Transcripts For CNBC Squawk Box 20171219

But it did not close above that level. We saw the major averages give back by the end of the day some off the morning highs well keep a close eye on this this morning green arrows indicated once again this morning dow futures up by 57 points. S p up by 4. 5 points the nasdaq up by 8. 5 points. Look at asia, the nikkei gave back some grounds. Hang seng up by 0. 7 the shanghai was up by 0. 9 . Then if you check things out in europe, its a mixed bag ftse up by a quarter percentage point. The dax and cac are weaker stocks in italy are down stocks in spain slightly higher. Check out crude oil prices you will see that crude oil looks like it is up about 29 cents. 47 57. 45 for wti. We are watching a couple big stories this morning were learning more about that deadly amtrak crash in Washington State yesterday three people were killed, nearly 100 more injured when the train derailed the ntsb confirmed that the train was traveling at 80 Miles Per Hour in a 30mileperhour zone the crash left several railcars on the roadway and dangling from a bridge separately, belgian food company greenyard is in advanced talks to acquire dole foods. Many of us know dole when we see a banana with a little dole sticker on it. Its been considering an ipo reuters says the greenyard deal could value dole at 2 2. 5 billion. Greenyards current market cap is 1 billion the company said they secured appropriate financing and can complete the transaction if the deal is reached. A pair of economic reports on the agenda. November Housing Starts and Third Quarter current account are out. Minneapolis fed president , Neel Kashkari is speaking this afternoon, first he will join squawk box at 7 10 a. M. Eastern. Carnival and Darden Restaurants report before the open after the close results from fedex, micron and recent ipo stitch fix. Its voting day for tax reform the house is expected to start the process early this afternoon. Ylan mui has more. We hear more republicans signing up saying they will vote yes on this republicans have been campaigning on this promise of tax cuts for 30 years. Now they appear to be on the verge of turning it into reality. The house is expected to pass the tax bill this afternoon with the senate wrapping up its vote likely tonight thanks to critical support from two new gop senators first, mike lee of utah who held out for a bigger Child Tax Credit he tweeted he believes the bill will cut taxes for utah families and he proudly supports it then Susan Collins of maine delivered her enendordorsement e bill from the senate floor yesterday. I will cast my vote in support of the conference agreement on the tax cuts and jobs act while it is by no means perfect, unbalanced this reform bill will provide much needed tax relief it will benefit lower and middle income families while spurring the creation of good jobs and greater Economic Growth. There is still one holdout. Senator jeff flake of arizona his office told us late yesterday hes still undecided flake supported an earlier version of the bill, but thatis gotten from gop leadership to work on a permanent fix for the children of undocumented immigrants now that issue is getting punted into 2018. So depending on where flake lands, republicans may need to call on the Vice President to cast the tying vote. Ylan mui, thank you very much i think dole, i think pineapp pineapples we were a ba flan that fn ba family dole bought the whole island of lanai when you think of hang seng, dont you think hang ten the hawaiian stock market would be hang ten. Then i think of case pineapples because he owns a lot of that land yes over there. I think in maui. Right any way, we have a couple of fat cat investment types that probably know all they probably own land in hawaii. Lets get to these guys. Markets are closing at record highs with the nasdaq hitting a significant milestone. Here is phil orlando, mega bucks. Chief equity Market Strategist from federated investors you got to be compounding since you were an original guest host 23 years ago on squawk box. Just compounding that earnings power you got to be, right absolutely. This is killing you this tax bill, right . Theres folks saying this is a giveaway to the rich i know. I love that. My accountant says be prepared to pay more and drew mattis from metlife investment management. You cover the gdp stuff. Youre still not sold. Why 2. 5 . I havent put the tax cut in yet. What should it be with the tax cut . 2. 7 its creeping up towards 3 would you be surprised if it was 3 . No. So its possible. What about this quarter were in now, the new york fed says maybe 4 handle, indiana 3. 3. Ill split the difference, upper 3s what signs are you seeing that that is moderating from the last three quarters . Even with the hurricane, it was 3. 3. Why is it moderating back down to 2. 7 what are you seeing . Consumers . The question is how long can the consumer keep doing all this kind of spending and activity. How do they begin . Do Savings Rates continue to decline . Are they already low enough . When do we get wage acceleration i expect wage accelerate towards the end of next year if we get that, the numbers for next year look good. Orlando is not someone who shies away from saying what he believes you know what his s p target is for next year . What . 3,000 we have people coming in im at 2760, 2790 about 11 from where we are now. Double digits that tracks to 2700 this year, thats pretty much where we are this whole thing from preelection to where we are now to where we think we will be a year from now is tracking along the lines of what we think will happen were excited to drews point, we have a 3. 2 gdp estimate for the Fourth Quarter, in part because we thought we would have a good christmas we get the retail Sales Numbers from november the other day, they crushed it. The atlanta fed went from 2. 7 or 2. 8 up to 3. 2 or 3. 3 on the basis of that number the economy is track the way we think. Consumer confidence is up. Labor market is good when does the fed play into this with the idea that they may raise rates more aggressively than the market is anticipating . Were right there weve got two hikes next year. I think the dot plots are saying three. Some folks think four. The one thing that is holding us back, aside from the fact that powell, assuming he gets through on confirmation, is a little more on the dovish side, much like yellen was. Core pc inflation is still sitting at 1. 4 . We think that will grind up over the next couple of years we dont think that goes from 1. 4 to 2. 5 instantly. Thats going to be a slow grind. I think that will keep the fed on the dovish side we agree with phil. We have two hikes pencilled in we think the tenyear yield wont move up that much. That will restrain how fast the fed wants to move. They want to go faster theyre not going to be willing to invert the yield curve. Phil, you dont do gdp forecasts. We do gdp forecasts where do you have it . 3 . You are at 3 yeah. I think were at or near the high on the street i know. What does that reflect guys that make forecasts, they look at the past and just its a higher trend growth. We do have a higher i think the single biggest mistake a lot of investors have made over the last year has been allowing their political biases to influence investment judgment folks i talk to down in the 2 neighborhood have a more pessimistic view i see guys that i know are democrats that are investment analysts and every one of them attributes everything thats happening to synchronous Global Growth but thats weird at least it should be somewhat agnostic maybe it is synchronous growth maybe half of them, it would be there. The other half would be could be dragged kicking and screaming into the reality that maybe deregulation and animal spirits and pro business investment, maybe that has something to do with it. But theyre so blinded by their antitrump bias, they cant say anything but synchronous Global Growth every time we go up 200 points in the morning, someone came to the conclusion that europe is growing. That day they came to that conclusion 35 in the market. Its it didnt happen in the last three, four years that europe was growing only this year youre spot on. The animal spirits, the resumption of animal spirits is an Important Role in this, in terms of better consumer confidence, Better Business confidence that will accelerate once we know what is in the Corporate Tax plan and businesses work on their 2018 forecasts one thing we hear is that business wont take this 2 2. 5 trillion, repatriate assets and do anything with it. Then they begin to factor it into the spending plans. I think well see a good year out of consuming spending over the course of 2018 as far as inflation goes, is it is the figures that we see, are those do those accurately describe the world right now . Theres system of these disinflationary forces, amazon, the internet, is there no commodity inflation . There is inflation. Why dont we see it were not far off the target. If you look at the year over year numbers, if you have a month where you have things like mobile phone costs dropping by multiple Percentage Points in a month, that affects the year over year rate for 1 mon2 months so those factors create this downward pressure. Thats what i think the fed is struggling with. We had that with mobile phones healthcare was quirky last month, probably wont do the same thing in the pcs. Pc numbers could be stronger than the cpi numbers we saw. And, you know, people are struggling with this what theyre really looking for is wage inflation. Thats coming. The tightness in the labor market is evident. The job openings are at an alltime low if you wanted to hire someone now, good luck finding a qualified person why havent wages gone up . It hasnt been long enough it takes a while for the Hr Department to come back and say you have not found anyone. Maybe we need to think about the Job Description were looking for. Maybe we need to push the wage rate up a bit. Though a those all take time. Theres a 3 to 6month lag there. Were in the middle of that lag period when it happens, it will happen fast gentlemen, thank you. Kudos to you guys with your ties and the suspenders. Stepping out last night of hon kashanukka, christmas next week. You guys are green and red, too. Kind of a marine red. Ill have to started wearing some christmas fare. Is it blue . What color blue. I dont know if i have enough stuff. When we come back, well talk to dan more dhead, the ceof a bitcoin fund that launched when boitcoin was 72 at the time he wrote it was like buying microsoft when shares were 22 cents. He will be with us after the break. 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. Show of hands. Lets get started. Who wants customizable options chains . Ones that make it fast and easy to analyze and take action . How about some of the lowest options fees . Are you raising your hand . Good then its time for power e trade the platform, price and service that gives you the edge you need. Alright one quick game of rock, paper, scissors. 1, 2, 3, go. E trade. The original place to invest online. Theres a reason for this song if it seems like youre getting more spam phone calls than you used to youre right complaints to the u. S. Donotcall registry rose to more than 7 million this year. New jersey got hit the worst there were 36 complains for every 1,000 new jersey residents, which i totally buy into delaware, florida, virginia and New Hampshire all logged more than 27 complaints bper 1,000. The most common topic was debt reduction, time shares, warranties and medical issues. I will summarize what they are after this there could be relief in sight. Earlier this year, phone companies were given more power to block robocalls theres no manpower its disgusting. Theres been times where i tried to get a person on the line, just to yell at them they dont take you off the donotcall list the first one they call, im calling about your credit card theres no problem with your card, but theyre trying to theyre not talking about a credit card you have theyre trying to sell another one. Another one, you can immediately lower your electricity bill. Its solar panels. And the one i hate, we sent you the last notice for the warranty on your car. They didnt send a notice. They always talk about a car i got rid of three, four years ago. You listen to them way too long as soon as i hear the machine, i say click. I get them on the phone what kind of car do i have do you still have a ford flex . You tell me. You september nt me a thing. Other times i say, you should be if theyre recording me, i will get in trouble. I say you should be in jail for doing this i get six of these a day i get them on my cell phones i get more than that. Im ready to rip out the home phone. Thats all that comes in on the home phone what i want to do is say listen, whatever you got, i want do it, but i think theyd faint. Years ago when my brother was in college he worked at one of these places he stayed two months he got youre our longest serving employee thank you for staying so long. You dont get these you have someone answer your phone. We dont answer the home phone. If youre home during the day what about your cell very few on the cell phone. I have your number. Youll start calling me ill say what it is its horrible. The ceo of one of the surging cryptocurrency related stocks is sounding the alarm on the craze. Shares of longfin jumped 1,342 in two days after agreeing to buy a Company Called ziddu, but longfin dropped more than 18 in after hours trading following comments last night on fast money. He said longfins 3 billion plus market cap is not a reality. Its not justified. Its insane. Im developing good country, there are people dragging this market this market cap is not justified. If you look at my revenues, i valued my ipo pricing. Look at it i valued my ipo pricing at 5. 