clearly violations of our securities laws, should there be an ability to get back those gains? yes, i do. >> and the concern about equifax, by the way, on that committee has been bipartisan. the hearing is continuing. sara >> hampton pearson, thank you for the update good morning it is 11:00 a.m. at equifax headquarters in atlanta, 11:00 a.m. here on wall street, and "squawk alley" is live ♪ ♪ good morning again, welcome back to "squawk alley.

i'm sara eisen at post nine, with me mike santoli john fortt is with a special guest. carl has the morning off we do want to head some headlines that are just breaking from president trump he's been meeting with members of the house ways and means committee. this is a walkup to the big tax reform framework announcement tomorrow here are the headlines president trump says he and lawmakers will discuss a framework for tax reform before its release tomorrow that's what's going on today president trump says he must make the tax code simpler and fair says we will cut taxes tremendously for the middle class. the president also saying he will double standard deductions and increase the child tax credit that's something that his daughter and adviser ivanka trump has been pushing for president trump also said he wants to lower the corporate tax rate, bring back trillions of dollars invested overseas. the president says he looks forward with working with the members of congress here today and just on another subject, the

president does say he will go to puerto rico on tuesday president trump may also stop at the virgin islands and on the health care, the failed graham/cassidy bill, he says we were very disappointed in a couple of republican senators. so, clearly, we're waiting to hear more details on tax reform, but starting to trickle out both from the president -- >> taking shape, didn't say anything about 15% for corporate versus 20 or any of those details, but seems we'll get those filled in pretty soon. >> with that, john fortt at the nasdaq with a special guest. john >> thank you, sara i'm here with satya nadella, ceo of microsoft and the author of "hit refresh: the quest to rediscover microsoft's soul and discover a better future for everyone." this is about cultural change, the future, a little of your personal background. so, hitting refresh on microsoft. you hit refresh. has the new element on the page loaded yet or are we still waiting? >> you know, to me, one of the

things that bill writes in the forward -- >> bill gates. >> right captures the sense of hit refresh and the logic behind it, which is you've got to be smart so that the page load time's fast that means, you don't want to change everything. you want to change the things that matter the most to be able to really go after the new concepts culture and culture change is in support of, in our case, innovation and in tech there's no such thing as a constant, so the idea that you have to come up with new concepts, which need new capability, is what culture enables. so culture on its own is not just an agenda, but culture coupled with new innovation is what really our business is all about. >> a lot of people are going to say why write a book now some people write a book after they've retired or after, you know, they've hit some obvious success point. you said this is not a memoir, you're not trying to say that the game is over and you've won.

is this kind of cultural touchstone moment where you're trying to do this for microsoft's employees and perspective employees and customers saying, look, here's what we're trying to do? >> you're right. most business books are written looking back, either as grand successes or grand failures. one of the things that i felt was as we are going through this process of transformative change amongst transformative technology change, how do i reflect on that process? that's more of this book, and this entire metaphor of hit refresh is we as individuals are dealing with change all the time and hitting refresh. we learn from it same is true for organizations and same is true for our society. so while in the midst of it, so to speak, in the fog of war, one of the reflections, this is clearly not some destination that has been reached, but it's more a process of continuous renewal. >> one of the challenges that you talk about in the book is

privacy versus security. we've just had the ceo of equifax resign in the wake of that huge data breach. 143 million accounts compromised. maybe not on paper the worst privacy breach ever, but i would argue it is the worst in terms of the impacts on consumers. is microsoft paying enough attention to technologies potential darkside even as you look ahead to artificial intelligence and some of these other technologies to prevent the equivalent of an equifax happening ten years down the line in the a.i. era >> it's a very important question there's no doubt that as every part of our life and every part of our economy increasingly is driven by software and is becoming digital, cybersecurity is top of mind in fact, if i look back, with any new technology there's alwaysgoing to be the dark side after all, with the telegraph there was wire fraud

