The dow crossed 24 how for the first time yesterday, but for the month the dow was up 3. 83 the s p up 2. 1 and the knanasdaq up 2. 17 . Telecoms led the way for the month. Check out the u. S. Futures those gains yesterday were something to see the dow Jones Crossing 24,000 for the first time the s p 500 was up by 0. 8 yesterday. All of these things we have been watching closely you are seeing a pull back this morning. Maybe related to what were seeing in europe the declines there are more significant. Declines in europe are because of the tax deal. You think absolutely. After we got so close last night. Its not just the declines in europe, europe is not matching 350 points of gains that we had here yesterday but the 350 points, that was at 4 00, all of this stuff they were supposed to vote yesterday. Im surprised theres not a bigger decline this morning based on the snags in the tax bill it was supposed to happen if we knew it would happen today, there would be further gains, now its totally up in the air. You think thats why the dax is down 1. 4 the whole thing has do with the Global Markets the day before were based on tax reform going up. I think were the dog. I dont think were the tail were helping inspire the growth that these guys keep hanging all this on. You just watched it yesterday. We were in the morning up 50 points our memories are short we did 250 and 70, i said were up 320 points in two days, then another 80 then up 50 yesterday we were amazed we were up 50 early morning. Mccain came on board in the middle of the day, it surged 350 points i think yesterday was entirely because of taxes, i dont think the pullback this morning is we got mccain, murkowski, and then all of a sudden it all hit the fan. Intractable stuff. That will be a tougher fix. You have the two parties that are opposed to each other moving further part you got the deficit hawks within the republicans. You have some guys that want more you have other guys that want less so now youre they have that score came out. Were it said it would trillion dollars in deficit corker has said he wont go for anything that adds a dime to the deficit. A trillion is a lot of dimes the global synchronous growth, i said you almost sound like a parity. Many of them didnt think it would be a good year because they were on the wrong side ochtd of the election their entire premiseis shaded by somehow midday yesterday, the global synchronous growth story got strong again, then overnight the global synchronous growth story got less strong lets talk about washington for a moment this is the story of the morning. The gop tax reform bill hitting a big snag in the senate at issue the trigger amendment proposed by senator bob corker ylan mui will break it down for us reporter the bottom line here is that the idea of the fiscal trigger is not going to work the trigger would have automatically increased taxes if federal revenues fell below a certain level. Lawmakers found out last night that position is not allowed under the senates complex rules. Now republicans are scrambling to come up with a new fix. I talked to one top lawmaker who said one idea theyre considering is a stair step increase in the Corporate Tax rate, but that could upset conservatives who were unwilling to entertain anything above 20 , not to mention President Trump himself who called that a red line corker is not the only senator republicans are worried about. There are three more still on the fence. And the danger is that anything they come up with for corker could derail the deals that the other senators were working on to get to yes. Moments ago, senator steve daines of montana said he is a yes on the tax bill. Thats good news for republicans. Lawmakers went home early last night to come up with a solution theyre reconvening this morning at 10 00 a. M well see if they can hold on to yesterdays momentum walk us through the timeline. Theyll meet at 10 00 a. M. This morning. Is there any expectation that something can happen today or now were pushing into many more weeks or days theres hope that something could still happen today they convene at 10 00, the first vote is at 11 00 it depends on whether or not they can figure out a solution to replace that fiscal trigger, whether its an increase in the Corporate Tax rate, whether its making some more taxes on the corporate side temporary what are they going to do . Replacing or reinstating the amt for the corporations and individuals. All of these ideas are on the table. It depends on how quickly they can come to a solution is there a way to satisfy these guys right now then when it goes into the pot, theytake it back could they is that not kosher we want your vote today, get corker then they have to vote again after. The hang up has been the senate if they put in a provision now, it has to be something the house accepts. If the house changes it, it has to go back to the senate they have to have a fix that all of these guys will agree to. Its up to the house to decide whether or not theyll swallow what the senate puts forward right joe, you pointed out that its tough for Business Planning if you talk about a corporate rate that steps up overtime or sunsets. If youre looking for a fix, raising it to 22 , that would be more palatable, but thats something the white house said is nonnegotiable they want 20 . Thats what we always thought. People thought the deal would be 23 , 24 to begin with your people maybe my people you were hoping for 28. No. President obama was at 28 i thought you were at 28 i was at rational math. Rational math, as demonstrated by the last eight years. Theres math involved i saw the deficit double with your rash mall math over the last eight years because it was a financial crisis that was that was caused by bush hold on, think about it like this if you want to give credit to whos ever on watch no, no. Is that your deal no. No i give credit to the market going up after it was down 40 and doubling since 1999. Right but the real moves that you were a little bit questionable