Transcripts For CNBC Squawk Box 20171215 : comparemela.com

out. a little bit of brinksmanship, or brinkmanship, i should say, as joe corrected me. >> less is more -- >> there are a couple more brinks, a couple senators you've got to wonder about. >> okay, then. >> what happens with susan collins, what happens with lee from utah, who said he's undecided -- >> lee who >> mike lee? >> oh, mike lee. >> who wanted -- >> got two first names it's confusing i don't trust people with two first names. do you >> yes, generally. >> you do? >> yeah. >> i think it's confusing. >> well -- >> you've got three, you're fine. >> i've got three, three names some people say andrew ross, two first names, even though -- >> no, i'm talking about when your last name is a first name. >> chris christie? >> there's a lot of them, bill george, ted david. i just made that one up. i don't really think there is a person by that name. all right, let's look at what else has been happening in the markets. the ten-year note, one we've been paying attention to, too. earlier this week you saw the ten-year pushing above 2.4%, but now we're back below 2.36%. a couple stories we're watching this morning. activist battle is raging on elliott management preparing a new proxy fight. the "wall street journal" reporting that elliott wants to remove hess' ceo, john hess, someone we've had on this show many a time, or force the sale of some parts of the energy company. hess shares are trading higher on that news let's show you that board right now, that stock up about 6% right now. >> not happy about this. very nice man, john hess. >> john hess is a very nice man -- >> always sends us the things. >> the hess trucks. >> always the hess trucks during the holiday season this is -- we've got to draw the line to this activist crap somewhere. i'm against this. >> now is time to take a stand. >> got to take a stand. >> the real danger is that the activists are going to say stop wasting money making the hess trucks we've got to be efficient -- >> don't they lose money on that >> no, no -- >> stop sending them to andrew and becky. that could be the end result from this. just think ahead i mean, what could -- >> paul singer watches the show. he could be taking notes, calling john -- >> so does john hess. >> if he wants to buy all of them and make sure we still -- we can talk, but did you see this year's? every year it's different, you know. >> right what are do the hess trucks look like this year >> i can't remember exactly. a lot of times there's a jet with it or something, but there's something cool with it this year. i saw it, and i was like, i want it then if you don't open them, you can sort of collect them, you don't play with them as much so you know, that was what i thought. >> what does this mean for me? >> what's it mean -- >> no, i like him, too >> he's a nice guy. >> yeah. oracle under pressure despite earnings beat the company, also saying growth in its cloud business will come in weaker than expected for the current quarter. also oracle announcing a $12 billion buyback. of course, as i was talking about buybacks and dividends, and what happens in a world awash with a little bit more cash/liquidity after this tax event? these guys are buying back stock now. stock down about almost 7% right now. also, adobe shares are moving higher on upbeat quarterly results. the software company says quarterly revenue grew 25% in the fourth quarter adobe also raising its outlook for the next year. joe? other stocks to watch. shares of h&m plunging after the retailer reported a drop, biggest drop in quarterly sales in a decade. the company says it plans to close more stores as it focuses more now, more aggressively on e-commerce shares of waste management are higher this morning. the company upping its quarterly dividend and announcing a $1.25 billion share buyback. and csx ceo hunter harrison is taking a medical leave. the company says harrison is experiencing complications from a recent unspecified illness csx chief operating officer james foote will take the helm during mr. harrison's absence. it's not immediately clear when he will return and in some political news, we are watching, what else, the big movement on tax reform today. cnbc's seema mody is joining us live from washington with the latest good morning. >> reporter: andrew, this is it, the final version of the republican tax plan will be released today just as there are new questions about whether there is enough in it to convince some of the reluctant gop lawmakers to support it. senator marco rubio going rogue, threatening to vote no unless the child tax credit is expanded he didn't say by how much. $1,100 is refundable in the senate version of the bill and he just told cnbc it needs to be bigger than it is now. >> unless they figure out a way to increase the refundable part, higher than $1,100, the way they figured out a way to give corporations an extra year of cuts, the way they've figured out a way to lower the top rate for someone making, a family making $1 million, unless they can figure out a way to add to the $1,100 figure, i won't support the bill >> also on the fence is senator mike lee, who had worked with rubio to expand the child tax credit and of course, there are the usual suspects like susan collins and bob corker, who are undecided. now, though republicans had reached an agreement on the broad contours of this bill, negotiation over the details continued overnight. lawmakers are planning to sign off on the report from the tax bill's conference committee this morning, and once that happens, they cannot make any more changes to the bill. it is carved in stone and they will have to vote on it as is. so, the text of this legislation won't go public until the afternoon, so that means undecided republicans will only have one weekend to digest this information before they take that tough vote next week. back over to you guys. >> it seemed to me just reading between the lines that there is a bit of chicken that's starting to take place. some republicans saying, yeah, okay, we know that marco rubio is not going to vote no. they wouldn't answer whether they're going to be doing anything to try and sweeten the pot, and it sounded like he was saying, yeah, we'll see, let's bring that on. this could be some pretty interesting -- if they can't make changes after the fact, this all comes -- >> they have to have a deal by 10:00 a.m. this morning when they start to sign that conference committee report. and rubio clearly has political leverage right now he is clearly using it all signs that we have gotten from republican leadership is that they are working with him and i think it is notable that he didn't set a firm number that he has to reach in order to get that support. >> right, just something more. >> just something, something more, exactly. >> susan collins taking care of at this point, is that the understanding? >> unclear i mean, it seems pretty obvious that she is not going to get passage of alexander marie and some of the other health care stabilization bills she wanted to see before a vote on the tax bill however, she has sort of been careful in her language to say that other amendments that she had supported, like expanding the medical deduction and like improving the state and local tax deduction, those things look like they are in the final version of the bill. and whether that's enough, plus an assurance to work on health care later, will be enough to get her on board when we saw her yesterday, she said she still wants to see the final version. >> you asked me for a few tips on the college process how old are your children? >> i've got a 5-year-old, a 3-year-old, and one on the way so, i'll be saving for a long time. >> by the way, congratulations. >> i didn't know that! congratulations! >> thank you thank you. >> yeah, so you know, just, what are the three -- i'm like, they're 5 and -- it's never too early. you're right. >> we've got 529s. we've got 529s set up. >> but you know who you need to talk to first is this gentlema over here about the -- because at 3, there are s.a.t. preparation courses that you've enrolled the twins in, right >> no, no. we're always talking about -- i don't know what it's like in washington. >> do you know the name of the nursery school collegiate or is it a kindergarten -- >> i used to teach s.a.t. prep to sixth graders. >> all the way to 12. >> all the way to 12, okay but obviously, we know where it's headed, right >> we can only hope. >> all of us are hoping. >> yeah, exactly and it goes fast that's the one thing that i'd -- but you know what -- >> yeah, and congratulations. >> thank you. >> we're going to get old no matter what. trust me on this and that's, at least that's, you know, you can watch this playing out and see progress and that makes it sort of okay, takes the sting out of it. anyway, not completely, but anyway, thanks >> thank you. >> i have to run to the restroom no, i'm fine joining us now, american enterprise institute resident fellow alex brill. alex, i liked, you know, you're truly a low corporate rate guy the one problem you have is that 21%, that it's not 20%, and they've got to fix that maybe by 2027 get down to 20% so, all the stuff that happens with high-income salt people and all this -- i mean, taxes for this big tax cut that we're supposedly getting, there's a lot of people getting tax increases. that doesn't bother you? it's just the 1% difference in the corporate rate from where we were does that really make a difference >> well, on the individual side, you're right, there's going to be a few winners and losers. that's actually part of the definition of tax reform. >> i love that. >> is that not everybody's getting a break. it's not like it was in the early 2000s when everyone's rates were going down. we're trying to broaden the base as well. on the corporate side, you know, is it the end of the world no, it's not the end of the world. i did think that it would have been clever of them to drop the rate back to their goal target of 20% in the last year of the budget because it would send a good signal to businesses of where they want to go, but i think overall, they're putting something together that's going to work, and i do think they're going to get the votes they need in the senate. >> if you, you know, were like a rorschach test, if you were to show one person this bill and they happen to be on one side of the aisle and show this bill to the other side, you know the comments you hear from both sides. how can that be? is there an objective analysis of this bill that can be done, or not in this environment that we're in right now because i mean, i've heard apocalypse i've heard end of the world. i've heard 10,000 people a year are going to die, and it makes you wonder, why would republicans and the president want to kill 10,000 people every year are they doing this on purpose >> does make you wonder. with a bill like this, with hundreds of provisions, you're right, it is a little bit like a rorschach test you can see what you want or you can see yourself in this test in some regards as i mentioned before, there are winners and losers there are all sorts of changes, international regular sea corps, pass-through provisions for smaller businesses, and of course, on the individual side everyone's going to be affected. the truth is, i think a lot of people in the middle class are going to be affected by a relatively small degree. the code's changing in many ways most of them will be better off. can't guarantee that everyone will be better off but there's enough in there that you can, depending on your perspective, you can point to the things that you like, like the doubling of the standard deduction, like the increase in the child tax credit, like a lower tax on corporations, or you know, people can find other things i think that the complexity of the tax code is shifting from the middle class they'll have a simpler system. but i think it's shifting up to higher income individuals and for many igh-income individuals, this pass-through provision is going to be more complex for them so, there are going to be changes across the board. >> complex in a good or bad way? i could argue that the complexity, unfortunately, they've created enough loopholes where people are going to be using these pass-through in a meaningful way. >> i meant complexity in a bad way. i think this pass-through provision is going to be an administrative challenge for people, or maybe you would say opportunity if you want to think creatively as a tax planner. we'll see how that unholds. >> how far along has your attorney gotten? have you figured out how to get health care? do you lose health care if you -- do you lose comcast health care if you do this >> if you do what? >> under the bill? >> you're having trouble following? when you go, when you transfer to the pass-through, how far has your lawyer gotten along and -- >> no. but i think there's going to be a lot of people affected. >> are you looking into it >> i'm not, no, because -- >> oh, okay. >> no, i've looked into the different provisions of how it all works. it's very difficult. there's going to be a lot of -- when i say there's going to be she nanigans, left and right. >> no, i know. i'm just wondering if you've -- i haven't talked to -- someone said you have to talk to -- alex, if you had to go give a speech in the middle of the country, there are going to be 500 people there, you need to get a majority to say i want to do this, could you do it and what would you tell the 500 average, main street people to get them to 51% yes let's do it, because i don't know if you could. >> well, it's not polling well, that's a fact. as paul ryan said yesterday, the '86 tax act, the last big tax reform act didn't poll well before passage, either, and i think that has to do with the fact that some of the things that are in the code, some of the goodies that are in the code are going away, and that makes some people nervous. if i had to pitch this in the middle of the country, i would focus on the fact that the standard deduction is going to double, and we've got a lot of itemizer who are trying to keep track of that process to at the end of the year track all their receipts, mortgage interest deduction, charitable giving, all their tax receipts and when the standard deduction doubles to say $24,000, whatever it comes out to for married couples, that's a huge simplification and not only does it make it easier to do your taxes come april, but i think it's going to give people a little bit more confidence in the system as being fair if they believe that their neighbor, their co-worker, their buddy is also taking that same standard deduction, instead