3 300 million five times my revenue. Our next guest got into bitcoin when it was trading at 72. The fund is up more than 25,000 since the inception. Dan morehead is pantera founder ceo. Congratulations on catching the wave where do you think we are on the wave i think for the big blockchains like bitcoin, ethereum and ripple, were in the first innings. Theres going to be some ups and downs. But this could be a big up. Could there be a big down . It could be down 50 next week thats where it was a movrnth a. In a years time it will be higher than today. Whats the intrinsic havivalf bitcoin . Its like a payment rail, a digital gold, getting around correspondent banking. You come up with a number thats an order of magnitude or two higher than todays price. So, i will make it complicated. I ran into a guy on the street yesterday, he stopped me on the street he mines bitcoins. Thats what he does. He stopped you . He stopped me to talk about bitcoins out of norway, other places where its cold, electricity costs are low. So the server farms can do this. I said whats your whats the cost for you at this point of mining a bitcoin he said we can do it for about 1250 per bitcoin. Yep isounds like i should be in the from an arbitrage perspective, i would rather be in the mining business rather than owning bitcoins that seems to be the same play, plus i can make them exactly thats what sucked a ton of people into it and most ended up going bankrupt its a difficult business. Its growing so quickly. You have to design the chip, fabricate the chip and roll it out within weeks or you will miss the opportunity explain that for those of us who dont understand i know enough to be dangerous but not know what youre talking about. There was a period it was doubling every six weeks if your chips get stuck in customs for three weeks, you will lose 30 of the value these are the chips that are processing this. Yeah. The price of mining a bitcoin is the price of a bitcoin capitalism works if its 1200 bucks to make something worth 18,000, tons will flow in. Right now, thats whats happening. Yeah. The price is gapped. So theres a chance for the people that established production to make some money. If youre trying to build a chip now and ship it, a lot of people already thought of that. A lot of chips are being bought now. The price will come up to 18,000 youre sense in terms of you said you think it will go higher along the way what is it that would take it lower . Theres all kinds of regulatory risks, speculative risks. The main part of the story is 95 of Institutional Investors have zero exposure to blockchain they will get exposure over the next 18 months that will push the market higher where are you Bitcoin Ethereum and zcash . Theres a lot of Nervous Energy people have i have to pick the winner. Will be bitcoin, ethereum or bitcoin cash thats not how you do a stock portfolio. You dont say ill put all of my net worth in google. Im never buying apple, netflix, facebook you buy a portfolio. I was talking to my wife last night about this she doesnt know a lot about this she says why dont i start my own you know, ecoin tomorrow yeah. Why cant we all just started our own electronic currencies tomorrow and we can she said that to me in the most simple way i said youre right and thats a problem. Bitcoin is just open door software you can copy it and make squawk coin if you could get 40 Million People to use it, it would have value. Its just hard to get 40 million to use it. We found people are not using it as a currency i have a Better Business idea photo sharing. You can set up a photo sharing site, if you can get 2 billion people to use it, it will be more valuable than facebook. Its just difficult. Bitcoin already did it its been there for nine years its 24 7 uptime its hard to compete with. We look forward to watching your success and the success of bitcoin. If youre watching, we have photo sharing as a business to get into. When we come back, the rise of Online Retail a new survey showing the tectonic shift from shopping instoi in stores to mobile phones has created some winners and losers. And landon dowdy is in kentucky on the bourbon beat. Guys, when you think of a christmas drink what do you think of bourbon. Lla in kentucky surrounded by biion worth of bourbon we talk that business next on squawk box. [vo] progress is an unstoppable force. The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning u. S. Equity futures at this hour lets look at whats going on ahead of the big vote today on the tax bill dow opens up higher again, 61 points higher. Nasdaq up about 5. 5 points and nasdaq about 4 points higher President Trump just tweeting, stocks and the economy have a long way to go after the tax cut bill totally understood and appreciated in scope and size we have more exclusive results from the all America Economic survey with insight on the retail world Courtney Reagan joins us now with more. Are these new results . New results does that mean liesman is coming on today steve had a little yesterday. A little more today. Yeah. A big survey a lot to talk about. These are not athletes. These are not allamericans . These are not all american athletes perhaps athletes within the survey you know, a lot of people go to athletes, they talk about do you know who ben bernanke is. Those are funny they are. This is not the same . This is not funny so cnbcs all America Economic survey tracks dramatic shifts in Consumer Spending both over the longevity of the survey and year to year. How are americans doing most of hair Holiday Shopping . Online took the lead for the first time last year tops the list again this year at 45 . Thats more than double the number that answered that question a decade ago. 5 higher than last year at the same time, Big Box Stores like walmart and best buy come in second. Onlines gain is that groups loss over last year. Online storhopping and smartphoe is the key most americans do their Online Shopping on their mobile device, thats up 8 Percentage Points from last year 40 do none or very little shops on mobile device that is down significantly from last year. So moving to mobile. As more americans are choosing online as the preferred method to shop, there is a Digital Divide when it comes to income only 20 of those making 30,000 or less do a fair amount of shopping online. Americans making 100,000 more shop online three times as much as those with the lowest incomes. I find that interesting. So many people use the internet as a Price Comparison tool and are big on things like Free Shipping if you have a high income, you wouldnt think that would matter as much. Those folks do much more shopping online. All right thank you. Joining us now for more on the brickandmortar battle versus amazon is matt boss from jpmorgan matt, the world that you cover has been rocked. Thanks for having me on thanks for being here who is faring well this Holiday Season is shaping up to be the best in five years you came in with lean inventories almost across the board. Thats aiding fullprice selling. The weather could not have been better from an apparel standpoint and we think retailers are fighting back. Amazon is continuing to gain share. I think it will be a big theme into next year i think across the board the Department Stores have seen better sales we think Urban Outfitters, pvh, which is sold in the Department Stores, calvin klein and tommy hilfiger, we think they had a great season Urban Outfitters as well as lululemon in athletic is the way to play. Its interesting you mention some of those names. You have been digging into the state and local tax issues the tax bill will change that for retailers. Those that are concentrated in the blue states could get hit harder some names you mentioned are the ones you think will be hit hardest by the tax bill. Theres a couple facets to it across the board in retail, average tax rates are in the mid to high 30s. Theyre one of the biggest beneficiaries on the corporate side average accretion to the bottom line is almost 20 it depends who will have the ability to pass it through more to others. If you have Pricing Power or a flow through model, such as buying goods from somebody else, reselling them through, youre in the best position the tj maxxes, the burlingtons, ollys, ross stores and dollar stores, those are your best positioned on the individual side, i think its the democrat fwrafic that matters. When courtney was talking about the online earlier, as you think about the online shift plus the individual tax side, more aspirational customers will face more state and local deduction change thats a headwind, especially for retailers with more concentration. You also said i think in your research, it was Something Like 77 of households that make 100,000 or more are in position of paying state or local taxes, so this could be an issue for them courtney, i dont know lou that plays into the demographic you were talking about maybe that hurts some Online Shoppers yeah. I think the timing will be interesting. How long will it take shoppers to feel that effect and make the difference in their purchasing we could see shifts in how the consumer is doing. Matt, you think overall its a net positive i think the corporate side is a net positive to the bottom line some use it to invest in things like digital and marketing from the individual side, i think that remains to be seen. Your middle income consumer who is in the middle of the country, especially in states like texas and florida that dont have the state income tax, thats your best position. That also coincides. Oil and gas markets are coming back two years of minimum wage increases at the low end we like the dollar trees of the world. The ross stores are nice beneficiaries. Value retailers have, to your point, a bit more insulation veve versus amazon and continued market share canes well see next year. Is there anybody you dont like in this universe . The key there is thinking about differentiation. We look at nordstrom, 9 private label. Everything else they say is sold on amazon or some competitors online separating the winners and losers is going to be mallbased retail that is really not differentiated over the multiyear, i think thats going to be a headwind for a number of retailers, especially when you think about a lot of my coverage, only t20 online 80 of the Business Done in stores as more and more of that shifts, theres a good amount of retailers that still stand to see a good amount of pain over the next couple of years i identified a box in nordstrom yesterday. That doesnt make it unique. I did. You were at a nordstroms . No. Nordstroms came to him. I was home. The dog was like i was like what is there the whole place was covered with criminals, my front yard apparently with what this dog was doing. He can jump up and almost hit the top of the door. It was somebody delivering a box from nordstroms. What did you get i didnt open it. Its not for me. I didnt order it. Its not for me. Thats what i can tell you i bet you might have paid for it, though not i didnt do the active paying actually, you know, we are a twoincome family. She has her own absolutely. So does pilar yeah. The two shall never cross courtney, thank you thanks for having me. Squawk booze news. Landon dowdy is in the blue crass state for bourbon where distilleries are pouring millions of dollars into the growing bourbon industry a live report coming up. And our newsmaker of the morning. Neel kashkari will tell us why he keeps voting against Interest Rate hikes and real estate titan Howard Lorber will talk about the impact of his friends tax plan on the Housing Market and whether hes mad at President Trump. Theyre friends, he does have some interesting things about what is going to happen to real estate stay tuned, youre watching squawk box. Tada hello there friend hi hey there. Im an Imaginary Friend of a kid just like you. Youre going through a lot right now and i know youre scared. But youre stronger than you know. But look, well get through this together. And remember. We at the Imaginary Friends society always have your back distilleries are betting big on the future of bourbon landon dowdy has a closer look at the Big Investments being made in the bluegrass state. 6 42 if you slur your way through this report, well 6 40 its 6 40 there, too, right . Theres no time difference, right . Theres no time difference. Dont give me its 5 00 somewhere. Its past that. We started an hour ago it is 5 00 somewhere we have not started our tasting yet. We are in the warehouse, so stay tuned for that joe, u. S. Whiskey sales have been on the rise the past five years. Theyre showing no signs of slowing down bourbon and whiskey sales, they jumped 7 and 22 last year. Thats according to International Wines and spirits record and Companies Like privately held papp vanwinkle are betting big. Its literally a giant guessing game. Its fine. We can if things start to slow down, we can decelerate the Investment Program right now were set to invest a billion dollars in the next ten year years. And its not just sazerac getting a boost. Deagio is also getting a boost where brown forman is positioned is the treatment yum end of whiskey were with the trends now. Brownforman is investing 4 million to modernize facilities and 50 million for a distillery and visiting center. The question among analysts is can they produce enough to meet demand while its on trend i with v. A bhave a bottle heres old, you can buy this for about 5,000. Were in the warehouse where they age these im standing around a billion dollars worth of bourbon right here i love that name. They get some papi vanwinkle . Is that it thats right. So a shot of this, probably costs you about 315 bucks at some places. Never been i dont know bourbon, you have to develop a taste for it, like scotch, right . Its never been bourbon and coke maybe but i dont know it skipped a generation. Mint julep, bourbon ginger. Tequila, if im going to do it, im headed that way. But not everybody is kentucky, if you want bourbon or a mint julep down there for the derby, thats bourbon. Thats right. And whats interesting, so these barrels, once they age, in the first five years, about 5 gallons evaporates and it continues to do that at the end about 76 of that has evaporated so youre losing a lot when it ages in here thats why this is so in demand and rare that, i didnt know our producer is rushing me through this arent you from kentucky, dana all right. So were done. Come on hes hoping ill bring him back a bottle its called the angel what . Hes from kentucky thats called the angels share. Thats right. Mark brown, ceo of sazerac standing here just told me that. See you learn something. That was useful. Thank you, landon dowdy. Well see you. Happy holidays, merry christmas. Coming up next are you a bourbon no. Im a tequila tequila drinker i always mention patron maybe thats what shy get i d get you for christmas. Silver. Youre thinking about what to get me for christmas we decided no gifts me and my wife no, we havent decided that i decide tlad wid that with you. No gifts for you. No soup for you. Next, if youre looking for a gift for the road warrior in your life, smart luggage is a growing trend in the 6 billion luggage market well talk with the ceo of away, luggage carried by some celebrities. Im not a celebrity, but i have one of these bags. As we head to break, a quick check of whats happening in european markets right now when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. I thwell wait. What did you meetthink about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. 