Transcripts For CNBC Squawk Box 20171218

Check things out today because we have now seen already 69 record closes for the dow this year if there is another record close today, as you would indicate if you see these gains again, this would be the most record closes weve ever seen in any year for the dow. Last record watts set in 1995 and that was a record of 69. The s p is already in record territory. Weve seen 61 record closes for the s p and thats compared to 18. The dow indicates almost 24,800. You see what im looking for. I cant see your screen. Its a map of south america because the train the sorkin train was oh. No, no. You said san paulo. I was down in san paulo where am i now youre down across from the falklands. The train is. Youre still here youre here i missed the train, as you know youre still in jersey, i think, camden or something not even. I havent left the island of manhattan. Seriously. Im stig thinking im like just hanging outside of penn station. The sad thing is, i had to look to figure out which one i knew you know, i get chile and peru mixed up. Thats west. Argentina. Youre past buenos aires definitely, the train. I dont know how we got across the make the jump panama canal maybe theres a bridge its the imaginary train. It is the polar express. Lets call it that. Take a look at what happened overnight in asia with the major averages the nikkei was up sharply. Gain of 1. 5 the hang seng was up. 7 in europe this morning with the early trading that weve already seen, it looks like the dax is already up by 1. 5 the cac in france is up by 1. 2 . You also see gains with the ftse and with stocks in italy and spain. If you want to check out crude oil, crude was relatively flat it closed the week at 57. 30 wti trading at 57. 61 a barrel. We have a travel alert for those of you trying to travel over the weekend power has now officially been restored at atlantas heartsville jackson airport. It forced more than 1,000 flights to be delayed or canceled the timing could not be worse as we head into one of the busiest times of the year. Georgia power said it was linked to a fewer underground serving that area. Well get an update from phil lebeau. The latest addition of the Star Wars Franchise, the last jedi brought in 450 million. It fell 28 million behind the force awakens. The movies three day take totaling 450 million closing in on half a billion. Critics of course liked the movie giving it a 93 rating the audience score as of this morning is a disappointing 56 . Did either of you see it . I didnt see it im going to see it over the holidays i have a correction to make. Saying we were already in record territory. We are not there are 61 closes for the s p. That is the third most in history. If we close at another record level today, that will be 62 times and that will tie the second most. The record is still held back in 1995 and that was a record of 77 times and hat tipped to Peter Shacknow for that. Thank you. Unbelievable. We know appotex, we know that company. These two strangle the founder and ceo and his wife. Youre talking appotex we know that Company Worth 4 billion founded that company we know the company. Was a generic clavix it was supposed to be murder suicide. The family is disputing that. We dont know. Unbelievable. What were you just talking about, andrew . Talking about the jedi. Jedi. Jedi Rotten Tomatoes. I Pay Attention to Rotten Tomatoes. Can you what . Critics not Rotten Tomatoes. It would be important is that a okay, so thats all browsing. How do you why 96 versus 50 the critics are 93 those are the critics. Individually. More likely a little bit. Then 56 of the audience, which is the sort of crowd source version of this that doesnt surprise me with star wars because youre going to have die hard old fans who are never going to be as happy with the first three installments that were 4, 5 and 6, talking about myself, but it doesnt surprise me. People have so many expectations that theyre walking into a series. I Pay Attention to Rotten Tomatoes when im looking for something to watch me too. Me too and i see i dont care. You look at the crowd the critics or the audience . I generally look at Rotten Tomatoes. I hit info on xfinity it comes up. This is a rare example where i dont care ill watch it anyway. Yeah, right, with this. But you remember the old days some people say this has ruined the movies. Yeah, right it gives you a preconceived notion the ability of a studio to market a film becomes god forbid we let the audience no. The music they think some of these things are manipulated. When you wanted someone to play your music. Harvey weinstein and the oscars. I think its a good thing to have crowdsourcing so there are not as many things this article over the summer about how the studios were hurting over the summer and they were blaming Rotten Tomatoes. Blaming the fact that people can tell each other about what they think about the movies. Maybe its terrible movies. Anyway, bitcoin. Yeah. 20,000. Bitcoin futures launched last night on the cme, that is the Worlds Largest Futures Exchange dom chu joins us with more on all of this. Dom, do you own any bitcoin . I do own i do own some bitcoin. It was acquired over the course of the years just kind of understanding what the crypto currency market is, but i guess in essence what were trying to figure out is whether or not this is going to be a little bit more mainstream, whether people are going to use it like a currency, whether or not people are going to start traveling and businesses use it. Were seeing the institutions given the fact that the cme group, the Worlds Largest cme group has launched Bitcoin Futures. A couple of differences that we had launched last week and the cme. The ones that launched last night are much larger in size. Each contract that trades on the cme is worth 5 bitcoins as to the cboe which is a onetoone margin if you go on to cnbc. Com and check on the tool bar, you can search for Bitcoin Futures it will show you both the cboe and the cme mark right now 657 futures have traded on the cme. A little over 3,000 contracts. That puts the total contract of Bitcoin Trading so far on the cme around the 63, 64 million mark thats about the same amount of dollars that we saw last week when i was onyewu guys for the first day of cboe trading. You get the feeling like a lot of these institutions are just dipping their tows perspective we know this isnt apples to appleless, futures to futures. The oil market, which is one of the more liquid markets out there for futures trades around 145 billion with a b on a daily basis versus around 63 billion with a b for gold markets. So as we talk about futures training for comex, nymex, wti crude, bitcoin is not in the same league. They need to see more liquidity and smooth trading before they get back in on the action. Dom, if youve been building this stake up over years, how much is it worth now i havent been building up a stake over years. Playing around. Checking things out. Yeah. It has to be worth a lot more than when you started . It was. It is now. I have a bitcoin. Wow youre a player. Quite a bit more than it has been. We were going to toss it. Hes not going to be sitting there. Im not retiring any time soon, guys im still coming to work i still need the paycheck. Were not allowed to invest in stuff did you clear this i did i have a cya email from our legal department. Cya, thats stand for a legal term it is a legal term. It is amazing that they tell us we really arent allowed to its like we have to yeah. Got to ask if i can scratch my i know who i feel like i feel like the duke of edinburgh. Have you been watching the crown . I have. He wasnt allowed to do anything. Look what happened to him as a result. But she classic line where he goes, my son out ranks me. She goes, well, of course. Hes the heir to the throne. I havent seen that part. He goes, but im his father he out ranks me . Hes 6 little hard to live with. They didnt invest in bitcoin. No, but were im going all in. In the meantime thanks, dom. Can i buy yours you should Pay Attention to this segment since you might be a potential buyer, right i might be. Okay. Nkts ask my kids want to talk to mike harris this morning he is the president of campbell and company. Good morning to you. For joe here whos thinking about it thinking about it. Currently thinking about it, he wants to know if he should get in he clearly missed the early train. Is there still a train to get on i think theres absolutely a train to get on. Were a very interested watcher this morning were looking at a number of factors. The first is what is the correlation to the other markets . Interestingly enough, its had almost 0 correlation in most of the mack control markets that we trade. That makes it a very exciting market i think about some of the Investor Feedback that weve gotten has been pretty polarized. People are really excited or theyre nervous and dont understand it. Weve gotten more calls on this market than we have on a new futures market in quite a time if you were to see a down side, just tell me, for those out there who are bearish about this, who look at this and say this is funny money, this is completely crazy, you see what just give me if you were going to be wrong, you think you would be wrong in what way well, i think that theres some regulatory uncertainty. Certainly we know the futures have been launched and the cftc and well keep an eye on those the cash market is a very unregulated market across the globe. I think thats one of the concerns that many people have about this market. I mean, theres a number of factors that were watching before will start trading the futures contract the quality of the data. Whether or not we can use the spot data in order to be indicative with all of these Market Participants getting in. Liquidity, volatility, trading cost spreads are somewhat wide but obviously its fairly new. Well have to find that. You have to find an fcm thats willing to help you execute and clear the trades there are only a number of fcms that have green lighted Bitcoin Futures. Most banks are in wait and see mode like we are. How many people are literally arbitraging whats happening every morning, meaning you look at these different exchanges, you look at the different futures trading now and theres clearly a discrepancy in the price . I think theres a huge opportunity there in the market. I dont think based on the spreads that were seeing that there is a lot of arbitraging happening so far and that might just be the newness of the futures contract as i said, the inability to define an fcn. Some of the models certainly trend in short term version make a lot of sense think about the carry opportunity. Theres no fundamental carry via the cash flows there is a fairly sizeable convenience yield when you think about the spread between the spot and the futures some of our strategies could definitely take advantage of that if they stay at these levels going forward. Final question. If we had this conversation in five years what would the price of bitcoin be . Well, you know, were a trend follow lower, not a trend predictor. I have no idea where it will be. In all honesty, no matter what happens to crypto currencies, i think the real trade is in block trade technology were seeing that improved settlement in some of the markets. We believe thats going to unlock the new markets. Before you go then, give us the macro bet on bitcoin without macro trade on block chain without touching bitcoin i think there are a number of companies that are improving upon the block chain technology. I think there could be some plays there. I think overall im very bullish for liquidity in the various Macro Markets that we trade because i believe the settlement process will be greatly improved going forward. Mike, thank you thank you so, you know appreciate it whats that . They call them the moustaches on the crown. These are the guys that are telling what he can and cant the moustaches are telling me you can buy bitcoin but you cant trade it its not going to move just like gold or an etf, have you to hold it for six months. Right here they are our Corporate Tax theyre watching and telling us. Keep your bitcoin. Im he going to stay where i am in the money market. Your money Market Making lots and lots of interest there coming up, republicans in congress say they expect to pass a tax reform bill this week and send it to the president s desk for his signature. Well get a live report from washington next and were going to talk to axios executive editor michael len broke a lot of stuff off those 10,000 emails well be right back. Keep it here 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. Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. In washington Top Republicans saying they expect congress to pass the gop tax reform bill this week. Y ylan mui joins us this morning. Reporter a lot of people raise the eyebrows when they said they would pass tax reform by christmas but it does look like they have the votes to make it happen. The lawmakers are pouring over the final text of this bill. Here are a few notable things to point out. The repatriation rates will be 8 for illiquid assets and the holding time is three years and the first in first out provision that would have limited investors flexibility to sell stocks is not in the final version of this legislation. Speaking on meet the press yesterday white house legislative director mark short said the real win here is taking the corporate rate down to 21 keep in mind whats most important, chuck, weve lowered the corporate rate from 35 to 21 to bring back jobs to our country. A 40 reduction. Reporter the house will vote on the bill on tuesday followed by the senate. Senator john mccain will miss that vote. He was back in arizona convalescing after he was in a hospital for the past several days over the past week. There are a few republican senators who have not made a final decision it is worth noting that all three of those guys voted for the Senate Version of the bill so barring any major surprises here the next few days should be a victory lap for the gop. Back over to you. Ylan, thank you for joining us mike allen has been breaking news lets talk taxes and then well talk mr. Mueller how about that do you want to do it in that order . Sounds good and good morning. One week till christmas. One week till christmas it does look like we will, of course, get a plan the question i have is whether you think that this plan i mean, youve been a good prognosticator thus far. Look out to 2018 how does this change the game one way or the other andrew, it keeps republicans in the game. They were so worried that if they did a belly flop on this, that they would be so behind the curve as they tried to ramp up their mid term campaign. So republicans would have looked weak the president would have looked weak now they stay in the game but youre right about that long game when they get to 2018 is this really going to help them . What weve seen over the weekend is a lot of mostly unintended consequences of the tax plan by people voting for them as you and your viewers know, theyre wellintended by the people who slipped them in so this morning were seeing provisions that help the real estate industry, help the president. Were seeing provisions in there that mean that taxpayers could move up in their brackets faster how this moves out when we start to pay taxes is something republicans arent quite certain about. Mike, there was a report over the weekend about bob corker and his determination to switch and how there was a loophole, lets call it, put into this bill which would be helpful to him. He said he didnt know about it. You look at situations like that and you say to yourself. These were just great coincidenc coincidences something was done specifically and there was a great term in that story so bloomberg broke that story senator corker said that he was going to write to the chairman of the committee, senator hatch, and ask him how it happened. This is a great term that i had forgotten from capitol hill. They talked about how this provision was air dropped in there, ninto the conference committee. So you have an air drop on capitol hill i actually believe bob corker in this situation. In fact, hes calling on the committee to release how it got air dropped in there im not doubting him. Ill saying id like to know how it got dropped in, too, though. The way it got in is a great behind the scenes term of art on capitol hill some of these provisions that are going to cause heart ache for members but they were deliberately put in. Figuring out who did what, who shot john, will be the fun deconstruction of this bill. I look around the world and its not just here, there are political divisions, whether its nationalism, i dont know what it is, great britain, denmark, finland, people going in the eu wanting to come out. So i understand that we are were like this. You cant see it on the camera im reading the journals piece about democrats against tax reform i know that now polling for the mid terms have the democrats up historically more than theyve ever been. So people are maybe theyre mad at republicans im trying to figure out what democrats stand for. Im going to play devils advocate the journal says after the slowest expansion and tepid wage growth, americans should want to see this succeed and its a shame democrats want it to fail. The fed is at a quarter. Markets are at new highs there are positive things happening. Democrats are against that theyre going to shut down the government if theres any talk of actually building that wall, of actually securing our borders. What are they really for slow growth and aly open borders where everybody gets in . What are they running on exactly . Well, joe, im so shocked to having you play the difls add voe carrot fwhou that im over my surprise about that i can try to answer the question. Ill point out that this is one way that this is one way that President Trump miss played his hand a couple of democrats should have been for these tax cuts h when youre giving stuff away you should be able to get democrats to join you. Whether youre joe manchin or a couple of others, they could have gotten a couple of democrats. It would give this plan so much more insurance for the long run. It would be so much harder to portray it as a give away, but they didnt do that. Youre right wait a second if they had given away more to democrats it would be tougher to portray it as a give away . Tougher to portray as a onesided corrupt bill. Down the road, exactly. Exactly. And youre right that there is a lot of good news in america. Democrats will admit that that complicates their plans for 2018 you dont find those democrats sincerely projecting that theyre going to take the house, theyre going to take the senate one of the reasons that they know that thats the case is that there are strong Economic Indicators in america and the tax cut is going to help psychologically at first and at least partly in reality. All right as long as we dont actually secure the borders ive got to draw the line there, sorkin guys got to come in. I have a question for you, joe. You read about all of these loopholes thrown in over the weekend. Yes sausage, sausage. When youre talking draining the swamp. Sausage. But hes right. No. The whole thing the whole thing about the president putting on the postcard, it would be simple, it would be fair werent going to be youre acting like youre naive. You have exactly 52. So marco rubio wants child credits. You have this other guy wants this, hes going to get this remember obamacare we had the nebraska purchase, we had the doesnt make it right though. Im not saying it im saying its the status quo in swamp land which is not ever going to be drained. Go ahead, mike. It is true that it adds complexities i love it on the winners losers list on the bill had winners tax lawyers. I have to tell you Something Real quick about securing the border very close trump adviser told me this over the weekend be this is a huge problem over the weekend. Theres no way there is no money for a wall get over it. As the president starts to think about 2020, and he lr is, that is something they have to figure out. Its the most visible symbol of what he promised during the campaign. Right he goes back. They realize inside he has to find something to say about that it aint going to be the wall that you and i pictured but they say they have to find a way to finesse that. Illegal immigration had tapered off and now its back to where it was suppose sitly you know that i try to take this side, i take that all sides take either side like a sociopath. Very little true beliefs about anything. He said it, i didnt. Mike allen, thank you, sir. Have a great week. Squawk square he jumped on that. I know. We have a little yeah. Squawk square. When we come back from squawk square, we have some new data on growth from cnbcs exclusive all America Survey Steve Liesman has numbers on the trump economy. S p 500 winners and losers 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. It can detect a threat using ai, and respond 60 times faster. It lets you know where your data lives, down to the very server. It keeps your insights from prying eyes, so theyre used by no one else but you. It. Is. The cloud. The ibm cloud. The cloud thats designed for your data. Ai ready. Secure to the core. The ibm cloud is the cloud for business. Yours. Welcome back youre watching squawk box, live from the Nasdaq Market site in times square. Good morning, everybody. Welcome back to squawk box. Lets take a look at the u. S. Equity futures theyve been sharply higher this morning. Gains for the dow of 150 points above fair value. Global growth. Picking up through the morning. S p 500 up four points, nasdaq up 14 points they will vote yes on the tax bill people are looking at this week as almost a done deal for the republicans and the tax bill and that is certainly helping stocks by the way, we mentioned earlier this morning that the dow has closed a record or has closed 69 times at a record level this year if it closes today at another record level that will be the record for all recordsetting years. Last time was 1995 when it close at 69 records. In the meantime, pharmaceutical distributor mckesson is out toy that story accuses mckesson of widely distributing opioid medication without doing due diligence. A substantial case was built and not sued they deny any criminal behavior and say the story was what they call sensational journalism. Very busy week ahead for economic data. Home builders survey at 10 00 a. M. Eastern tomorrow november Housing Starts and Third Quarter current account. On wednesday existing home sales. Thursday the philly fed survey friday, look for durable goods, personal income and new home sales. There are a few notable names reporting earnings this week as well take a look. We have Darden Restaurants coming up, fed ex, micron, General Mills and then joe i dont mean to leave becky out, bed, bath and beyond. Kind of like you guyss thing. Our thing to check out the vaporizers there. Duvets. The heavy duvets. Didnt you get one yet . Is the new brita water thing out . Got to check that out. What else are they selling these days that you like you can get a grill scraper there. Okay. For your little that little the one that the water he has a little hibachi thing out on your terrace . No, but ive always wanted to find a hibachi that attaches to the windowsill thats what you need. That sounds safe. That would be a product, right . Invention. You have one is that what youre saying, steve . You have one. For your kayak . No, for my it goes on the side of the boat. What about one of those pillows thats supposed to stay cold all the time . How many people out there this morning had a tough nights sleep last night. Who are you, the my pillow guy . Its an issue. There is some new data out this morning on the trump economy. It comes from cnbcs exclusive all America Survey Steve Liesman is here as you now know. I was here a quarter ago breathlessly talking about the rise in optimism i dont know what the next step is up above breathlessly because we have done it again. Weve sur passipassed the old hyperventilating. I dont want to hyperventilate it appears to be helping the Approval Rating of President Trump. Take a look atthe numbers here for the first time in the history of the survey, folks, weve been doing this for more than ten years now, 51 of the public says the economy is good or excellent we have not been at 51 . You can see it Rose Steadily under president obama but it absolutely surged under President Trump. By the way, this is the life of the survey, right the life of the survey that were looking at, absolutely. Then 41 of the public says that the Economic Outlook is good or the economy will get better in the next year. You dont see it here. 50 of the public said its a good time to invest. Upbeat on the outlook for wages. Upbeat on the outlook for housing. Take a look at the next set of screens and well show you how this may be affecting the Approval Rating of President Trump. You can see that his Approval Rating went up by 4 points and his negatives came down by 3 points this is the Approval Rating, by the way, guy, is in line with the recent trend you can see in some polls 40 over above getting the 3 handle, getting the 4 handle. Still having half the country disapproving even with eke no, maam economic numbers like that hes performing better. The next screen, his economic levels, those are better he was already net positive in our poll, 43, 41 now hes positive 47 43. A little bit wider people approve of his economic handling of the economy. Less so the overall. The trend here is it the next screen the net approval. We do approval minus disapproval. You can see he had a very bad summer and then its come back to where it was. Hes minus 7 and on the economy hes plus four right there what you dont see the question is why is this happening . One thing we know for sure, republicans have come back home. Theyve dug in they have abandoned him a little bit. His numbers, the republicans, were not as high as they should have been. Theyre back where they are. Independents, a touch more positive democrats a touch more positive. It doesnt seem to be the tax bill ill tell you, the tax bill does not poll very well just 26 approval overall of the 800 americans we polled nationwide and its even tepid among republicans. Just 56 approval among republicans. Hold on, let me just tell you the other side of that theres a large dont know. Okay. Theres a big 30 dont know in our poll. We still tonight kndont kno the final details. I think thats probably it. What were seeing here, the economy really helping out the president. Well see what the up side here, how far it can go. There are other things that keep people from backing the president. They said people vote in the stock market. Right so i know global synchronous growth has to do with the tax bill. People voting with the feet to control the money and theyre voting in favor. Youll never get a tax bill very high as far as the Approval Rating for trump, what do you think, becky, the maximum Approval Rating what do you think his solid negative number will never change 45 minimum. 