of thinking, oh, well, i'm paying this tax, but i'm pretty sure that my neighbor across the street is taking advantage of a loophole, and that makes people feel really unfair, and i think that's going away in large part. >> i saw that ice cube tweeted that they're going to take -- they're going to give money to corporations to make things -- make more things that the people they took the money from aren't going to be able to afford to buy anymore, the average people on the street. so that's -- >> i don't think that's true. >> no, i don't think it's true, either, but that's what you're going to see things like -- i don't follow ice cube. someone retweeted one of his comments. >> i don't follow him. >> no, i don't follow him. >> look, there's going to be a lot of people. there are major changes that are coming through and it will take a long time for people to figure out what's going on. outliers. >> but people were pointing out that the money that you're, actually, that the government sort of, that you pay back of your money that you have, it's not really that they're taking it -- since you already own it, it's not really that you're taking it from -- >> taking it back. >> well, look, i'll tell you, the one -- i have to imagine unintended consequence and i go back to my blue state-red state salt situation if you care about education, which i know you do. >> do you think -- >> hold on. >> -- the schools in new york are -- >> hold on, hold on. >> do you know about the public school system here >> if you care -- >> this is the model for the country? >> i want to hear what he says. >> i think if you care for half a second about education -- by the way, not just at the lower grades, but if you care about college, if you care about putting kids through community schools, if you care about -- what do you think's going to happen to the budgets of those schools? what do you think? what do you think's going to happen to the scholarships for those kids i mean, it is -- >> you're talking about in the blue states? >> in the blue states, it is going to become an abomination and so, if you think we're trying to reskill and retool our workforce, you talk about wanting to have growth in this country? >> i'm sorry, which part of it >> i think a budget -- >> go ahead. >> the changes that are happening to the s.a.l.t., which is a compromise between the policy we have today and the elimination of that deduction, right? we know that a lot of those taxes will remain deductible, so they're going halfway on that provision -- >> wait a second, i think andrew's talking about what's going to happen to the budgets of the states -- >> i'm suggesting the budgets of these states will come down in a meaningful way -- >> because they're going to have to cut taxes. >> they're going to have to cut taxes. where are they going to take money from >> not necessarily -- >> one of those places -- >> if it's really just hitting the wealthier types, if the $10,000 provision -- it depends on how big that hits in the upper class -- >> in every state budget that has any kind -- that is going to come down by default as a function of this. >> in new jersey, they're just talking about putting additional taxes on people who make $1 million or more. that's been bill murray's solution. >> if you think they're not going to -- >> so, you wouldn't -- any of these states with teachers unions and with the way some of the money is allocated and spent, and they have democratic, like, governors, and they've got public unions that work with -- you don't think any of that is wasteful you don't think any of it could -- it's got to stay where it is right now? >> -- the budget already slashed over the last eight years because of -- >> none of it is waste >> pensions that are there -- [ everyone talking at once ] >> what i'm saying is, the california university system, one of the best in the country new york public university system, one of the best in the country. you know, we can really start thinking, massachusetts, these are real issues. >> what i will say -- >> you don't think the overall 3% we get in economic growth is a good off -- anyway, we've got to go. alex -- >> new jersey has already been in a dire strait system that they've been hosing the university systems for quite a while. all right, when we come back, latest "star wars" film is already setting records and it's only been open for a few hours the business behind the force when we come back. cannot live without it. so if you can't live without it... why aren't you using this guy? it makes your wifi awesomely fast. no... still nope. now we're 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. welcome back to "squawk box. the latest "star wars" film hit theaters last night and has already became fandango's top-selling ticket of all of 2017, beating "beauty and the beast" in prerelease ticket sales. it could earn $200 million in its u.s. debut alone, making it the fourth largest of all time after "star wars: the force awakens," "jurassic world," and "the avengers. all right, let's get back to the markets. joining us right now is steven wieting, who is citi private bank global investment strategist and dennis gartman, founder, editor and publisher of "the gartman letter. gentlemen, welcome to both of you. >> good morning. >> good morning! >> good to be here. >> let's talk about super short-term trading first, just because of the wobbles we saw yesterday. markets sitting at new highs until it looks like marco rubio says he may not vote for this bill what does this tell us about maybe the next week's trading, while we see this kind of hashed out? >> it's still a bull market, isn't it but yesterday's activity seemed rather tenuous at best in the manner which it sold off later in the day was i think not a strongly bullish sign. you still have to have a side of owning stocks. it is a bull market, but i don't think one needs to be aggressively long at this point. price to earnings multiples are high, price to book is high, price to almost anything is high be careful. >> what are the odds you're kind of figuring on whether or not the tax bill gets passed i've kind of written it off as something that will happen. >> it has to happen. if it doesn't, it will be a disaster if it doesn't happen -- >> for the market. >> for the market. >> this is exactly what's going on it. we've had companies with high tax rates rally 23% more than companies with low tax rates. >> right, caterpillar, that's been part of the big thing, and that was one of the biggest losers for the dow yesterday. >> tax cuts are not a secret at this point you see analysis, if taxes are cut, these are the companies that benefit those are the companies that have benefited this has played out in the marketplace, and so we are susceptible to the potential news of one guy saying this or that on the tax cut. so, this is largely in the market now, at least the initial capitalizing the benefits of a tax cut is in the market very much at this point that's the united states there's overall world markets which are in a different position, and we will still grow next year with or without. >> i guess i'm just running through the calculus looking at the votes coming in, because the senate is the question mark. the house, i don't think they're going to have a problem with but you have mike lee, who has said he's now a maybe, marco rubio who says no unless they increase this, susan collins, who has had some issues, bob corker, who's already voted no, and then john mccain with his health in and out of the hospital i mean, that gives you some potential there. >> still the potential for the house to use the original senate bill so again, it won't be pretty if it got down to that and it got down into next year, but certainly, this is something that they can work around for the near term. they've gotten both chambers to pass this. the likelihoodthat something gets passed is -- >> i hadn't thought about that, cramming the senate bill -- >> what bothers me is they're doing it quickly to get it done before the end of the year that reminds me of nancy pelosi saying we have to pass it to find out what's in it. there will be a lot of garbage, bad things in this legislation, stuff written at the margin that i find dismaying we'll find out what it is, but it is disconcerting that they're trying to get it done so quickly. >> is there any value, and i'll take the other side in this that maybe this is all positive but is there a way to think you may sign something that has problems and you can come back how quickly can they come back to rectify even the smallest problems >> that's beyond my pay grade. i leave that to people brighter than i. >> think about one thing if you take a look, if there is no tax cut passes, projections are that u.s. daebt to gdp, so marketable treasury debt to gdp goes from 75% to 90% with no tax cut passed if it's passed, it goes to 94% we have fiscal policy issues in the united states. we have structural budget deficits these are things that are not dealt with in this particular plan, but one thing that it does and the only thing that it really does is provides us with an internationally competitive corporate tax rate. >> and so, therefore, you think it should be passed -- >> i think that particular issue is going to make a difference, that it's going to mean that the down side for american production, whatever downturns we get in the future, it's going to be a higher low it's going to have an effect on the u.s. exchange rate it's just going to generally cut that one incentive, right, to push production out of the united states and to export back in the u.s that goes away with this particular plan. >> all right, steven, dennis, great to see both of you. >> good seeing you. >> always love having you on set. >> thanks for having us. disney announcing a major deal, of course, to buy a major asset, or assets, i should say, from fox, but could someone e owl try to step in and steal thsh we're going to debate that next. ♪ it's a small finger...a worm! like, a dagger? 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a look at a possibility of someone might actually try to outbid disney. is that really something that could happen ed lee is managing editor at recode and also a cnbc contributor. we will talk net neutrality in a minute, but there is an idea floating out there among some very senior media executives, also some folks in silicon valley, and of course, the wall street banking community could somebody either top this bid or have the effect we put all of 21st century fox effectively in play? >> so, it's in play, right they're interested they're, you know, wanting to have a buyer comcast, of course, was kicking the tires and expressed interest verizon was someone that took a look there are very few players that could sort of top a bid like this, certainly. the key thing, though, is that rupert is basically betting on the future of disney, you know he's getting disney stock in exchange it's not a cash deal so, whoever comes along, the cash has to be that much higher, or that stock, whatever is being offered has to be that much more valuable in the future comcast is probably the only one that like from a futures standpoint, at least within -- >> unless you saw two players team up. >> unless you saw two players team up. i think rupert wants a cleaner deal i think he wants to do deal with one entity. >> but if two players teamed up and went for the whole company, it wouldn't necessarily be rupert's deciding vote. >> can he decide i want this for my family and my kids instead of i'm going maximize what i get for shareholders is he allowed to do it that way? >> it's strange, yeah. >> i would think it's strange. don't you have a fiduciary responsibility to consider the highest offer? >> of course he has to consider it in that event, he has to vote just the equity stake -- 17%, as opposed to the 39% -- >> you vote for the entire -- >> he loses the benefit of the -- >> let's say what you said is true, he wants his heirs to have disney stock steh somebody else -- >> or the potential to have a management position there. >> but we think that -- the position is now not in the cards. >> not in the cards. there is a chance, though. i think it's possible that with the international assets coming into disney with this deal that james could be running that business that seems to make a lot of sense. he used to run sky in the uk, so he knows it really well. in terms of the argument about what company's more valuable in the future, if it's going to be like a stock-for-stock deal, you've got to look to silicon valley, right? so, amazon i think, if there is a silicon valley player who would want to come in and really make a motivated bid, amazon would make the most sense for a whole lot of reasons it's a company that likes to diversify. it's not just one type of business, as we can all see. and then, you know, talking about future value, amazon, you know, that's one of the few out there that has trading at really, really high multiples for future profits or future lack of profits. >> and you couldn't see an amazon as a gang-up with a comcast or gang one a verizon? >> so, comcast gets in, gets international business -- >> distribution assets internationally, that would be attractive to a comcast, to a veriz verizon. i'm not going to take the u.s. stuff because i don't want to deal with the regulatory -- >> you couldn't in a lot of places with the broadcast -- >> you could do a deal where you could get, every sni could grab the few remaining cable networks out of fox and comcast gets the international business, amazon gets the studios, right? which is, i think that's what their interest would be, which is to fuel the content for their streaming service. >> let me ask you a totally separate question. i don't know if you saw sarah huckabee yesterday. >> yes. >> made a comment that president trump talked to murdoch, congratulated him on the deal. >> slapped him on the back, yeah. >> also said that he's looking forward to this deal creating jobs. >> yeah. >> which seems to be completely misguided -- it's like calling you andrew ross -- >> sanders >> sarah huckabee -- >> you're andrew ross. >> yes apologies, but, it seems to be a completely misguided idea, given they've announced there will be $2 billion-plus synergies, so layoffs. >> and cost cuts. >> my question -- andrew sorkin. but my question is, why do we think -- >> sarah huckabee sanders -- >> will pass muster with regulators in a way that the other deal wouldn't, given that one of the offers that they've made to time warner/at&t is to get rid of the turner broadcasting system, because that's just other content with other content. >> it's really