about a year ago, the real moves that happened, these are policy based moves. The previous ones were normalized moves normalized. What pro Business Stimulus did you see during those eight years . That helped businesses out other than rebounding from the financial crisis the auto bailout the auto bailout happened second piece of t. A. R. P. And the fed. The fed but emergency measures with central bankers is not a growth policy that you put in that helps the private sector thats just thats triage for hoping to get back from 666 on the s p, which we did. But now these are actual advances being made on the possibility on the possibility of policy. A policy that hasnt happened yet. Im not saying it wont. A lot of it has a lot of deregulation its all about animal spirits its all about business confidence, which is at the highest can i continued lets bring in our guests . Joe zidal with Richard Bernstein advisers and Charles Campbell with mkm partners. What do you think . How much of what were seeing is based on the assumption that the tax bill will go through good morning. I hate to mention the word fundamentals after the conversation that has taken place, but we have this terrific cocktail now of accelerating profits growth, low Interest Rates all around the world and Investor Sentiment that remains september cal. You put those three things together, theyre powerful forces maybe the daytoday story will trade on the ebbs and flows of whats happening in washington, but the fundamental story argues that equities should continue to go higher and higher through 2018 i think its an earnings driven bull market. People have come up with every name under the sun for this bull market the trump trade, the mccain rally. But no one is focused on the fact that s p 500 profits are now back at record highs the entire way weve given credit to earnings and fundament fundamentals people have said dont chase the rally. We already got our move based on Global Growth and earnings it was up 8 0 poi00 points this, from alltime highs from levels that people thought were nosebleed. You hear about valuations. Goldman says this is the most overvalued then it goes up another 800 because of mccain saying something the daytodays will be driven we were up 800 this week. Of course that happened from strong earnings and global synchronous growth when you look at the s p 500 earnings that wrapped up, earnings were up over 20 . I know that that doesnt explain 800 points this week. The most interesting thing about it is Investor Sentiment heres whats amazing. You went over the november returns, the dow and s p were up over the last four weeks, if you look at investor flows, how people are voting with wallets, they have withdrawn almost 20 billion from u. S. Equity mutual funds and etfs and put over 20 billion into bonds thats skepticism. The dow and s p are up for the last eight months in a row that hasnt happened for the dow since 1995 charles, you say look out below if the tax reform doesnt go through. This week you had massive moves in the market. Part of that was powells ted, where he said well have a lighter regulatory market for banks. Part of it is the tax reform which was expected to go through. Now theres incremental uncertainty about that the downside each 1 is 26 s p i wouldnt be surprised if you get a 50 or 60 handle move in the s p on disappointment, especially if theres uncertainty going into the weekend. Thats not look out below thats giving back some of yesterdays gains. Would be the beginning of a move lower i wouldnt be surprised if we move 2 to 5 lower. Hedge funds, which so far, whether its global macro or long short are underperforming benchmarks since midseptember the s p has been up 69 of the time. Since 1950, the historical average is 54 of the time that 15 percentage point difference is significant. Most of these gains on the upside are larger in magnitude than the declines on the down side so when hedge funds at the end of the year now, as they go to preserve capital, if the market begins to decline, theyll pull back more aggressively and if the market is advancing, they will increase exposure more people are sitting at home saying i missed this if i have not bought into this i missed a big rally this week alone. Would you tell people to buy now or wait and see what happens with the tax bill . I would choose option c a 1 , 2 move down is nothing. Joe what do you think if we see the tax bill run into roadblocks, it would be a big buying opportunity the underlying fundamentals remain strong. Joe, heres a point for your argument on animal spirits, if you do a Google Search over the last 12 months for the word deregulation in the news, you find more than two times the number of instances of the term deregulation being used now versus the 12 months before. All right there wasnt much in terms of that. There was reregulation when you look at the way it happened, everybody remembers healthcare they remember that dramatic so midday yesterday, its like you never know with the maverick you never know we talked earlier about how he seems to go back and forth this time he totally pod his own party, the democrats love him again. I said watch, hell flip back. Midday, the guy who went like that says hes on board. This is done its done and then maybe that was the top. After that it was nothing but downhill you got the trigger cant go then you will go to 22 . And it was just i watched it. Its like straight downhill after the euphoria of in terms of the momentum. Murkowski had come on snow was even like, you know, im not a no if they try and appease corker and flake on some of these issues, you will lose people like cruz who say forget it again, whack a mole every team you whack one here, you get another one coming up over here. This is only in the senate before it goes to the house and you have to cram the two bills together its complicated charles what areas, do you like the best what sectors would you tell People Technology has had a massive run. As professional investors look to preserve