45 45 would be impeach him. I dont think 45. I do. I think 45 at least. Just with the tweets and the, you know if you took id love to see if you took twitter out of this. Or just in general. We asked that question a while ago. People want him to stop tweeting yes. Republicans want him to stop tweeting. Everyone want him to stop tweeting taylor swift, god bless her said, wow, 2017 was a great year couldnt have been any better for me i hope 2018 is great she is absolutely getting hammered on twitter. If you just were to look at gdp, stock market, optimism, consumer, it has been a good year. I saw the people some of the comments of the people that were just like taking her down so hard it was, i dont know, White Supremacists are everywhere. Theres everybody hates everybody. Were divided. They came up with all of these things, but it just depends on, you know, others would say, well, they like the deregulation, they like you know, its just, again, which side youre sitting on is 2017 how was 2017 for you, steve . I think it was pretty good, wasnt it . Yeah. Yeah good year. Caught a lot of fish music. Youre going to get i sat next to you successfully yeah, right youre going to start trending on twitter by saying it wasnt apocalyptic. I didnt think it was going to be apocalyptic. Reporting that less of the public believes its apocalyptic. Thanks, steve it didnt kill me at all. For more lets bring in the chief economist at steeple financial and ryan dietrix i think, guys, honestly that the market could double from here and maybe trump would get an uptick of one more point on approval what do you think, lindsay i certainly think theres some up side potential for the market, particularly if we do see tax reform come to fruition. As weve heard from many ceos, a lot of that cash going back to Balance Sheets will be used for reduction in debt, stock buy backs which is very positive for the market other ceos are talking about putting that cash in terms of the traditional investment cycle, growing investment which is great for the equity market near term it does seem like its a winwin, but of course we do have to look at the broader sense of whats happening in the economy, which to steves point, yes, we have taken steps in the right direction, but were still on very moderate footing if we take a longer term view and not just a narrow view of the last six months which has shown above trend activity so id like to be talking about a stronger labor market. Id like to be talking about stronger wage growth not just optimism supporting the economy at this point. Are you above 3 for this quarter, lindsey i dont think were going to see another 3 quarter i do think were going to see an above trend growth rate for the final Fourth Quarter of the year. The atlanta fed is wrong at 3. 3 and the new york fed is wrong at 4 well, remember, they consistently revise those forecasts. Theyve been revising to the down side. I do think as we see some of these additional figures come in for the end of november retail sales for december, i think the risk is to the down side certainly to those forecasts coming in closer at around 2. 5 . That would be a surprise. Ryan, do you get into gdp forecasts or are you just is that not as important to you no, i mean, joe, obviously gdp forecasts are important, but when we take a Bigger Picture look at whats going on into the next year, we just released our 2018 outlook when we think one of the big themes we have is this move from monetary to fiscal policy, weve talked about a great rally is the economy really there . No more fiscal policies, tax reform, infrastructure, deregulation, we think thats another juice for the economy next year that will continue this overall global bull market to continue. I want to touch on one more thing. Global earnings. Weve touched on it all morning. Fourth quarter, 10 year over year earnings on emerging markets and developing markets we havent seen anything like that since 2010. Next year supposed to see growth again. Synchronized synchronized u. S. Growth. That good old global synchronous growth. People woke up and said, wow, feeling this global sink cloe news growth. Thank you, lindsey and ryan. Other stock splarkts out performed us. Thats not all. Did you look . Yeah. I looked. I tried i looked and there are many that havent. You know, well just say it i didnt say everyone has okay, folks well continue to look at the various markets. Theyll have a little debate privately and well bring it to you publicly meantime, new shopping data. Verizon out with new information on ecommerce data that i promise will surprise you. The great emperor penguin migration. Trekking a hundred miles inland to their breeding grounds. Except for these two fellows. This time next year, were gonna be sitting on an egg. I think were getting close make a uturn. Uturn . Recalculating. Man, we are never gonna breed. Just give it a second. You will arrive in 92 days. Nah, nuhuh. Nope, nope, nope. You know who im gonna follow . My instincts. As long as gps can still get you lost, you can count on geico saving folks money. Im breeding, man. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back, everybody. Some stocks to watch this morning. Procter gamble is adding nelson peltz to its board. This comes after a lengthy proxy fight between the activist investor and the Consumer Products giant Procter Gamble said it shows peltz fell short of a majority but because he received shoch shareholder support he will be given a seat Chinas Tencent and j. D. Com will be investing 863 million vipshop up by 45 . Coming up, new shopping data verizon out with new data on ecommerce data squawk box 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. Usc kmersz traffic to the top 29 onlean retailers grew by over 100 on black friday this year thats according to a new report by Verizon Enterprise Solutions. For more on its ecommerce this Holiday Shopping season, lets bring in michelle dupree, Group Vice President at Verizon Enterprise Solutions its good to see you welcome good morning its great to see you. Great to see you too. Tell us how you come up with this data. You are measuring traffic across all of verizons Broadband Networks yeah, thats correct. We measure broadband traffic across theu. S. Top retailers, and we compare that data yearoveryear and look for trends and indications of volume either increases or decreases. We know there was a big increase in black friday has that kind of worn out through the rest of the Holiday Shopping season as well . No. It actually, i think, good friday or black friday kicked things off and we saw an 1 1 111 increase yearoveryear, and then that carried through the weekend with 24 on saturday, 29 on sunday, and then cyber monday actually saw some really strong growth at 84 . It continued over the weekend, and then weve seen steady growth from that point forward this past weekend we actually saw a 15 increase on friday and a 17 increase on saturday much more modest advances, but much more modest gains for some of the other dates outside of that, that one big weekend right after thanksgiving yeah, absolutely. Absolutely i think that that was to be expected when you think about promotional activity and what retailers, you know their strategy for such a long season. They had an extra week they have to think about how do they stretch out their promotional activity and really continue to, you know, get consumers engaged for that very long sixweek period yeah. Theyve done a great job. We usually would think about Online Shopping basically being just about finished at this point. Youre already talking about the 18th of december that makes it tough to get things here in time. This morning i saw additional deals from amazon, something i paid 129 for last week is now on sale for 99. Is that what we can expect even more of a push even in this final week yeah, absolutely. So we got a couple of days you know, you have standard shipping, which is tuesday is the cutoff for that, and then you lead into Super Saturday i think youll see a lot of promotional activity for the retailers theres a lot of procrastinators out there that have a lot of shopping to do between now and the 24th, and i think youll see it just the volumes increase this entire week and lead up to the actual holiday. If you are looking at all this traffic and actually monitoring where people are going, you must know who the big winners are in terms of the Online Retail players yeah. We actually look at that at a macrolevel we dont look at the individual, you know, location or the website that the consumers are hitting. We look at the macro level, the total volume, and look for those trends yearoveryear. Anything else surprise you from the data this year . You know, i think the one did surprise us is cyber monday because this is the fourth year that weve done the Holiday Retail index by verizon. Cyber monday proved to the retailers that its still its still an event, and its something that they can absolutely capitalize on okay. Michelle, thank you very much for your time. Its great to talk to you. Thank you when we come back, our guest host for the next hour is an Investment Banker who specializes in media and telecom deals. Big player in the industry Aryeh Bourkoff joins us next here on set. Plus, were talking about the gop tax deal thats up for a vote this week squawk lsquawk box will be ri. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. 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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 dow futures pointing to a triple digit gain. Another record lets make a deal. Multibillion Dollar Health care tieup reportedly in the works details straight ahead plus, travel trouble over the weekend. The nations businessesiest airport scram begging to get back up to speed this morning after a massive power outage grounded flights and right at one of the most hectic times of the year as the second hour of squawk box takes off right now take a look at the futures right now. Were going to show you whats going on this monday morning dow looks like it would open up, yep, green again 147 points higher right about now. The nasdaq open about 50 points higher s p 500 looking for another big open about 14 points higher perhaps on the back of expectations we will get this tax bill along the way. Heres whats making headlines csx chief executive officer Hunter Harrison has died now, this is just days after taking medical leave the operator says that harrison died of severe complications from a recent illness. Acting ceo will continue in that role you saw that stock fall on thursday and friday when that first announcement was made that he was taking a leave. This has taken a terrible turn for about 50 per share. About 4. 9 billion then take a look at Procter Gamble, this is activist investor nelson peltz after all that time following a very long and contentious proxy battle with both sides had claimed victory. Procter said it decided to hold talks with pelz about a board seat because the election was so close because a large number of shareholders wanted pelt zbr on the board. Weve been saying it for months. He had won even when they said he lost. You have a whole different situation. You have a good story. Hopefully its accurate we have more with ari in a moment meantime, a developing story this morning power has been restored at atlantas Heartsfield Jackson International airport. An outage there forced more than 1,000 flights to be delayed or canceled phil lebeau joins us with the latest, and, phil, even though the power is back up, this is going to take a while to work out. You have to figure out how to get people on flights over the next couple of days. It is going to take a couple of days power has restored shortly before midnight. Basically shut down the airport for 11 hours what caused it there was a Power Substation that caught fire and then that fire, the heat from that fire, then caused the redundant or the backup station to also fail. Heres some of the travellers who were stranded in atlanta snoo lack ofcommunications was probably the number one complaint. More than 1,100 Flights Canceled thats yesterday as well as some today. Inbound flights, as i mentioned, they were held at airports, so they didnt come into the airport because some of the planes that were there were stuck in the tarmac for several hours. Delta and southwest are most impacted you take a look at shares of delta. Keep in mind that this is an airline that dominates Atlanta Heartsfield Jackson airport. The second biggest carrier, if you will, is southwest airlines. Ive talked to both of the airlines there is some wiggle room in trying to bring back capacity in order to help with the backlog of people who were stuck there or may have had Flights Canceled cnbc did an earlier report about the deal being in the works, and Penn National was also buying Pinnacle Entertainment in a deal worth 2. 