we had to come up with both the laws, as well as technology to deal with it i think the same is going to be true, whether with a.i. or cybersecurity. to me and microsoft, one of the thing that is we have to really step up to, and this is something even we started 15 years ago, is the core security of our products has got to be a top priority we are, after all, the first responders, so, therefore, really being on top of our game on a continuous basis. >> because it's often said of the internet, wasn't built for security, right, if it had been built inherently secure, that would be better. is machine learning and a.i. the constructs you're building, are they being built with security and the potential dark side in mind >> that's a great point, because one of the things we sometimes think is security is something that can be completely built in. clearly, there is a way for us to secure the protocols, the data, and so on. but one of the things that is so important for everyone to realize is that operational

security posture that all of us have it's kind of like if somebody said this to me, you can't get fit by looking at others go to the gym. you have to go to the gym. >> what's that mean in the technology sense >> that means in some sense you have to really say what's the digital estate what are the intrusions? what are the attacks am i able to detect them fast enough am i able to remediate fast enough so the operational security posture is as important as quote, unquote, the locks on your front door. are you watching, and in some sense it's an intelligence game. i'll give you an example at microsoft, for example, using one of our cloud services. the fact we see a billionplus end points and what's happening at them in real time, we use the intelligence from that to secure our cloud. anyone using office 365 won't get the malicious things that may be propagating in e-mail because of our ability to take data from one place and secure it from everyone else. >> what about businesses like equifax, if they had been on your cloud would you have had an

early warning system that would have alerted them that they were losing data? >> i can't speak to the specifics of equifax and their state, but overall, i think, the more we have the ability to take data that we see across our digital estates and all the good guys share that data, the better off we will be in keeping anyone who is trying to attack, and that, i think, is something that i am a proponent of at the industry level >> it's been about ten months since the linkedin acquisition officially closed, i believe, $26 billion, big buy how long before we see -- we look add linkedin and see office 365 completely baked in, we look at office, see linkedin and there's more of that mixing of the two platforms. >> yeah, in fact, first thing that i want us to sort of make sure we measure ourselves and the street should measure us is

what's happening to linkedin's organic growth we're pleased with how linkedin post acquisition is continuing to accelerate and that's the first sign of a very healthy franchise. then there are two obvious areas that we can really see the integrations one, in fact, we launched just yesterday was the office 365 and linkedin coming together to help professionals who use both those products in fact, you could have gone to a conference, used the linkedin app to find the other people at the conference and then network with them. that is sort of a cool thing and in outlook you can find now your linkedin contacts. somebody sends you mail, you'll find them there, see the files you exchanged, so that's fantastic to see but another area where it's really a game changer is for us in the dynamics area we now have solutions, which bring together the linkedin sales navigator with crm, our dynamics 365 crm, and that's a game changer for anybody in the b to b side of it, so we're

excited about the applications side and office 365. >> in the book you talk about your own experience coming to the u.s. as a 21 year old, being on this college campus, and then going to work for microsoft. and in it you talk also about how you transition from being this lone worker to getting married and being a family man, and you had a green card this i didn't realize about you, i'm going to read just a portion from it. you had a green card and you say you're looking to get married to your wife. the h1b enables spouses to come to the united states while their husbands and wives are working here, such is the perverse immigration law, there's nothing i could do about it. my wife to be was my top priority and that made my decision a simple one. i went back to the u.s. embassy in delhi in june of 1994, passed the enormous lines of people hoping to get a visa and told the clerk i wanted to give back my green card and apply for an

h1b. he was dumbfounded you gave up your green card, because u.s. immigration law at the time said your wife would probably have to wait five years at least to come over. how does that inform the way you as the ceo of microsoft look at this immigration debate that's happening in our country right now? >> the first thing i'll say, john, i'm the product of two amazing, unique american things. american technology that reached me growing up, helped me dream the dream, and then the enlightened american immigration policy that let me come here and live the dream so when i think about it, only in america would a story like mine be even possible. so before we are critical about our immigration policy, the fact that the u.s. is the beacon of hope and the attracter of talent from all over the world is something we should hold as precious that's where the criticism comes from, not in terms of anything else having said that, i think, we

