triple digits, gain of 106 above where it closed yesterday. s&p indicated up by over three and nasdaq up over 5.5 it's important because the dow touched over 23,000 for the first time yesterday. >> cramer said there's numbers boost on the do you components reported yesterday make sure you join us, speaking of cramer, he's coming up now with his friends make sure you join us tomorrow, "squawk on the street" is next ♪ ♪ i'm gonna knock you out >> good morning, i'm carl quintanilla with jim cramer and david faber. big blue could add as many as 50 points to the dow at the open after the 50th record high of the year on tuesday. some solid gains in europe and

benchmark yield at 2.34. the treasury's warning for washington and wall street pass tax reform or markets will fall. >> ibm shares on the move after better than expected earnings despite 22 quarters of declining revenue. big blue up 6% in the premarket. dorsey vowing to make a more aggressive stance to crack down on hate speech and sexual harassment not only has the dow surpassed 23 k but up 25% since the prds was elected. on a political podcast the treasury secretary did warn failure to pass tax we form could derail the rally. >> there's no question that the rally in the stock market has based into it reasonably high expectations of us getting tax cuts and tax reform done it also has based into it optimism on regulatory relief, which they've begun to see and there's expectations so i think to the extent we get

the tax deal done, the stock market will go up higher but there's no question in my mind if we don't get it done, you're going to see a reversal to the significant amount of these gains. >> we've had these discussion o whether it's priced in or not. >> with respect to secretary mnuchin, he's working hard all the time with what he's talking about not on the conference calls. i'm on the conference calls and not working very hard but negotiating congress and whether it be the goldman sachs -- the ibm yesterday or over and over, jp morgan. it's not they are saying maybe it happens, maybe it doesn't. it's not baked in. my wholetop last night on mad money, let's stop talking about politics because it's not going to get done and anyone who thinks it's going to get done isn't listening to the calls he has that young fellow, eli

miller, he should assign him to read these conference calls in the 15 hours he's not working of the 15 hour-day. and then he would know that's -- i'm not saying it's ill-informed, i'm going to use what my former partner larry kudlow used to say, with all due respect, which basically meant, come on -- >> i'm coming at you. >> come on, man, they do that on espn they say, come on, man. >> treasury secretary said without question and i would echo your comments, i have lots of questions about that statement. >> you spend a lot of time on conference calls i spend a lot of time talking to investors. i don't know, you could make arguments whether or not this market effectively prices in risks that are out there or that multiples may be too high. i know you and i may go back and forth on that. but it does not come up as one reason why people are buying stocks right now now, will i tell you -- as i have when i report on the prospects for it that a number of companies have sort of given

up the idea of tax reform this year and moving ahead with their strategic plans, only to perhaps stop briefly now that it is in play again, yes. but does that really mean there's a large premium in the stock market because of people's belief we're going to get reform >> i don't hear it. >> the secretary gave an absolute guarantee that the president would sign this by year end after taping this, later said it would be extraordinary if it happened by year end. >> i think the treasury secretary mnuchin, should speak softly, carry a big stick and look at what the companies are saying listen, we need to get it done to stay competitive and have that be the watch word keep saying we need it to get done to stay competitive -- >> long-term health of corporate america and a lot of different ways that are beneficial, but this idea of somehow using a scare tactic, come on. >> come on as he's saying, i want you to buy a lot of puts.

focused on the mission which is just to make us more competitive and we'll take care whether the stock market factors in. watch the show no disrespect but watch the show you'll get a much better feeling and you've got to get out of the play book. >> a group of ceos from the s&p 500 company, i think a majority would say their expectations are we'll get some sort of tax cut let's call it in the next year. >> it takes a long time to do these things. >> you might get division on how effective or meaningful it would be, but the majority would say they expect it there's still a significant minority that will think they are not going to get anything at all. >> i think minority is building and people are buying stocks because fundamentals are good. no one is buying j and j and united health, if anything united health you're buying it, aca and the recent compromise -- >> you did say earlier in the week, short tax cuts because health care is in focus.