8 billion in cash and stock. I think this is enough deals on a monday morning to call it a merger monday. Wedding wednesday. Throwback thursday that would be Something Else lets get to washington again. Washington news. Back with the news good morning again, joe barring any major surprises, it does look like republicans have votes to pass the tax bill the house is going to vote first on tuesday, and the senate will follow suit. One new development, however, senator john mccain. He will not be there for the vote he is back in arizona after spending several days last week in the hospital with the side effects of his cancer treatment. On a missouri positive note, however, senator thad cochran tells us that he is in washington and plans to be here to vote for the tax bill and on a government funding measure he had been dealing with Health Issues as well mike lee tweeted this is a big win and is still reading the bill and will hopefully vote for it Susan Collins applauded several changes to the legislation, including expanding the deduction for state and local taxes in medical expenses and getting rid of the first in, firts out provision that had been in the Senate Version of the bill now, assuming they all are on board President Trump made it clear yesterday that he is ready to sign the bill we are just days away, i hope, i hope you know what that means, right . From keeping that promise and delivering a truly aumazing viktsry for american families. We want to give you the American People a giant if tax cut for christmas. Guys, the next few days should be a victory lap for republicans. Perhaps the best Christmas Present ever back over to you all right, thank you very much our guest host this morning, as weve mentioned, one of wall streets Top Technology and media bankers, areh bourkoff he is ceo of lion tree he served as the head of American Investment banking at ubs. Thank you for being here thank you for having me you are sitting here at a really important time for media and technology deals weve been talking so much about these things you are positioning the marnl players. You have the technology players, which have a direct to consumer offering around the globe. We all use google, facebook, et cetera, amazon, of course. Netflix. Then you have the Media Industry and the Telecom Industries and the Cable Industries trying to realign themselves to compete directly for that consumer we dont yet have National Broad babtd in this country. Were dealing with tax reform now, which i think is huge, but next year, 2018, i think youll see more focus on Broadband Connectivity as well, which is essential. The pieces are getting set here. From your description i think i know, but who do you think is in the best position are you talking about the old line media players, or are you talking about the new Technology Companies, the new giant i dont think anyone is properly positioned. The Technology Companies are beautifully positioned to distribute content most efficiently around the globe they have lots and lots of money in their coughers. Theyre going to get more potentially 2 trillion of cash will flow back in weve been saying for years that apple or amazon or google or facebook or somebody is going to have to do this thus far, the only people who seem to be rearranging the deck chairs are the traditional media guys who do you think among the fangs is prepared to make the first move i think its clear that amazon and netflix have a huge head start against the other companies and Technology Platforms. One move begets another. If theres been a 6 billion, 7 billion 8 billion a year on content, they dont need to make a merger theyre building their own you could argue gents that or they look at disney and fox coming together and saying now were going to face another robust competitor for direct to consumer i would still be thinking of the original genius jerry. That was going to be so great, wasnt it . He had the right idea, didnt he the biggest destruction of shareholder value in history, but amazing, though, right timing is everything, right i think the essence of that has that day come i think that the day has come there are questions in washington whether theyre politically motivated or want on the at t time warner deal. By the way, if you have problems with that deal, and im not sure you should, but if you do, you have to imagine you probably should have a problem with fox disney or at least hulu or some of the items within it i think it is very difficult to predict precisely what their grounding principles are okay on one hand, going on net neutrali neutrality, and that makes a lot of sense, although theres probably middle ground longterm. They like deals with disney and fox, and not at t time warner. Do we know that we know the president just because they said that the press conference assuming that we know that they really like fox can that make him come out and say this isnt kosher. Anything could happen unpredictability is a function of this administration and obviously the times we live in however, its a function of the fact that there are new seats being placed on the table. Right . I think its too early to say this cant happen or this cant happen i think anything is possible right now. Even who would have thought the murdochs would have sold i think the government will largely watch this play out. Would you say lets go do you a deal and announce it now, or wait until after april 22nd and hopefully theyll have an answer one way or the other on that deal i would not wait. Clearly, disney and fox did not wait i would not wait because i think there are a few things you have to demonstrate consumer friendly behavior look at amazonwhole foods that deal was approved and done in 70 days the government doesnt necessarily like amazon either, but that deal had a good narrative. I think theres more uncertainty about what can get done and what doesnt get done the overarching forces at work about the realignment of the industry are so powerful that no one is sitting still and waiting until next april everyone is getting and going and seeing how we realign today, and thats where were seeing a lot of thefrenetic activity were talking about. Areh is with us we have a lot of other issues to talk about in the meantime, when we come back, if the dow closes at a record high today, well smash another milestone. This time for the most record closes in a year were going to talk about the drivers of that rally next stay tuned youre watching squawk here 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. Want to bring in keith banks, the vice chairman of the Global Wealth and Investment Management bank of america. Also, tobias is here he is chief u. S. Equity strategist at citi, and areh is also here. Lets talk about the tax plan and what you think is going to happen not this week. I think we all think its going to happen. The question is how do you think the markets are going to react i think the markets should react positively this is a big deal in our minds. Youve got about a over 200 billion impact from this which represents about 1 of the gdp, which makes it bigger than the 2003 progrowth tax cut and second only to the reagan tax cut in 1981. We think it would be very positive not baked into the cake some is what people came out with recently is more progrowth than with both the house and the senate came in im not saying run away, head for the hills. Down from where it is today down from where it is today again, valuations, though, not great, but its okay its not going to bloi us up the key is Earnings Growth the question is how much is baked in i think a fair amount is as your team has looked through the tax plan over the weekend, and a lot of people have been looking for either new loopholes or new provisions that were not expected. Not hugely. I think people are going back to this idea that Domestic Companies took the benefit of domestic Earnings Companies get the benefit. You havent seen it in small caps where you would arguably see it more. I think thats more about the kind of global synchronized growth story thats also in the cake here and that the large caps have more exposure. Tech companies have been the big winners this year. Does it stay that way . On our books . No we think inflation emergence is an issue whatever blind yields go up, growth tends to fall to value. Same thing if theres inflation changes. I keep looking for the factors. I read about inflation coming back coming back now its been going down the other way. Ty think while the market has been hitting highs, i think 25 of the trading days this last year we all want to think its priced in, and youre the expert to my knowledge, Technology Companies or even the tax paying Distribution Companies and media and technology, i mean, we havent even seen that what theyre going to use the cash for yet. I think one thing thats not being discussed enough right now is what the investment is going to look like to bolster future earnings that could give you a billion support for future growth, which is obviously sort of the market continuing to go up. You said something that makes cents. Weve watched people say that multiples have continued to go up there are now at 23 or 24, as Interest Rates have been going up maybe thats not whats look, it has been whats happening, but maybe its because the 10 earnings gain is already in part of the and when we do get the 10 , the multiple just comes down to a more there is the treasury, and there is the equity reskriening. As people get a little bit more faith in growth, your tenyear yield can come up, and your risk premium would come down offsetting, and i would say if you get the 3. 25 or so on the tenyear, you probably are out of that risk benefit probably its much more challenging for multiples. Well be down to a more normal multiple with higher earnings eventually. Probably. Whats more normal . 18 over longterm . I would say what are you thinking i think were above a normalized level of pe multipled, but were the view that we can maintain that 18, 19 times multiple i think with the lift that were expecting and most people are expecting in earnings, most people say our range is 2760 to 2,860. When you add dif debds on top of that, you can see another 8 return next year on top of 22 this year. Not too bad. If you stay at 19 times, you get about 2,830. Oh, you do . Yeah. Multiples could even come down in the middle and still be did. Get a positive return and a pretty good return when you add in dividends on top. I think bourkoff is much more bullish. I believe you because youre now youre like a buy side guy you are putting your money where your mouth is. You left that just like talking about things so youre not wrong, right. We walked in with a surprise election and want ping what the market is going to look like, and now we like to talk about a lot of uncertainty, but things are starting to fall into place going into 2018. Theres a tremendous amount of certainty walking into next y r year. We think companies should be investing where. If you are doing a deal, would you tell them to use cash or use their own stock well, in m a land, the multiple m a is at a 20year high, about 11 times on average. In Media Technology theres a lot more of a pace, but overall, the media that they the m a environment is getting topee i would say use the stock. Youre all in it together. I think every case is different, and then in media land obviously theres a lot more together. Okay. Tobias, thank you. Thank you. Areh is going to be sticking around if areh is right, were going to go under antarctica and its going to come up on the other side of the youre going to be somewhere in Southeast Asia actually, you missed that. Yeah, you missed people that are on the train, you know what were talking about . Finally get to coming up, the finally get there coming up, shares of twitter are rising this morning. Well tell you why next. [lance] monica, it is absolute chaos out here gale force winds, accumulations up to 8 inches. Dont know if you can hear me, but [monica] whats he doing . [lance] can we get a shot of this cold front, right here. Winter has arrived. Whooo hahaha [vo] progress is an unstoppable force. Brace yourself for the season of audi sales event. Audi will cover your first months lease payment on select models during the season of audi sales event. 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. 