can't have an immigration policy that is enlightened for our own competitiveness. it's not about doing this out of anything else other than to say let us be the place which attracts the best talent so that best talent can contribute to our economy. but it's not just about skilled immigration. we also need to stand up for being the last place of hope for most people -- for people who need it the most that's what, again, drives america's uniqueness and we should never, never give it up >> microsoft's immigration lawyer at microsoft was one who suggested to you that maybe you needed to shift from a green card to an h1b to do that. not everybody has that kind of expert advice in place, and some would argue our immigration system hasn't been enlightened for a long time, if ever how do we get there? how does microsoft help us get there? >> i think a comprehensive immigration reform that, again, speaks to our interests as a nation, makes us stronger, what makes us more competitive, i

think, is much needed. some of things, the idea you have to give up your green card to get an h1b is in retrospect silly. let us take the reform and what works for us, both our security, but as well as our competitiveness. >> let's say you're leading a great power with a proud legacy of dominance, but you see that trust is breaking down in the culture and the infighting is keeping meaningful work from getting done could be talking about microsoft, could be talking about the united states right now under president trump. can america hit refresh? how? >> i think america and what it has done in the 200-plus years is a society that has hit refresh constantly if anything, we can learn from our own history is our ability to deal with change and really come up with the change that is needed broad spectrum. not only change that is needed in technology, but change that

is needed in society, so that we can be the country that, in fact, creates the most new innovation, creates the most new opportunity. one of the things i admire the most about our country is no other society in human history has created so much opportunity for so many people we call this blue collar air sto it didn't exist in history until the united states. that's something that happened because we were able to hit refresh. >> microsoft is a sponsor of the nfl. your surface tablets and computers are all around the field being used more and more you are -- you were also on the president's tech committee what would you say to him if you still had that seat at the table? >> you know, for me, i think respecting all points of view. in this case, the players, the

fans, and making sure we're doing everything possible to bring about more cohesion, understanding where the other person is coming from, i think, is the need of the hour in all of us. so the more we can have a rich dialogue, doesn't mean we have to agree on everything all the time, but let's have a rich dialogue, let's have that empathy for the other person's point of view, let us respect the point of view of other people that is, i think, what has made america what it is today and let us make sure we don't trade that off. >> as you look at what surface has done with this nfl relationship, has it worked? is the nfl effective in its platform for a technology company, and is it becoming more effective or less so >> you know, for me i learned football when i turned 21 and came to the united states. >> cricket before that >> cricket before that it's an amazing sport, it's an amazing brand, and for sure our association with surface and

xbox and many other technologies with the nfl has been fantastic and it's something that we value a lot and i know the nfl values a lot. we've even learned a lot, what does it mean to build technology that can withstand the sidelines of the nfl, so we're proud to be associated with it >> i want to ask finally about artificial intelligence. you've got this a.i. and research and development group that's grown from 5,000 people to 8,000 people just in the past year it's now more than 5% of microsoft's head count how do you do that and look to the future without falling into that old xerox trap of having all these researchers in a group and not being able to get innovative products out the door >> it's a great question, john in some sense that's the existential question for us. 43 years after our formation, one of the things we realized is whatever novel new concept you've come up with, ultimately, will stop being novel. you will need to come up with the next thing in order to come up with the

next thing, you have to perhaps build new capability like a.i. is something we've always had, but we are, in fact, have to be building new types of a.i. and to do that you need a culture that fosters that capability building long before, quite frankly, even the new concept is clear so one of the great benefits is the long-term approach microsoft has taken towards a.i. it was in 1995 when bill said, you know, the speech recognition thing is going to be important let's get started. right, we didn't turn around just yesterday to start working on speech synthesis or speech recognition. that ability to take a long-term approach, but then seizing these market opportunities when they arrive, and it's not that we perfectly timed them, because you can't, but you've got to be able to build capability and have a culture that allows you to seize these opportunities >> and the partnerships you've been doing lately, cortana, microsoft's speech agent,