but does alexander murray, does that clear a path to tackle taxes? >> i would think so. when you look at say pennsylvania's rates went up 31% without it >> pennsylvania now about the state xhafrpgs under the aca. >> 63,000 votes, that swings they have to do something because it is so drastic about how much the -- that could hurt the consumer which then could hurt the stock market. that makes senseto me as something far more important than tax reform. tax reform when it comes to consumer spending. >> listen, just take a look at our own parent stock if you want to -- >> do you have to? >> yes, you know why, it's a great arbitter there was a period where comcast went up a lot because it would be a big beneficiary of deregulation, which is happening and tax reform as a large domestic taxpayer. >> you're absolutely right. >> you know what's happened recently, worries about the

underlying fundamentals have crushed the stock because that's takes precedence. >> that's really good -- i'm going to steal that tonight because i know you're probably busy swimming -- >> i'll be under water i will, hopefully. >> take him in the pool. >> sometimes i get out and get to catch the show at the gym when i'm -- >> miss the opening because i'm going to use it and claim it's mine. >> jim will also tackle ibm tonight. the dow component better than expected quarterly results boosted by cloud offerings and did see the 22nd year on year decline. main frame, the first revenue gain in a couple of years. they wonder, is this a cyclical? >> no, it's built an mobiles, it's an answer to cyber security what people -- first of all, the next quarter is going to have the first revenue up the street is going to break it's going to be $304 million

proposition. martin shroeter is under promising and will overdeliver next week will be terrific only when i look at the notes from morgan stanley, who is excellent gotten this one right. it's a terrific story because of cybersecurity. remember, everything in the ibm system is encrypted. if it's encrypted from the start, you can argue that there's a lot of the bad hacks just can't happen and that is -- that is a great selling point. i also think the health vertical starting to take -- finland takes the health vertical and italy, you don't realize the health vertical is great for national health systems if they get into china and start selling that thing to the three shanghai hospitals, they would have 500,000 patients you're looking at the major home run. the ibm story is back, it shouldn't have been as low it's not a discussion about buffett anymore, it's a discussion about reignition of the earnings >> well, the thing that i always

look at as you well know, the crossover between the growth of strategic imperatives, 45% of revenues and approaching a $40 billion business. >> for real? >> versus the decline of the so-called not legacy, but core -- >> they are integrating these. >> strategic comparatives is up 11 13-year over year and margin increases. lots of data and analytics only up 5% on the year. everything you hear about that and the importance of ai, 5%? >> they need it to be more and block chain. by the way, walmart. >> what about walmart? >> they are going to use -- >> not amazon, not aws. >> most likely not walmart doesn't really like amazon web services thing xgt i think what you're so right about is that the strategic initiatives have really started

to build they'll be on the main frame. >> that's the idea and where the focus is -- >> that's not one time only. that's very good but you know the main frame, a lot of people have been waiting for the main frame the sales people have a lot of good calls to make -- >> you think it's not a one time thing with the main frame. >> this is highly cyclical. >> i would say the software as martin makes clear is not connected to the cyclical nature of the ibm mainframe there are two head winds that are gone, the big acquisitions, they don't need them anymore >> and the head wind of currency is almost gone that is such a positive story that will make it so that ibm i'm not concerned. >> to hit their $13.80 guidance for the calendar year they have to do 37.3% of the eps in the fourth quarter. >> they do say $300 million will be added i think that's lower

than what they can do. i think the main frame will be tremendous appeal because of cyber security and you have a selling point. you don't need the keys to cyber -- when somebody leaves the upper level of a company, that's when the bad guys look and say that vice president left i'm going to go in and get that. it shuts the system down with ibm, no other system is shut down that would indicate someone had left at he cequifax they could stopped it. >> i think the cyber security element has become so large it's a great selling point for ibm. and block chain is for real. they did not talk up block chain as much as i would have this time. >> should buffett have hung in there. >> i'm sorry that's a very hard call. i think what happened is that buffett realized that a lot of people were in this space, the cloud space and didn't understand the dynamic i think what's going to happen, he could stop selling. he shouldn't be selling now. the company -- although the

company very clearly is saying, listen, we're going to use more of this cash if we want to to grow the business. that's important because you have to finance the main frame. >> you do. >> and $2.5 billion, i mean, they've got free cash flow and also $8 billion in dividend and share repurchases in the first three quarters. >> i think they should cut down -- >> it's a lot. >> they have certain commitments they feel they need to make. >> yes, they have. if you have this tremendous advice and advance people the money and get back on great service revenue and all of these different strategic imperatives you layer on you have got a really, really good multiyear story to tell and you are at an inflection point and tony versus katie uberty reflection will go to katie. >> you see revenue and margins. >> margins -- stock declining. >> bullish on ibm. >> yes, i have >> wow >> and martin shroeter who's a