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. Washington is preparing for a vote on the tax bill as gop leaders rushed to get the job done before the end of the year. Well talk about the implications for businesses and investors with the former top aide to senator mitch mcconnell. First, though, as we head to i abreak, take a look at the u. S. Equity futures. The rally is building this morning. We are now talking about the dow futures indicated up by 170 points above fair value. Thp futures up by 14 e nasdaq up by 50. We will be right back. The great emperor penguin migration. Trekking a hundred miles inland to their breeding grounds. Except for these two fellows. This time next year, were gonna be sitting on an egg. I think were getting close make a uturn. Uturn . Recalculating. Man, we are never gonna breed. Just give it a second. You will arrive in 92 days. Nah, nuhuh. Nope, nope, nope. You know who im gonna follow . My instincts. As long as gps can still get you lost, you can count on geico saving folks money. Im breeding, man. Fifteen minutes could save you fifteen percent or more on car insurance. Good morning welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Among the stories that are front and center this morning, several takeover deals announced just moments ago. Hershey is buying amplify snack brands for 12 a share amplify had closed at 7 a share on friday. The company specializes in healthier snacks like skinny pop popcorn. Two Gaming Companies are also joining forces Penn National is buying Pinnacle Entertainment at a deal thats worth 2. 8 billion in cash and stock. That deal is valued at 32. 47 a share. That compares to pinnacles friday Closing Price up 30. 95 a share. Campbells soup is buying behind snyders pretzels and other snacks that deal is worth 50 a share or 4. Billion in all. Cnbc had first reported last week that snyders had hired an Investment Bank to investigate a possible sale. Think of snyder pretzels yeah, but those what about lance . You know lance cheesy crackers. The little red, white, and blue sort of i like them, but theyre high in calories and theres cheese on them . I dont really think its cheese, but they call it cheese. I dont know. That actually was a pretty good guy, i guess low teens. Okay house and senate participants preparing to vote on the republican tax bill votes expected as early as tomorrow, starting with the house. Joining us now is p. W. C. Tax policy Services Leader kumar its good to see you a couple of things to get added. On margin, positive for corporations look, this is a significant development. One of your earlier guests, i think, echoed that really on the business side its more reform than relief. This is architectural change to the code it brings us in line with the rest of the world in terms of the way we tax multinationals and their income it substantially lowers the headline rate, which benefits multinationals and Domestic Companies and provides reform, although temporary, on the individual side, although i suspect that in the long run we find that even the individual forms end up becoming permanent. We have many people saying the effective rate is 23 already. 23 to 21 doesnt do anything how do you explain that there are plenty of places at 35, and because theyre at 23 they have moved things off shore to get the blended rates down to 23 or theyre at that rate because they found a bunch of oversea earnings that theyre not bringing back to the United States under the old regime or the regime as it exists as of thork if you are a u. S. Multinational, you have profits generated overseas you pay local tax. One of the few developed countries in the world that had that regime. As a result, a lot of that 2. 6 trillion dollars for u. S. Companies is the latest estimate stays overseas, and now under the new regime there is no sort of second layer of tax of bringing that money back to the United States. The same people that would say, oh, this is no big deal, this is sort of a weak, soft reform are the same people that are also saying it is the end of the world as we know it. 10,000 deaths a year, but it really doesnt do much no big deal yeah. I think can be andrew or you could be andrew. The estates, the states, new york, thats where you want to go to school they got, you know, the big buildings and, you know, they got all this great stuff, and theres a reason that move there. It costs money to do all these great things in new york they pay more federal income tax than anywhere else they deserve a break its new york, and theyre the best, and sfo Everything Else is a flyover state, and anyone that lives there is a rube anyone who lives there say rube, and i need to deduct my why is that okay when they pay so much in federal taxes . They basically are subpoena c y cityizing the rest of the country, new yorkers new yorkers. Now they dont get their state deduction anymore. Yeah. So whether you are a donor state or a recipient state is a function of a burj of other programs the policy rationale and the underlying, they dont eliminate it completely. Likewise theres no one in new york thats new york subsidyizes texas, right, andrew . Thats part of the federal system right . We all kind of throw in together, right . We have national defense, and we have National Government we build roads across state borders. There was a republican in congress who was speaking out against this this weekend who said, look, im opposed to this because its federalism, and you shouldnt be paying taxes on money thats already been taxed. What about the federalist part of that every congressman said its my job to vote in favor of my constituen constituents, whatever you might think about it thats what you are going to see. Youre going to see 218 largely House Republicans and 50 Senate Republicans vote for this bill maybe 57 Senate Republicans because netnet they think this is good for their constituents i think this is one of the i dont know if it was a foreseeable side effect, but it was a side effect of the representatives from the states that are disproportionately care about the deduction for state and local taxes deciding if they werent going to what do you think is going to happen to lets call itab bl states that are going to be affected by the salt deduction do i think a buvlg of people are going to leave do you think individuals leave . Do you think businesses leave . Weve seen varying degrees. What do you think happens to the state budgets themselves what do you think happens to education in those states . All of that is derivative of whether or not people decide to leave or not if they continue to stay and pay the tax, those things stay fine. I think theres some data to suggest that while taxes have a role in the decision about where you live, it is not no one is picking where theyre going to live or where theyre going to work purely on tax considerations it helps maybe at the margins, and, you know, if you are living in a part of the country where you can live on one side of the border or the other, and your commute only changes by five minutes, it may change that. Look, it is clearly going to put pressure on states to be, you know, more circumstance pect abw they raise income. The countrys values eventually are supposed to be encompassed somehow in this tax plan, right . Thats how there has to be some semblence of fairness you look at the real estate provisions that were thrown into the last minute. Over the weekend you look at the Capital Gains rate issue you look at the estate tax issue. How do you think americans will look at this you can see how im looking at it, obviously. I can imagine i get a sense of what your perspective on this might be i this i tend of the day most people are going to judge this by what happens to their paychecks, and theyre going to see starting in february withholding tables will adjust they will see a bump up in their take home pay. Thats how theyre going to judge it i remember on any number of occasions pieces of legislation that were either popular or unpopular when they were being passed, but the way the political industry judged them is what happened after the bill was enacted into law and who did the aboutest jo job of telling the rep electric of what they did and why they benefitted from it if you win the report, you dont have to win the political argument or the polling argument during the vote. You have to win it enough to get it passed. What ultimately determines whether or not a bill is successful or popular is what happens after its enacted, and i think republicans understand they cant walk away from that i dont think it inequality one way or the other youre talking order of magnitude for the economy. Its not equality or inequality shifting thats determined by much larger factors in the economy okay. If youre switching to a passthrough doesnt work out, have you checked in to, like, the scarborough method maybe you could move to florida and we can do it on a remote put an office in your house or something down in miami or palm beacorh something and just or do you think you need to be here have you looked into it . The moment a fish is pulled out from the water, its a race against time. And keeping it in the right conditions is the best way to get that fish to your plate safely. Bacteria can multiply to high enough levels that even cooking it will not destroy all of them. Its definitely the most important thing in my business. How fresh is the fish . Where it comes from . How it gets here. The more i know, the better. Sometimes the product arrives and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. We took our world Class Network and we developed devices to track environmental conditions. This device allows people to understand whats happening not only with the location of that asset, but also if its too hot, if its too cold, if its been dropped. Its completely unique. We ship fish, beef, poultry, vaccines, insulin. This is about monitoring and protecting everything we ship. I catch all this amazing, beautiful fish and then once its out of my hands, i have no control over what happens to it. If you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. Its really all about the network. You are looking at trillions of transactions a year. Not too Many Companies in the world can even scale to that type of volume. Who knew a tiny sensor could help keep the food chain safe . Food has to be fresh. Its that simple. 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 disneys acquisition of fox assets comes as the industry is shifting gears to try and battle cord cutting just how big of a threat is it julia borestein joins us right now. She has more on the story. Good morning, julia. Good morning to you, becky. Well, cord cutting and cord trimming have more momentum than ever a new report from pwc finds that the number of respondents that subscribe to pay tv is now down to 73 its down from 76 last year and 79 the year before. A remarkable find of the rise of streaming tv alternatives, the very same number of respondents has subscribed to tv 73 subscribe to netflix another trend to watch is cord trimming people switching to smaller lower cost bundles 27 say theyre cord trimmers, which is dramatically up from just 18 just two years ago. It appears that sports is glue holding the tv bujs u bundle together 82 of sports fans say they would end or trim their pay tv subscription if they no longer needed it to access live sports. In fact, the average sports fan would pay around 23 a month for unlimited access to live sports on any platform. That could continue to drive sports costs higher. An interesting nugget, as we watch netflix and amazon pouring billions more into content every year, says having a wide variety of content is more important to subscribers than access to exclusive content. Andrew okay. Julia, thank you for that. The fact that now one entity controls 60 of it as you know, hulu has competed in the s5 market with netflix. Now in this virtual bundle at 39. 