talking to alexa at amazon, isn't that risky >> look, all partnerships can be viewed as -- all relationships can be viewed as zero sum or market expansive one of the first things that at least i look at is what can we do we're in such early days of these voice-first devices. there are probably, what, 5, 10 million devices, so it's just minuscule. i think what is most important for us is start making it a daily habit. ambient computing, i think, is going to be big. and more importantly, the strength that we have is around productivity and communications and things that professionals need, even in a voice-first world. just like how we took our office 365 apps and put it on ios and android, we want to make sure our voice-first applications are available on all platforms, so that's the fundamental construct behind it. >> hopefully those two a.i. kids will be good influences on each

other and won't get into too much trouble satya nadella, ceo of microsoft, author of "hit refresh," thanks so much for joining us >> thanks so much for having me. >> john, thank you great, wide-ranging interview, which we'll continue to discuss here on "squawk alley. also to come, watching this market, tech is on the rebound today following yesterday's big selloff. we're tracking the sector's move next then the ceo of equifax out. detailwh wrerns ene tu [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.

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equifax announcing ceo richard smith is retiring today, following that massive data breach affecting millions of americans and their private information. david faber making his way back to post nine after making some calls and doing some digging on the retirement program here. >> the bigger story is, the fact that the board finally did move, as we were all talking about beginning 9:00 when we first got the news and what took them so long, some would say but as a part of this, as well, is the use of this word retirement, which we do often see in these kinds of cases. why, when clearly it does appear that he was fired, if you want to use a more appropriate term but retirement can have something to do with the benefits that are given to one as a result of their employment package, and in this case we did some digging here to see what we're talking about with mr. smith. it does appear over the last few years his base salary stayed at about $1.45 million. he did have stock awards worth

$7.3 million last year, $8.3 million in '15 and $6.1 million, you see right there, in '14. and that gets to those totals that we're talking about but importantly this morning the company puts a filing out in saying that when it comes to what he is owed in terms of his employment agreement, they are going to wait and see what the results are of their independent review of the breach itself before they allow his departure to include any obligations or benefits that are owed to him. there you see some of that now question is, what does that actually mean? we don't really know the answer. we went back and looked and found his payments made upon retirement would include the continuing investing of all outstanding stock options. he would also retain options for the lesser five years of the remainder of an outstanding

ten-year term, continue to invest in a performance-based stock grant upon completion of such performance milestones, so clearly like so many other chief executives, mr. smith isin a position to have both made a lot of money and in large part through stock compensation and collect a lot going out. and, of course, as always is the case, he would have access to retiree medical benefits for life always nice. >> the board have to be aware of following the wells fargo scandal and the at the time i believe also called the retirement of one of the executives there, a lot of scrutiny over the package, what they were able to walk away with without any ongoing jeopardy after they leave the job you have to imagine equifax is in a position where they are making sure they don't necessarily trip up in how they deal with this dismissal >> whether it's cause for, i guess -- >> that's what i'm speculating >> yeah. lawyers are involved there's no doubt about it. but as this story grows, we will

also have people looking at exactly what his compensation is and what he deserves >> he was the ceo since 2005, and the journal's reporting before the breach he actually told people familiar that he planned to stay at the company at least two more years and even after the breach didn't want to leave. i mean, obviously, because it took, what, 20 days for this to happen since it was revealed wanted to solve the problem. clearly, that's all different now. >> it is >> david, thank you. >> sure thing. when we come back, it's a vc that's successfully invested in companies like snap, netflix, dropbox, and more. now the firm's launching its biggest fund in its almost 40-year history. "squawk alley" back after this

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we are seeing stocks just dipping into the red the dow down four in a row now are reversal of what we were seeing earlier this morning. keeping an eye on facebook closely, coming off its worst day of the year. looking at europe, moments away from the close there, where stocks are mostly in the green

after a mixed start. let's bring in mark, global chief investment officer at ubs. mark, welcome. >> thank you >> technology in focus after that fame fuelled drop we saw yesterday. it's been an area of weakness. is that a concern? is it time to take money and rotate it somewhere else, or are you buying the dip >> we don't think it's time to pull out of technology we still like it maybe the broader s&p 500 kind of tech sector, you know, you've got telecoms in there, you've got cybersecurity in there, so we still think that there's opportunities. >> as a general posture right now, it's common to talk about this being kind of a late cycle environment, if you look at credit conditions, how long the market has been doing, what it's doing evaluations. is that the right way to think about it is the clock ticking on this kind of broad asset market melt up we've had >> we get that question from clients around the globe and for us we don't think it's late cycle yet in terms of where the