straight shooter never did any ge accounting. he did have issues with tax rate, they do talk about tax rate being 15% but the numbers are optimally clean. there's not ill advised tax stuff -- >> citi and ubs maintain neutrals, you're not seeing analysts flock to the story. >> this was a really good quarter. that was -- >> yes, i am more bullish. >> that was important. goldman sachs, you know, revenue beat should support stock but inflection is needed that's wrong there's a deinflection and ubs best quarter in some time as the business stabilizes. th that's good enough the word is inflection it's very funny, if you go on reed hastings conference call, he goes -- a bunch of guys, you guys like inflection points. well, yeah, that's what they like we like to inflekt not infect -- but inflect, the

operative term and they are inflekting right here and right now. >> you give -- all the credit for this time. >> she stuck by her knitting and martin stuck by it i remember when there were 25% and having lunch with martin, wake me up when they are 40. rum pling stillskin, that's the term jeff seinfeld used by peltz -- i thought that was -- let's keep that going. we like that. >> we just mention his name makes him happy. >> that's a good point i'm more pertinent -- >> we have a call on chipotle and b and a. >> that's a nasty call. >> and talking about twitter takes steps to cut down on hate speech and sexual harassment back in a moment i was playing golf days ago...

love golf. i used to love golf. wait, what, what happened? i was having a good round, and then my friend, sheila, right as i was stepping into the tee box mentioned a tip a pro gave her. no. yep. did it help? it completely ruined my game. well, the truth is, that advice was never meant for you. i like you. you want to show me your swing? it's too soon. get advice that's right for you. investment management services from td ameritrade.

twitter outlining new guidelines as part of a crackdown on hateful and abusive tweets it includes a tougher

stance on nonconsensual nudity and those who share such content will face harsher penalties and twitter will make it easier for users to report unwanted sexual advancements basically this means permanent suspension rather than a temporary suspension they are working on other things like hate symbolism. >> i've been begging for them to do this stuff. they have always said they are going to get it done and they got it done of the the idea you can reinvent yourself and keep saying nasty things every single day made it so a lot abandoned twitter. this is a positive defense mechanism. >> it is >> i'm not raving about twitter but i'm going to rave about something called tbh. >> to be honest? >> this is a site that facebook bought for $100 million. >> my 12-year-old daughter and all of her friends and she keeps getting -- what the heck is this tbh. >> this is a great flanking

move had snap bought this, snap stock would be at 18 this is pre-snap you get it when you're every 11 and 12-year-old this is the number one downloaded site for months. >> it was viral, all of her friends. >> it's part of like -- it's going to start, you're going to start with tbh, then you go to instagram and facebook this is a direct shot at evan spegle on the forbes list. >> wealth is comparable to the president's now, believe it or not. >> he's having a better year. >> snap in our own parent networking on short frorn programming, eight minute sitcoms. >> it's cheaper to have 11 and 12-year-olds to generate content then it is to have nbc or anybody generating content this move was brilliant because they chose not to have to invent it -- >> this move is not a snap move.

tbh is owned by -- make sure people understand. >> by facebook. >> one of the things so great, they wait another month they had to pay a billion dollars this was snap to buy and they didn't buy it. zuckerberg gets it it's stupid, 11 and 12-year-olds thing it's brilliant and i'm an idiot. what are you wearing to the party tonight, david i'm confident o enough i know what i'm going to wear the site has positivity, it's weeded out the negative, all positivity, therefore youas a parent should like. >> i'm glad to know that because i was hesitant to allow her to engage with it. >> every 11 and 12 jld. >> it wants to go through your contacts which i don't really like. >> i think this is the real deal and not being talked about so i decided to bring it up in the crucial b block. >> that's right. >> we'll get cramer's mad dash and count down to the opening

bell in a moment solid action on ibm and we'll get to the merck upgrade in a moment back in a moment