capital, they look to manage their risk, one thing that were seeing, i think, is a rotation from technology into other areas. One area thats attractive is industrials. Leading indicators are good. Industrials and Norfolk Southern this week, rails are doing well. Transporteds are at an alltime high that would make sense to me. Does the market tell you guys that we will do four quarters of 3 we got 2 or 3 already. It could happen nearterm. That wouldnt have been from policy t policy, it would have been from guys being more confident about the future with things theyre doing with their business and consumers. What will the naysayers say about there was no population growth, no productivity change what will they say when it finally happens after not happening for eight years . Do you think its going to happen i think it will happen. If you look at how investors are positioned, theyre positioned for defense, lower rates for longer theyre not positioned for Growth Growth would be a big surprise 33 with the purr canes it cou it hurricanes the hurricanes were the net stimulus its a slight headwind. 33 with the hurricanes people thought it would go back to 2 regulatory rollback is one reason and central bank accommodation. Even if we raise the market expects two raises, the rates are still low. Big healthcare news. Cbs nearing a deal to buy aetna for 66 billion, and amazon is now in high level talks with pharmaceutical Companies Details and analysis straight ahead. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. Wifiso if you cant live without it. T it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Joining us for the next few minutes is anna gupta. A couple of stories to talk to her about today, starting with cvs, moving closer to a more than 66 billion deal to buy aetna. The wall street journal reports the deal would value aetna between 200 and 205 a share. Mostly cash. An announcement could come as early as monday. The rational, anna, is a onestop shopping place for healthcare would that is that what they need its defensive and ambitious. Defense, its because we talked about amazon a lot cvs needs to do something. Aetna is not growing much at all in terms of the number of insured lives, margins are peaking. They have pressure on that all of those are the defensive elements it could be potentially transformative it would take a while, but its an integrated offering across medical and pharmacy they could repurpose the real estate into Community Health centers, and the agenda would be to dwroorive up aetnas insuran offering is that what you think part of it is definitely. Is it 50 change . Cvs has a lot of unused stores and big space. 9700 stores, 1 01100 clinics. 70 of the revenue has been coming from the front store, but thats into the really growing because of amazon. They talked about low cost primary care, urgent care, and dialysis clinics, taking out the greeting cards, shampoo. What is the knockon effect, if this deal happens monday morning, whos next . I think that humana is in play i wrote about this cigna is the potential horizontal acquirer. I wouldnt eliminate walgreens, walmart and anthem as other potential walmart yeah. Humana and walmart have been in a tight relationship for six, seven years. Not a formal jv, but they steer humana members to walmartment what kind of a purchase would that be . Were talking about maybe a 25 , 30 premium now to humana, which is somewhere in the mid 30s. 37 billion. Another 25 off of that i think its a 300 a Share Offering humana is rallying the last couple of days on tax reform you referenced the amazon story a couple of times. Meg tirrell says amazon is in exmroe exploratory talks with drugmakers, reportedly about taking a roll in drug purchasing and generics what do you know about that . Novartis made some comments a couple days ago in an investor meeting hosted by our firm, they had discussions with amazon. A potential play, if you wanted to look at this more transformatively, could be amazon saying, hey, walmart is doing the 4 generic drugs in store. Why dont we do Something Like that with Online Shopping and mail order lets say they work with mylan or one other do you think they need to own a mylan or no. No straight partnership stuff. Straight partnership. The threat would be im not saying they would do this, but this could potentially happen. They disintermediate the pb marks because they negotiate the generics, they do the sailing, all of it, end to end in the drug supply chain. You know walmart is going bricks to clicks, and amazon is going clicks to bricks, but thats a good play for them at this point know vnovartis hat confirmed anything that ambitious, but its a possibility. We dont know. Amazon, god not an industry where if we dont talk about something happening, we dont go amazon. I know. Theyre likal ove athe overhang threat like kroger yesterday whats fascinating amazon and bitcoin. You talk about vertical mergers ordeals like this. At some point do regulators look at amazon, even though theyre not in the space at all. On a traditional metric, you go, oh, okay they can do this groceries, they can do this. Tv, they can do this but at some point do you have to look at them in a different way . Too big to fail i dont know. I dont know dont mention his book. Thank you. Royalty he pays. President trump tweeting about tax reform he says republican senators are working hard to pass the biggest tax cut in our history the bill is getting bet every a better and better. Obstructionist democrats trying to block because they will not get the credit, even though its the republicans themselves who are doing this why does he write these things because hes because thats not did you read axioss analysis of how trump works read it. Its on axios today. It has a fivepoint chronology trump starts here. His people retweet it. All of his followers the rest of the Mainstream Media gets up in arms about it then it starts trending. At night fox does one side nbc does the other side. But you talk about fake news, here h