backwards if you think about it because the at&t/time warner deal is a vertical merger where these things are companies that don't compete with each other combining -- >> and that becomes the question, are we now dealing with regulatory thing by fiat? and based on personalities and who we like and who we don't >> it's a little bit banana republic in terms of who, you know, i want this but not that just on the face of it, by precedent and by sort of -- >> why wade into that? >> this is a horizontal merger these are two companies that compete with each other, both in entertainment, tv, and they're combining. and somehow, that's supposed to be a better deal >> somebody's brought up to me the regional sports networks, which espn is number one in all of them. the regional sports networks are usually number two how big of a threat is that? >> if i'm the doj, that to me is the biggest potential thing that could hurt consumers that could hurt sort of the ecosystem, because you're combining espn even though it's got declining ratings, the regional sports networks combined with that, that's a real, real powerhouse, which is a smart deal on iger's part, but at the same time, if you are a distributor, if you're a cable company, you're a little bit upset about that you're like, wait a minute, this is going to be that much harder for me to renegotiate deals going forward because they've really locked in all of the sports so that's something that doj should look at the other thing they should look at is hulu, right? so, hulu with this deal, disney will get 60% or controlling interest in this and you know, if you're a comcast, you could argue, hey, wait a minute, i had a big hand in getting the 12 to 15 million subscribers it has now all of a sudden, i don't have any control over this. i don't think that's fair. so, that could be something that on review, they could force the sale of hulu itself -- >> do you think the regulators are going to force it? the flip side is comcast and time warner could say the next time we have to make a deal on content, we're just not giving it to you, and therefore, it may be more attractive for you to buy us out -- >> i think that's the easier solution saying i'm not going to give you my content anymore in fact, buy out my stake. then hulu will look really different. it will be a different service altogether i think there will be a weird period where disney will have to figure out what they want to do with it. iger said yesterday on the call with the analyst, it's more of the adult kind of content, meaning it's not the family-friendly films, necessarily. that's a smart way to go, but what do you fill it with if you don't get the nbc stuff, if you don't get time warner or turner content? >> so you think they'll still do the espn thing as a separate you think they're still going to do a separate disney thing as a separate, powered by bamtech and hulu as a separate >> as a separate, right. conceivabl conceivably, he could get three streaming services out of this, which is ultimately the point of this deal. the whole tv ecosystem's moving online the more streaming, the more tech, and the more sort of subscribers you can generate out of this, that's the future, which i think again is pretty smart. >> you think the future, though, is independent apps like this? because part of me thinks, look, so many people now go home i even do it, and i say what's on netflix tonight not meaning -- >> you cue it up, exactly. >> and you cue it up i don't know if i'm going to flip around and go to see the disney one, then i'll go to the sports one, then go to the hulu one, then the netflix one, then the hbo, then the showtime one. >> that's where you can see a future with another bundle, where people are bundling the online streaming services, a little bit of disney -- >> less of an interface that you can work your way through. >> this is a good way to tie into the whole net neutrality thing, right because what the fcc yesterday was basically saying is we're taking our hands off this. as far as we're concerned, we should not jump into how isps deliver their stuff. if they want to charge for fast lanes, which means, if, say, charter or comcast or any local broadband provider wants to charge facebook or netflix or hulu or whoever else more money -- >> takes up the bandwidth? >> lots of bandwidth. >> you're talking about the small guys, they say this will stop innovation, stop the little guys from developing these are giants fighting giants. >> these are giants fighting giants, but what about the next netflix or the next facebook because online content is increasingly just video, right so -- >> which takes a lot of bandwidth to run through and it costs a lot of money in the pipes for this. >> well, it costs a lot of money to kind of create the content -- >> if you want the pipes to be built, you've got to be willing to pay for it. >> right, and they were built. the other thing is -- i understand that's the debate i also think the commercial internet for the first 15, 20 years was sort of built out on this sort of tacit understanding that net neutrality is the law of the land, even though it's not encoded or enshrined anywhere so the fact that you had this innovation with that sort of level playing field, with that understanding, is why we have a facebook and an amazon today. >> and i would also argue it grew the cable subscriber number, meaning the content was the tail that wagged the dog. >> they are begging us to go. >> i know they are. >> they are begging us. >> all right. >> thank you >> of course. >> great to see you. when we come back, you can call them the narco nephews. two relatives of venezuela's president and first lady were just sentenced in new york in the federal court there. emttd uthetells us abo t balecountry is next. what are the ingredients of a life well lived? is it the places you go? the things you own? or the people that fill it with meaning? for 150 years, generations of families have chosen pacific life for retirement and life insurance solutions. protecting what's most important to you. that's the power of pacific. ask a financial advisor about pacific life. hello there friend! hi! hey there. i'm an imaginary friend of a kid just like you. you're going through a lot right now and i know you're scared. but you're stronger than you know. but look, we'll get through this together. and remember... we at the imaginary friends society always have your back! there is more evidence this morning that the venezuelan government is acting as a narco state. the nephews of venezuela's first lady were sentenced to 18 years in prison yesterday in federal court in new york city the feds say the two nephews were trying fund her election campaign this comes as the oil-producing country is trying to fend offer nearly all its creditors, including many u.s. funds that hold the country's debt. michelle caruso-cabrera's here with more. >> good morning. in spanish, they call them the narco sabrinos, meaning the narco nephews. flores is on the left and frankie defretes is on the right, nephews of celia flores, venezuela's first lady they were busted in haiti where they had flown on the private jet with the expectation of picking up a multimillion dollar payment for cocaine shipments into the u.s instead, they were busted in a sting and extradited to the u.s. and convicted after a two-week trial. feds say they were trying to raise $2 million to fund the first lady's national campaign for the assembly another crucial detail, the feds say the two nephews used a part of the airport that is controlled by the president of the country for their private jet flights. already we know the vice president of the country, tareck el aissami is on the fed's list as a drug kingpin. he is in conversations with the creditors about the nation's debts, which they are struggling to pay after years of mismanagement. after this week, a lot of their debt trading around 20 cents on the dollar or below. >> who is investing and putting money in their bonds when it's basically run by a bunch of kingpins >> so, people who bought a lot of the stuff when it was closer, a long time ago, closer to par, when they thought there was going to be enough oil to pay the stuff off. now it's vultures what we call the vulture funds and people who are into distressed debt but the situation -- >> i'm surprised you can get 20 cents on the dollar for this stuff. >> right what's interesting is during this trial, to that point about paying debts, they revealed that these guys were running another scam as well, which was, you know, the oil company isn't paying its debts, right? so, they would say to people, oh, if you have a debt owed to you, come to us. you give us a bribe and we've got a cousin who will put your invoice at the top of the list so you can get paid. they weren't convicted of that, but that was evidence released in trial it's a banana republic, for sure. >> crazy >> do you think wi think bananat a bad wrap we all want to go there. >> it's warm there are beaches. >> that's what's sad is they ought to be able to get it together. >> yes. >> there is a sale at the banana republic downtown. >> right, clothing, right? or a foodie. most parents would tell you a good night of sleep is priceless. i could tell you that. that could be why tech companies are taking interest in this space. we'll introduce you to a very cool company with a crib that is promising miracles, next time for "your business of the week." 'tis the season all year long at the world's largest christmas store. brauner's christmasland in frankenmuth, michigan, has been a global icon ever since wally brauner started it more than 70 years ago. 2 million customers shop at the store every year for more, watch "your business" weekend mornings at 7:30 directv has been rated number one in customer satisfaction over cable for 17 years running. but some people still like cable. just like some people like wet grocery bags. getting a bad haircut. overcrowded trains. turnstiles that don't turn. and spilling coffee on themselves. but for everyone else, there's directv. for #1 rated customer satisfaction over cable, switch to directv. and for a limited time get a $100 reward card. call 1-800-directv we come into this world needi♪ others. then we are told it's braver to go it alone. ♪ but there is another way to live. ♪ a way that sees the only path to fulfillment- is through others. ♪ . welcome back to "squawk box. the new parents are familiar with the feeling of exhaustion, and everyone at this table can speak to that at some point. that's what the ceo of the happiest baby, smart tech and parenting solution company he joins us now to talk about the future of babying. tell us about the snoo >> i want to tell you everything about it i have to do one thing first i have to give a shout-out to congress to say get off your butts and pass chip, which is five million children across the united states need health care support. congress missed their deadline to pass that two months ago. we need them to be able to walk and chew gum at the same time and do that. >> we'll come back to chip, but -- >> sn -- >> let's talk about tech and babies >> snoo is a smart bed that responds to babies giving them the sensations they had in the womb why do you want to do that you do that because it helps babies sleep longer, cry less, and it keeps them safer because for the first time in history we can secure babies to the bed with a special swaddle that we have so they don't roll to an unsafe position. >> this works in part with an app. >> right >> and it's monitoring the baby as well. >> that's right. it's monitoring the baby, and actually it will give you a read-out starting next month it will give you a read-out of your baby's sleep so you can follow them day to day and see how your baby is progressing. the reason this is so important people think crying babies, it's a nuisance, things like that turns out crying babies and exhausted parents cost billions of dollars in terms of health care costs it's the number one trigger for poets part post part emdepression and child abuse, and billions of dollars of employment costs from higher health care costs and on the job accidents. >> can i crawl into the womb bed? are there full size beds that can -- >> we'll work it out for you >> what does it feel like and sound like you peaked my attention. i have thought about going back in the womb. >> here's the amazing thing. we all know that you fall asleep in trains and planes and cars. that motion. >> right >> why because it imitates the womb adults respond to that babies almost can't resist it. we're able to add an hour or two to the baby's sleep. >> again, you just talking babies talk to -- i mean, i have a my pillow that helped, right >> he is looking for a full-size -- >> he wants a king size version of the crib. you can swaddled are you okay with the swaddling? >> he with talked about the heavy duvet cover. >> it's all that that imitates -- >> i do that already >> do you use white noise at night? >> i don't, but i know people that do. >> white noise is part of this crib, by the way >> it turns out is a special white noise. you need different white noise >> sounds like the ocean >> ocean is the least effect iv of one >> what is the white now's we should all be getting? >> low pitch rumbling white noise for sleep and hissy white noise for calming baby's crying. that's why they say turn on a vacuum cleaner when a baby cries. it gives the baby what it needs whether it needs it. >> part of janet yellen's speech >> here's the question there are people who co-sleep with they are babies i don't know if you think that's a good or bad idea >> bad idea. >> bad idea. >> there's, like, three beds what's the right thing to do with my baby >> i have taken care of thousands of babies. >> is it okay for me to breast-feed? i am saying none of you got up three times with a baby last night like i did >> that's true, but i have been up thousands of times with babies in the middle of the night, so a little bit of street cred there the fact of matter is 70% of the -- almost 4,000 deaths each year in the united states during sleep. 