♪ >> all right, time for mad dash and what we like to call your hump day, serve minutes before we get started with trading many lam research, a battle ground. >> i've been riding this bandwagon forever, because of dram and for flash, it's going

to be up it's been a monster. unbelievable job, applied materials similar monday ter what's going to happen and happened before, people will say wait a second the customers won't stay disciplined they are going to build new -- and buy too much from lam and micron and flash will go down. this is consistent with what we're hearing from a ciscoe and hp i want to bring up apple because we don't talk enough about it. they are part of the bain acquisition of toshiba's flash business apple is keeping flash price down, since they are the largest buyer. let it go up but be aware there will be a backlash saying -- the customers will not be as disciplined as martin said fabulous conference call, martin is great bought back a ton of stock at 136. last time it did the same thing and started going down when

people started questioning. >> looking at the last year it hasn't gone done that >> that was really bad i had martin on and what are you kidding me >> really. >> they've got to remember with perspective that's not so bad. >> this is amazing and great liquidity. i love the company but people worry about the customers. they worry the customers will lose discipline. sam sung, i don't know, they've got issues on its own. will micron lose -- but the western digital worriy ies me because i think flash can peak and that won't be good in the second half of next year they built in a great quarter in march already. i worry about apple bain >> we're going to have another chinese company coming public here when we get the bell ringing. largest i believe chinese ipo of the year when we come back on "squawk onhetrt. t see a u

throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise

something we all think about as we head into retirement. it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife. >> you're watching cnbc "squawk

on the street. the opening bell in just over a minute's time. earnings season rolls on today it is ibm which is going to add 75 points to the dow at the open we do look to see interday highs on the dow and s&p at the bell nasdaq will be more of a challenge, might almost get there, jim. >> i think apple kind of creeps up and microsoft creeps up ahead of the quarter and facebook doing more than creep up you have some stories about alphabet talking about secure mail and headlines about google and then ibm is just -- and j and j terrific you're getting these big comps in the dow not involved with tax reform that are just doing better i think that's going to be the continual theme until we get to ge and hear exactly what is it going to do. >> a viewer was asking, which analysts have a buy on ibm >> katie uberty has been

fabulous. >> j and p. >> morgan stanley, been so right. does a monster amount of homework, nice person. fabulous on apple too. really no -- she's rigorous. >> the opening bell on the s&p at the big board it's online microcredit provider in china celebrating its ipo today. we'll talk to the ceo when the stock opens. celebrating their 55th anniversary. this is the fifth chinese ipo on the nyse this year >> i've got to tell you, that alibaba was down yesterday some of that i think was literally because -- the fifth anniversary -- they've got the fifth year plan there and they made you not be able to get on the web if you're within a certain kilometer of the for security purposes. people interpret that as sell al

bab by a to buy make this ipo i think the quarter is going to be fabulous. >> they are having their kind of annual meeting and we got the letter from jack ma for his thoughts for the years ahead and many years ahead changes taking place. we've heard from mr. ma a number of times i last spoke in june -- >> you know, you with ma when the stock watt at 80, changed my mind yesterday's weakness is a buy. >> you are >> yeah, because i think they are a great value proposition. remember they were worried about the transit business that turned out to be good it trades in the pink -- >> talks about the logistics industry to the subject of chinese ipos, we've got one of those logistics coming public not that long ago. the reason i guess the nyc keeps going to china, that's where the

money is. >> light logistics. >> he talks in his letter about doing 100 million packages a day in china, 100 million a day, ten years from now, we may be faced with 1 billion packages a day. >> also by the way, guys, the 19th chinese communist party congress, xi spoke overnight the sweeping vision for transforming the country they say they are going to continue to open to foreign business to ensure rates become more market based. >> at the same time there were overturns -- lennonist discussions that you don't associate with the chinese, one man rule kind of. >> the question also, i believe, whether or not he's going to extend beyond is it 2022, when this current tenure is up. there's a belief that xi is setting himself up to be -- xi

as one of the most significant leaders. >> he continued behind the state run enterprises but -- i was thinking those are the ones that borrow too much money and maybe that's going to be knocked and was not knocked. i know a lot of freebies you can't get. there's not a lot china -- walking around any more, they stopped that if you want to know how to play this, it's alibaba, because the long-term vision fits. the consumer will get stronger. >> even with the stock up over 100% this year, approaching a $500 billion market value -- >> yes, david. >> and continued questions in some areas about counting particularly as it relates to logistics and consolidation and lack thereof sfwl who was the lawyer i think he is the head of the sec now. >> jay clayton. >> that often puts an end -- it could be neutral

