of like bitcoin. Whoa. All right, jim, thanks. Thank you see you back here tomorrow. When we come back, Grover Norquist and austin ghouls bay will debate tax refor. Keyboard clacking ] [ mouse clicks, keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Talk to one today and see why were bullish on the future. 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. Back to squawk on the street. Im david faber along with Michelle Carusocabrera and mike santoli. Were live from post nine at the new york stock exchange. Carl is off today, and sara eisen on Maternity Leave she had her baby over the weekend. Congratulations excellent congrats to her and her husband. Dont forget him played a small role. Lets take a look at the markets this morning as you can see, we are up on all the major averages, at least right now. With the crude oil also advancing by, lets call it 20. 24 lets get to our road map. It does start with that explosion this morning at the Port Authority bus terminal in new york city. Were going to take you there live and get the latest. And a developing story out of Southern California. Wildfires continuing to spread across the state more evacuations being ordered and a big day for Bitcoin Futures. Trading is well under way. Price surging more than 20 in the first few hours and triggering two brief Circuit Breakers details straight ahead lets get first straight to the breaking news this morning an explosion going off near new yorks Port Authority bus terminal Bertha Coombs is on the scene to bring us up to date. Bertha good morning, david it happened this morning just as the rush was getting into the thick of things between 7 15 and 7 30 this morning. A young man Police Identified as 27yearold akhud lowe wearing a vest with a pipe bomb attached by velcro and zip ties, according to authorities set off that vest in a tunnel that connects one end of times square to the other. Heres how the Police Commissioner described the scene this morning preliminary investigation at the scene indicates this male was wearing an improvised low tech explosive device attached to his body. He intentionally detonated that device looks like there were three other people in the immediate area also sustained minor injuries Authorities Say a couple of those other victims went and took themselves to the hospital. It appears they are experiencing ringing in the ears, minor injuries that should clear up. At this point, part of times square is shut off the part that connects it to the shuttle to Grand Central terminal on the other side according to officials, they had just undergone an exercise here about a month ago to see how they would handle this very type of situation according to Police Spokesman john miller, there have been 26 plots that have been preventing on new york city of people trying to attack in the name of terrorism, of course, the most recent september 2016, a bomb that went off in the chelsea area south of here and in 2010, there was a bomb that failed to detonate, and the suspect was seen by pedestrians, and police were alerted to that. One of the things that happened in new york city is people are very aware of the potential for terrorism here Officials Say this is a target for those who might want to, in the words of governor cuomo, attack democracy and liberty so people, those of us who work in this area are always very alert and always looking for anything that is out of the usual. And police often do drills in this area, so that when these things happen, they move and mobilize very, very quickly. Fortunately, this morning, no injuries the major injury to the suspect himself who police are now questioning and they are asking anyone who may be familiar with this suspect to contact them with any more information. Guys, back to you. Thank you and again, of courseering as you say, very fortunate that nobody was really hurt seriously. Lets give you another look at markets at this hour. The dow, the s p, holding on to the gains after a record close last week. For more, were joined by Bmo Private Bank chief Investment Officer jack abln and Brian Jacobson i think you wrote the economy is coming off two consecutive quarters of three plus growth. We expect the momentum can continue in the first half of next year. Why . It is predicated on tax reform going through, and hopefully well see a baton be passed from Consumer Spending, which accounts for roughly 70 of economic activity, to business spending, which is only about 17 of business spending im hopeful that will continue and well be able to keep this 3 plus growth at least for the first half of next year. And what gives you the confidence that will be the case well, i think part of it is analytical just looking at the fact that business machinery and other Capital Equipment is at an alltime high in terms of age, i think Something Like 11 years. Also, just, you know, talking to many of our clients who are small and middle sized business customers. More than half but not quite three quarters say that they will ramp up spending if they have tax incentives to do it i think, you know, those two combined but again, were still in a 2 nominal economy. At 0. 7 , labor force growth, plus 1. 