70% of those occur in bed with an adult >> really? >> it's a risk problem much better to have the baby right next to the bed where you can breast-feed your baby, but not take the risk for the baby >> it's cool technology. >> we're working on with korpgs. there are many corporations that are now providing this for their new parent employees to be able to be family-friendly and support them and get them back to work faster >> okay. doctor, thank you. >> thank you >> appreciate it >> coming up, we're going to welcome guest host scott sperling who has an investor's take on tax reform what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley why did you take credit card debt on? second kid. private school. medical bills. moving costs. solid ground. a personal loan from sofi is a smart way to consolidate credit card debt. certain borrowers cut their credit card interest rates 42% and increased credit scores 17 points on average. borrow up to $100,000 with low rates and no hidden fees. find your rate in just two minutes, and take on your debt at sofi.com. good morning, wall street. again, pointing to a higher open as tax reform continues to take center stage we'll get you set up for the trading day straight ahead tax stock front and center the latest from washington just minutes away former des any board member and senator george mitchell will join us to discuss the big media deal and some politics maybe a little 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, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernan and andrew ross sorkin. the futures this morning actually continue to pick up strength at this point the dow futures are up by triple digits. it's a gain of 104 points over fair value you are also looking at the s&p opening up by eight points higher nasdaq up by close to 16 here's what's in our headlines at this hour the brexit process is moving on to the next step european union leaders have given formal approval to opening the second phase of negotiations which will focus on a transition period and the future trading relationship between britain and the e.u. the approval is a signal that e.u. leaders feel sufficient progress has been made costco shares are gaining at a premarket trading. retailer earning $1.36 a share for the latest quarter that's 2 cents better than expectations it also posted a 10.5% increase in same store sales. 10.5 that is huge the stock had dipped down to the 150 level during the summer after amazon announced it was buying whole foods, but now it is trading at all-time highs a gain of another $5 this morning to $191.50 csx ceo hunter harrison is taking a medical leave of absence. the rail operator says that the move is because of complications from an unspecified illness. chief operating officer james spoke will be taking over as acting ceo and harrison's absence, and that stock is down by 9.3%. he is a well known operator and someone who has been well respected. elan lily joins us with more on that >> good morning, becky it looked like republicans had this locked down until senator marco rubio went rogue he is a no on this bill unless he gets a bigger child tax credit what really made him mad was that the proposed corporate rate went up, but the money went toward paying to lower the individual rate at the top level. he tweeted yesterday adding at least a few hundred dollars in refundable cuts for working families who always seem to be forgotten isn't hard to do the lawmakers who have been negotiating the tax bill are scheduled to formally sign off on the final version this morning, and once that happens, they cannot make any more changes to the tax bill. it will be a straight up or down vote as of last night, at least five other senators were still undecided. republicans are also worried about the health of two important lawmakers, and those include john mccain and thad cochran. both of them missed votes this week, and it is unclear exactly when they will return. republicans have wanted to start voting on this by monday, but now that date is a little iffy also, still not settled is whether the house or the senate will vote first and that timing does matter because congress is also staring at a potential government shutdown next friday unless they pass a funding measure. guys, republicans really are in a race against the clock right now. back over to you >> okay. thank you. we have a lot more if are you are hunting for companies that potentially stand to gain for the most for wholesale reduction, dom chu has a look at the most capital intensive industries dom. >> andrew, these are the ones that pay the most in tacks already effectively, so if we do get some kind of tax rejs las vegas that lowers corporate taxes, these are the stocks that may benefit more than others if that comes to pass goldman sachs -- over the last five years the median effective tax rate for energy is the worst. industrials 32%, your capital intensive side of things utility is 31 as well. consumer discretionary 30% going down to the next batch of them take a look at these consumer staples, 30%. financials, 28%. materials, 27% health care, 26. as we get lower in taxes, the perceived benefit maybe goes away a little bit, and the one that pays the least in terms of taxes, the technology sector within the s&p 500 among the stocks that could benefit, there is a high tax basket 50 stocks or close to 50 around 49 of them that have high effective tax rates. among those 49 stocks, names like conco phillips on the energy side of things. 49%. ten-year median tax rate good year 46%. jb hunt, 38, and 35% if you are looking for relative winners, joe, those sectors could be some of the ones. energy, telecom, industrials those capital intensive businesses might be the ones that benefit the most if taxes get cut, guys. back to you. >> great, dom. thanks continue on with the subject as well. our guest host for the morning scott sperling, co-prosecutesest thomas h. lee partners you look for a good return for you and your clients did you mirror the market return have you done 35 nerz? >> of course, joe. of course. >> always. >> always. >> what happens? will it continue is it too much >> what are the answers, joe >> i don't know. that's why you are here. >> i'm here to -- so then let's highly discount everything i say because i don't know much more than a lot of the people out there who -- >> as you point out, everyone said this market was going to generate a 5% to 8% equity return, and it's 35% number one, there's math that has to do with both the low interest rate environment we're in, but also the frothyness of lots of markets beyond the equity market. >> the interest rates are -- >> we've had low interest rates for eight years. now they've been going up. that doesn't explain it. >> the real estate market arguably is even frothier than the public equity markets. if you look at the credit markets, they've extended in ways that, again, arguably, just looking at the data, would suggest that it is in a reasonably frothy -- >> you keep on saying it >> you keep on saying that word. >> people would argue we've gone from 16 times pe from 2010 to about 23 times today if you look at the low interest rates and you look at the alternatives both the supply and demand for equities is driving you in that direction, and the math is driving you there. people are saying if we get the tax rate down from 35% to 21%, then that will have obviously an impact on the company's earnings and justifiable. again, what -- itdoesn't reall account for the fact that the effective tax rate is actually much lower on average than the 3 35%. i think the move in the direction they're talking about that involve simple fictions and removal of deductions on both the corporate and earnings side and return for lower rates is a big plus they've added new complexities, if you look at pass-through entities and things. i can't figure out exactly what -- >> they didn't say anything about deregulation >> well, deregulation and i think the last time we talked a lot about that is a major driving force that has been in existence. >> it's not zero interest rates. >> if you look at the movement because we've known about deregulation and the impact of deregulation before we saw this enormous move most recently. i think this move is a reaction to both the things i'm talking about, where the -- >> take into account global growth and take into account the creation from the new tax rate that gives you what type of earnings per shared growth because then if we're at 23 and if rates are slowly rising, it's not going above 23 on the price to earnings multiple the only thing we should deserve in here on out is what we get from actual -- from the e side of things. >> from the e side of things >> what is that going to be? >> again, the real effect of tax rate is in the mid 20s we're moving down to 21% for most companies without the ability to do the sorts of things that have gotten tax rates down into the single digit or in the teen level >> for a lot of companies you'll see little impact on the eps as we were just -- your reporter was just talking about, you are going to see another set of companies that have been paying much higher effective tax rates, and you could see, you know, the net going from mid 30s or low 30s to that 21%. it's one-third more. >> given that you are in the private equity industry and we talked about carried interest, this is one of the components -- i know becky and others have a big issue with in the sense of if you believe that our values are also instilled within the tax code you want to argue it >> i think it's been quite simple the carried interest has been treated as a capital gain for two reasons. the first is people have to invest in risk money in order to get carried interest >> not true. >> i know it's true for us and true for most firms. you can't get your carried -- you can't get your carried interest unless you make significant co-invest. the two are tied together. it does meet the standard for capital gains, and it does meet the standards for loss on a purely technical basis, this is not some kind of gimmick that was created to turn the same kind of ordinary income that people get for guaranteed wages into -- >> let me -- that's not -- >> it's been fairly explained by stan druckenmiller who say, no, you are betting other people's money and letting them run the risk on it >> that's not true that's why the tax authorities -- when i hear people say that -- >> so they have no idea what they're talking about? >> all i know is what we do and what the other firms in my business do. >> i apologize, but i think you're confusing the issue maybe you're not yourself, but definitely fort audience it's this. yes, just so we're 100% clear. nobody is objecting to you getting the capital gains rate on the money that you invest in these businesses on your own >> what if the fee is -- >> we're talking about the fee -- we're talking about effectively the fee which is the carried interest that you are taking separately. zhoo that is not a guaranteed fee, and it's not without risk again -- >> it's not your money that's at risk >> no, it is >> if it is your money, then you shouldn't pay -- >> that's why -- >> if you put in $100, you are also -- what you are saying is i'm putting in $100, and then i'm getting additional -- i'm getting more than my $100, right? >> i get the benefit of buying cheaper stock effectively than the investors do in the same way that the management of lots of compani companies. >> if i get cheap stock, and it vests, and then five years later, in certain cases, i get the stock five years later, with do you know what i can pay i pay ordinary income on that. if i were to get a bonus at the end of the year, which was at risk, by the way it's not -- it was at risk it was never clear to me i was always getting the bonus if i was a real estate agent and i used this example a million times, working a deal for many years and it finally happens, five years later after working it, it's ordinary income if i'm a banker -- contingent income, which is what you are talking about. in every other instance in the world, it is considered ordinary income >> i don't think you're correct because if i give somebody a restricted stock instead of stock options then they get capital gains treatment at that point. >> no. >> not true. we get -- >> we have to pay for -- >> i'm a beneficiary of restricted shares. >> you pay your tax on that, and then -- >> anything that goes from there. i pay my tax when i'm given it anything that goes through there is a stock >> that's what i'm saying is the appreciation that you get is treated as capital gain as opposed to stock options where it's not you were describing stock options where, restricted stock is a way for people to be able to get stock at a price that allows them to benefit through capital gains. in the private equity world for most firms, we have to doll two things we have to write a check for the carry itself >> that makes sense. >> the check that you are writing. >> that makes sense to me. >> we have a much bigger check at the same price that the will lp's pain in order to get the carried interest i can't get my carried interest. i'm not allowed by the contract of my firm unless i risk money at the same price that the lp's risk. we're talking about when we talk about the carried interest area. again, i know you're passionate about it, but -- >> scott, if you are telling me a it's a situation where you put money in at the same price, and you have -- >> i apologize no i'm not saying you are disengen wisconsin, but i think you're conflating two things. by the way, this is a function of the way your firm operates, by the way not every firm operates this way. you are saying -- he is not collecting the carried interest components unless he puts his own money in he is not talking about just it getting carried interest on his own money. >> the two are reeld, and that's one of the reasons >> i know -- >> it's very different if you are putting your own money in and investing it, i get that >> either way i'm putting my own money in the question is -- >> it should be money you've paid taxes on or not >> one final question on this topic. if the carried interest provision were to go away, it would change the business how given if from an incentive perspective pension funds. by the way, doesn't even impact them how do you think it would change the business >> for our younger professionals, it makes it a less attractive compensation situation than perhaps some other businesses that -- >> maybe like every other. >> or lots of industries if you go -- again, if you go so a start-up, you get a lot of founder stock, and that is often a lot less expensive stock than people who are investing in that company are able to invest at. >> it's the same thing, but you have gone in a different direction in terms of structuring. the impact from a tax perspective is the same. you get that dividend or capital gain treatment i get there's a lot of chatter about this i think that there's a lot of -- and maybe in some cases it's as you describe it. for a lot of firms that's not the way it works >> okay. scott. stick around we have a lot to talk about. >> thank you for playing along with us. >> my pleasure >> coming up, a dow