99, you now essentially replicates the fox owned 30 disney owned 30 they owned however, Parent Company of this network, comcast will still own 30 time warner, which may or may not go to at t will own 10 . My question to you is does this turn into disneys over the top platform, if you will, or does it become a chess piece in some larger dance with all of these other players where comcast and time warner said were not going to give you any more content, we dont want to play with you, we want to effectively force you to either buy us out or sell the whole thing to us . The chess game i think is better for areh, but what you are getting at here is that, you know, can disney now use hulu and use it as its over the top strategy to potentially compete. You have to do it separately using the bam tech thing that was the path they were going down just six months ago look, the Media Companies realize that the world is shifting to internet video theyve got to have a direct to Consumer Product probably its hard to put the jeannie back in the bottle because theyve licensed a lot of those rights to netflix over time what happens . I dont think its bad for netflix. I think that i dont think disney is going to put all their chips into the hulu basket just yet. I think it could be a second offering until they resolve the time warner stake. You think theyre going to go all in on a disney oriented ott product and an espn ott product powered by bam tech . Thats my assumption. Do they ever merger down the road we talk about cord cutting and streaming. That is clearly the trend. As much as made on disney and fox as solidifying the bundle. Its so difficult to balance both you have the pure innovators dilemma where the fact that you are worried about cord cutting and the affiliate fee stream that you have on this side of the ledger is really hurting your ability to go to market quickly to innovate, and i think that puts you on your heels instead of on your front foot. They may be guessing internally you have to both factors. You are missing alignment of content spend and consumer takeout netflix spends 7 billion a year customers go up every quarter around the globe they hold Technology Distribution engines and spent 70 billion a year on content. Subscribers go down. When you look at the content spend at netflix, do you say to yourself thats the right number do you say its way too much look, theres a lot of people who say they cant surface enough of that content to actually make it worth it right now, but given the growth that theyre having, theyre saying, you know what, lets throw the spaghetti against the wall they say they need that content, and they are surfacing it perfectly because youre seeing different content than im seeing and youre seeing different content than shes seeing i think that now you have a huge statement of competition against netflix and amazon by disneyfox, and youll see others as well, and net flick has subscriber growth and net flick has content, but not a lot of cash flow then. If theyre going to get pressure on competitive factors, theyre going to have to reinvest more of that. Final word. The market for netflix has been incredibly competitive, and theyve grown through it for a long period of time. I think youll see more rationale spend in certain areas for fnetflix, such that it improves globally. Final, final. Whats the cost of Net Neutrality for these guys . I think for netflix its a nonevide nonevent from a business perspective. They have arrangements with the isps. Its okay for them to be very pro Net Neutrality, but also theyll be okay without it its really bad for startup oorz Small Companies that cant afford to do those pay periods over the longterm, everybody will be paying a fortune or no in. Its not a fortune. Its not what you think for a big well capitalized company like netflix thank you, guys Market Forces. When we come back, 2018 predictions from our guest host, areh bourkoff. Check out the futures this morning. In the green all morning long. Powering through right now with the dow up 172 points above fair value. S p futures up by 14 the nasdaq up by 48. Stay tuned you e tcngsqwkoxarwahi ua b right here on cnbc lets get started. Show of hands. 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We just briefly touched on Net Neutrality you saw we talked about the tax bill and the world, people dying, apocalyptic that didnt happen after Net Neutrality, i set an alarm early to see if the sun would come up, and it did that day, which according to a lot of people on the left, that was not going to the ones that were calling the bomb threats to the fcc. What where did all that come from it does cost money t infrastructure of the internet, doesnt it were talking big ticket items like tax reform and the open internet, the broadband in a few minutes. I think Net Neutrality has become a political jumpoff. It has. People use they demagogue it and dont really talk about it in realistic terms, do they . It should have never been overregulated during the obama administration, and now we are rolling it back probably to an extreme degree, which is obviously a good dynamic for a commercial application of the fact that no one is really ab e abusing it today the reality is in the future there should be settling in to appropriate Net Neutrality rules and regulations. Can Market Forces hajd that hangds thdle that or not . I applaud him as regulatory humility practices that he is employing right now to roll it back from the government to commercial enterprises, and we have to monitor it what do they do if they do something that was not fair . How would they how would they do it . How would they hide it how would it benefit them . How would other players not get in there and undercut them to make it impossible to do that . I think the ability for one distributor to lock your content versus another piece of content presupposes theres not a competitive dynamic at play. If you are going to block my content from one distributor, ill switch to another one you have a Technology Platform you have Cable Companies or telecom companies, satellite companies. I dont really see a dynamic in play here where you are going to be monopolized by providers anymore. You have choice. Murder is against the law is it still hapsz, unfortunately. Yeah. I dont know whether will laws help here, or isnt it the bottom line eventually is that markets i think you are getting a lot of content every day if you do it in a way that is free and unfettered, it should take care of itself, should it not . The competition at play right now will allow it to take care of itself. Over time well have to see where it shakes out and get them under regulations. You cant stay until 9 00 you have somewhere to go were doing pushups at the company right now. We do every day at 4 00. Thanks for having me. Happy holidays we have more of this mornings top stories. Plus, games they will play a new paper out this morning from a dozen law professors on how wealthy individuals and businesses will figure out how to get the best tce omouomfr the new tax bill stay tuned dad promised he would teach me how to surf on our trip. When you book a flight then add a hotel you can save. Three waves later, i think it was the other way around. Everything you need to go. Expedia. Trust 1 doctor recommended dulcolax. Use dulcolax tablets for gentle dependable relief. Suppositories for relief in minutes. And dulcoease for comfortable relief of hard stools. Dulcolax. Designed for dependable relief. Snoo stocks higher open as the gop is on track to pass a tax reform bill this week. New this morning. Breaking deal news campbells soup buying Snyders Lance for 4. 9 billion plus, broken bonds we will not print and give them our stress analysis we dont want it going public. Did ubs ignore Early Warning signs that cost some people their life savings that exclusive cnbc investigation is straight ahead. The final hour of squawk box begins right now. Good morning. Welcome back to squawk box here on cnbc live from the Nasdaq Market site in squawk square im joe kernan along with becky quick and Andrew Ross Sorkin triple digit gains on futures this morning based on the increasing likelihood that the tax deal actually does happen. Maybe tomorrow up 166 points now on the dow jones, which is closing in on 25,000 the s p indicated up another 14. Thats closing in on 2,700, and enthen the nasdaq up 46 points 4. 9 billion. Cnbc had firtsd reported last week that snyders had hired an Investment Bank to investigate a possible sale. The deal is valued at compared to pinnacles friday Closing Price of 30. 95 a share. As part of that deal boyd gaming is buying some of pinnacles operations for 575 million in cash huma is reportedly in advanced talks to buy Kindred Health care in partnership with other equity firms it would provide acute care at 9 a share reports say that huma would get kindreds and pe firms would get the hospital and the rehab centers. Bitcoin futures now trading on the cme the price right now, you can take a look. 19,585 dom chu is tracking down all the bitcoin action this morning. Dom. All right so the bitcoin action is this. We do have contracts traded on the cme with regard to the futures. Remember, the difference between the cme futures that are trading for bitcoin and the cboe that have been active for about a week now is that the cme futures, the ones you see currently on your screen there are the ones that are going for five bitcoin per contract that puts it in lean with total bitcoin underlying for 3,500 bitcoins in total. Thats about what we saw with the start of cboe futures trading last week. Dollar amounts around about 66 million, 67 million mark in terms of dollar volume by no means a large futures volume you still get the sense that a lot of folks are trying to get a feeling for what the futures triegd will be like. For right now the difference between the cboe futures and the cme futures in erterms of pricei about 110 still relatively wide. Not on a percentage basis, i guess you can say, for such a young asset. Still, trading volumes as they pick up will start to see if people can actually do enter the workplace in ermz it of the Bitcoin Trading type of the situation. Not a lot of brokers let you do it right now, and the margin requirements, guys, are still pretty high. Around 44 for the cboe futures. Around 40 there for the cme futures as well. Guys, back to you. All right, dom. Lets talk tax reform. The gop expected to pass an overhaul bill this week. Robert frank joins us now with the details of a new study that says the tax bill is right for gaming any of the numbers you gave us on the break is that part of your report . Ill add those. Youll add those at the end first, lets go through the bill is complex. It was quickly written its built around vastly different rates for companies and individuals. It is right for gaming an academic paper written by 13 prominent tax law professionals called games they will play says the bill would allow new tax games and planning opportunities for well advised tax payers that will arrive in unanticipated consequence and cost for every else, including the treasury now, lets go through the top three. First of all, passthroughs. Now, accountants are already creating ways around though guardrails they need to prevent people from shifting income into passthroughs. Law firms, for instance, they could create subsidiaries where the associates are the partners in those subsidiaries and allow them to deduct 20 23 of their income as long as they make less than 315,000. You can go passive the plan favors passive business owners, rather than the people who own and run them owners can split the businesses into different lines to make sure they dont participate in any single line. Family companies are going to make sure that no one Family Member spends too much time running the business none of them will be now you can stuff the ccorp people are going to push their salaries and investments through corporations not passthroughs. They would create and generate income in the form of corporate profits or dividends at the Corporate Tax rate there are fewer restrictions on the forms of income allowed under a corporation than a passthrough get this, about 95 of americas 26 Million Companies and businesses are structured as passthroughs because that rate was lower than for corporations. Now the equation is flipped, and that could reshape thats right. Everyone is talking about passthroughs. Its the corporation creation thats going to you look at it, and weve already talked to people about this the answer from republican lawmakers with a question about this is, yes, you will see a lot more corporations kracreation n year, but were how will it be seen as a legitimate new business and what is something that is just a tax plan . The proof will be at the economy is growing as strong as it is now, and treasury collections are down or not in keeping with the economy well know that that was income shifted on to the lower rates. Well know through the treasury i looked over. You were wrapped andrew has a column that he writes for every tuesday, right . Normally on mondays he is working on the entire show and doesnt hear a lot of when you started talking about some of these he looked up and i mean, there was a look on your face the irony it was so focused irony is this was supposed to put tax preparers out of business this is tax cuts and accountants job act lets get to the numbers. So you say that you figured out the number of new jersey tax payers that see an increase senator toomey said your friend is an outliar your friend would he so a tax hike well, lets talk actually, its 13 of all taxpayers in new jersey. 