2 Labor Productivity we hope, its a faithbased initiative that this business spending will ultimately flourish into some productivity down the line. Brian, obviously, not everything necessarily changes with the markets when the year turns, but i do wonder exactly how long this type of environment we have been in for so long can persist with this extremely calm market, low volatility, kind of a global story thats carrying things now were getting this potential extra boost from fiscal policy so where do you think i guess the direction of surprise might be if the markets change their character . Well, what we have been telling our clients is that really you want to position portfolio to balance the risks around the upside and downside, with where valuations are, it as as though the fairly good news is already priced in so it seems like the balance of risk may be a little more to the downside as opposed to the upside business spending has been picking up already since the beginning of the First Quarter of 2017. And we anticipate that thats going to continue, which is one of the reasons why a lot of our managers have been favoring things like industrials. But lets not count out the consumer we know that Consumer Spending continues to be very important Consumer Discretionary has lagged as a sector perhaps were going to see a period of time in which we have a bit of a rotation from some of the more high flying tech names into some of the names that have been flying under the radar, especially on the more consumer cyclical side of things. Does that suggest that you mean can i just follow up on that . Sure. Faang stocks generally investors clamor to faang stocks when theres uncertainty, when theres earnings uncertainty because Companies Like netflix can crank out earnings no matter whats going on or amazon, you know, can grow no matter whats going on but if we do see a broadening of economic activity, then perhaps as brian pointed out, we will actually see value oriented sectors like industrials financials, even energy perhaps lead the way and so i was actually encouraged as it looked like this tax plan was taking shape that tech stocks were actually falling and some of these other names were leading the charge higher. That would suggest that investors are perhaps looking for broadening of Economic Growth brian, you suggested that maybe, and as jack was talking about, maybe there will be a rotation to some of the under the radar stocks as opposed to the faang stocks does that mean you might sell faangs right here if you were talking to one of your clients who had a large one of the interesting things about this environment is how long do you ride a rally you dont want to get out too soon or too late, but it was rockefeller who said he never regretted being out too early. And so we have been rotating more into some of the more value oriented names my good friends at the Wells Fargo Investment Institute in their 2018 outlook, they have been talking about how to invest in an aging recovery lets face it, a lot of people think were in mare the last third of a bull market, but this doesnt it will be the clock, and this can run a lot farther and a lot longer than people expect because while we have very broad Economic Growth, its rather shallow so theres a lot of breadth but not a lot of depth to it 95 of the worlds gdp is growing, but only about 40 of it is growing at a pace faster than the average over the last 20 years so thats one of these paradoxes of growth where even though you have a lot of growth, it can still command a premium valuation in this type of environment. But im much more comfortable looking at in this aging recovery, looking at more of the value oriented names so what would some of those names be then . Well, i cant talk about specific stock names but as far as the general themes, were looking at those companies in the more consumer cyclical areas that are focused on consumer experiences. Everybody is talking about how do you create this moat around the amazons of the world there are a lot of specialty retailers and also say home supply companies that can protect themselves at least for now from the Amazon Effect but then also on the industrials side, youre seeing a lot of opportunities in those companies that are going to, as jack had pointed out before, perhaps benefit from another surge in Business Investment spending if we get tax reform, especially if theres this asynchronization between when they get the tax cuts and bonus depreciation. If theyre allowed to do full expensing in twount 18 but they dont get the tax cuts until 2019, that really incentivized businesses to accelerate the business incentive plans which can benefit industrial firms bl something to watch in the final form of the bill thanks to you both, jack and brian. When we come back, Bitcoin Futures are trading on the cboe, seeing wild swings causing two trading halt well have more details strad ahead. You can see all three exchanges where they coin actual bitcoin new Evacuations Ordered as California Wildfires rip across the region well take you there live. Squawk on the street will be right back zar one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. We continue to follow that developing story out of Southern California new evacuations have been ordered as a string of massive wildfires continue to grow jane wells joins us with an update evacuations are happening just across from where i am right now. The smoke is really heavy right here, as it goes into car pint area, and the flames move down the hill over here as