snap in its five-day winning streak. we'll find out what's driving the markets afternoon the break. check out the futures right now, in the meantime. scott, you are a very good sport. dow up 109 points. cannot live without it. so if you can't live without it... why aren't you using this guy? it makes your wifi awesomely fast. no... still nope. now we're 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 check on the broader markets. wells fargo investment institute president and torston, the chief international economist at deutsche bank. at at what point will people say we'll come back next year? >> i doubt i think they'll push it out into next year. i do think january you could see a little bit of a swoon of just taking some of the 18.5% in the s&p, 30% to 35% in the tech sector some of the stuff that's been deferred and delayed basically on the hopes that you might get a little tail wind from tax reform albeit, they're not adjusting capital gains. how are both of you looking at that >> now the ecb and fed this week basically still saying it's steady as she goes many things on autopilot doesn't look like we'll have disruptions from the federal banks. fundamentals are still okay. things should still be okay. >> we're still a few years aaway from the recession what's the trigger of the recession? >> normally there are three reasons. either imbalances in consumption or you have imbalances in cap x. or imbalances in financial markets. doesn't look like cap des moines is too high. if anything, it's a little too low. consumer spending doesn't look like we are anything too high. if anything, consumers have been too hesitant through the expansion. the real risk is financial markets. that's why the central bank exit and particularly the eb exit ending next year and the next few quarters if the ecb starts changing their tone, and the money from abroad that has been coming to the u.s., if that starts reversing, then that could start to wake up markets to the fear that maybe the risky asset run that we've had in the u.s. could be coming to an end financials will benefit industrials with big cap x exposure as cap x picks up, we'll benefit. some of the industries like retail, albeit, has been challenged, should benefit because it's domestic. >> does anybody have a contrarian -- >> is this a payment system or an asset class it was invented as a payment system, but if i had to transact a bitcoin, it would take ten minutes. there's not an efficient payment system >> it's been a big move even in the past 24 hours. >> people are treating it as an as the class, but it doesn't have an underlying cash flow it doesn't have any demand and supply, which is what you have in kmoedtied there's no value from a pure fundamental perspective. that's why it's really difficult to come up with what is valuations of this if it's just an asset class futures is treating it as an as the class. it's complicated when you don't have a fundamental cash flow to put your into your finances. >> five years from now what are we going to be talking about >> i think this is two bulbs in the modern era there is really nothing behind it there is no sovereign that says we're going to support this currency the inefficiency of the market is seeing the fees that you have to pay, which make it very expensive to transact. block chain is a very useful technology for payments and transfers and that is not -- people sometimes tie it to bitcoin, but it's not tied to bitcoin. it's something that is a technology and bitcoin seems to be -- i don't know how to describe it. >> people get mad. can you give out your e-mail >> i'm going to add that and carried interest to my two -- those are going to be -- i don't tweet, but i'm going to get @carried interest. >> gene sperling a keynote on net neutrality. >> time for today's aflac trivia e sw wn thanerhecnbc "squawk box" continues and a gentle wave-like motion... liberate your spine... aflac! and reach, toes blossoming... not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. so he had your back? yup in just one day, we process, approve and pay. one day pay. only from aflac right in the heart of the was in his financial crisis, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was on is really the value of a on financial advisor. now the answer to today's aflac trivia question. who was tesla founded by the answer martin eberhard and marcq tarpenning what are the 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indeed. amazing speed, coverage and control. all with an xfi gateway. find your awesome, and change the way you wifi. >> a few economic numbers will be getting to conclude the week. the new york fed is out with its monthly empire state manufacturing index in just about an hour's time, and we'll be getting november industrial production figures at 9:15 eastern time >> it's disappointed with what it calls the company's underperformance elliott is seeking to oust ceo john hess. the two sides had a contentious battle back in 2013, which resulted in several elliott nominees joining the hess board. the national labor relations board has overturned a key obama era rule that decision had made it easier for companies to be held accountable for actions by contractors and franchiseees the board reinstated a prior rule that said that companies are responsible only when they exercise direct control over workers. the sec opted to scrap web neutrality rules yesterday the short seller jim chenos, spoke to cnbc about the vote, and whether or not he has them in his crosshair. >> particularly on the -- >> but you're not willing to bet against any of those companies right now, are you >> we're looking at all -- let's just say that. one or two more than others. >> major internet service providers at&t, verizon, charter, and nbc parent company comcast responding to the vote yesterday saying their internet practices will not change. all right. i don't think net neutrality -- here we go i was going to read a chenos quote for emphasis did you see that anyway, the latest star wars film officially hit theaters last night it's already become fandango's top ticket seller of 2017 beating beauty and the beast ticket sales are reporting that the last jedi could earn as much as $200 million in its debut in the united states, which would make it the fourth largest of all time the other ones, there's another star wars, the force awakens that's up there. jurassic world, that's the more recent one with chris pratt, right? is that what we're talking about? the one that was -- >> yeah. nicer park if you saw it. >> jurassic park >> it was nicer. >> but the dinosaurs got out again. >> it was much worse you still need -- i'm not sure what you are going to need to make it safer. >> don't mess with nature. >> you have seen that we do have the ability to do some of that stuff. >> yeah. >> tigers that are extinct and some other things. we've got some existing dna that we could -- >> the lesson is -- >> do we >> can't control nature. nature always finds a way, and when we start playing god -- >> except for climate we can control. we can't -- as long as we just get a handle on that, we'll be fine with that no more hushs, no more any of that stuff >> let's get back to things we know about your disney and fox announcing a mega deal. the ceo of the mouse house, bob eiger talking about anti-trust concerns >> we think this is very consumer-friendly. the aim of this combined company is to create even more high quality content, and then to distribute in ways that consumers prefer and consumers demand in today's world, and we think that this combination is going to enable even more of that, and we hope that regulatory authorities both here in the united states look at it with the consumer in mind. >> for a closer look at the implications of the fox-disney deal let's bring in george mitchell former u.s. senator from the state of maine who also served as majority leader senator mitchell served as middle east peace envoy during the obama administration and mitchell was walt disney company's board director during other parent company comcast bid for disney back in 2004, and senator mitchell accident thanks for being here >> still angry >> thanks. >> let's talk about the implications of this i mean, this is a merger we would expect would receive some regulatory scrutiny. what do you think happens in that situation >> well, the primary consideration in a horizontal merger like this is, of course, the rel vapt market. the entry of apple, of netflix, amazon in a big way means that the market is now worldwide and expanding at a very rapid rate i, frankly, am biassed, of course they have been taken on by the department of justice. >> there are two different cases. that's a vertical merger, every. >> they made the same argument that the landscape has changed so drastically and that the big giants in this world are the tech names that you just mentioned. the apples, amazons, and goings who have pots of money and who are going to be the ones to really try and figure out in years to come. >> you may think the case was a priced in, and i don't think it is i don't think that the at&t case is a direct precedent for this, and i don't think one can conclude logically that because that's -- >> he made a decision on what the department does and what the courts say >> let me ask you a question disney shareholders have long wanted to understand. >> richard mur doch ptsds him to be there given that he is emotionally invested in this particular transaction at the same time is there a problem? why -- >> no question i don't think anyone is questioning his expertise and his success. the question is when you measure an executive, is part of the measurement long-term who they put in place as their successor and whether they have the right mix of people ready to go afterwards thus far, i think there is still a question mark on that. >> well, but that assumes there is a reason for him to leave for this, and i don't think that's the case, and i think that he has done very well the company has done very well its shareholders and consumers have too i think by the time he does leave, there will be a solid succession in place. >> i just say it is the anxieties that if you were to look around right now, it's not clear who you would point to at least internally >> although now he is staying until 2021 >> he is, but i would think, for example, scott when he buys a company or owns a company, he wants to have a ceo in place, and he wants to know if the ceo happened to get hit by a bus tomorrow that there is like a plan what i'm saying is it's not clear that -- there may be a plan, but it may not -- you see what i'm saying? >> i'm sure the board has had discussions and does have a plan it may not be evident to you or me at this point, but i think the company has done real well, and i think investors. >> it's the phrase that's always used >> you guys didn't know that iger -- >> they may not have somebody saying that's the permanent ceo, but they certainly would have some measure -- >> people didn't know iger was going to be great, and eisner had been the greatest, it seemed like, but then he didn't like steve jobs, so they weren't talking or something, and then iger paid so much for pixar, right? that was a question whether that would work, and then it worked unbelievably, and then everything else did. you didn't know he was -- >> i think the company was blessed. michael eisner did a fantastic job for 21 years bob iger has done a great job since then i think, andrew, that the history of the company in recent years should give confidence to investors in the quality of their management, including the board and including the process of succession. >> i'm not trying to push bob iger out at all. i know enough investors who have wanted to know and feel confident in the next person >> yeah. >> senator, you are making a point about anti-trust, which is the world is changing, and it's changing very dramatically, and there's no space greater than the media space. you have these enormous players who have the ability to put enormous sums to work in creating content and then distributing it from the technology side. >> ironically i began my legal care career the criticism historically has been that the department looks backward and not forward, but in terms of the distribution of content the revolution created by the invention of the smartphone is undeniable i think disney has recognized that, as have many other people, and they're moving to meet the demand of consumers in that regard, and i think bob iger was exactly right when he said this is consumer-friendly in that respect. it creates more content, more competition with others who are active in the field, and i think we'll result -- i think it will be approved and move forward and hopefully be successful. >> what about the future of media writ large you pointed out yourself, things are changing drastically, and there are some big new players with very deep pockets this is a brand new world. what happens >> i don't think anyone can foresee with high confidence exactly what is going to happen. i think bob and the disney people have recognized what is happening, projecting into the future is beyond that is awfully difficult, i think >> senator mitchell, i want to thank you very much for being with us this morning >> thanks for having me. >> it's good to see you. >> when we return, researchers are examining whether video games could help treat conditions like adhd and depression meg terrell has a great story on that in the meantime, check out the futures at this hour we are in the green again. dow looks like we could open up 114 points higher. s&p 500 up abo ne in ua rurns in a moment your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. time for another edition of modern medicine. the time, this time, anyway, turning to video games and meg terrell has the story. >> these aren't your typical drug developers. instead of pitre dishes and beakers, the team works with coding, art, and alga rhythms. they're programming video games as potential medicines >> the cortex feels very exercised. >> we want this to be on the proverbial shelf next to pharmaceuticals. >> a boston area biotech akili hopes to develop vamz that can treat depression and adhd. it affects more than 6 million kids in the u.s. the studies show that akili's game improved inhibtory control. >> the results i think showed us that pretty clearly we can have a significant impact on attention function >> the original hypothesis was that if you could challenge your brain at this high level that activates the prefrontal cortex, the most evolved part of our brains, and its network with the rest of the brain, could you have improvement