14 of all taxpayers in new york state. Are going to pay higher tax. Lets do the math mitt romney told me 47 dont pay any taxes at all 47 plus 13, is that of 0 yeah. So 40 of the people are getting a tax cut then basically. Thats right. Okay. So can we say that some people that theyre outliars. Theyve taken one more the team cant they just 40 are the out liars theyre the out liars the 13 can you tell them take one for the team . Its gooed for corporations . Its good for growth take one for the time. All of this sun stable and will change in ten years certainly this is going to create its terrible. We just heard areh say everything was totally certain for 2018 theyre going to get on this table a lot. For 2018 is certain. For years after that but taxes change behavior, skps we and were going to see a lot of changes. Now, president of the Tax Foundation scott hodge and scott, go ahead. Tell me. Take one for the team, joe if you say thank you, im fine with this. Or my friend im talking about thank you, sir, may i have another. Scott. There will be some people who will pay higher taxes because their lives are wrapped around the tax code, and the whole point of tax reform is to remove a lot of the incentives that people build their lives around the tax code, and thats going to happen. Some of that is by moving to new jersey, i wrap myself around the tax code and try to exploit the loopholes in the tax code by moving here thats the case where local politicians have wrapped themselves and the local tax code around the federal tax code its different. Its not any better. I think theres a lot of simple fiction, especially for lower income people. Well see an increase in the standard deduction you have millions of people that wont have to itemize. Thats great simple fiction for them their ability to game the system was limited to begin with economist advisory complained since that was first introduced. Its a big mistake to do that, but the good news is the lower Corporate Tax rate thats going to create more Economic Growth, make the u. S. More competitive thats the kind of thing that we ought to be cheering yes, as a consequence of this major overhaul, were going to see some opportunities to game the system there are opportunities in the current code as well its going to create lots of opportunities for tax lawyers and accountants to make a lot of money. I think at the end of the day we have just completed our macroeconomic analysis of this plan we find its going to lift the longterm level of gdp its going to create a little over 300,000 new jobs. Whats it going to cost, sko scott . A little under 500 billion under a deckated we see between Economic Growth and repeeling the aca mandate will lower the cost by over 1 trillion and if you compare that to the amount of new Economic Growth youll see, i think its a pretty good tradeoff. Im going to play devils advocate a lot this morning. Lets say the Heritage Foundation designs its own tax plan, or think about the tax plan that railroad wouonald read have designed. Would it have included all these o outliers that have large tax increases. You remember when president obama talked about what to do with the tax code, he said people at the high end should pay a little bit more to subsidyize tax cuts for middle class people and people at the low end. Thats effectively whats happening here this is almost an obama tax plan in that it raises taxes on a lot of highend the weird thing is that the left is saying that its a big tax cut for the wealthy. When, in fact, a lot of these outliers are funding the Corporate Tax cut. Thats not the way you would have designed it, is it . Well, the personal income tax system, i think, will become more progressive look, thanks to it will be. Definitely will be earlier tax plans like the blueprint that paul ryan had and even the earlier version of the house and senate plan were far more progrowth fan that,ing and somehow throughout all the sauceable making theyve actually taken out some of the good progrowth things that should have been in there, but, unfortunately, a lot of this is due to senate rules. It added a lot of complexity to what could be should be a simple system you seem grateful at least. We had who was it we had on last week . Roscom was just yelling at us that we werent thanking clup when we return, the latest in the Star Wars Franchise brings in big bucks for the second biggest opening ever, but was the audience satisfied . Well talk to fandango right after the break. Interesting rotten tomato numbers. More than the forecast, the Company Holiday Sales Forecast exceeding the National Retail federation estimates by as much as 4 billion. Well talk to accuweathers founder at 8 positive a. M. Eastern time u wchg ted yoreatinsquawk here on cnbc its all yours. Wow record time. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. Im not really a, i thought wall street guy. Ns. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade this morning take a look at futures we are in the green, and in a pretty big way, actually, as it happens. Dow looks like it will open up about 170 points higher. Nasdaq up about 46 points higher s p 500 up about 15 points higher all of this, of course, on the back of expectations of the likely passing of this tax reform bill. Check out shares of twitter this morning. Higher after an upgrade at jp morgan the analyst citing skbrooue inid products and improved growth there is a little bit of speculation even that maybe 2018 will be the year of the takeover whether it comes to twitter. Well see. Also, a big weekend for the latest in the Star Wars Franchise. The last jedi. Had the second biggest opening ever bringing in 222 million thats just in the u. S falling 28 million behind its predecessor, the force awakens close to half a billion dollars when you account for foreign viewers as well. Eric davis, managing editor of fa fandango here. The big question this morning, we were talking about the rate the ratings or the rankings of this obviously did very well. Rotten tomatoes critics, 93 love it. Yes audience, at least on Rotten Tomatoes not so much 53 say they like it whats going on . Lets take that with a grain of salt. First of all, the cinema score exit surveys, the official surveys gave it an a people coming out of theaters being surveyed got an a score. Rotten tomatoes, metacritic is down some people are saying thats trolling weve seen this in the past with films. Especially more femaledriven films like goss busters. Groups of people getting together, fox coming together because theres some kind of other agenda at play how do you think it plays for the holidays whats your total take for this film . Well, i do think lets say by the new year keep in mind, the force awakens had 30 years of anticipation baked into it yeah. All the last jedi had was the force awakens. I think its going to perform well i dont think its going to be the force awakens, but right now were seeing its, like, that 20 million off. What was the budget on this one, do you know i do not know probably high, i imagine very much the reason i ask is the last film was very expensive. For some reason i dont think this film was as expensive i know the phrase is going to throw certain people what are called adult flimtz. Not in that kind of way, but films like the post, for example, something thats the new movie about the Washington Post they have clout to them. Those films will do well films that get awards nominations will continue to do well other films will have to see theyll have to find their ought yends. Has something happened in the past year. People talk about whether netflix is killing the movie theater, but are there lots of flimtz like that that might be described as smart adult films where people see the ad and they say to themselves, you know, im going to wait to watch that at home you can use that as theres a number of services now that are like what i call the netflix for movie theaters where people are buying subscriptions, effectively, these membershipbased systems where you pay 15 , 15 for the month, and then you can go to as many films thats crazy. I dont understand how that makes sense. You go to two films, and you have made is that the sort of new model . Its definitely a new model from what i have seen, though, its better for people that are really close to a theater. I think you have to be, like, within 100 yards of the theater for it to work have day were seeing something that i didnt think we would see. Anything is possible at this point. I would imagine. Thank you great to see you thanks. Appreciate it when we come back, top executives at ubs have direct knowledge that brokers in puerto rico were selling risky bonds causing many to lose their life savings. Well bring you that story its coming at 8 30 a. M. Eastern time squawk box will be right back. , causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. When we come back, broken bonds. An investigation found that ubs executives ignored Early Warning signs about risky bonds in puerto rico causing many to lose their life savings that story is up next. Right now, though, as whaed to a break, take a look at the u. S. Equity futures big up day for the markets dow futures right now indicated up by 175 points s p up by 15 the nasdaq up by 44. Quk xilbeight back. 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. Live from the Nasdaq Market site in times square im joe kernan along with becky quick and Andrew Ross Sorkin among the stories that were following front and center is it because i said times square no. I slipped i slipped and meant squawk square i went back to times square. Gasoline prices are easing into changing the name of maybe we can fool isis and they always mention times square, right . If its squawk square, they might not even oh, thats squawk square. Never mind. Its not. Im not joking. You do see it a lot, though. I mean, right . They always have eiffel tower, times square power has been restored at atlantas airport after an outage that led to hundreds of Flight Cancellations heartsfield jackson, atlanta, International Airport is the worlds busiest airport. The problem likely resulted from damage to an underground electrical facility according to georgia power. Csx ceo Hunter Harrison has died the Railroad Operator says that harrison died of severe complications from a recent illness. Csx had announced friday that harrison was taking medical leave and the chief operating officer jim foote had stepped into that role he was instald as ceo at the urging of activist investor paul hilliland. There was second guessing about the board that had a pretty good idea when they were bringing him into the country and had some health problems. Didnt seem to dissuade them from making that move. Or to making more announcements more public. Where does the expectation he was working from home a lot too, supposedly, but he immediately moved apparently to close down some of the profitable lines and to get rid of some, you know i just dont know he was doing a lot of pairing back he has been an amazing operator, and that means why the stock had risen so dramatically under his reign there. Folks, in recent years thousands of puerto rico residents lost their life savings. Many blamed ubs whose broker sold them funds that were over concentrated with puerto rico bonds that blew up as the islands economy crumbled. Cnbc investigation found that within ubs some brokers raised red flags early on leslie picker joins us right now with part of her story broken bonds. Hey, becky. Thats right weve reviewed thousands of confidential documents, including internal emails showing that employees at ubs were worried about the risks from selling bond funds to clients in puerto rico instead of fixing the problems, brokers were pushed to continue selling the funds. Years before the funds imploded, a Branch Manager in puerto rico compiled a list of 22 concerns in an email that his brokers had. Among them, excessive lefrmg, instability of prices, it excess supply, and geographic concentration. Several years later ubs puerto rico chairman miguel ferrara wrote to his bosses in april 2013 that Financial Advisors were requesting a risk analysis of the total puerto rico bonds held on margin to understand the worst and probable scenarios over the next 12 to 18 months. That prompted a sharp response from the second in command at ubs americas we will not print and give them our stress analysis. We dont want it going public. He was even more direct the next morning. The request, he wrote, he is absurd and you should know that. Ferrara dough clieeclined to cot ubs declined to make anyone available for an interview, but a spokesman wrote in a statement to cnbc that concerns about the puerto rico economy and its prospects have been the subject of wide public debate and press coverage for many years. No ratings agencies or analysts predicted anything like the drop in bond prices that occurred in august and september 2013. He added, there were no undisclosed issues with the funds and that the funds generated tax free returns greater than 12 in 2010, 2011, and 2012 guys i think thats kind of telling, though, the idea that they thought it would be absurd to have a risk analysis of the bond portfolio exactly they were very redicent about sharing details with the brokers who were raising their hands as early on as 2011 saying were concerned about selling these funds to you are on clients. In hind silent these brokers do have hundreds of complaints racked up against them on their public profiles over this product, over selling these funds to their clients, which have subsequently imploded and resulted in the losses of life savings for many residents down there. We already hear its a strong shopping Holiday Season. How much has the weather impacted that, if anything well, the weather has been favorable, and it will continue to be right into the Holiday Season we had a touch of snow early a couple of events that got people in the mood thats always important to start buying winter gear and winter type things. A storm in the middle part of the country, but most of it will be north of the cities, and the same in the northeast. Some fog will slow travel. There will be some usual nuisances, but no severe storms that have gone to interfere with the shopping were expecting sales to be well ahead of last year 4. 