mario, his house, he had to evacuate yesterday its in there in the back of this nursery area. It is amazing that after one week, after one week, thats when this fire started, it is still threatening homes, still destroying homes and still forcing evacuations. If you look at the video from yesterday here, very, very unusual that this would happen suddenly, the santa anas yesterday blew up in this area the fire moved west into Santa Barbara county and to the wealthy enclave of montecito, where they have homes and estates worth potentially tens of millions of dollars, and several celebrities, many of them tweeting. Rob lowe, for example, tweeted praying for my town. Fires closing in firefighters making brave stands could go either way. Packing to evacuate now. Oprah winfrey also has a home there. She tweeted, peace be still is my prayer tonight for all the fires raging through my community and beyond yeah, because there are still half a dozen fires burning throughout Southern California most are nearing full containment, not this one. This is only at 15 containment. 230,000 acres, that is over 300 square miles burned. And when its all added up, guys, there will probably be 1,000 homes that have been destroyed at least thats a big deal for the insurance companies. Power lines, tens of thousands of people have been without power. And the Power Companies are out here socal edison trying to restore that, and we still dont have a cause for any of the fires was it power lines or was it manmade, either accidental or intentional . We just dont know right now and important to note, to be able to prevent them in the future thanks so much the first Bitcoin Futures now trading on the cboe, and in less than 24 hours, the exchange had to trigger two trading halts due to price action. Will these contracts give the cryptocurrency legitimacy or make it easy for Institutional Investors to short it, just as bitcoin euphoria goes main stream, you can see the Contract Trading below the price, 17,790 for settlement in january. Joining us now, spencer bogart, head of research, and gene munster. Good to have you here. Gene, is there anything we can conclude as we approach a little more than 12 hours of trading of Bitcoin Futures . Two things. First is bitcoin or the broader block chain is here to stay, and second is were in a nearterm bubble i want to put some perspective on this. Typically, you see movements of usage where the currencies move in tandem. In this case, the transaction volume is up 60 year over year, and the actual currency is up 1400 . Your quick fact of the day here, too, is 1400 is the exact same that amazon went their run, 11month run from may of 1998 until it peaked in april of 1999 so this 1400 increase is a little bit of a daunting tale when you think about bubbles still, to compare it to amazon, a lot of people will hear it and say amazon is now much higher today, and therefore, if bitcoin follows the same trajectory, theyre going to stick with it i think thats probably the right approach this probably is going to take a natural pullback in the next few months, but its fundamental to the future the natural pullback in amazon was like 90 . Went down to 7 not to say it has to happen, but worth pointing that out. Reminding people. Spencer, what do you think bob pisani points out the transaction volume, while rising, is still so small compared to gold, for example. What do you conclude after the first 12 hours plus of trading of Bitcoin Futures listen, shortterm trading action could go in any direction, but i think overall, bitcoin is absolutely in the first inning whether we look at the institutional side of the table or the retail side of the table, were absolutely in the first inning less than 2 own bitcoin on the retail side. Zero percent institutional ownership. I think most people would be crazy to aggressively short the market lets think about the supply side of the situation here probably 80 to 90 of bitcoin are locked up with longterm holders that have conviction in this asset these are people who have been through up markets, down markets, multiyear bear markets, and extreme volatility. If you think theyre going to short because of a little downside on futures trading, i would be surprised to see that gene . I think theres going to be a pullback here. I think we have a disconnect for the near term fundamentals of the amount of usage. A quick cautionary tale here as well over the weekend, one of our analysts was in an uber, and the uber driver asked him, how do you buy bitcoin . And she actually purchased some, tried to purchase some at the end of the uber ride and i think when you hit that point, this is just too reminiscent of the dotcom and real estate bubble im in the camp, also believe in this, but i think its going to pull back. Spencer, im told theres going to be thousands of cryptocurrencies you mention the lack of supply when it comes to bitcoin itself, but i dont quite understand it would retain value when theres so many other cryptocurrencies out there. None of them are bitcoin. Its the king of crypto currencies even the name cryptocurrency is a misnomer in itself it contains the greatest network effect, and its going to continue thinking of it in terms of transaction volume is helpful, but too much relies on bitcoin as a currency. Its like a platypus here. Just like the platypus has features its