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 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. The business is on track to get 50 million in revenue this year, and its been a celeb favorite its carried by the likes of carla, and jessica alba and myself and other people. I dont put myself in those categories, but i only steph cory is with us right now. Steph yeah. I just want to advertise the bag for one second theyre very light because theyre made out of sort of a plastic material polycarbonate they have a charger, which is helpful for those of us who are running out of electricity at all times for your phone yep so very cool idea thank you so where did this come from, and why has it taken off i mean, it really has. I dont know where we first learned about way bags, but somehow we got them. We saw it on tv yes, the original idea was my friend, jen, was traveling, and her crappy suitcase broke, and she called me to kpran, and she said why are my replacement options like another cheap crappy suitcase or a high quality suitcase that somehow is more expensive than the trip im even taking it on, and its the brand and the product isnt really designed for the way i travel we put our heads together, and we said maybe theres a better way. So how does this theres like a very highend i dont know if you consider this a highend brand where do you put a to me thats a high quality brand its a high quality brand where do you put away compared to that from a quality perspective, were equivalent or better, but because of our direct to consumer Business Model, what we charge the end customer is a fraction of what they do to me may cost 700 or 800 ours are all under 300 can we talk about this, though you said direct to consumer, which is the key to all of these new brands that have really just killed it in a remarkable way on social media you guys are one of them all birds, weve had the ceo of all birds on theres been in handful of brands thatzorrazors theres a move to direct to consumer how much are you doing how much are you spending . Where is your money spend going . Yeah. So thats a good question. In terms of, like, the direct to consumer Business Model, we actually direct to consumer business have an unfair advantage because of our distribution model we can offer customers a really high quality product for a fraction of what they used to pay we have, like, a really solid, like, data and feedback loop from our customers because every customer purchases directly from us in terms of what we spend, our business is profitable, so i know that the big question is always about acquisition costs and were first order unit economic profitable. Amazon. You dont sell on amazon we dont. Would you ever . Unfortunately for the buyers, amazon who email us every week, we are staying away from wholesaling. Is the issue youre not going to get the data and the direct to consumer relationship and that breaks apart . Is that the issue for you . Its partly the data and feedback, and its also, like, a big part of why customers love us is its not just the product. Its the whole purchasing experience, its the postpurchase experience everything about the experience with our company or with our product is very thoughtful and very do you ever say to yourself if i dont sell to walmart and i dont sell to amazon im never going to be able to scale the way to me has, for example i dont know if they sell through those channels, but i think that our scale anlt opportunity is even greater because we can scale to anyone who uses the internet. Longterm, is this a company that goes public is this a company that what do you want to do with this, and can it go into other categories . So our vision for the company is travels is an amazing thing it makes your life better, and we are going to do whatever we can to make travel as seamless and enjoyable as possible for you. Luggage was just the beginning, and, yeah, we what would be the other Products Private jet other travel products are coming out next. If theres some part of your travel experience we can help with content or anything like that at some point with content . Content business yeah, we are our goal is to become the biggest travel brand in the world z. Thanks for coming in. Making travel easier. Private jet away airlines someday were privately working on can i say were working on a suitor bag to put suits in for men. Road warriors that want to put suits in a bag we need to make a perfect suitor bag were on it. Were going work on it together thank you. Thank you when we come back this morning, minneapolis fed president Neel Kashkari will be with us. David perdue will weigh in on the tax reform vote thats expected today or sometime this week squawk bo wl rhtacxilbeig bk. There he is. Your new brotherinlaw. You like him. Hes one of those guys who always smells good. His 5 oclock shadow is always at 5 oclock. You like him. Your mom says hes done really well for himself. He has stocks and bonds. Your dad wants to go fishing with him. Your dad doesnt even like fishing. You like your brotherinlaw. But youd like him better if you made more money than he does. Dont get mad at your brotherinlaw. Get e trade. 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. Work with ai thats been trained by experts in twenty different industries. The ibm cloud. The cloud for business. Yours. The dow nasdaq and s p 50000 set to open at record highs given where the futures are as that sweeping tax reform bill nears the finish line. The latest on the days big vote coming up. Plus, minneapolis fed president Neel Kashkari is pointing to signs that rate hikes could send the economy into a recession he lays out his case in just a couple of minutes. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Good morning welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Im becky quick along with joe kernan and Andrew Ross Sorkin, and the rally rolls on this morning. Right now doul indicated up by almost 60 points this morning. S p futures up at four the nasdaq up by four points as well remember, this comes a day after the s p 500, the dow, the nasdaq, the dow transports, the russell 2000 all closed at record highs once again. Now theres more record days than any other year in history, and the nasdaq yesterday closed above traded above 7,000 for the First Time Ever before giving that back later in the session. Well see where things go today. Heres whats making headlines this morning a 6 billion takeover deal has been struck between two oil and Gas Infrastructure companies. Mcdermott international is buying Chicago Bridge and iron in an all stack transaction. Mcdermott is focused on off shore operations while Chicago Bridge and irons operations are on shore another deal could be in the works. This one in the food industry. Belgiums greenyard is in advanced talks to buy u. S. Based dole foods dole has been in the process of planning to go public, having filed earlier this year. Revenue also being forecast, and we will have much more with phil lebeau when he talks with ceo troy clark thats coming up at the bottom of the hour. The deadly amtrak crash in Washington State happened yesterday. Three people were killed, and nearly 100 more injured when the train derailed in washington thats about 50 miles south of seattle. The ntsb has now confirmed that the train was traveling at 80 Miles Per Hour in a 40mileperhour zone. The crash left several railway cars on the roadway and one dangling from the bridge, and it was the inaugural trip on a new fast route to seattle and portland from the air theres a curve in the track coming up right where this happened. Its so obviously not an 80mileanhour curve. Its just i mean, its the first trip, but i still dont see how that how could it be going 80 when you are approaching must have been some computer was messed up or something. This is part of a track thats been in the works for over a decade. There was Computer Systems that were supposed to be part of that overhaul that i dont think were quite ready yet. Theres still a lot of investigating takes place. Its still early on. This was the speed rail line that was supposed to connect these two cities two largest cities it was from the stimulus from you know, were hearing about infrastructure problems. Supposedly this was one of those. Not to make it political, but you saw prufrps tweet he said we need Infrastructure Spending thats normally then you look it was it. Then, by the way, you look at the president s budget, by the way. His request on trains . A nearly 13 reduction in transportation spending in 2017 and a 630 million reduction in subsidies from long distance, amtrak routes. This was a shovelready project that was in the obama stimulus package number two, if the last time we heard about wuf these trains, that was what we heard youre cheaping out on infrastructure and trains are he mentioned infrastructure, so now were still its desperately needed in this part of the country because these two towns are growing so rapidly. Hundreds of people moving to both seattle and the infrastructure plan that he is talking about that he wants to do is separate from whats in the budget that is separate. Unrelated to this. Well, yeah. I dont know what happened were even seeing it, you know theres all kinds of things squirrelling around people were in the northeast anarchists were saying anything thats delivering fossil fuels, were going to disrupt it. It looked like it was going 80 in a 30. Supposedly someone in the nearby town said that it did need work, the track there. That it was inevitable that something was going to happen, but when you are going 80 in a 30 i dont know what any of this means none of us do. Separately, it is voting day for tax reform the house expected to start the process this morning we have more right now good morning this is a landmark day for republicans, andrew. Tax cuts are the bedrock of their platform today it looks like theyre finally going to deliver the vote in the house expected around 1 30 this afternoon the senate will go next. Potentially theyll vote tonight. Only one gop senator is still undecided, and thats jeff flake of arizona, and he didnt seem very forthcoming when he spoke to how do you anticipate putting on the tax bill . Have you made up your mind still looking at it two other republicans who had been on the fence are now on board. One of them is senator mike lee of utah, who tweeted that he believes the bill will cut taxes for families in his home state, and now he is proudly on board also, Susan Collins of maine she said the bill isnt perfect, but that it will generate Economic Growth. Only 51 Senate Republicans are going to be voting today since john mccain is at home resting in arizona that means if flake is a no and democrats actually hold the line here, republicans will need Vice President mike pence to break the tie. Pence will be on capitol hill all afternoon, guys, so maybe he is going to hang around into the evening hours as well. Back over to you okay. Market optimism, thank you for that we expect to hear a lot from you today. Market optimism about the house plan passing this week continuing on wall street. Joining us right now is mark doms, senior economist at w. Maura, and jason tre fl ner, chairman of stratega Research Partners how much more does the market have to run off this news . I think it could run quite a bit more i think actually the bigger impact might be on the bond market rather than the stock market in my opinion this is a big this is a big package. Its bigger than 2003. Its almost as big as the 1981 tax cut. When we looked at 2003, tenyear treasuries moved from 310 to 460 in about six weeks after that package was passed i think a good portion of the as far as the stock market is concerned, a good portion of aggregate earnings is probably priced in, but there are certain sectors that i financials and industrials have energy that havent fully caught up to the rally. Is there anybody, though, who you think will take a turn for the worse . Ill ask mark that question. Mark everybody seems to think not everybody, but a lot of people seem to think, jason here seems to think, that the market will continue to rally, bond market in particular. Industry by industry when you look, in terms of winners and losers, were not really talking about it are there losers in this its kind of amazing that the games are so broadbased were looking ahead, and were going to have lots of industries paying more taxes. Especially like retail and manufacturing. Especially those industries and firms that do a lot of Capital Spending were going to have a lot of Consumer Spending next year because of these tax cuts and our exporters are going to do really well because the World Economy is doing pretty well this is going to be one of those rallies that i think well see really broadbased gains. You know, if i could just hop in here. The one thing i will say is that there is a chance next year where i think the economy outperforms the market the last several years the markets outperform the economy, and thats largely because all of the excess liquidity went into financial assets. It didnt go into the real economy. When you say the economy is going to outperform the market, does that mean that the climate will catch up to the market, or does that mean and the market is going to have it just means youre not going to get multiple expansion, and this year will be a very from a stock market point of view in my opinion this will be a very hard act to follow. Its going to be very difficult. Youll get a big earnings increase next year, but it will be very difficult to get multiple expansion on top of that mark, go ahead. Yeah. If i could follow jasons point about the debt market. This is where we think were going to see the biggest news. Maybe even later this year and next year. Equity markets have been absorbing this information about, say, the tax cut and also other spending, but if you look at the tenyear treasury, were still talking about, say, 2. 