in other aspects of cognition like how we sustain attention. >> currently it includes behavioral therapy and drugs like aderol and ritalin. experts say new options would be welcomed as long as they're validated. >> the idea of a child sitting down and playing a game is remarkable and would very much kind of change the landscape, but i would want us to kind of look at it from a skeptical lens >> so akili plans to file for fda approval early next year fewer serious side effects than traditional drug treatment the main things reported were headache and frustration the games which we couldn't show in detail as the studies are ongoing, aren't easy i got to play, guys, and they're really challenging you could see i was kind of struggling there to play with these games. >> we shouldn't -- i was skeptical, but then i think of muscle rehab or ways that says the rest of your body you do things to -- or even people that come back from strokes and the way that you can rehab the brain. if you think about it, you can -- it's not all about just inserting chemicals. there's pathways that can be developed, you know, to learn how to speak again i see how it can work. it's a little bit of a stretch, but i understand >> there are therapies that are designed entirely around -- >> we've done this because we play the jumble. well, two of us play >> that's why i can't. i can't play >> you theoretically could train your -- >> my brain is too slow. >> you get better at it over time i used to never win. i still win less than half of the time, but i win sometimes. >> also, crosswords. as you -- people to stay sharp i could see this for people that are getting older with dementia and stuff. >> dr. adam gazali, his original research was in elderly folks, and so what they're trying to do is figure out whether they can create games that not just make you better at the game and the exercise you are doing, but that those skills and that stuff that you improve your brain doing could be taken to other things and attention for kids, cognition for adults >> then on the flip side, there have been games that have caused people to have epileptic-like seizures and things like that, right? flashes and stuff. >> yeah. these things can be really powerful that's why they really want to go through the regulatory process. >> fda approval for a video game that sounded ridiculous, but -- >> then you thought about it >> yeah. the fda is really focused on digital therapeutics, and this is a different way of thinking about medicine >> all right >> thanks, meg >> thanks, guys. when we come back, we have much more from our guest host today. scott sperling also, a list of stocks to watch. right now, though, as we head to a break, take a look at the european markets at this hour. things are mixed ftse is up, but in france and germany, stocks are down "squawk box" will be right back. we've been watch being the futures this morning, and they have been picking up as we've been going through the morning every time we look dow futures up another to points or so right now they're up triple digits a gain of 123 points above fair value. it looks like the s&p would ep on up by over ten points here. the nasdaq up by over 20 take a look at some stocks to watch fit bit says downgraded to a sell the firm says that the company as -- or the device maker has a high hurdle to clear to achieve break even operating margins given the slowdown in its sales growth oracle reported quarterly profit of 70 cents a share. that's 2 cents above estimates however, it gave lower than expected guidance for the current quarter for growth of its cloud computing business it's now down over 6% because of that the design software maker also raised its outlook for 2018. >> let's check in with our guest host this morning scott sperling, the co-president we've had our debates now. my question as an investoris are you looking around and saying prices are frothy, i'm going to sit on my hands, or are you saying i'm going to buy with both hands >> i think what we have to do is find places to invest where you're not paying that frothy price. in any value that they may be able to provide and in whatever form that is whether it's an operating capability the way we and some other firms have or maybe some other way. i don't think -- we could end up being happy in five years. i hope i'm wrong about that. >> there are a number of public private equity firms blackstone, kkr, carlisle. how do you rate them based not just on their own success, but also on the current way they're being valued >> so there's a high valuation put on the steady fee stream and a very low multiple put on the carried interest if you look historically and particularly we've looked at u.s. buy-outs, it has outperformed significantly every other asset class for three, five, ten, 20 years. if you believe that will is sustainable, then the fact that there's a low value, very low multiple put on the aspect of those companies would suggest that there are some hidden values there that's not fully reflected in the stock price >> you can pick one or you can divvy up your million dollars however you like how are you going to do it >> they're all good. >> you're so good. >> it is >> you're too good >> when you take it and invest it yourself, right >> that i would definitely do. >> separate question what do you think of these mega funds? >> then i don't have to pay carried interest >> what do you think about this idea with the hundred billion dollar fund. he is now talking about whether he can roll multiple hundred billion dollar funds over time there are other private equity firms i have heard who say, you know, i also want to get to some kind of 50 billion, 60 illion. maybe he will do tech and i'll do health care or i'll do some other industry and that there's some benefit to having -- that if you are at that size and scale, basically every deal has to come to you >> so i think if you look in the venture capital world, they don't think every deal has to go to soft bank vision fund they think that there's a real place for them now, we're not in that, but, you know, the hundred billion is clearly coming in some very concentrated forms i don't know if there's going to be room for more >> okay. we'll continue that conversation scott, stick around. >> when we come back, disney's 52 billion dollar deal to buy fox's assets will further shake up the rapidly changing media industry jeffrey katzenberg former ceo of dreamwks amaonorniti will join us with his take on the deal "squawk box" will be right back. most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and. csx ceo takes a medical leave. shares of the operator are in the red. details coming up. plus, "squawk box" exclusive. legendary hollywood executive jeff katzenberg calling the disney fox deal. he was chair of dream worgs animation. that interview just minutes away the final hour of "squawk box" begins right now live from new york this is "squawk box." >> what is this music? aye heard this >> something sounds familiar maybe a little >> good morning. welcome back >> oh, god have we heard it enough? welcome back to "squawk box" on cnbc it's not overplayed. is it? >> not to me >> you remember when bill murray was on -- >> anyway, cnbc live from the nasdaq market site i'm joe kernan along with becky quick and andrew ross sorkin guest host this morning is scott sperling i was so excited about gene sperling that he was going to be here, and then this guy -- no, actually, if you know me, you know that that's not true. up 118 november added to gains. a lot of this is the -- you can almost gauge when one of the senators says, okay, i'm in. you do have a couple of guys that -- that's why penz canceled his trip abroad. either based on kane or cochran. these guys -- if they can't get there next week, that's weird that you have to physically be there to do it it could all rest on someone -- >> not showing up. >> in a hospital bed couldn't you vote by proxy couldn't you call -- >> this is john mccain >> huh >> you got to be there >> got to be there it's a physical thing. >> if unless you facetime because you can't see the thumbs up or thumbs down unless you facetime treasury yields, don't rush me -- treasury yields are indicated at 236 i think on the ten-year did not go above that 2.40 year yield that we were looking for 2.35 don't get it >> check out the price of bitcoin. it has moved materially just in the past 24 hours. crypto currency touched another record high this morning 17,750 we were up depending on where you do it, you are looking at bitcoin future cbo at over 18,450 on the bit stamp exchange you got lots of different exchanges there. keep an eye on csx the company declined provide any details on harrison's health issue. chief operating officer james foot is going to be taking over as acting ceo. we will have much more on this story in the next few minutes, but check this out the stock at this point down by more than 11.5%. the company beat on both the top and bottom line, and also posted a 10.5% increase in comp store sales. i'm going to say that again because that's pretty stunning 10 .5% increase in same store sales. anybody who was writing costco off after what we saw happen between amazon and whole foods better think again costco shares now up another $5. it's a gain of more than 2.6%. this i think is an all-time high too. 191.50 we'll check that out meantime, sinclair may have to sell off about a dozen tv stations to win government approval of its planned buy-out of tribune media that's according to the "wall street journal." the justice department has reportedly signalled it is willing to approve the deal with that concession. >> okay. the force is with disney this week after launching that mega deal with fox. the magic kingdom unleashed its latest blockbuster star wars, the last jedi. >> the last jedi is expected to be the biggest film of the year. $45 million in north america last night that would make it second only to "force awakens. it's been fueled by positive reviews. it has a strong 94% on rotten to tomatoes, and last jedi is the number two preseller of all time last jedi is expected to bring in more than $200 million of the north american box office this weekend alone. that's more than "rogue one's" opening last year, but down through the record $248 million that the force awakens brought in on its opening weekend. >> according to ttpm -- an opening in orlando and anaheim in 2019. the disney-fox deal will also bring all the star wars movies together under one roof. fox owns the rights to the original trilogy, plus more recent prequell trilogy. not only could disney re-release or package the flumtz, but more importantly, it could include those movies in its disney branded streaming app, which is set to launch in fall of 2019. andrew, i don't know if joe has star wars fatigue, but i saw the movie, and i thought it was pretty fantastic back over to you >> i want to see it. >> maybe -- >> everybody, it's an event. it's an event. it's an event. i need to know all the other stuff that's happened. >> can't go back and watch all of it. >> can't do that can't. watch four, five, and six. >> i learned from playing vamz >> if you don't watch the storyline -- >> meantime, everybody, the big event of the morning we have a gentleman waiting. disney's $52 billion to deal will further shake-up the rapidly changing media jeffrey, good morning before we begin, your initial thoughts when you first heard not the deal yesterday, but when you first heard the rumors and speculations and headlines which, frankly, were broken on this network by david faber about a month and a half ago, what did you think >> big, bold certainly surprising surprising in that i don't certainly -- didn't anticipate this was the moment in time for rupert and family to pass the baton, but also, you know, what a tremendous seismic shift this might represent for the traditional media business, and, frankly, that is what it needs i think this is kind of, you know, it's going to go down as that sort of dividing moment when new media really sort of woke up traditional media and here we go >> you know, rupert has called it a pivot it's on what is the most powerful media enterprise in the world. i think the sum of these two together is certainly going to be very powerful, very competitive, and from a financial standpoint for the shareholders of fox, i think it's a tremendous outcome. >> there's been some speculation that perhaps a rival suitor could emerge to try to top this b bid. you would have thought that they might want to be there >> when you maybe look at it in a theoretical way, andrew, certainly that might be the case i think when you get down to practical and tactical and you think about how somebody like an amazon, like a google, like a facebook might assess these assets and how they might, you know, bolt them on, i don't think it has the same logic. i for sure don't think it's going to have the same value for the walt disney company. when you look at all the places in which you get alignment here on the content side, you just talked about consumer products and the $3 billion for star wars, imagine what happens when you take all of that fox ip, the avatar and the marble ip and put it inside that disney consumer products enterprise, and there's nothing close to it in the world. >> you know the cultures of both of these cultures perhaps better than anybody do you think -- when you think about the integration of them and you think about just the people that run the various divisions and the overlap and they talk about a $2 billion synergy number, what do you think this looks like? >> well, i don't think you can emphasize enough that one of the great assets that bob iger covets is an extraordinary management team. i'm certain that bob covets those executives, their leadership, and their team as much as he does the assets themselves >> you mention the, james murdoch, a lot of speculation about the role that he will or was going to play. there had been a lot of speculation in part that he had been pushing for an executive role to manage the international assets beyond the integration. that at least at the moment despite some of the comments that iger has made that he will be there for the integration, nothing in a press release no formal role what do you make of that >> well, i think that's about time in terms of i think when enterprises like this come together and the leadership comes together, i think you got to give them time to get to know one another and to see is there a fit, is there a comfortable role james is in the cat bird seat. he is one of the smartest, most articulate, most intelligent media executives today he is young. he is bold he has been