venomous, egg laying, has a beaver tail and otter feet, scientists thought this thing was so weird, they had to make a new category for it. They believed it was a hoax and had to define its own category bitcoin is the same thing. Its actually not good at being any of those things, but it is great at being bitcoin were talking about a new category right im trying to understand why this particular whatever you want to call it at the moment, platypus, happens to be better than any other platypus thats going to come along. Theres leap frogging in technology, right . The model a was really good until the model t came out and people traded up what are the characteristics of bitcoin that mean its going to retain besides the fact that everybody happens to be using it right now and has first mover advantage, we could have said that about myspace, and then it went away. Absolutely. What about bitcoin makes it better absolutely. Listen youre right something could absolutely challenge bitcoin, but the reality is right now, bitcoin has a Gigantic Network effect lead over anything else. It has the huge first mover advantage, and all of the onramps point to bitcoin. When you logon to any major exchange, thats the first thing most people buy. Look at the institutionization of this. What are the first products to roll out what will the first etps be. Thats only extending right now. Its not decreasing. Gene, from your perspective as somebody who follows technology, broadly speaking here, the advances in block chain decentralized applications such as bitcoin or ethereum, do they have a significant future are we at the beginning of something new . I absolutely believe that i think this is a great case where they can do things better than traditional currencies. And not all industries are going to be impacted by it, but i think the whole concept of the block chain and again who knows what currency is going to be the winner, is going to be structural and fundamental to how we trance act value in the future all right, guys well see. Spencer and gene it goes on and on. Thanks so much. When we come back, were not going to talk about bitcoin, at least for a brief moment elite is challenging qualcomm well, elliott wants qualcomm to raise. Well give you details on that also, a quick check on stocks at this hour. There it is right now, were up on all the mor aras. Ajvege squawk on the street will be right back its all yours. Wow record time. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. 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. To help you grow and protect your wealth. For every hour that youre idling in your car, youre sending about half a gallon of gasoline up in the air. That amounts, over the course of the week, to about 10 pounds of carbon dioxide. Growth is good, but when it starts impacting our quality of air and quality of life, thats a problem. So forwardthinking cities like sacramento are investing in streets that are smarter and greener. The solution was right under our feet. Asphalt. Or to be more precise, intelligent asphalt. By embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to analyze the flow of traffic. That data runs across our network and we use it to optimize the timing of lights, so that traffic flows easier and travel times are shorter. Who knew asphalt could help save the environment . Shares of nxp up a bit this morning, after elliott this morning, a 6 holder of this company, said it believes nxp is worth 135 on a standalone basis. Why is this important . Well, elliott along with a number of other shareholders had been for some time in the belief that qualcomm should not be able to complete its 110 a Share Acquisition of nxp that had been previously agreed to the approvals for which are forthcoming very shortly that being the eu and china, which will allow qualcomm to complete the deal, but what is also important for qualcomm to be able to complete the deal is that it get at least 80 of the shares tendered to it. Thats why elliotts opposition to said tender at 110 is of importance because it along with large shareholders such as hedge funds and a number of others, might be able to have enough shares amongst them alone that prevent qualcomm from getting to that important 80 number we have been following this for many months. In fact, it was, i dont remember, may have been june or prior to that when i first pointed out the possibility that given the performance of nxps peer group and its own underlying performance, there were many who were starting to at least claim that if you simply throw a market multiple or the peer Group Multiple on its earnings, you would get to a higher price, because its business overall has been doing fairly well. In a long presentation this morning available on a website they set up, elliott makes a similar contention saying that its pure multiple is 18. 