4, we wouldnt be surprised if the treasury in the longer end really pop up in the first quarter. Once we get past these political charades that are going on and were going to see, as jason was saying, were going to see really strong growth next year next year theres going to be a lot of good news the fed is going to be unwinding its balance sheet. Thats going to put upward pressure on longer term rates. The ecb is tapering. Theres going to be a big increase in the federal deficit too. You take all those factors, and it will affect the bond market quite a bit. Hey, mark, the other question i was going to ask you, we were talking about this the last hour, and becky asked about the retail space, which is to say retailers, you would think, will be marked with beneficiaries in terms of the tax rate coming down, and a meaningful way other than the fact that in many markets, other places, there is a sense, at least, that the wealthiest among us, at least some of the wealthy, are going to get hit by salt in a big way, and the question is whether you think there will be a pullback in spending on the consumer end because of that . We think theres going to be an increase in Consumer Spending there are going to be people who will be hit by salt, but thats going to be a minority the estimates are basically talking less than 10 of the people will be paying higher taxes next year. In 2027 thats a different story. You know, when all the stuff expires. In the short run most people will be seeing rather, you know, big increases in their takehome paychecks. The people are going to be hit by salt, those are the folks who dont really change their spending that much based on changes in the tax code. You mean because youre talking wealthier people exactly i think, you know, one thing i would mention, though, too, as far as next year is concerned, the withholdings will change early next year by february. In terms of the salt deductions and all that, you are not going to really feel that until you pay your taxes in the beginning of 2019. Just from a Strategic Point of view as far as the markets are determined they wont appreciate all the itemizations, and then they might. It will feel worse in 2019, but next year were just urging people not to overthink this this is a highly stimulative progrowth bill in the shortterm mark, thank you jason will stick around until the end of the hour. Mexican restaurant news yes big news. Jack in the box selling qudoba its kind of like a chipolte it hasnt had the problems chipolte has had with mexican food you never know its just normal whats happening with me afterward. 305 million in cash for qudoba sorkin, you know, is there a website or Something Like a gotcha website or something . You always have these facts. Did you look at the budget beforehand and see that 13 gets taken out of rails you do the Rail Infrastructure trump says infrastructure about rail you immediately at your finger tips have, yet, he is cutting 13 from is there who sends you that who does the work i do work before the show oh, you knew so in one is there a gotcha no. I knew does the New York Times have a site, gotcha trump. I thought we would probably talk about the rails you had that ready to go. There was a lot of folks, by the way, on my twitter feed who its not an actual msn website that has facts it came from i believe it was from a Washington Post tweet that i had copied and pasted okay. All right. A Washington Post i think somebody else had tweeted i got to go back and look through the full i just wonder whether everybody gets together and puts it somewhere where you get its like a vast left wing conspiracy no, no im just kidding when we come back this morning, he has been a guest all three rate hikes this year well find out why minneapolis fed president Neel Kashkari sees a risk down the road that interview is next then the ceo of trucking manufacturer of navistar will talk about the economy and the transportation industry. Plus, the chairman of douglas, Howard Lorber talks about real estate prices if the tax plan passes stay tuned you are watching squawk box right here on cnbc jack and jill went up the hill to fetch a pail of water. All because of a burst water pipe in their house that ruined the Hardwood Floors in their kitchen. Luckily the Geico Insurance agency had helped them with Homeowners Insurance and the inside of their house was repaired and floors replaced. Jack and jill no longer have to fetch water. They now fetch sugarfree vanilla lattes with almond milk. Call geico and see how affordable Homeowners Insurance can be. Minneapolis fed president Neel Kashikari is our squawk bouz every newsmaker this morning. Thank you for being here becky, great to be with you thanks for having me explain your logic. Youre kind of the holdout in this scenario. Why vote no three times . What do you think is happening inflation has fallen, and the job market has continued to bring more workers back into the side looirn. As you know, the headline Unemployment Rate has fallen from around 10 at the peak of the Great Recession to 4. 1 today, but i still think that doesnt capture everyone who is out of the job market. My comment is why are we raising rates when inflation is low and falling . Now more recently were seeing warning signs from the bond market weve raised Interest Rates. The front end of the curve has gone up, but the long end of the curve has stayed anchored. That flattening is also sending a concerning signal. For all of these reasons, i just didnt see the reason why we should raids rates right now neil, the bond market is something that a lot of people have pointed to and raised concerns about this time i know these are famous last words. This time may be dirfferent because of whats happening globally with Interest Rates its hard to think about the long end of the bonds moving up when you have Interest Rates that are basically zero in so many other places around the globe. That tells me that inflation Interest Rates are lower, and the neutral real Interest Rate is probably lower than we appreciate, so we dont have much more room to raise Interest Rates. At least thats what im reading from it. Mr. Kashkari, is there any discussion at the fomc meetings about the unintended consequences of keeping rates so low for so long . I mean, you have onethird of the companies in the russell 2000 that havent earned any money in the last 12 months. If we raise Interest Rates simply to try to constrain the stock market, that can be very costly remember in 1996, then fed chairman Alan Greenspan said theres irrationale exuberance if he had used Monetary Policy to try tostop the stock market from climbing, you know, the stock market climbs strongly until there was the tech bubble bursting i think those Interest Rate increases that chairman greenspan would have imposed would have been very costly to the economy. More costly than the correction itself in 2000 for my perspective, we need to try to segment whats a stock market correction, and thats investors problems versus something thats going to lead to financial instability like 2008 i think we need to work very hard to protect against an 2008 type scenario, but if markets correct, its not the feds job to protect investors from losses neel, the fed has two mandates one is to watch the inflation rate the other is to watch the Unemployment Rate. With unemployment sitting at 4. 1 , there are a lot of people who say this is naturally about as low as we go. Most importantly, you want to assess a market, supply and demand look at the price. Wages are not climbing theyre not increasing at an accelerating rate. Its a 2. 5 wage growth. Where is the wage growth if labor markets are really this tight. My perspective is we have very powerful tools to keep inflation in check if we get surprised on the up side. We have very limited tools if inflation continues to surprise us on the down side so why dont we just wait until wages grow until were sure the labor market is really tight fed chairs have traditionally tried to build a consensus before they take these votes what are your colleagues saying to you or look at you around the table when you are one of the rare disent edissenters we have the same goals. Everybody is aligned in what were trying to achieve. Its a question of balancing risks. Some of my colleagues are worried that inflation pressures are building its not showing up yet in wages or in the inflation data if were surprised to the up side, we might have to raise rates quickly to keep inflation in check i dont dismiss that thats not impossible. At the same time my concern is if inflation continues to be low and we start raising rates prematurely, we could end the expansion on our ownby, for example, inverting the yield curve and signals that the bond market is sending us we have the ability to deal with high inflation rather than low inflation. We have the luxury of time to let that inflation actually show itself and then we can take action mr. Kashkari, i want to go back to the question i asked before because its not about asset prices its the idea that keeping rates low actually reinforces lower inflation. Bank of japan has talked about this reversal rate and i think theres a chance i guess what im getting at is the fed there to play god with the economy, or is it there essentially to be a referee . I get a strong sense the Central Banks have been playing god with the economy when it really should be a referee and that maybe allowing prices to float freely, asset prices to float free throw freely, maybe thats a better way of going about what you are trying to achieve than trying to target an inflation rate well, i mean, im not sure what how do you set Monetary Policy if you are not if you have no targets that you are trying to achieve. Maybe you are advocating getting rid of Central Banks and getting rid of the fed and going back to the gold standard. No. I dont advocate that you know, the argument that if we just raise rates, thats going to lead to higher inflation. I have yet to have anybody explain to me mechanically how that works i mean, people are frustrated that the recovery has not been as strong as we would like, and i agree, but then i push back and i say, well, can you please explain to me how raising rates in a period of low inflation leads to higher Economic Growth . How does raising borrowing costs lead to higher growth and stronger earnings . Neel, separately, you went after jaime dimen and the too big to fail notion are you in the same place . I think about what it was like in 2008 i am what happened when the big banks got into trouble and the terrible position that taxpayers were put in. I think the progress is the main banks do have more capital its not just the minneapolis fed that has said that the bigger banks need more capital half a dozen different economic studies have come out in the last year or two completely independent from each other all concluding that the biggest banks in america need more capital. Are you arguing they need more capital or effectively arguing that you want to break them up . No. Im arguing that they need more capital. If you look at our plan that weve put out, it calls for roughly doubling the Capital Requirement of the biggest dozen banks in america they can decide if they want to stay large, they are well capitalized. The big banks make us put 20 down when i bought my house down, i had to put 20 down. That 20 is designed to protect the bank in case i run into trouble. If we made the big banks put 20 down on their investments, we could basically deal with the too big to fail issue. Would you do that instead of raising Interest Rates it might have the same function. Well, i think that there are different policies for different objectives the Capital Requirements are there to solve the too big to fail issue and to protect taxpayers. The Interest Rate policy is to try to achieve our dual mandate of stable prices and maximum employment what im arguing, though, is you would invariably slow the economy to some degree by increasing Capital Requirements, no thats true its not free. Our analysis we run costs and benefits we think the benefit outweigh the costs. Increased Capital Requirements are not free president kashkari, what do you think of jay powell, who is likely going to be the next fed chairman do you think he sees things the way you do i think jay is a terrific choice a very serious, thoughtful policymaker with great experience at the federal reserve. I think everybody around the table is happy with his choice and think is he going to do a great job. Ive enjoyed working with him the last two years, and i will look forward to working with him in the future. I think theres going to be a lot of continuity on where were going. I just cant believe, though, these two viewpoints that one is that we stay where we are with Interest Rates because theres still slack in the labor market, and we want the economy to grow even more quickly that be it is right now i find myself one day believing one thing and one day believing the other because theres a lot of people criticizing this tax cut Tax Reform Tax cut that youre at 4 unemployment, and you are priming the pump in an already overheated economy on the one hand you have people saying what the heck are you doing trying to stimulate this economy, which is already riproaring, and then you have someone like you that doesnt even want to get below basically crisis level Interest Rate levels who is right how can both people be looking at the same set of facts in the same world well, i think the facts are i mean, over the course of the last year the job market has continued to be strong, but wage growth has not picked up. Usually in a tight labor market you would expect wage growth accelerating thats not been happening. Inflation continues to come in low. Now, inflation tends to be a global phenomenon. In most major advanced economies, inflation is coming in low that tells me theres Something Real going on here that these are real factors we also know, as i said earlier, there are more than a million workers still on the sidelines just looking at the labor force. There are parttime jobs made in the last eight years. Absolutely. You figure prime the pump, stimulate the economy, and stay at zero. Do it all. Dont even worry about it . Im saying that there are real costs to embedding low inflation. You like the tax cut. You like the tax reform plan you think its a good time to do it i think that you know, on the margin it might actually help us achieve our inflation target if it were up to me, i think it would be revenue neutral because longterm we do have fiscal deficits we need to worry about. Not in the shortterm. On the margin maybe it helps us hit our 2 inflation target. We could if we hit 2 trillion or 2 trillion without paying for it. I guarantee you if you are worried about it, you shouldnt worry about that wed added more than in the history of debt in the last eight years and now were doing 1. 