economy is you've got synchronized global growth you still have earnings growth and the central banks are still putting money into the system, so we would call it mid cycle, but we do think you've seen really strong performance this year for equity markets, up about 14% globally, and so we took a little bit off the table last week on the equity side because we think that has gone a little too far >> what about the reaction to geopolitical events like north korea? yesterday there was more saber rattling from the north korean side talking about war, we've heard it from the u.s. side, as well feels like the markets shrug it off or if they do react, it's no more than a one-day reaction >> you know, it's such a difficult issue for markets to price. when you see these actions in north korea, you see the yen rally, which intuitively doesn't make sense, but some consider it a safe haven i think for us what we're watching very closely is does this escalate in terms of fleets

moving into the region, diplomats being called home, then it's time to really start to think about what are the safe havens going to be, but until that, you know, the south korean market has done very well this year and i think it's going to continue to be something that the markets toy with day to day, but won't affect the longer term trading, which is driven, of course, more by fundamentals >> if your wealth management clients are forever asking where it's going to end, does that mean they are in a position very defensively, are they worried about what's going to happen in washington, is that going to help or hurt what are the issues mostly in the air for them >> yeah, i think one of the issues from a global perspective was really this kind of march of populism, which for many of them started with the arab spring and then went through brexit and then, of course, the u.s. election and then after macron in france, a lot of them said, okay, this is not a trend that's

necessarily going to continue and upset this tremendous global growth story, so that's one of the perspectives that's out there. but people are still scarred by what happened in the great financial crisis, and i think many are always waiting to see if we see the signs we're headed back in that direction >> so you're still bull, you're still bullish? >> we, you know, we're looking at it, i think, with some trepidation, but at the same time as long as those fundamentals are in place, we are going to stay overweight >> mark, thank you for joining us ubs chief investment officer now out to headquarters, sue herrera with the news update good morning, sue. >> good morning, everyone. here's what's happening at this hour appearing on msnbc's morning joe, puerto rico's governor calling on the u.s. government to do more to help as that island deals with the devastation caused by hurricane maria. >> what i ask is very simple, we need more help we need more help with resources, we need more help with people being deployed so

that we can get logistical support elsewhere, and we need congress to take action so that we can have an aid package alabama gop senate candidate roy moore criticizing his opponent for what he calls fake ads distorting his position on various gun rights issues. in response he brandished a revolver during his final campaign rally in the city of fair hope. moore is running against luther strange, who was appointed to jeff sessions' senate seat for the remainder of his term. heavy winds are fuelling a wildfire in southern california this morning that blaze has already scorched 2,000 acres of land. nearly 1,000 people in about 300 homes have been ordered to evacuate it's the santa ana season in southern california. that's the news update this hour back downtown to "squawk alley." sara, back to you. >> sue, thank you very much. i want to send it out now to eam eamon javers in washington with

more on president trump moments ago breaking >> yeah, that's right, sara, the president meeting with the house ways and means committee here at the white house to go over some of those final tax details before he unveils his plan the president used the occasion to say some optimistic words about where this is going. here's what he said a few moments ago. >> i look forward to working with members of congress today to pass the reform and massive tax cuts that our country desperately needs to thrive, to grow, to prosper if we do this, we will create millions of new jobs for our people and bring many, many businesses back to our shores. we will become a competitive nation again >> in terms of the details, the president said that he wants to cut taxes massively for the middle class he also said that he wants to nearly double the standard deduction and increase the child tax credit

those things would have an impact, he said, on middle class taxpayers and on health care reform the president expressed frustration here with republican senators who expressed opposition to the bill on obamacare that he's been supporting up on capitol hill. the president calling them so-called republicans and saying he doesn't know why they are opposed to the bill. so some frustration from the president on health care, but saying ultimately he does think that he will be able to repeal and replace obamacare and then on taxes, sara, the president giving us a little glimpse at some of the details here, but not a whole lot. we'll have to wait for the big speech tomorrow. back over to you >> all right, aman, thank you very much. "squawk alley" will be right "squawk alley" will be right back whoo! ( ♪ ) woman: class, let's turn to page 136, recessive traits skip generations. ( ♪ ) molly: i reprogrammed the robots to do the inspection. it's running much faster now. see? it's amazing, molly.