6 times you take what they believe it will hit in the not too distance future, even 2018, and get to their price of 135. Will it really come to that . Probably not elliott is known for being somewhat stubborn in these deals, taking them right to the mat, but other shareholders made it clear they would be willing to take a price above 110 but below 135 qualcomm soon will have to make some decisions as to what it is willing to go to for a stock, of course, that has continually traded above that level for months at this point this morning, all we get from qualcomm is the following statement. They say elliotts value assertion for nxp is unsupportable and clearly nothing more than an attempt to advance its own selfserving agenda we remain fully committed to closing the acquisition of nxp and believe the agreed upon price of 110 is fully fair. Its their contention that it is unsupportable that would tend to be central there are others who say, oh, no, its fully supportable you have this multipart a arbitrage where people are laying bets. What is the outcome of how its being handicapped right now . They could close this thing within lets call it, if they agree to a price, pretty quickly. I dont know, a month or something along those lines. Time, value, money not sure where theyre discounting but there may be upside i come in in the low 120s based on having had conversations with some of the participants here. But elliott can be tough paul singer, he doesnt back down he doesnt back down when we come back, the final push for a tax overhaul. Congress focusing on passing a bill before end of the year. The president of americans for tax reform, Grover Norquist, and a former chairman of the council of economic advisers, austan goolsbee, will join us to discuss. Squawk on the street will be right back well, its earnings season once again. Yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Good morning, everyone im sue herera heres your cnbc news update at this hour. As we have been telling you, a pipe bomb strapped to a man went off in the new york city subway near times quer this morning injuring the suspect and three others all of the injuries are nonlife threatening. The man is identified as 27yearold. Akayed ullah he reportedly told police he did this in the name of isis former Trump Campaign manager paul manafort, and rick gates arriving at a washington, d. C. Courthouse for a status conference both were indicted on 12 counts into alleged russian interference during the 2016 president ial election. Russian president Vladimir Putin meeting with Syrias Bashar Al Assad at an air base in syria he announced a partial pullout of Russian Forces from the country. The stopover was on the way to putins visit in egypt later today. Israeli troops clashing with Palestinian Protesters in the west bank as demonstrations continue following President Trumps recognition of jerusalem as israels capital. That announcement has sparked widespread protests in recent days you are up to date thats the news update this hour ill send it back downtown to you, michelle. Thank you very much, sue. All right, congress is getting ready to make a final push on passing tax reform before the end of the year Jackie Deangelis joins us now with what the plan may mean for oil and gas companies. Good morning to you well, its not the primary focus of the bill, but there are several provisions as you mentioned embedded in the tax reform plan that will impact the energy industries. These are important for investors in the sector. The bill bolsters trumps effort to recover investment costs. Big oil should continue to benefit from exploration, infrastructure build out and drilling the impact on clean energy is a little uncertain at this point the house version of the bill would partially or completely roll back credits for wind and Solar Projects the Senate Version doesnt necessarily do that, but it does add a new proposed tax that would discourage multinationals from moving jobs and profits offshore its believed that could cancel out the renewables credits Nuclear Energy seems to be a benefit as well. The tax credit would be extended, helping companies that are already Building Nuclear companies. The S P Energy Sector is down about 9 over the last 12 months, but thats palshy because of the swings in oil prices support for big oil could certainly help stabilize that group. On the solar side, the guggenheim solar etf up about 30 over the same time period, seemingly unphased by whats happening in washington. The one thing we know is we still need more details, michelle, a lot is still uncertain and unclear at this time yeah, so many differences between the senate and house at this point all right, thank you, jackie lets stick with tax reform the house and Senate Conference committees meet publicly for the 1st time as republicans are racing to get the bill through lets bring in austan goolsbee, former council of economic advisers chairman, and Grover Norquist gentlemen, good to have you here good to see you grover, a story thats going around a lot, started in the wall street journal that says the Senate Version of the bill could mean that for some, marginal tax rates could top 100 its a narrow group of the slightly rich, i would say, versus the super rich. But its certainly going to be very coincident with our audience are they going to fix that by the time this comes out of conference yes, absolutely look, this has been several years in the making. As it gets put together, that sort of stuff will be fixed. Also remember, theres another tax cut in april thats when the next budget reconciliation package comes by, when we do block granting of means tested welfare programs. A lot of spending restraint over the years, and that also means an opening for extending some of the tax cuts that are not yet made permanent, and adding more, and certainly fixing anything that ends up falling