5 trillion, and you think its the end of the world. Well, well see good to see you, joe happy holidays. Thanks for having me. Coming up, the road to success for navistar, ceo troy clark has seen shares of the company jump 68 since he got behind the wheel a lot of these type things well hear about stocks on the Trucking Industry and where he stands on tax reform medyame up with playing thats the kind of 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. 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Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Welcome back to squawk box here on cnbc were live at the Nasdaq Market site in times square among guys. Guys among the stories yeah, okay. Used to tell the public that olive garden parent is out with earnings this morning beating street forecasts darden earned 73 cents a share for its Second Quarter 3 cents above estimates. Darden raised its full year forecast in other restaurant news, we talked about a jack in the box that struck a deal to sell its Mexican Restaurant chain, qdoba. Funds affiliated with Apollo Global management for 305 million. Its going to use that cash to retire outstanding debt. The house expected to introduce legislation that would would authorize 8 is billion in disaster aid that almost double says the amount the white house had asked for last month however, opponents could potentially hold the stop gap Government Spending bill up over the issue. Theyre concerned that the aid packages impact on the federal deficit. Joe. Truck manufacturer navistar releasing quarterly results. Phil lebeau. You want truck music, phil you go country im just telling you thats where you can find all of them joe is a former country dj. I can show them to you and play them for you sometime. Lets bring in troy clark, the president and ceo of navistar. You beat the street by a wide margin 1. 36 versus 84 cents. Revenue better than expected paint a picture of what the Fourth Quarter was like for you. Yeah. It was a good quarter for us i think it was it was the second consecutive quarter of profitability for a company thats been in the turnaround for the last several years, and it contributed to being a profitable year. This is our first profitable year since 2011. Do you feel like the legacy issues that have been well documented that hampered you for so many years, are they finally in the Rearview Mirror completely you know, every day theyve gotten smaller and smaller in the Rearview Mirror and they fall off theres still a couple of things were still out there doing. The thing about that is were working to take care of customers and making sure that were on their consideration lits for the next round for their next buy in terms of demand and in terms of the economy overall, it appears to be perhaps its strongest, i would say, in at least eight or nine years. What do you think . Yeah. I would agree. I would agree. I mean, i think 2017 came in like a lamb and is going out like a lion. In 2018 its probably going to be 13 , 14 , 15 better. In terms of profits in terms of in terms of unit growth right. For a company like us who just began introducing a new line of products at the end of 2016, couldnt have timed it better to recapture market share and to get back in the market in a big way creating some more momentum going forward. The question that we hear from a lot of people is the gdp growth that were seeing out there. Is it sustainable to the point where you were seeing trucking operators, the Trucking Companies that buy your trucks saying we need to add even more because we need to be prepared for that expansion yeah. Just kind of a rule of thumb that we go by, gdp growth is over 2 , and that means you got to add to the truck market to carry the goods. I think the Truck Companies have been a little constrained by access to drivers. You know, Truck Companies are pretty creative. Rates are going up spot rates are going up. All the indicators are pointing in the right direction theyre emboldened to solve the problems and take a bigger piece of the pie lets talk about tesla. You saw the event with elan musk where they introduced the electric semi. Everybody said here we go. They are completely disrupting the Trucking Industry. Do you think that they are disruptive to the point where your longterm longhaul carriers are going to say we want all electric, or do you look at this and say thats not the sweet spot in the market actually, i think mr. Musk is pushing our industry in the positive direction i think electricification is going to transform our industry over the next decade its a trend weve all been studying and participating in. As a matter of fact, to your point weve identified weve made not one, but two electric vehicle announcements just over the course of the last two months one in the medium duty space and one in electrified school bus that will launch in the 2019, 2020 kind of time frame, and we think for growth and getting the profitability faster, thats the sweet spot those are trucks that are involved the medium duty the medium duty more in the urban areas its a more urban truck societially it has more advantage taking electric truck into the congested cities, but on top of that, the issues with the charging infrastructure become much easier to solve. I think you get to scale quicker and you get to a profitable conclusion much quicker. Are the orders about whether its the tesla semi or for you guys or the other truck makers, do you look at it and saying the company is saying, yeah, well take a few and study it for a while, or is there a conversion taking place i think this is an industry that adopts change very deliberately because especially in that classic segment, you know, its about the purchase price, but its about the operating cost and its about the residual value were just at the beginning of the cycle today. We as part of the Trucking Industry, were all prepared to jump into this space in a big way. Troy clark, the chairman and ceo of navistar on a day, joe, where they beat the street by a wide margin in the Fourth Quarter. First profitable year since 2011 joe, back to you wow yeah not even look at that 1. 36 versus 64 cents. Amazing. Play another song for you too. I know you know this one coming up something about a truck. I got more too i got pickup man. I got cab on my truck. I got big truck. I got look at my truck. We can just keep going well keep going we dont need trucking anymore grateful dead. Okay when we return enough of this more truck lets get we got some home prices in new york and new jersey in jeopardy seeing a double digit drop in value thanks to tax reform is that possible were going to hear from the chairman of Luxury Real Estate company Douglas Elleman. As we head to the break, take a look at u. S. Equity futures right now. Dow up about 57 points ckn mont zploifrmts when we come back, the chairman of Luxury Real Estate company Douglas Elleman will join us in the meantime, take a quick check on the european markets at this hour. Right now things are relatively mixed. Actually, relatively flat across the board. Were seeing bigger gains with futures here stick around well be right bk. Ac shes nationally recognized for her compassion and care. He spent decades fighting to give families a second chance. But to help others, they first had to protect themselves. 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It may increase your risk of bleeding if you take certain medicines. Xarelto® can cause serious, and in rare cases, fatal bleeding. Get help right away for unexpected bleeding, unusual bruising, or tingling. If youve had spinal anesthesia, watch for back pain or any nerve or musclerelated signs or symptoms. Do not take xarelto® if you have an artificial heart valve or abnormal bleeding. Tell your doctor before all planned medical or dental procedures. And before starting xarelto®about any conditions, such as kidney, liver, or bleeding problems. Its important to learn all you can. To help protect yourself from a stroke. Talk to your doctor about xarelto®. Theres more to know™. The tax bill being hammered out in congress can have a big impact on real estate in new york and other high tax states here to break down the real estate reality, cnbcs wealth reporter robert frank and howard norber, chairman of douglas ellison, the largest broker in the new york area. We talked about it yesterday we hear two sides. One is that people dont necessarily base all of their decisions on taxes and aa mass exodus is unliable a 10 haircut from where the prices are right now wouldnt be out of the question. Where do you stand theres definitely not going to be an exodus. People live in new york city and want to live in new york city and have jobs in new york city and will stay in new york city i dont see any mass exodus. As it relates to 10 decrease, look that all depends on what levels of invebtory you have on the market, and i would say that if you see any if you really see any decrease, its going to be on the it already existed, but the sellers were not accepting it the pricing is too high. Theyre not stuff isnt being sold Real Estate Agents in general, in looking at this takts bill, theyre predicting all kinds of dire things why i mean, i know youre very close to the president , and when you would come on during the election, obviously, you were one of his supporters in the Business Community its like the end of the world i know for a fact that you were talking on the phone with President Trump a lot right before this tax bill when you talked to him about the salt elimination, did he know that this could be a problem what was his reaction to when you said, look, mr. President , this could hurt a lot of highend real estate people in new york city. What did he say to that . What are his feelings about it i didnt ask that question exactly that way, and he didnt have an exact answer like that, but i think his world view is that some of the people that were complaining had nothing to complain about it was real hard for a real rich guy to call them up and say, hey, youre going to hurt me okay i think look, my own personal view, and i think theres plenty of people in the business that share it, is that the city will not have a mass exodus it will not really hurt pricing in the city. In fact, we effectively have the bill we know what it is already we know there was going to be happening. We knew salt was happening for a while now. Weve done some of the biggest sales in the city over the last month. I was looking at your chart because you always have this great up to the minute chart on what is selling. You had over 20 deals just in recent weeks over 20 million. Theres one apartment or one unit at 432 park that just could sell for over 120 million the fact is people that are spending that type of money dont worry very much. People that worry, the market the market that has been softer has been what we used to call the highend traditionally from 8 million to 10 million to 20 million. Those people still have jobs theyre Investment Bankers theyre bankers. They worry its not the 20 million plus thats going to get hit. Over 20 has been so strong this year. Like ive never seen before. Where does it end i mean, we know the number of households that are going to pay potentially higher taxes i mean, is it a 2 million or 3 million . Is it an 8 million . Whats the price range under two has always been very strong and continues to be strong under two under two i think over eight or ten five to ten, thats going to be the tough thats been a little harder realistically, you know, the 3 deduction in the top rate probably makes up for salt you are the largest deal in new york as well as southern florida. You have the sellers here and then you are capturing the buyers down in florida what do you see in florida i talk to brokers there who say their phones are ringing off the hook with people that want to move and were thinking about it and now they want to make that move do you think it will help that market, which was kind of soft because it had a lot of inventory . It was soft because it had such a big runup in over building theres no barrier to entry. Its not like new york city where you need all sorts of permits and approvals and people could stop you that was the reason for florida. Look, its very hard to change d domicile if you are here and working and doing well, you are not running to florida, okay now, i think you know enough people who commute, though. You do they are new york taxpayers theyre florida taxpayers, and they come for the absolute maximum days they can be here. Look, im telling you that to change domicile, its very difficult. Its not as simple as people think. Ill spend 185 days in florida that does not work separate question for you snuck into the bill over the weekend. You saw the news if you are a real estate investor, this is going to be a very good thing for you relative to just about every other piece. Relative to just about every other industry do you think thats fair you get the 20 pass through rate, and its a carveout for that industry. Your interest. Is carried interest fair . I would argue it isnt. If i say it is, are you going to say it isnt the carried interest isnt fair the real estate i dont know how much its going to affect people, you know, in real estate i think the biggest thing for the Real Estate Group is this expensing. If you are building a hotel or you are building ab office building, you know, core and shell is depreciated now 25 years i think instead of 35 or 39. The total buildout, the fitout cost, you can expense. Are we going to see a lot of building in the next couple of years . I think so. If this 20 pass through rate was not applied to real estate, what would have happened to real estate real estate investors. Would it have changed the system at all i think theres enough other things that are positive for the Real Estate Industry like the expensing. I dont think it would have a big depreciation is it necessary i dont know if it was necessary or what it was for, but i dont think it matters much to the Real Estate Industry its almost like saying if they got rid of carried interest, would that be the end of the Hedge Fund Industry . No. Or private equity no. You would hear a lot of harping about it when we come back, were going to wrap up the hour with our guest host and market pro Jason Trennert and then media mergers and more with ben lear. Well be right back. 