an entrepreneur. he has a bunch of billions of dollars. james has got a heck of a path in front of him. whether that is with the walt disney company or not, that i think will reveal itself over the next year. >> jeffrey, obviously you know all of this old media stuff so very well. everybody is trying to figure out what to make of new media, including what you are doing with your new company. where do you see the future of technology and media at this point? where are the big winners? where are the spots we haven't quite seen yet >> well, i think the thing that's exciting about it is that, you know, maybe for the first time our customers are actually moving into new places. in some instances they're actually ahead of us for the first time in 100 years. we're not leading them they're leading us in their consumption habits the kind of content that they're watching, the way in which they're watching it. they're telling us now in a feedback loop we've never had before where their interest lies and, you know, says how to serve it up to them. i think what you are seeing is aggressively both new media and traditional media is racing to catch up with them, and to deliver them, you know, the best opportunities, the best value, and the best viewing experiences. >> how do you -- big question over the future of hulu. obviously comes with this deal and puts disney now in control of it. however, they have some interesting bed fellows in partnership with comcast, parent company of this network, and also time warner once that consent decree comes off of time warner, there is a question that they'll be able to vote they obviously won't have a true vote, but maybe they may decide i'm not going to give you our content, dprafrm what do you think happens? >> well, you know, that's the defensive play there's an offensive one, which i haven't heard anybody really speculate about right now, which is that bob iger wants to double down, if not triple down on hulu if, in fact, that is the -- and to have a competitive full offering you know, not separate from disney, separate from espn, but a more adult offering. in which case, he will be a buyer for content. he will want the output from comcast, nbcu. he will want to -- >> yes, but comcast and others may not want to share it because they would be helping the competitor, right? >> everybody wants to sell content. if he creates a new competitive platform that's now going to go out and buy movies and more television and more content, that's good for the entire ecosystem. it's good for the consumer because it gives them offerings. i think this notion that netflix is, you know -- that it's a zero sum game, it already is proved that that's not the case people are, you know, out subscribing to hbo never been bigger or better. you know, netflix continues to do a brilliant job and to grow hulu in the face of all of this has continued to grow. meanwhile, show time and stars, there's diverse offerings out there, and they are all growing and they're all doing well >> jeffrey, final question it's a complicated one i give you $1 million. you can invest in the new disney with fox or you can invest in the old fox. what do you do >> easy. new disney that's not a hard question >> okay. jeffrey katzenberg >> you can see the new star wars you don't have to go back and see any of them. it stands on its own, and it is fantastic. >> i respect your opinion. do you have like two or three other dramas, serial dramas on netflix or something that i'm missing out on i watched ozarks >> godless, the western. brilliant. >> i already saw it, and i did like it. i saw it, and i did -- i wanted a bigger ending, but, god, i -- and i wish whitey hadn't died. i thought he was a great gun slinger. >> don't tell me >> oh, yeah. >> stop that >> but there -- that was a -- that was only -- >> i think it was just spoiled >> that was a one shot deal. that was a one shot deal that's not coming back how great was jeff daniels huh? how great was -- >> brilliant >> i go back to him. the first beverly hills cop. >> exactly >> my other favorite movie axel foley thank you very much, jeffrey is the monolithic view of emerging markets obsolete? at pgim, we see alpa in the trends, driving specific sectors of out performance. where a rising middle class powers a booming auto industry. a leap into the digital era draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential. >> i think when you look at the demographics of our business and you pull two customer files, you find that over 60% of our customers are between the ages of 18 to 44. when you look at the costco customer set, they're 60% boomers and seniors. we do similar things our demographics and our customers are slightly different. >> you have to be envious of costco, right? >> 10.5% is not bad if we operated stores, but i'm not sure if we'll ever operate stores i mean, that's a tough game to be in right now. >> what can you tell us about your customers >> so, you know, we started -- we started in my garage about -- four years in 2014 we were going to take over the world? >> it's about 40,000 for the year that might right back is a run rate >> have you studied at all -- >> i did an interview with the ceo of pdd it's exactly like your business in many ways, except you don't buy it all in one box. it would be if i told i wanted to buy a toothbrush and you also wanted to buy a toothbrush at the same time, and everybody else did that we then go to you and try to buy, and it's the fastest growing e-commerce company in the world right now >> you have the office managers saying what grill and bars do you like even people that live in a house together what you can do now is that you can actually all add to cart and one person checks out, and everyone pays in via payment method, and everyone gets to split the savings. >> that feels like that is like the next big thing >> that could be we're also launching spirits one of the first ever to have not only express deliveries, but dried goods and wine and spirits from a single check-out. that's pretty big for us >> you can buy a single bottle i love to buy it in bulk christmas party is tonight we definitely bought it in bulk. you don't have to. you can buy a single bottle. spirits is one of the few sectors where there's not really a bulk buying -- >> what about the margin margins on spirits have always been high, but i could think you could try to undercut that in a billing way. you want to keep the margin, don't you? >> we power that spirits business through independent retailers because we don't have the license for it >> i see >> we're just marketing it >> what do you think about the move that target made? is this something that will be enough to get it caught up maybe not to amazon. that seems ridiculous. will it get it caught up to a respectable position when it comes to on-line private companies thatter help with grocery or fulfillment suspects or sell oreo cookies and wipes and being private equity owned or venture capital backed, the pack is dwindling. i can't name many more folks other than instacart and box that are still private in the game >> are you for sale? is that a for sale statement >> no. i think i'm pretty proud of the fact that we've been able to make it this far independent i think the ultimate goal is to end up upstairs and push the button "y adlicltred >>squawk box" will be right back why do you do it? it's not just a pay check, you actually like what you do. even love it. and today, you can do things you never could before. ♪ ♪ you're developing ai applications on the cloud. finding insights hidden in decades of medical documents. and securing millions of iot sensors. so get back to it. and do the best work of your life. ♪ ♪ and do the best work of your life. 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. why did you take credit card debt on? second kid. private school. medical bills. moving costs. solid ground. a personal loan from sofi is a smart way to consolidate credit card debt. certain borrowers cut their credit card interest rates 42% and increased credit scores 17 points on average. borrow up to $100,000 with low rates and no hidden fees. find your rate in just two minutes, and take on your debt at sofi.com. . >> good morning. welcome back to "squawk box. we're live at the nasdaq market site in times square among the stories front and center at ho hour, t epa pharmaceuticals adding to yesterday's gains. goldman sachs upgrading it from neutral to a buy goldman says teva is on its way to a credible turnaround waste management has raised its quarterly dividend it's upping its pay-out by more than 9% to 46.5 cents per share. it authorized 1.25 billion dollar stock buyback program we called them an environmental company. >> they do a lot of -- >> garbage it's a garbage business. >> that's environmental cleanup. >> that's a piece of it. for recycling. >> it's a pretty big chunk of it, and that was part of what they were doing, trying to reform themselves. >> you get someone that will come up and clean up your garbage or someone that will lower your co2 emissions which do you want to make sure you have >> probably both >> economists expect a rise following an increase of .9% in october. >> shares of csx dropping suggestly this morning on news that ceo hunter harrison is taking a medical leave of absence. that stock down 12% this morning. morgan brennan just got off a call with the company. she joins us right now morgan, a huge reason for this big drop is that at least in the press release, there was very little information given about what this leave of absence is or what is happening. >> the call was led by csx and acting ceo jim foot who is a protege of harrison and worked with him over at canadian national, which is where he was before canadian pacific. the scientists say when harrison might return also, did say that he is in continuing to improve every day, but also said it's too soon to talk instead he focused heavily on what's been going on, the turnaround that's been happening at csx under harrison, who implemented precision scheduled railroading. that is what he is known for, saying that is astonishing how fast harrison has changed the culture and practices at csx since taking the helm in march faster than add canadian pacific where it took 18 months to do that, and having experienced it at cn faster than several years it took for him to do that there. that performance metrics at csx showed rate of change, velocity, and they've significantly improved over last year, but there's still much more work to be done. everyone at the company is focused. he said that they have strong operating plans to deliver value to kmerds and shareholders, but, guys, again, this stock is up really because of harrison at the helm without him at the helm, as one analyst said to me this morning, in some ways this is the investors' worst fears realized. back to you. >> all right morgan, thanks now to politics. votes, tax reform expected next week a few republican senators have some last minute doubts. we have more good morning again >> good morning, joe well, the negotiations are coming down to the wire here senator marco rubio warns he will not support this bill unless he gets a bigger child tax credit that has sent republicans scrambling for ways to find money to accommodate him without changing the total cost of the package. it can't go over $1.5 trillion now, reviews are pressed and they're competing against demands from other key lawmakers. susan collins and house republicans from high tax states are pushing to expand the deduction for state and local taxes. conservatives in the house, they want a 20% corporate rate that starts right away. it's unclear if the deduction for pass-through businesses will satisfy ron johnson of wisconsin. to pay for all of these concessions, there had been some talk of making the tax cuts for individuals expire sooner, which is a very politically dicey maneuver, but lawmakers have been giving us conflicting reports of how seriously that was being discussed if it at all. republicans had been billing tax reform as their once in a generation opportunity it's the crowned jewel of their legislative agenda, but all of this last minute back and forth gives you a sense of just how much has been up in the air for some legislation that could fundamentally reshape the finances of business and households across the country. now, the tax bill's conference committee will formally sign off on the final text of this legislation later this morning it can't change once they sign it, so there is not a lot of time left to lock in those votes they need to get it passed next week back over to you, guys >> all right thank you. joining us now larry kudlow, who is here in studio. senior cnbc contributor. steve liesman. and steve liesman, senior economics reporter who was front and center i was so impressed with that i spoke to greg. there are signs that late yellen and early jay powell will leave the spigetts more open to see if the supply side investment tax cut works. that's good. i like that. especially with steve liesman smack in the middle of the picture. >> i haven't -- you guys can talk about whatever you want to talk about, but i haven't seen you to tell you about my latest atlanta fed thing. 