between the cracks a lot of people would look at this and say this points to how quickly they are moving. Critics would say rushed your thoughts on the bills the competing bills as they stand right now. Well, look, the polling is now out. And if this tax bill has a 32 Approval Rating, thats the lowest Approval Rating for any major legislation in 40 years. It is less popular than previous tax increases. And the reason it is is because if you look at the bill as its flowing through now in both the house and senate, its going to raise taxes on millions of middleclass people in order to give a gigantic tax cut for people with 20 million estates, for corporations that already have the highest profit levels that they have ever had in the united states, and to cut the rate on millionaire passthroughs it doesnt make sense. And what grover just told you is confirming what paul ryan said, which is they want to pass this tax bill, rush it through, so that they can then turn their attention to cutting medicare, social security, and a series of other programs that are run by the government thats who i think theyre going to have problems and theyre going to have to seriously change whats in this package. Cutting spending, in other words. Grover, your response to what austan is saying a lot of that stems from the inability to eliminate state and local taxes in states like california, new jersey, new york, where a lot of upper middle income people live. This is where the left and the Public Sector unions are focusing their attention we had federal government tax subsidies to corrupt big city machines, which pay for their problems with high property taxes, and incompetent governors who pay for their failures with high personal income tax rates and Corporate Income tax rates and its very important that we remove this subsidy for overtaxation in new york, new jersey, connecticut, minnesota, california and youll see that come down. You have already seen the Senate Leader in new jersey who had said he had been planning a millionaires tax saying thats off the table now. All thats changed so 1,000 tax increases that the democrats wanted in blue states will now not happen. And 1,000 tax reductions will over time also come through. So this is a bill that will help keep taxes and spending down at the state and local level, particularly those states and cities that have been most abused by high taxes if i could summarize that much more quickly, its if you live in a high local tax state, dont worry, your local governments will be forced to lower taxes because so many people are going to move how long is that going to take, and a small consolation for people who live in those states and feel that they cant move . Are you talking to me yeah. Oh, im sorry look, its not that people are people have been moving for the last 20 years. These hightax states have been hemorrhaging highincome earners. I was just down in florida speaking to a bunch of Hedge Fund Managers with new york accents. They moved their operations to florida with no personal income tax. New york has already been kicking people out of new york what will change is two things one, we are bringing rates down for all of the groups as well. This is not if there are any challenges where some particular income group doesnt do as well as we would like, we can fix that now we can also build on it in the april set of tax reductions. But local governments and state governments themselves do react to losing the subsidies for high taxes, and theyll bring their taxes down california cant maintain a 13 top rate and not lose Silicon Valley over time not immediately, but over time austan, treasury this morning, i think it was this morning, saying we think this will pay for a lot of itself because were going to get higher growth. Were coming back to that again. Get us to 3 regularly somehow i think you care to differ with that point of view yeah, look, were back to the magic bean stock argument. That did not happen before when george bush did that its not going to happen now the official scorers who add up what the cost and effects of this will be have definitively shown that its not true many of the members of your audience are going to get hammered from the state and local deduction and things like that but more important, both politically and in content, everybody making less than 75,000 is getting very little and millions of those peoples taxes are going to go up in order that we cut taxes by trillions of dollars for corporations whose profit rate is already at record levels. And to abolish the estate tax and things like that it doesnt make sense. The reason why this bill is unpopular is because of whats in it. And you know that republicans know that because they dont want people to see the details theyre trying to do this in the dark of night, scribbling in provisions by hand rather than releasing the bill and having open hearings the way we did for all the other major pieces of legislation. Grover, millions of people who make less than 75,000 going to face higher taxes well, one of the things this bill does thats very good is it eliminates one of the obscene tragedies, crimes of the obama administration, when they put a tax in to force 6. 