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. This is your yes virginia moment every year my team and i come up with an investors letter to santa claus, and were asking our wish list. It goes back a little bit to what were saying with mr mr. Kashkari before. The one thing we want more than anything is a real business cycle. We want Capital Spending we want more fiscal, less Monetary Policy. We also want stock splits. Stock splits, the average price of a stock now in the s p 500 is higher than its ever been thats right. Brokers make more money too. We make less money as a result of that, and we want stock splits would be a very welcome development. We want to thank you. Its always great to see you happy holidays. Merry christmas. Take care another big hour of squawk box is straight ahead we Welcome Group nine media ceo ben lerer for the hour and then david perdue will join us. Squawk box will be back after a quick break. 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. 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. The rally continues. The dow coming off its 70th record close of the year, and this morning the market is pointing to another higher open. Its tax reform day on capitol hill the house and senate could vote on the gop bill as early as today. Senator david perdue, a former business leader, will join us. Plus, a bite out of the apple. Shares of the tech giant in the red after a rare downgrade on wall street. The final hour of squawk box begins right now one, two, three, four, five, six, nine and ten money cant buy you live from the most powerful city in the world, new york. This is squawk box. Good morning welcome back to squawk box here on c nks, live from the Nasdaq Market site in times square im joe kernen along with becky quick and Andrew Ross Sorkin ben lerer, ceo of Group Nine Media, will join us. Well hear from him in a bit and then throughout the hour the futures right now are strong once again not as strong as they were yesterday morning. Indicated up getting a little stronger as the morning goes on. Up 68 points now on the dow, indicated up five on the s p the nasdaq indicated up four treasuries, i saw, closing in on 2. 4 on the tenyear again. First thing in the morning and we are now above 2. 4 again well see if we actually get throughsantelli said. 2. 4 i think he said was significant. A couple of pieces of news to tell you about this morning. Big news crossing the tape tenet now exploring a sale of its subsidiary they expect to make a sale decision in the first half of the year the hospital operator also issued 2018 outlook that falls below consensus. Take a look at the shares right now. Theyre off about 3 in the premarket. We also have a little bit of deal news. Jack in the box about to sell or will be selling its qdoba Mexican Restaurant chain its selling the chain to funds affiliated with Apollo Global management the price tag 305 million in cash it says its going to use that cash to retire outstanding debt. The Trump Administration has publicly blamed north korea for unleashing the wanna cry Cyber Attacks that crippled banks and hospitals and other companies earlier in the year. Tom bossert wrote in the wall street journal that the attack was widespread and cost billions, and north korea is directly responsible that attack originally appeared to be a ransomware campaign. Now some experts think that Holding Data Hostage for ransom was just a distraction and that the true intention of the attack was widespread destruction a notable downgrade this morning on wall street take a look at this. Apple downgraded to neutral from buy with a price tag of 175 the firm suggests that gains for the iphone 10 super cycle, they say theyve already largely been realized and priced into the stock. That stock trading, by the way, right now at exactly that price. A developing story out of the middle east this morning as well a saudiled doucoalition has carried out air strikes in positions in yemen this comes after the Rebel Movement fired a Ballistic Missile towards the capital of riyadh earlier today a Saudi State Television reports that the kingdom intercepted that missile, and now, by the way, theres been a handful of these situations i dont know if you remember the last few weeks. Last few weeks. I was going to say when we were in saudi, i think it was literally either days after we left it was the week after you left it was the week after we left there had been a missile shot at the airport. Right its scary stuff. It is a concern in the meantime, in Business News Global Venture Capital Investment hitting an alltime record that is according to data provider pitch book. Global bc has disburse the more than 142 billion this year. Here in the United States Venture Investment hit more than 81 billion, which still trails dotcomera totals from the year 2000 pitch book said that fewer startups are raising money, but the round sizes are getting much bigger our guest host for this hour is ben lerer, ceo of Group Nine Media. Thats a portfolio of Digital Brands that generates over 500 monthly views. Names like thrillis, seeker. He is also a managing partner at lerer hippo ventures thanks for being here. I think so that for having me lets talk a little bit about whats been happening in the media world at large in the online Digital Media world. Weve seen some concerns of whats been happening. Just talk its gotten pretty dire when you listen to some of the top publishers when it comes to online digital property saying that, hey, google and the big Search Engines are stealing all of our revenue yeah. I think theres been talk track that theres certainly a concern that sort of some folks have expressed. Generally i tend to feel very differently. I think that theres a huge amount of opportunity. Were in a moment where the pipes are laid digitally, and so between facebook, snapchat, youtube, instagram, twitter, you have the distribution pipes now in place, and when that happens, you see the pendulum swing, and i think the pendulum has swung to content theres a ton of platforms now that want premium content, and i think being a premium content creator is a great business to be in right now, but the ad product still is sort of figuring its way out go back to, like, the beginning of cable, and weve talked about this before. Before the money showed up in cable, there were a bunch of folks making you know, sort of launching all the big Cable Networks weve grown up with, and there was a time where it looked like that was going to be sort of a dicey business all the money was still in broadcast. Five, ten years later it turned out that cable was a fantastic business i think were in a very similar place right now in digital where go ahead. No. Finish i just think you have these brands now that are building sort of these enormous audiences on these platforms and while a lot of them i believe that youre going to see the products develop from monotization, and five to ten years from now were going to be feeling very good. Investors are thinking show me the money theres been a lot of money thats been poured into some of these things, and maybe those investors are getting a little restless at this point well, i think there is definitely a need to be concerned if you have raised a huge amount of money and you are not growing right now and you are sort of in that middle market a year and a half ago when we had the idea to create group nine to consolidate some of the digital assets, we didnt want to be one of these smaller midsize businesses because we were seeing that the platforms were looking for bigger partners, the advertisers were looking for fewer bigger Digital Partners you dont want to be subscale. I understand those concerns. A lot of those businesses also were built on sort of a web one. They were selling display ad inventory on owned and operated web sites. What do you make of it almost feelings like facebook has pulled back a little bit in terms of some of its content plans, in terms of not its plans, but in terms of some of the programming. Well, i think facebook is just figuring out where they want to play here. I mean, facebook has gotten a lot of sort of flack about the fake news stuff and so theyve had a little bit of a rough year in that regard i think theyre just retrenching and figuring out how they want to operate do you believe the numbers . All the time i run into people who say did you see this on facebook 100,000 people are watching. 3. 5 Million People are watching it they say look at youtube look at the number right under the thing. If you look at the do you believe the numbers . You dont think the numbers are real like if i press click and play and i watch it for five seconds or ten seconds, its counting as a number that will register. Even though the actual video is five minutes to 20 minutes. Well, its going to depend on the platform facebook has a different definition of a view versus youtube versus snapchat. I think the numbers based on the way that theyre reporting and measuring views are totally believe those numbers. The fact is the way that they measure it will be different nielsen measures it, and nielsen is now measuring digital. Nielsen over the last few months has rolled out digital rankings for digital properties, and what you actually see is that the biggest Digital Brands compare incredibly favorably to the biggest Cable Networks at this point. There is that amount i mean, like, whatever source of sort of measurement you want to use, whether its nielsen, sort of the old tried and trutv metric, their measurement of digital is confirming what facebook or youtube or the platforms are saying i really do believe the numbers. Obviously, we see the amount views are one thing. I dont really care that much about views. Im much more interested in engagement are people sharing the content are people responding to the content . Are people commenting on the content . That for me is the signal of content thats really making an impact we are very at group nine we have more engagements on a monthly basis than any other publisher in digital over 120 million monthly engagements. That for me is the sign that were doing something right. Much more than the fact that we have five billion views. I agree, views are a little bit of a silly metric. We had been waiting to see when you take some of your content and turn it into Television Content we were going to ask you why it was taking so long, but you have some breaking news yes well, lucky for me i have a better answer to your mean question. Yeah i mean, weve been spending a lot of time thinking about how to take our brands and the ip that were creating digitally and find new platforms for them. Today we actually announced that we have a show that weve developed with Animal Planet at the dodo called dodo heroes that will be launched which will be our first long form tv show that were creating were really excited about it. Its the first of hopefully i would say definitely many projects like this there was one of a guy chasing a cat around that i got drawn into it pops up it was short, but these are longer form, and theyre about people who are rescuing animals, right . Yeah. Weve been finding weve been making lots and lots of sort of longer form content than what the dodo was originally famous for. We have a show the number one show on facebook right now on Facebook Watch that is a five to seven minute show that is doing, you know, upwards of 20 million minutes of view time per episode. Thats real thats real right . Putting it on tv makes money too. Thats a putting it on tv makes money too. Its a different Business Model for us its not selling advertising its selling programming thats going to be one of the things that Digital Businesses are going to need to do while the monotization figures its way out. You need to make money in different ways not just in advertising. You need to have programming and a licensing strategy i think that theres a huge amount of opportunity to sort of build diversified business, but you have to have strong brands to do that were going to talk more with ben. Zblievgs the house and senate could vote on a sweeping tax bill as soon as spoke to democratic senator mark warner about tax reform he was actually a Business Owner and im glad to say he is actually going to back the deal now, right, john or no . Have i got that wrong . You got that wrong. Just like the obama debates over obama care in his administration, over the stimulus and the Health Care Debate earlier this year under President Trump, this has been a party line debate. Now, as this bill gets ready to go to President Trumps desk, its worth noting the arguments from democrats and what the democrats are saying, citing economic forecasters, is this is mistimed for the economic cycle. It will increase the deficit and that it wont produce the big burst of growth that republicans are claiming