3-3. that's what i saw a couple of days ago >> it's a little outsized for the street >> okay. but that was -- >> the actual cnbc rapid update, which is the official tracking forecast of cnbc is 2.6. >> the athletes are forecast -- >> the -- no, no, no this is what we do, joe, is -- we've actually proven ourselves to be more accurate than the atlanta fed is we're at 2.6 because we put together all of the forecast >> we don't get through straight three's. >> look, joe, two after the last two quarters, is a huge victory, right? i would have expected a rebound. i think we can get up towards 3% i think it's going to be okay. >> up, up and away >> the consumer yesterday was a big deal >> i think that for the fourth quarter we're going to be surprised at the strength of business equipment investment. i think we're in the front end of the major investment boom probably the biggest in the last 20 years i think the best part -- you've heard me say this. the best parts of this tax bill are the business side. not the individual side. i would vote for it just to get the business side. in terms of the report, they have decided the corporate rate will be 21% going into place in 2018 that's done. ron johnson is fine with the final final on the small business even though i think small business don't do near as well as they should in this thing marco rubio -- >> and potentially mike lee who says maybe on this too >> mike will come around >> i want to be -- >> you want the pass-throughs to be even lower? is that your issue >> yes, that's correct i want all the small business -- close to 30 million business in this country it's a huge part of the labor force. i think they should have done better in our draft steve moore and i and others for the campaign, we had them doing better. >> would you -- >> can i -- i just want to engage larry and joe on what it's like for you guys at cocktail parties >> real quick, can we finish marco rubio's point? i think this is a sticking point potentially. what happens with marco rubio? does he come along does he not? is this a big game of chicken? >> to be honest, becky, i'm not sure i'm rather cross at him today for pulling this last minute sophomoric stunt >> he would probably say he has been saying this all along his amountedment was defeated on the floor of the senate, and that should have been enough right there. >> we've been watching them buy off votes all the way through this >> he tried. he lost. here's my solution i don't like these child tax credits. i just -- i mean, i love kids. that's not the issue it's very inefficient way. it's a subsidy it should be scored as spending on the budget. putting all that stuff aside, okay, he has a $500,000 phase-out ceiling. >> which right now in existing law it's $150,000? >> $120,000. if you want to add refundable tax credits at the low end -- all right. if you are going to go that route, there's a case to be made, okay help the poor. >> lower the cap >> please. i mean, the cap should not be more -- it was originally -- >> 75 or something like that >> imauto just going to say 100 round numbers. >> even if you dropped it to 300,000. you could make the argument in some of the blue states that people working -- making 300,000 dollars. you could drop there from 500 pretty easily. >> remember this, the brackets have been widened considerably secondly, the top rate has come down somewhat. it ain't perfect this could be easily solvable. give up the high-end stuff, marco, and let's move on and get this bloody thing signed because, i'm going to tell you something, we are seeing good numbers in q4 on the, you know, basic cap x and orders i think -- i believe, we're on the front end of a huge investment boom that we haven't seen in 20 years, and, you know, i'm going to say an investment boom, right, we're talking capital stock, we're talking business equipment and cap x stock, right we're talking about more investment per worker, which helps productivity, and the demand for workers are going to go up and so will wages. everyone is going to benefit from this kind of boom >> yesterday jeffrey -- the ceo summit where he -- he anonymously asks people questions. the ceos from all across the country, by the way, pretty diverse mix. not left-leaning right more than the other. the question was asked once this law passes, my company will immediately make large dmersic capital investments. 86% said they disagree with that >> i think there's a case to be made that the benefits as touted by the supporters of this bill are vastlyov overstated. you have people pointing out very plainly that you have an effective tax rate of 23% going down to 21%. there's something of a 2% net benefit in all of this the idea to me that somehow investments in this country have been constrained because of taxation, seems to me to be an unproven argument. >> one more point, larry, i was going to ask you about -- i am being absolutely assaulted by people at these parties who have incredible palpable concerns about the economic impacts of razor getting rid of the state and local deduction. what you are doing -- i'm ama d amazed, larry, at how little the chief revenue raiser increasing taxer has been studied and looked at. i can't find almost any economic effect what you are doing is you are raising $1 trillion in taxes on your biggest economic generators in the country >> i wanted them, true tax reform is to slash, slash, itali italics, slash personal rates so you don't need the deductions. we didn't get that it's an imperfect bill technically, you are confusing marginal rates with effective rates. we are the highest of the g20 in marginal rates we are also the third highest in effective rates. you can't switch from 24 to 20 that's a nonstarter. 21 now becomes the marginal rate on the last dollar earned. 24% and actually even lower than that with respect to the actual marginal incentive rate. we are high up on that scale too. don't confuse -- >> why can't i find a single model, larry, that shows a greater than, i don't know, .4 or .5% gdp impact from the tax -- >> the treasury ceo. >> not the model -- not the jct. not goldman sachs. almost anybody, my friend. >> goldman sachs, look -- the battle of the models is not numerically. >> i would be happy to accept the model. i just don't see one >> they don't have -- they're inaccurate they're opaque they won't open up goldman sachs, i'm not here for jihad and goldman sachs. when obama came with his trillion dollar stimulus package, goldman sachs along with cbo and others predicted 4% economic growth in the subsequent four years, and they got two. let that be a lesson >> i think that's fine, but the lack -- >> let me try -- >> the inaccuracy of prior models doesn't mean no models is the way to go. >> i think history is much better than economy -- >> you have a faith and hope model, which is better -- >> i have a historical model i encourage you to read my book, jfk and the reagan revolution. >> at the end of the day this is going to be a clearly imperfect bill for lots of reasons >> yes >> it is the best bill we have, and i think it will allow for the -- for higher growth >> yes >> and i still go back to this is only one part of the equation this can't be the whole solution when my father came out of the bronx and went to the korean war and then came out of that, the government helped put him through school economic growth was in the mid-single digits, and there were all sorts of opportunities that came up >> today this hopefully will help stimulate more economic growth, but it's only one part of it. we also have to get at the other elements that create the opportunity. >> the education and innovation. >> yes >> exactly i asked you as a resident of connecticut and somebody that works -- >> and new york. >> and new york. you tell me what do you think is going to happen to the budgets, the education budgets in some of the best schools in the country, public education in this country, whether it be the university system in california, whether it be the public education systems in new york, massachusetts, connecticut tell me what you think is going to happen. we talked about wanting to educate people to retool them to work in this workplace what do you think the implication is >> i'll tell you this salt controversy, if it works over a period of years, is going to stop extraf gantt state and local spending in a whole variety of areas >> historically education has always got to hit first. >> i'm not going to argue that, because i'm not running for governor of connecticut, but i will just say this the game has to stop where the states can spend and tax willie nilly and knock off one-third to half of it on the federal government that game has to stop. >> how has -- historically the first deduction in the federal tax code in 1913 actually goes back to -- every generation has agreed >> actually -- >> -- that there is a nexus for allowing states and municipalities to deduct >> i beg your pardon >> i will show you the tax foundation history on it >> they can do as they wish at a state and local level. uncle sam can't stop them. ♪ a wealth of information. a wealth of perspective. ♪ a wealth of opportunities. that's the clarity you get from fidelity wealth management. straightforward advice, tailored recommendations, tax-efficient investing strategies, and a dedicated advisor to help you grow and protect your wealth. fidelity wealth management. welcome back that huge wrapped gift under the tree might just be a 3-d printer. after years of only being available to the pros, 3-d printers are actually hitting the consumer market. we asked our eric to check them out to see if 3-d printers should be on your holiday wish list >> we wanted to check out 3-d printers, so we bought five on amazon and took over a colleague's office we had each printer make the same thing the famous wall street bull, prosecute the for the markets all-time highs they started with setup and some unclear instructions >> am i installing a garbage dispose l a? what is this zblur on experiment came to an immediate halt whether we could not get four of the printers to work it took until the next day to get all five printers we ordered, and we ultimately did complete five wall street bulls. of varying quality as you wind down your holiday shopping, here are my 3-d's of 3-d printing you'll need determination. the setup process took three adults hours this is not for the faint of heart. perhaps a degree or at least some experience with welding helps. and, lastly, be prepared for disappointment >> that is total -- >> our verdict for low priced 3-d printers this holiday season, slightly better than a lump of coal >> that was just the hardware part what you did not see were the hours it took designing the designers in cad software. these are great gifts doctor. >> you had to design it or find a design or import a design. >> unless you're a super geek who just -- >> really interested inni manufacturing. >> i brought a bunch here. these are the different wall street bulls. >> which is the best quality >> the blue one -- this one wasn't going to work for a while. i brought a couple of golf balls for joe. >> this is what you get? it's like you bought it out of a gum ball machine. >> that one doesn't have much -- the leg didn't work so the leg broke off, can't stand properly, they just fall down. >> maybe this is something that the time is coming. >> which one made this >> chinese company but they sold us a printer that had been returned back to them so something else was stuck on it we had to burn it with a match to remove the thing on and get it to work a couple of producers in the video, both studied welding, if not for their help, i would have never figured it out myself. we needed to film the second day. you'll spend all day. >> it will take -- >> how long to print that? >> two to three hours -- >> the final verdict, not ready for prime time. >> if you're spending under $400, don't spend anything if you want to spend five grand and get something high quality like the shoe companies use to make prototypes, maybe it's worth it. >> may not be here yet. >> couple years away. >> you couldn't make me a kidney >> if i had the right reenagemt. >> jim cramer, live from the new york stock exchange in just a moment well jd power did just rank them highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management. win an uncertain world?k predictable income pgim sees alpha in real assets. like agriculture to feed the world. and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over $120 billion dollars in real assets. partner with pgim. the global investment management businesses of prudential. nothey're not investing iney commoditiesies. or fixed income. what people are really putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more. let's get down to the new york stock exchange. jim cramer joins us this morning. lots of news but i haven't got a chance to spend time with you thinking through this whole transaction between fox and disney and specifically how you think about the fox stock right now. >> well, look, i like both stocks, i really like fox because the stub will be worth a lot of money, better balance sheet as david faber said. i just think this is one of those deals where we're not -- when we talked about disney for the last i'd say eight quarters all we did was talk about espn i don't think we're going to talk about espn any time soon again. there's too much good here and the rest of it, look, murdoch is a money maker the stock had been doing nothing for a while but look at this thing you want to be -- you want to be in both. and that's really kind of unusual. but andrew, this is the transformative deal and i know that always sounds like every deal is transformative i love the new narrative from disney and old narrative got tired and didn't matter what bob said, this is really compelling. >> i don't know if you heard jeffrey katzenberg, we said if you could invest in the new disney fox or 21st century fox what's left of it, what he would do he said disney all the way what about you >> i like that i think that disney, i want to see the avatar ride and fantastic tour and what they do with the simpson's. i hope they get hulu, if i were the government i would challenge that it's no $1 million, it's about 879,000. >> thank you, mr. cramer, i'll see you in a little bit. "squawk on the street" will be up in a moment looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. ♪ ♪ ♪ ♪ 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, far-reaching networks... deep knowledge of industries... and, yes... maybe a little magic. ♪ your new brother-in-law. you like him. he's one of those guys who always smells good. his 5 o'clock shadow is always at 5 o'clock. you like him. your mom says he's done really well for himself. he has stocks and bonds. your dad wants to go fishing with him. your dad doesn't even like fishing. you like your brother-in-law. but you'd like him better if you made more money than he does. don't get mad at your brother-in-law. get e*trade. special thanks to our guest host this morning. after all was staid and done, yo heard the argument,s what i was talking about earlier, liesman says it does nothing and larry thinks we'll be growing like the reagan years. >> we won't know until we implement thinking there's lots of elements i don't like and people don't like that's the nature of the sausage making it's a step forward. i think the theories about whether we get growth through the reduction in the corporate tax rate becoming more competitive are very interesting and have validity to them but i'm not sure the extent. i think the simplification and getting rid of deductions is generally a good thing. >> leisman -- >> may hurt in the blue states. >> he mentioned the penn model, i think what a school. right, sorkin? >> pretty good. >> what a school what an incredible xoschool. >> right now it's time for "squawk on the street. ♪ >> good friday morning, welcome to "squawk on the street." i'm here with jim cramer and david faber. futures suggest it's going to be close. we expect a reconciled house senate bil

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