6 Million People to pay a tax because they wont buy obamacare because hes smarter and better than they are, and theyre punished. They get nothing they dont get obamacare they det taxed and 80 of them make less than 50,000 a year we are getting rid of th Obamacare Mandate tax. They change it from the mandate to a tax its a tax and thats going away. Its a very important part of this bill. And i know the democrats and the liberals always, they attacked reagan they said this would be helpful only for rich people, and 20 million jobs flowed from that, and higher income people paid a higher percentage of income taxes after than before. And the tax cut we had most recently, the 20032007 bush tax cut, revenues were up beyond what they had said were going to happen without it. So we do have examples of tax cuts paying for themselves not that long ago. Gentlemen, we have to go. Thank you. Good to have you when we come back, its another big day for bitcoin. This time, well, futures trading well under way, surging more than 20 in the first few hours, although cooling off a bit well speak to the ceo of block Chain Security company bitco, and lets get a quick check on stocks still up ghbahetrtomg ee cin rit ck 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 how vd you position yourself ahead of the Federal Reserve meeting . Well lay out your playbook at tradingnation. Cnbc. Com more squawk on the street coming up. Lets get right out to the cme group in chicago Rick Santelli is there with the santelli exchange. Good morning. Thank you. I would like to welcome jim beonco we have to quickly weigh in on bitcoin. Quickly, you know, hit a 10 , 20 volatility market, didnt capture 30 . I personally think no contract is going to give you the information that people want to derive from a futures contract on bitcoin until we get an established selling presence being able to short that contract is many that many fcms arent going to allow for a while. Thats correct. In fact, the bullish story for bitcoin is exactly that. Theres no way to really sell it the only sellers of bitcoin are people who already own it to long liquidate futures contracts allowia to sell things you dont own . I never had a barrel of crude oil, but i sold my contracts in the day. It is want that they cant its because thats where the greatest risk is that the toll keepers are going to try to monitor. Thats exactly right. After going up 1,000 in the last year, they dont want people shorting it and risking the margin calls as well youre right, once we get a real short presence and much larger volume, because the volume is only just a couple percent viewers, this is something that is just intrinsic to opening new contracts in anything, whether its futures or a cash product or a new kind of derivative, these things take time in bitcoin, the fascination is running way ahead of the liquidity. Its going to take time to figure out what exactly it means that its trading at an 8 premium to cash. You know what i learned in the credit crisis . Obvious things always come back to haunt you there were certain derivatives that were unregulated and even places like teachers Pension Funds in california would participate in these products, but when it all went awry, many of these managers are running these funds understood the products, they were able to claw lot back theres so much nefarious activity that has been associated, may be associated with bitcoin, that i think these futures clearing missions by merchants just by having accounts should things go wrong, theres going to be clawback issues, i think. Theres big problems. Lets start with problem number one. Theres dozens of bitcoin exchanges, and there are different prices all over the lot. And the first feeling is youre saying the price is off the Gemini Exchange or off this, and yet the price on coinbase is much different on the price on bitstamp is much different you have the wrong price, you owe me money thats going to be problems they have to work through i agree 2018, were going to see a taper in europe, and any Central Bank Activity speculators get in front of, but what were seeing is they were wrongfooted. Interest rate are going down before the taper in europe do you see 2018 when the taper actually begins as a binary scenario, the opposite with rates going up it could very well be, especially at the end of the year taper is supposed to end in september in the ecb lets look ahead to 2019 mario draghi has to leave by rule by protocol, though they dont have to do it, a german should take over. There is no such thing as a dovish german. And we could wind up thinking that were going to have a bit hawk come in to ecb. An interesting couple years with negative rates in europe. David faber, back to you thank you, mr. Santelli lets send it over to jon fortt, get a look at whats coming up on squawk alley. Well, we have dan niles from alpha one coming up. He used to be a chip analyst now hes looking at the Broader Market, and he was nervous about how high we were moving midyear. Well see how he feels now plus, get his outlook for 2018 and his take on what bitinco really is. Thats coming up on squawk alley. Let out your inner child at the lexus december to remember sales event. Lease the 2018 es 350 for 319 a month for 36 months. Experience amazing at your lexus dealer. Win an uncertain world . K predictable income pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over 120 billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. Bitcoin futures now trading this weekend as