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silicon valley venture capital firm institutional venture partners announcing a $1.5 billion new fund this morning. this is the largest fund in the firm's 37-year history the plans to invest in nearly 40 different companies. for more we are joined by ivp general partner sandy miller sandy, welcome, nice to see you. >> good morning. >> so, your biggest one yet. i think your 16th fund what's that say about the overall environment right now out there when it comes to fundraising and appetite for vc firms like yours to invest in private companies? >> i think it's a great time i think the fact we're doing the largest fund ever reflects our confidence in the environment we're in we're in a situation where there's more great technology companies, private companies, of scale and growth than really

ever before, so we have, i think, there's a tremendous number of interesting companies. we focus on later stage companies, so we benefit from the tremendous number that have been backed by the earlier stage venture capitalists. at the same time, the evaluations have muted somewhat from the fairly frothy evaluations on the private side in 2014 and 2015, kind of more back in line with discounts to the public market, which is a more normalized private company environment. so i think it's a great time to invest, and i think limited partners understand that, and i think they are still supportive of the venture capital -- venture capital firms that have a track record and a strategy that makes sense in today's environment. >> sandy, how does your calculus change, if it does at all, investing in later stage venture capital deals, private companies, when there is this reluctance among many to go public you don't necessarily have that more predictable path to an ipo exit than years past

does it alter the way you approach these things? >> not really, but it certainly is an interesting phenomena that there's been so few ipos despite, obviously, a very strong overall public tech market and plenty of strong candidates in our portfolio and all the venture foportfolios some are on file confidentially, of course, but i think the exit environment is going to be more diverse going forward. we're seeing a number of new innovations in terms of potentially in the spaks, in direct listings, exits potentially like the softbank vision fund, exits to private equity buyers and strategics, of course, remain the biggest exit, the biggest exit source, because they have so much cash available, the big tech companies have cash hordes and they are very inquisitive as they compete with one another

and basically kind of fill out a matrix whorizontally and vertically i think we're going to mainly see m & a as the biggest exit. that's kind of always been true, but especially true the next several years. i do think we're going to see more ipos, some later this year and into next year, but we're not relying upon that as the only exit, that's for sure, and it has been a bit surprising there haven't been more. >> wonder how some of the high profile recent ipo flops have fed that mentality and the willingness for companies to stay private longer. blue apron, snap, which you are a big investor in early on >> yeah, i think whenever you have stocks that don't perform as well, ipos that don't perform as well, it cast a little bit of a pause on the sector, because investors want to see that they are making money and ipos is supposed to be a source of alpha, and it has been, actually, over a sustained period of time, including generally fairly recently, but

not -- there's been several notable ones that haven't worked i think it just gives pause because most of the companies today don't need the ipo to raise capital. there's plenty of private capital available. the ipo is a, you know, beginning of a liquidity process, branding event, a lot of good things about it, but people aren't pressed to do it because it's generally not capital they need, so that's caused a lot of companies to put it on hold for the moment. >> five seconds, company you're most excited about right now that you're invested in? >> well, interestingly, still snap at these prices, i think snap is the most compelling one. >> all right, well, it is up 3%. we'll see if they can pull off an earnings win. it's been a bumpy road so far in the public market. sandy miller, thank you for joining us so much on the new fund, general partner at ivp i want to get you some comments from the ceo of hilton. let's send it over to seema mody live at the skips global travel

forum in new york. >> hi, mike, that's right. devastate caused by the hurricane certainly has had an impact on the hotel industry and that does include one of the leaders in the space, hilton worldwide. here's what the ceo told me. >> we have nine properties in puerto rico, all of which are closed rightnow. we have -- we had hundreds of guests they've got trapped during the hurricane. i'm happy to say we kept them all safe and sound and the very large majority of those that have chosen to leave have left the island of puerto rico. we still have, you know, approximately 2,000 team members that live in puerto rico, that worked in these properties >> aside from whether hilton grabbing headlines at the conference, announcing testing of the mobile room, also loading the hotel room with your personalized settings. everything from your favorite spotify play list, tv, movies that you want to stream, and