heres mark warner from my speak easy interview it will not only be not a boost, but i believe its the single worst piece of legislation that i have seen since i have been in the senate, and let me tell you why. One, there was a process found this whole bill was cooked up in secret folks like me who spent years being interested in the subject were not invited into the room because its been done in secret, i believe tax lawyers and accountsants will spend a decade finding some of the loopholes and problems, particularly in the pass through area and some of the Corporate Tax reform because they didnt have the test of time and the test of public review, i think they messed up some of that now, as you mentioned, joe, mark warner was a successful businessman before he got into politics he says he favors lowering the corporate rate to make the u. S. More competitive, but he would have done it in a much different way. Take a listen to something that he says would have made this bill closer to a sell for him. One of the things that would have made this much more pat palettable is if these companies are going to bring back their profits they generated in foreign countries, extraordinarily low rates, and the rate the range is between 7 and 14 , why not say, fine, company, bring it back, but part of the price of bringing it back at that low rate is youve got to put in place a meaningful Training Program not just for everybody, but everybody that makes less than 80,000 a year now, the significance of this is not that democrats can stop the bill if it passes the house today, it will almost certainly pass the senate tomorrow and go to President Trump, but it is significant because in the times that we live in, because debates are so partisan, if you have a change of congress, youre going to hear arguments like mark warners put into play to try to repeal some of the tax cuts. Did he say turn the camera off and then did he go god, all mighty, do you believe this market, job . Up 35 do you believe that gdp i mean, this is were rocking and rolling here did he mention Business Confidence or the nfib or the Conference Board any of those things in stevemans all america survey. Did he just go dont tape this, but wow, we are really cranking. Did he say that off camera he did not. He did not. Okay just wondered. He cites his own authority as a business guide okay. I just wondered whether he i know he is an authority and all, but 35 is pretty good, i think. Anyway, thanks, john were going to talk to republican david senator david perdue he was a former ceo of dollar general. Also, reebok athletic brand. Up next, the check on main street Small Businesses weigh in. That story is next stay tuned be youre watching squawk box on cnbc. See thats funny, i thought you traded options. Im not really a wall street guy. 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 welcome back it is official Kindred Health care is being acquired by huma and a group of pe firms, including tpg capital. The price tag is 9 a share and cash the deal is valued at 4. 1 billion when you include debt. Normally we dont do that, but 4. 1 billion when you include it welcome back. This year cnbc has been traveling the country hearing from small Business Owners about regulatory concerns and which ones are key 2018 is just about two weeks away kate rogers joins us with an update on where main streets key issues stand first up is tax reform hey there, joe. Thats right good morning take a look at this map behind me now, in the past two years weve been everywhere from san diego to minneapolis hearing from small Business Owners about the key issues theyre hoping to see addressed in washington d. C. Well, they could see some progress as early as today with expected votes on the gop tax plan one of the concerns they reference most throughout my reporting. This perspective change has sent optimism soaring on main street with the nfib latest sentiment hitting the highest level ever weve been generally supportive of the bill because it provides tax relief for most small companies. It encourages investment both from individuals and companies in their businesses. It sets the stage for Economic Growth over the next few years we are concerned that it increases the deficit. The plan does include, of course, lower rates. A 20 deduction for pass through businesses on income of 315,000 and a drop in the corporate rate to 21 the n sba, though, does say they like to see an even simpler tax code put forth in the future to even further ease the burdens for small companies. Back to you, guys. Coming up, when we return the ceo of long fin told other melissa lee that the market cap is not justified the details from that newsmaking interview right after the break. Coming up in the next half hour senator david perdue will join us ahead of the key tax ayun today st ted youre watching sidewalks box youre watching sidewalks box here on cnbc at tmobile when you holiday twogether, great things come in twos. Like tmobile and netflix. Right now when you get an unlimited family plan, netflix is included. Wow tmobile covers your netflix subscription, so you can catch the hottest new movies and shows all year long on us. Amazing and its your last chance to buy any of these hot new Samsung Galaxy phones and get a 2nd one free. Thats one samsung for you and one to gift. Just in time to finish off your list. Tmobile. Holiday twogether. Ok, so with the awardwinning our customers have 24 7 access, digital id cards, they can even pay their bill beep bill has joined the call. Hey bill, were just phone hi guys, bill here. Do we have julia on the line too . k, well well just phone hey sorry. I had you muted. Well yea lets just phone so what i was thinking ok well well phone yeah lets just go ahead phone oh alright the awardwinning geico app. Download it today. The markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. Check out shares of long fin. They are plunging after the ceo made comments on fast money last night melissa lee spoke to the ceo on that very program, and she joins us right now and has what he had to say well, the story of long fin caught our eye because the company went public here on the nasdaq december 13th two days later they buy a Block Chain Solutions provider dotcom. Zidu. Com then the stock goes from 5 to 142 at yesterdays high because they bought a block Chain Company. We were interested we asked the ceo to come on fast money. We had a lot of questions. Especially when you start peeling back the layers. Zidu. Com was owned by meridian capital, which was 95 owned by longfins ceo. All right. Well, what does it do exactly . Well, two years ago it was a cloud and Distribution Platform somewhere along the lines. It made a transition into a Block Chain Solutions provider for import and exporters the asked the ceo in longfins valuation is justified im people are bragging that the market cap is not justified. If you look at my revenues, if i look at the i valued my ip pricing and look i have valued my peer pricing at 5 5. Its five times of my revenue. As you can tell, it became a very heated interview long the way as we were grilling him about this meet orric rise of this company to be fair to me and avali, the market will do the markets will do to the stock. He had no role in it he owns a lot of the shares, but he is not going to sell. He cannot sell he will be locked up for three years, he says he is not personally he is not personally profiting from this, but this really raises the question about a lot of these companies that have gone out to market now touting themselves or associating themselves with some sort of Block Chain Technology that captured this mania Bitcoin Company a block Chain Company. Its the buzz word take a look at riot block chain. It used to be bioptics, which was an Animal Health services company, until very recently bought a block Chain Company for Something Like 12 million and gained hundreds of millions of dollars in market cap. Nice trade for them. For the investors along the way, they may not be buying what they bought i was just talking to this guy about bitcoin. You have some. Thats pretty scary that these companies i mean, seeing so whats the market cap now of the market cap at last check was at yesterdays close was somewhere around 4 billion. 4 billion. And it was last week a 5 stock. About 270 million because of the word block chain. Because they bought zidu. Com which is a Block Chain Solutions provider what does that even mean . Supposedly they remove the friction in imports and exporters, theres commercial bank in between. Got it. Offering collateral they remove that will friction through a coin that they offer on their website called zidu coin wow you can look it up this is why we need to start a squawk coin. This is the issue. The issue is that anybody can start a coin this is symptomatic, and weve seen this before its been a while. Remember the late 1990s. I remember this weird biotech thing that had a similar thing this is money sloshing around. Its symptomatic of something. Isnt it symptomatic of pencils are the new thing because youre selling them online. It feels like a sign of something. Its definitely its definitely az br i do think that there is like the power of the block chain is very real and clearly the bnt was real too. Heres the problem. It became real then it became real then it became unreal the problem is are we in 1997 or 1998 or in 2000 right right before thanksgiving you remember that . Thats the question. Melissa, thank so much. When we come back, we have icarnd enoc ws stk ou but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. Welcome back to squawk box breaking news. Of course, this follows what was a big number, but it was downgraded a bit sequentially now we go from 1. 296 to 1. 297 how about permits . Down 1. 4 . Isnt as juicy just shy of 1. 3 million. Seasonally adjusted annualized units. There was an upward revision just under 6 . Is it stands roughly 7. 4 . Close to 7. 5 . Current account balance, Third Quarter, cousin to the trade balance. This, of course, is down 100. 6 billion. That actually is much less than we were looking for. About 16 billion less than we were looking for i would like to see bigger positive numbers we cant get above key tech levels, but if your bet at the end of last year was for an unchanged tenyear, you are close to winning three basis points away or so as we hover around 241. Back to you. Thank you very much lets get to Steve Liesman he has some fresh data on Holiday Spending from cnbcs all America Economics survey take it away this is where it all started. Back in 2006 when we first started doing the survey asking people about Holiday Spending, and we have record numbers. Take a look. First time ever were passing over 900 you can see here the dip that we had after the recession. This is the nrf numbers. Were generally below them remember the leg up for the next screen i want to show you because this is the numbers we showed you yesterday this bump up in optimism more than hatch of the population say the state of the economy is good or excellent thats the first time weve been at 51 , and thats largely responsible for the big spending numbers weve had. Lets take a look at how we drove this up. It comes from not from these lower spending intentions, but big spending intentions. Those planning to spend over 1,000 onethird of the population that, folks, is a big jump, and it drives up the average the median quite a bit lower, but still higher than it was last year. Now we can drill down even more. Lets find out who is spending for christmas. Republicans, theyre up quite a bit more than last year. Now, remember, when we drilled down into the smaller buckets here, the it looks like good Holiday Spending, is and this is all online. How much are you planning to spend . Not really sure it its. Theres four letters there. A lot. Your survey is getting a lot of play a lot of different play. Steve lease map, its a little funny, i this i, but so many positive things. Joe, i like your question to john about mark warner because i dont understand how the democrats and their view of the world processed this rides in confidence, which we can chronicle. It happens because republicans are way more optimistic about the economy under trump than democrats err were under obama just acknowledge it instead of being in total denial. You p, they can do what they want anyway he was a business guy. He is worth 100 million, i think, from what was that i think warner and a lot of democrats do support a lower Corporate Tax rate, though not this much. I think its really where the rubber hits the road what was his sorken, what was it, the mobile you know the mobile phones down in d. C. That warner started . Youre not listening to you wouldnt know. Net im sorry not yet for you. Not yet. Im worried about you i do i cant come up with things net i find it happening to me nextel. Eventually i come up with it no one told me that. Anyway, voting expected today on congresss historic tax reform package. Republican leaders expect the bill on the president s desk ahead of their selfimposed friday deadline. Joining us now senator david perdue, the only former fortune 500 ceo in congress. Senator, its good to see you. Its about an a long road. Today is the day in your view. People are expecting to get this done, and i think we will, joe even without mccain i guess you got collins now. I think we got the votes. Our hearts go out to john. I know he would be here if it were at all possible were hearing a couple of you know, theres always going to be criticism, but the latest criticism coming in in some different ways that this is theres going to be years of gaming the system now with Tax Accountants because of whats in the bill and really doesnt simplify things. Do you accept that premise no, not at all. Not at all honestly, this is a simple fiction. I mean, my goodness. Only 30 of taxpayers today itemize, and thats projected to go down to 10 joe, saying it in another way, 90 of all taxpayers will use the standard deduction, which was double this is by any definition simple fiction. Thats not the only goal the big goal is to get us competitive again. Getting our corporate rate to be competitive with the rest of the world is the best thing we can do for the American Worker i think thats what you are seeing in some of the optimism numbers now. The second thing is getting rid of this repat yags tax and thats the best thing we can do as well. Then the last thing, this is indeed a tax cut for the middle class. Couple a couple with two children that make 73,000, are going to get a 63 tax cut a single mom with one child will get a 75 tax cut. The journal says if you could have let me in a Perfect World its the journal editorial board. They say you should have cut the top rate not from 39. 