we mentioned, traffic was so heavy it caused temporary delays mike delshi, a company that enables businesses to integrate into existing financial systems, counts the cme group and royal mint as customers. Good to have you with us here. Describe a little more exactly what role your company plays in this whole emerging ecosystem of cybercurrencies. Youre allowing institutions to better trade the currencies, how does it work right well, a lot of the focus over the last few years has been on the consumer and retail markets. Bitco has been behind the scenes working on institutional products institutional products are very different than Consumer Products instead of worrying about signing up 100,000 new viewers a day, were looking at how to integrate these products, make sure you fully understand the Technology Stack and at the forefront of all that is security so, these are not institutions that necessarily are saying, okay, were going to port everything over to the block chain, were going to in a wholesale way decide to change how we do business its more about kind of adding this as a layer or transitional point in terms of how they transact thats right. I mean, right now a lot of folks are anxious to get into bitcoin, have some exposure with Digital Currencies, so this is really more integrating with traditional financial markets. Asset managers, Hedge Fund Managers, a lot of folks are looking at how to use Digital Currencies within their products, so take that to market with existing things theyve done in the past as we see the Futures Begin to trade, what do you think some of the Critical Issues are in terms of deciding if this contract is going to be successful and all the counterparties kind of have what they need to make this a functioning market seems as if this might have been a little bit tough to get rolling in any real volume and, obviously, we saw those sort of trading halts. Well, excitement is always there, and it people get excited really big, really fast. I think usually things take more of a step by step approach with the futures marktds that we have right now, they are cash settled. We dont have physically settled futures yet. That will be interesting to come i think everyone is highly anticipating all of this ruling out, but it takes time to do this in a safe way that works for existing businesses. Risk has to be understood, legal has to be understood this is a process. Were just at the beginning of it its a very exciting time for sure, but theres a lot more work to be done. And if you can explain for the novice viewer, cash settlement means you get cash when the transaction completes, say, when the contract expires in january as opposed to when youre trading commodities, for example, if youre holding that contract you might have copper delivered to your front door you dont actually get a bitcoin, you just get cash could you just explain a bit more about your business i hear youre helping Financial Institutions create products around trading or related to bitcoin as it stands right now are you doing anything that would actually help them run their underlying businesses so that they dont have to use, i dont know, visa or mastercard or a bank . Well, its a little bit different from the payment side right now. Visa mastercard is more of a payments type of product what bit co does is have a platform for folks who want to integrate Digital Currencies they integrate within their back office, behind the scenes. Youll just see the traditional application you see and underneath that, the technology, whether its bitcoin, ripple, or even royal mint gold, all of those things can be powered through the technology bitgo has. We help keep all the digital tokens secure and safe, accessible, and easy and they can go about figuring out their actual business. All right imagine you might be even busier mike belshe of bitgo, thank you very much for joining us this morning. Thank you we have a new addition to the squawk on the street family to tell you about our sara eisen and her husband matt welcomed a baby boy over the weekend. His name is Samuel Harrison levine both mom and baby are doing very well they are always cute, but thats particularly a cute baby i got to say it is she looks so happy yes, she does cant wait to have her back. Ill send her a note saying shell always remember when Bitcoin Futures started listing. Maybe she bought some a while back when we come back, alpha one Capital Partners Founding Partner dan niles is with us his take on the bitcoin craze. Squawk alley is up next. Dont go away. Ive asked chase sapphire reserve cardmembers to find my next vacation. Uganda, what are you up to . Thats a real silverback gorilla. Im freaking out 3x points on travel and restaurants. Sapphire reserve, from chase. Make more of whats yours. 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. Welcome back to squawk on the street. Im dominic chu. Markets are trading slightly high tore start the week energy up about a percent or so. You have chesapeake, range resources, apache among the names leading that sector. Another standout performer, vallero. That does it for squawk on the street. Back downtown for the exchange for the start of squawk alley. Guys, back to you. Thanks, dom good morning, it is 10 00 a. M. At the cboe, the Chicago Board Options Exchange 11 00 a. M. Here on wall street, and squawk alley is live