your preferred temperature this all in hopes to really differentiate hilton from its competitors like marriott. guys, back to you. >> seema, sounds good. seema, we'll be talking to you throughout the day thanks very much let's get over to rick santelli with the santelli exchange >> thanks, mike. now to my special guest, charles biedermann a man who knows the flows. aloha. >> aloha, ricky, how are you >> very good so, you wrote me last night $82 billion so far in q3 bond fund inflows. six out of eight quarters now over $50 billion pretty amazing tell me your thoughts on that dynamic. >> well, bond flows are up like over 50% versus last year. at the same time money going into bank savings accounts is down a lot instead of people putting money into the bond market because it's just as safe as the savings account, right so that's where the monies go.

>> that's certainly the way they sell it in our textbooks at school it's the credit, right i don't know >> yeah. >> but another thing that really struck me is that you said real wages and salary growth are accelerating more in september dig down on that one for me. >> well, it seems as if ever since trump took office the one thing that has made a difference is the cutback in regulation, the ease of getting, you know, it seems easier to start stuff than it did before under the previous administrations so we are seeing a pickup in small business, and it's evidenced by growing wage and salary income tax collections are rising at the same time we see a slowdown in auto sales, a slow down in housing, and corporate buying is slowing. so it looks as if big companies are not doing as well, but the individual small business guy seems to be doing okay for right now. >> you know what, charles, you're right at the point i

wanted you to be in and i have a whole minute left. so if small businesses seem to be more bullish than big public companies, my question to you is, we keep talking about potential tax changes and everybody's talking about the corporate rate listen, i think that's great cutting taxes, but let's be honest here, money in the biggest corporations pay an effective rate way below the advertised rate, which leads me to this intersection sub chapter s corp., small businesses, you're getting bullish on them. wouldn't they be the real entities that would thrive with the kind of tax cuts we're talking? you finish it up, charles. >> well, corporate -- the corporate income tax is the worst tax in existence companies pay taxes on what they've done business on, and then the remaining money gets distributed to shareholders, first employees for wages and salaries and then shareholders

by distributions so we reduce -- we give money to government and then that money is whatever it's done, my point is, i got a little sidetracked, when if all the money that was given instead of corporate taxes was given in wages and distributions and then taxed, there would be no change in income tax between reducing corporate and increase in individuals. if all the money that companies got that they distributed to shareholders and wages and salaries and -- >> we're going to have to have you back and dig more into this. i'm out of time, but i think we're at the right intersection here charles biderman, thank you for taking the time. sara, back to you. >> all right, rick santelli, thank you. for more on the massive sports bribery scandal unfolding this morning we'll go down to contessa brewer, who's made her way outside the u.s. attorney's office in new york expecting that announcement at noon contessa >> yeah, i'm heading in just

after this, but this federal complaint we've just read through details a complicated scheme involving coaches at some of the nation's best known universities, student athletes, agents, financial advisers, and adidas, among the murky twists and turns here, prosecutors say adidas executives arranged bribes to get star high school players into the top school that it sponsors, university of louisville adidas has a sponsorship contract over ten years worth $160 million an executive, jim gatto, director for sports marketing for basketball is accused of arranging $100,000 to a star high school player's family to get him to louisville. another named conspirator says that's the way things happen, how you get them into particular schools. he's also quoted as saying the payment is on the books but not what it's actually for adidas released a short statement saying today we became aware federal investigators arrested an adidas employee.

we are learning more about the situation. we're unaware of any misconduct and we'll fully cooperate with authorities to understand more and the complaint is also accusing an agent, manager, of funneling money to coaches throughout the nation. so, i'll get more details inside, sara back to you. >> absolutely, and adidas this morning saying they were just learning about this all this morning. didn't know much and they'll comply with the regulators contessa brewer, thank you straight ahead, why o'reilly media ceo tim o'reilly says public sentiment is turning against silicon valley it's been a story 'vwee been all over here on "squawk alley." we'll talk to him next ...on the perfect hotel. so wouldn't it be perfect if... ....there was a single site... ...where you could find the... ...right hotel for you at the best price? there is. because tripadvisor now compares... ...prices from over 200 booking... ...sites ...to save you up to 30%... ...on the hotel you want.