6 to 37, but you should have cut it to 28 and done nothing for the pass throughs just let them come in at 28. Then you wouldnt have this problem where youve got a lot of not really rich people, but just sort of wealthy people tax rates are going up 15 , 20 on some of these people in blue states because of salt and for others reasons it is a big tax hike on certain people that voted republican well, if you listen to the other side, joe, i mean, theyre saying this is nothing but a tax break for the rich youre exactly correct the math works exactly like you are saying it does its one of the problems, frankly, i had with the system i mean, Capital Formation is a large part of this effort. That runs counter to that. You are exactly right. Hey, senator. Theres no question that this is going to help companies and corporations, and theres no question that the rate comes down for the middle class. I dont think thats in dispute. I think theres a larger question, though, of how this hits the like i like to say, it soaks the rich, but it doesnt soak the richest sort of to the extent that you believe that the tax system encompasses the values of both fairness and this country, when you look at the donor class given the pass through issue, given even the real estate loophole that emerged over the weekend, does that not concern you that people are going to look at this plan and say theres something fundamentally unfair about it . Well, i dont know how to do it any better than what weve done what weve done is tack a system where 1 of the taxpayers pay over 40 of all taxes pay the top 1 honestly, many of their taxes will go up just as joe just mentioned. Our focus here was to get competitive again, and the person thats going to benefit the most in this tax plan is the person that gets the job, guys im not arguing that point. The point im arguing very directly is if you are a billionaire today that your tax rate from a percentage, given the games that you can play with both passthroughs and s corps and other things puts you in a materially better position than a employee thats on a w2 oh, im not willing to accept that at all. Youre not . No, not at all. If you do the math, and weve got examples of that thats not the case. Look, by the way even if that were the case, thats not a problem because what you are trying to do is get Capital Formation. What those people are doing is investing in the economy, creating jobs, and helping us become competitive again weve had eight years of the weakest Economic Growth in our history. We have to do something fundamentally different. With respect if im a company known as whats called a loanout where theres a company well call it Andrew Ross Sorkin inc, you contract with my company, and effectively i loan my services to you, i can effectively lower my tax rate materially relative to what i would be as a w2 payer. Well, what you have right now well, i dont accept that at all i like to see that example what you have today is a lot of our intellectual property is owned off shore, and what weve done is given incentives to bring those back were cutting a lot of the games out. We took over 1. 3 trillion of tax breaks for corporations ouflt tax code, guys im not disputing the corporate piece of it. Let me ask you a separate question you look at passthroughs you look at the real estate provision that was put in. Some people even described it as snuck in over the weekend where effectively one industry goes down to the pass through 20 rate how do you explain that . Well, its a pass through what we are trying to do is get all these people why for that single industry relative to every other industry in the world thats not just a single industry what we try to do is to eliminate some of the imbalance that is we had in there. Im not familiar with what happened over the weekend, but i will tell you this this is the most balanced tax plan i have seen in fact, over 30 years weve seen the detriments of a tax plan that was an immalgamation that was over 100 years of these disincentives, and we tried to clean a lot of that up, and i think this makes us much more competitive. Are there loopholes and imbalances well find out i dont think this has as many as we have in the current code senator, if you are going to concede that corporations are the donor class and this entire tax bill was about lowering the corporate rate, youre never going to be able to refute the other side saying that it benefits the donor class you know, thats what you if you are going to say that corporations are wealthy people, then they are getting the tax breaks just by saying that the donor class is getting the tax break, thats why you are doing it in the first place is to get corporations more globally competitive. Its like arguing against that you cant win. Theres just no way to win if the corporations arent healthy, there are no jobs, and by corporations im talking about subs corp you are preaching to the choir. I understand why you want to cut Corporate Taxes. Im saying its going to be called the donor class by people that dont like it, and its going to be called the rich. Were taking six Million People at the lower end of the scales off the tax rolls today 52 of households pay no income tax, and were adding six million to that. This cannot be just about the donor class. Thats a false i understand, but, no, youre missing my my point is if you are going to call corporations a donor class, then youre obviously its tailored to the donor class because youre cutting Corporate Tax rates. Thats what were trying to do in the first place anyway, thank you, senator you know, georgia tech didnt even show up we talked about that not this year no, they did not. You said they would. Now are you a georgia fan now . Go dogs barely got that out see you guys. Tnkounks, senator ha y, senator. When we come back, a lot more from ben lerer. Back in a moment 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. We have green arrows ahead of what is likely a vote on the tax bill and an expectation that its going to pass dow looks like it would open up about 70 almost 80 points higher ben erer is with us. He is the ceo of Group Nine Media and managing partner at hippo ventures we just got into a raz, a debate during the break about carried interest yeah. You are a beneficiary of carried interest you are going to have to now hold this stuff for three years rather than one to get the benefit under this new plan. Yeah. You still dont well, what do you think ill let you say it yourself well, i mean, look, i think that theres you know my politics i think that theres, you know, this tax plan just in general, like, i think that theres a lot of income inequality do you think that you should get carried interest i think that its a little bit insane a little bit insane a little bit insane yeah. I think that the rich get richer when you talk to your other friends, the venture capital, private equity community, investment community, lets call them i think i honestly think it does depend on the politics of the person and sort of broader thoughts most of the folks who we deal with i think think its insane as well. Do you think it changes the debate that joe and i have long had about this whether it would change the incentive structure i think becky is with me on this, by the way i think it would change the incentive structure wouldnt be a bad thing. Would it change the incentive structure for people in the venture and private equity community, meaning would they invest less . To the extent that somebody could argue that private equity or venture is helping the economy and want the economy to grow and you want to incentivize that, right, that is the argument the that joe has made, would change that. My argument about carried interest is its such a small amount you argue it on an optics basis. Thats fine. I dont feel strongly one way or the other if you want to get rid of carried interest. I dont think it you spend so much time talking about that and estate taxes you can paint the whole thing as a cut carve out for the rich, and its not just using those two things does not make it does not, you know, cancel out Everything Else thats happening here. The wealthy are not its really its kind of ironic that i keep getting told how theres a big tax cut for the wealthy, and we know how much taxes are going up for a lot of people if its really a big benefit for wealthy people, then so the Tax Policy Group scores this and says that 5 of people taxes are going to go up right okay. So lets just start there however, the 0. 1 of the 1 , not necessarily right okay. So that makes sense to you i would have done it to be able to do the passthroughs and to get them where they are, i think it was a mistake i think we should have i would have done an across the board to do korpgs at 21, i would have kept i would have lowered the top rate to 28 and not done pass throughs thats the way i would have done it, and then the salt doesnt matter none of that stuff matters can i ask you a question as somebody who invests in new startups. Yep when you meet new entrepreneurs, how often is the conversation is there any conversation about tax rates, where you want i want to be located because of tax rates all of this policy conversation that were having every single morning in startup land, how does it manifest itself . It doesnt. Its something thats never discussed at all were all so very early stage investors, so were spending time with a team with a dream who is just thinking about going and building some, you know, amazing thing in some new industry, in some new space. You dont see people saying do you think more people are going to say i would like to start my company in florida, i would like to start my company in texas. There is some every once in a blue moon you hear a team think like that. I think much less about traditionally its been much less about taxes and more about sort of, you know, different pools of talent and the ecosystem ecosystem, going to you know, costs of operation, things like that. Do you think if they create more jobs, is that a way to solve it, or do you believe in pure redistribution . Is that the way . Look, i how would you do it if i had an answer, i would be doing much more intelligent things than i do now i think that we are in a situation right now where not right now. We have been, and we will continue to be in a situation where rich people and Big Companies get have it way, way, way easier than they should, and thats whats the right answer to make sure . It didnt trickle down much in the last eight years, right, just with the about the media ndape enlascwh we come back. Jim cramer will join us live from the New York Stock Exchange protect Sensitive Data from millions of kinds of malware, with a cloud thats secure to the core. The ibm cloud. The cloud for business. Yours. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Lets get down to the New York Stock Exchange where jim cramer joins us now. More stuff with food and more stuff with pharmaceuticals, all kinds of mergers going on. You saw melissa lee with that that went from like 5 to 300 and then back down well, i mean, i think that people we all have to be sensitive, you guys dont see it, to the tape that runs underneath it, we have blockchain going up 4. We you look at Something Like that and it went down after melissas report and we have to remember that theres a lot of people who only know that what trades must be right. And theres a lot of wrong to that these are companies that i think are taking advantage of pretty much the enthusiasm that we know is occurring and the cryptoworld, im not denying the cryptoworld, im supporting the cryptoworld. I think crypto is great but i think we have to be a little more careful weird name too, the crypt keeper, thats where a bunch of dead people are, right, jim . This is going to its a different thing. Its cryptic, not a crypt, right . Right look, when you see the level of enthusiasm, what that says is there are true believers and you cant talk a tru believe out of it i always say, as long as you know the risk, be my guest he never mind anyone trying to make money but a lot of people come on the shows and say they missed it. Im not one of those im saying as long as you know the risk, its fine. But you have to understand the risk. All right, well see you at the top of the hour as we head to break check out shares of apple still in the red after the downgrade at nomura. Squawk box will be right back. I think that shes a very nice girl. You never got the brakes looked at . Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading companies see it and see it throughwith digital. We have to say a very special thank you to our guest with us for the hour we have a question for you, we talked about the media landscape, when do you think all of this is going to truly be monetizable, all of the digital programming which feels like i dont know, lots is monetizable right now. There are plenty of ways to make money and they are growing quickly. But when will it happen into sort of the scaled advertising dollars a la television . Yeah or be able to mac a meaningful profit. Were heading very rapidly in that direction but it will require changes in the way facebook and snapchat and google do you know Chris Hardwick . Ive heard this before. Have you ever been in the same room . Have you two been seen in the same room . Youre not him . You swear youre not him. You do talking dead youre not him. Hes also didnt get my great answer but anyway join us tomorrow. Right now its time for squawk on the street. Good tuesday morning, welcome. Im Carl Quintanilla with jim cramer and david faber futures steady, that breaks the record from 95, the house votes on the tax bill today. Fedex and micron report today