2 how far out can you predict these weather patterns what were you guys saying before thanksgiving we were saying before thanksgiving this is our prediction, and were sticking to the same forecast you know, we predict that day by day out through 90 days on our website and so the forecasts have turned out pretty well as expected lots of them. Absolutely true too. No, accuweather you know, ac kruweather only goes out 90 days day by day brsh. Thats pretty tough thats pretty hard. Yeah, i know. Tomorrow is pretty hard. They should, but go ahead. Go ahead. Im sorry. The accuweather forecast is the most accurate. Clearly, the weather forecasting, nothing is 100 you are right. Weve seen a lot of extreme weather this year. Particularly im thinking of the fires in california. How has that played into what that might mean in terms of shopping predictions too well, theres no question that that has interrupted shopping to some small degree of california its a big deal in california, but as far as interrupting and really having a major effect on shopping for the nation as a whole, it is a small amount. Joel, want to thank you very much for being with us we appreciate your time. My pleasure glad to be here. Have a great day you too up next, ceo call well talk to the chief the ceo of a new jerseybased commercial bank. Just one right near my house pete pack lab stone. Its a Community Bank. D x folaoning about reguti antarerm stay tuned well be right back. Most etfs only track a benchmark. 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. 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And for a limited time get a 100 reward card. Call 1800directv welcome back to squawk box. The futures right now taking a look at where theyve been all morning. Up its almost as high as theyre seeing 178 now on the dow nasdaq indicated up 41, and the s p indicated up 15. In europe there were some green arrows as there were especially in japan earlier has the environment not been great the last few years i think that the Great Recession was such a horrific event for the country, and i think Congress Sort of held the regulators, all of them, to task the reaction to that has been to take a lot of what was intended for much larger institutions, ones that would be systemically at risk, and many of those have been viewed as best practices and then sort of pushed down and filtered into smaller institutions on the Residential Lending side, theres still a quarter of the counties and the country are not occupied with the National Player Community Banks are extremely relevant it takes that local understanding of the market to be able to support that economy. The rules that were put in place sort of overreached beyond that, and sort of it was a one size fits all i think what were seeing now with legislation both in congress and whats coming out of the committee in the senate is a sort of back that up a little bit, and i think that will be good for the community from the stroke of a pen, has trump done anything in the first year that has helped really nothing tangible the way that rules are interpreted by regulators, the various agencies, what it really comes down to is the notion of how they want to apply that and interpret it on a case by case basis. I think really the bigger thing event is powell coming into this job and him being able to sort of affect sort of from a top down what the tone is going to be are you ready to feel tonally from a regulatory perspective that theres going to be more leeway no. None . None. That is fascinating you are a bank and a sector of the marketplace that is affected by these low Interest Rates in a flat yield curve i guess too. That hasnt helped either. How is the operating environment about been for the past five years i think our businesses, like every business, including yours, for example, technology has changed it flat yield curve we talked about regulatory and the adoption of technology for the consumer the folks that we do business with all of that is sort of culminated into sort of a total shift of the banking business. When i started my career, there were 16,000 banks. Today theres 6,500. There will probably be 3,500 five to ten years from now those factors, the consumers, what theyre looking for and what they want from their institution combined with sort of the underlying economics of spread compression is forcing institutions to scale, get larger to adomtd every do not technology, and having said that, the industry is not dead if you have a well defined niche youre going after, its either geography, like i just mentioned, or in our case really went after the wealth segment. We operate in three of the top ten most affluent counties in the United States. That is we could not get scaled out through technology, but to be able to support personally and i remember a time not too long ago, maybe four or five years ago when somebody came in and said there are going to be no more banks under 1 billion theyre all going to be bought up how much has the industry shrunk over the last seven or eight years . So over the last seven or eight years i know in new jersey weve lost half the banks. Community banks. If you went back eight or ten years we had about 1r50. Were down to 85 thats the market that i operate in i still see additional consolidation. Theres clearly scale thats relevant, but, you know, its not in the context of as the b of as and the wells were being sort of built, if you get to somewhere around 5 billion to 10 billion, if you look at how those banks trade as a multiple, its a sweet spot. It actually trades better than the mega banks better than the smaller banks. There is a sweet spot of somewhere between 5 billion and 10 billion. It used to be the old model was you grew a Community Bank to the point where you could sell it to bank of america. Right is that over . Do you think thats going to return under powell . Meaning, do you think that the big guys will be allowed to get bigger, or is it just going to how is this going to play from a deal perspective . I dont know that the deals are going to happen and thats really sort of a shortterm fix to be able to take costs out of the company, and thats going to be done at lower levels it will not be done by the National Players if it is, it will be, you know, so sort of small that you wont even see it. I think banks like bbnt who have grown are going to stay inside the areas theyre at the problem i have is i look at consolidation from my perspective. Theres a lot of down side to it number one, if im now evaluating that i ma i have too many branches, why in the world then would i go out and do a deal, dilute four or five years worth of a recovery on tangible book, and to go buy a bigger problem than what i already started with the 4 trillion, the fed does all this weve had Richard Fisher say theyve primed the pump, its out there, and now it needs to be loaned out. The question has been that the Community Banks work have you turned down businesses that wanted loans have you turned down no. I can tell you that in terms of access to capital it hasnt stopped you it hasnt stopped it was really overblown. When we were in the heat of the recession, that was absolutely true not anymore over the last five years theres been really no challenges at all. Are you more like are you more like mr. Potter, or are you more like George Bailey in terms of like when people come in, do you say, you know, your money is in joes house and his money is in your house. Are you you say youre more like George Bailey, do you think . He has been very unprofitable. Potter was very profitable for shareholders wouldnt be it better to be like potter than unwinnable. Zblou take your clients. You take care of them, and you that i care of your employees that are taking care of your clients, and the shareholders will benefit from that every bit of smile that goes away at doing something shortsighted or undercutted towards their clients, wf, ill give you a couple of initials, thats not a strategy or a model that will work over a long period of time to deliver shareholder value. What do you think the implication of this mortgage Tax Deduction will be on your business the Tax Deduction if i look at new jersey, the answer is it will have an impact because we live in a very high cost area. I think capping it at 750,000 is problematic just because of the cost the salt deductibility thats probably its a big issue. We actually did a survey over the summer before the tax package even came out, and it was really an effort to gauge, you know, because we have this wealth practice whether or not our clients it was whether it was relevant for us to be with them down in florida or georgia or wherever they ended up retiring to. Would that be important . Do you think theres going to be a huge exodus i dont think so. We redid the survey, and we got results last week. Okay. So it did show an uptick, and it did show a preference towards texas or florida there was a jump i think its too early i think its built on emotion. Tend of the day for me my taxes will go up, but my grandchildren, theyre five doors up the street. Am i going to move for a tax motivated reason probably not essex county. What are the three counties . Essex, union hunter don, morris, and you have a branch in essex . Right i got it. He thinks that. Whats the sn arizona . Everyone talks about florida and texas retiree youve got to google it. Certainly lower than new jersey. I love arizona. Who doesnt, its great i was curious where everyone is going to move. Great to see you youre going to watch this year . Clarence and all of that i will. Its the best. What did you say 4. 5 it rafrpg not bad. And if you have the 10,000 when you when we return, jim cramer live from the new york stock exchange. Well get his take on todays top stories. Look at the futures before we go dow jones opens up 177 points higher in a moment lets get down to the new york stock exchange, jim cramer joins us now there are important business developments, but i couldnt help thinking what your thoughts were yesterday you gave up a lot of points to the giants and some people are saying, youve got to tighten up the defense if youre going to go far in the postseason, right . I have to agree i was surprised, its one thing to give up a lot of points to the ram, seattle did that. But another thing to give up a lot of points to the giants. Giants were playing for pride and manning had a fabulous game. He could be a hall of famer. I dont know, but absolutely, we should have shut them down and we didnt. We have a lot of work to do even though well be home field advantage, we know weve got the bye. You know what everybody is talking about, jeff hostettler, right . It doesnt seem like fols is the problem, to beat colton at 4 touchdowns, i remember him during that season where he had just a huge number of touchdowns and two interceptions, youve got to be hopeful. Were a franchise that its time its time for us. And then did you see gronkowski and brady, that combo. Theres a lot of people who are kind of just saying, steelers fans out of nowhere. Right, that was a weird call but that one catch that was that gronk made where it was that far off the ground hes amazing. Those guys are fired up that was so great to watch that makes me have faith, a little faith, a little more faith. The crossing pattern, you cant defend the crossing pattern. Steelers d is a little weak but that was at home and they didnt show just ran out of gas. Well see whether brown comes back and roethlisberger, that would be a great camp meet in the super bowl, you have to worry about those teams as an eagles fans. One comes out and they are pret pretty powerful. Anything in the markets interesting . Food deals. Food is supposed to be dead, amplify longs like conagras popcorn business and this campbells that they are in and make changes is really, really important. To me this is lance snyder, all about snacks that sell you know who eats snacks millennials. They do they dont eat lance cheese and crackers, are you kidding me they like the snyders pretzels. Okay. I like those. Me too. Were going to leave. Were going to go but another 180 points this is just like a freak show. Its like the old days and get in front of this thing seems like a real dangerous thing to do i never buy chase an opening like this but theres you look for stocks that are for sale and there are not that many. Jim, well keep you in a couple of minutes. You wont believe the reason why ambulance usage is down. At nt. Ntly because of uber thsex 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. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley us. Its what this country is made of. But right now, our bond is fraying. How do we get back to us . The y fills the gaps. And bridges our divides. Donate to your local y today. Because where theres a y, theres an us. More people choosing to call an uber in an emergency rather than an ambulance. In cities across the country, per capita ambulance volume has fallen by at least 50 often times, you can look and say theyll be there in four minutes and ambulance, certain cities takes much longer join us tomorrow squawk on the street begins right now. Good morning, im david faber. Carl has the day off lets look at futures as we start a full week. Keep having to remind myself i keep thinking theres a day off. Five Straight Days well start when we get started with a strong open, european markets generally had been fairly good. Lets see if the gains are