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coming up, we'll tell you where one well-known wall street strategist says the s&p could go before the year is over. and we are talking hundreds of points higher. plus, biotech ceo defending his company as the stock drops more than 70% we're seeing bullish activity, we'll tell you which one, and bombshell charges including big time college basketball, threatening to shake up the sport on the eve of the season "halftime report" at noon eastern. meanwhile tech giants like facebook and google continuing to feel the pressure over their size, their ad policies and fake news among other things. and for more on the silicon valley sentiment, we're joined by the ceo of o'reilly media, tim owe rhy'reillo'reilly, alsof

what is the future and why it's up to us out on october 10th. tim, you deal with some of these issues in tech's reputation and what companies should be doing with some of the innovations coming down the pike what is your thought on what brought to this point? >> well, the silicon valley mantra of disruption is so out of touch with the public moment. the point is not to disrupt. the point is to enable if you think about technology, what it's really good for is letting people do things that were previously impossible and this is no less true with today's technology than it was with the technologies of the industrial revolution. it's job is to make us all wealthier. and yet we've had this narrative which emphasizes we'll disrupt, we'll create this enormous value for the entrepreneur and not enough that we will creates value for society.

>> we see that with the bodega business and the backlash against this, uber and autonomous driving coming to that perhaps but what about facebook, what about google and some of the ad controversies, how does that fit into your vision of how silicon valley should be looking at the future differently >> well, we have to understand that these are vast algorithmic systems, increasingly using more and more a.i but what people don't understand about these systems is that they do exactly what we tell them to do they are a little bit like the genies where you give them your wish and then they go at it. and if you haven't stated your wish exactly right, they go awry and you think about fake news. facebook had this idea that they wanted to make engaging content, that people would share, and they didn't really understand what all the implications of

that were. >> so officers at companies whose job it is to phrase the question the right way >> first off, i think every ceo must be the company's chief ethics officer ethics are fundamental to a company. it's not something that you add on but facebook is working to try to understand where they went wrong, how do you fix the algorithms so they do what they meant them do. and i think every company in our society needs to be thinking that way because we have been hollowing out the economy. and so facebook with fake news is an easy target. he yes, they got some things wrong. yes, they have some things to fix. but so do companies that are relentlessly outsourcing and getting rid of people in order to drive corporate profits it is actually a neem -- go ahead. >> i'm afternoon trade of a tri

leave it there your book is out in a couple weeks, a different look at the future of silicon valley and how products should be built also he will be on the fort knox podcast at my guest. "squawk alley" back after this ♪ approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in.

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cnbc's iconic conference hitting l.a. again this year let's send it out to kate rogers with a look at some of the city's most innovative startups. >> good morning. online shopping may be a breeze, but returning those items is a different story. happy returns here in santa monica is on a mission to change that the company provides in person refunds for online retailers they have 40 return bars around the country where shoppers can get their refunds initiated on the spot the company's founders tell us it's a win for all parties involved >> it's great for the consumers because they get a return process that is easy and fast for them it's great for the locations hosting the return bars because they are obviously getting the foot traffic and it's great for retailers because they are not only providing customers with is a serservice, but also saving

money. >> we're out here of course ahead of the iconic tour our second time in l.a we have a great lineup of speakers can't wait to bring it to you live all day tomorrow. >> looking forward to the coverage so what are we watching? a few sorts stories. >> trying to hold steady is the main thing >> all right "halftime report" starts now welcome to the "halftime report." our top trade this hour, the roll over in the fang stocks and what whap happens if they can't recover. and also an alleged bribery scandal. we will take you live to lower manhattan as soon as the u.s. attorney appears t