>> it's neutral but good. >> your exli-lawyer to be the hd of the sec. >> ibm, when was the last time ibm led the s&p? 7.3, when we heard warren buffett was a buyer of it. >> the biggest gain at least since 2011. >> totally deserving what can i tell you? if you're going to sit there and say, oh, boy, another missed -- no, it did not miss. oh, boy another guide -- did not miss oh, boy, 22nd consecutive -- the next quarter won't have that mainframe cycle, i like the story. it gapped down and now it's coming back. and i think it's good. and it's got some longer lasting legs and i do like the strategic imperatives and they are 45. they delivered on plan and i think that people forget that ibm has a potent main frame for finance. finance -- some things have to be on main frames.

in some calculations have to be on main frames and can't be on other devices. they own that market and they have a lot of sales people and can go out and have a lot of new technology on the main frame that is very suited to the current times. the previous main frame did not. so yeah, i get it. >> right >> did want to revisit a story i've been following the last few days, which is those carriage negotiations between charter and viacom late yesterday. it's called 8:30 when i saw the release pop in my inbox. they said they reached a deal. this morning called both companies not getting much in terms of details here. that is the key. one of the keys will be did viacom accept a roll back in rate often times you won't learn about that at all. but one thing you may find, spectrum customer and we're talking all 17 million subs that charter/spectrum, the name of the product for them, has, will it be tiered

viacom has 23 networks, some enormous number of networks most people have never heard of. >> right. >> and it's really about nickelodeon and comedy central and b.e.t. and that's being generous maybe the question is what will be tiered if some, all, none, in terms of offering to under the basic cable package that is offered to spectrum subscribers. i don't know the answers but importantly, when they do one deal like this, if it does include things that are more favorable for charter, they have the mfn deals, most favorite nation deals with a comcast, for example that says, well, somebody else gets a better deal than we got when we signed a few years ago with you, we get that deal that's when things can become important and typically can lead to well, a lot of dislocation in the marketplace. we don't know the answer on tiering, on pricing at this point. it's not clear we'll ever get pricing. we will know tiering but we'll see.

and that's been one of the keys here. >> they have all of these networks that they force down the throat of the distributors that nobody wants, and yet it doesn't enable them to go to a hulu and say we'll only give you the two. you have to go back to the distributor like comcast or charter and say you can only have the two key networks. they put themselves in a real bind and we watch them all decline. viacom goes down day after day, discovery is another name. >> oh, my. >> an ideal that has done nothing but go down. today it is up a bit but it has been ugly we're talking really what we're talking about guys, a complete reset of the economics of the business that's what we're in the midst of right now. >> you're so right i sit there and think about when viacom was a take over name and remember how much discovery got killed when it made a takeover. >> and viacom was the cover bid and could have gone higher with an all cash.

scripps made the wrong decision except in the cash and stock deal from discovery, although they did seem to want discovery more as their partner. and at this point, of course, viacom may be -- shareholders saying we're thankful but the future of these companies that have these networks, despite ratings increases is very much uncertain in the new evolving wolf that is taking shape so quickly. >> i'm glad you mention that es espn, which i wuch constantly is usually the poster child i find it hard not to watch something that happened in boston, wish it happened had happened. >> watched it over and over again on their site. i watched their ads, i watch their ads everywhere when i look at the recaps every single night. why shouldn't that be included >> i don't watch viacom, what was on the repeat? but i have to watch these things over and over again, typically for the later games and i check

a lot of scores and hockey scores and this is the way i do it and bob eyeinger is getting no credit for an unbelievable app we all use and we all watch the ads. >> it's all true >> the direct to consumer offering from disney is a truly seminal moment for the industry. as it was two years ago in august when he first told us and talked to us about on this show, that morning, two years ago. that was the beginning if you look at the performance of the stock, netflix versus the media industry overall and facebook and google versus it, it's incredible. >> if you shorted the media names and gone long the new media names, you would be very happy. >> so true. >> on the media front, amazon, their studio chief roy price is out having taken leave on some of these allegations of harassment albert chang is going to be the

new interim chief of studios and we'll see if they can make headway in creating content that has true mass appeal, not very niche appeal. >> i think reed hastings talked about, amazon may be finding it harder to integrate itself into hollywood. buster cohen who wrote great stuff for the street talks about how the greatest directors including ethan cohen, want to do things for netflix because of the freedom. and the freedom is something that is underestimated as netflix's appeal i look at amazon, i think maybe this is a reset. this guy is out. got to start over again with hollywood contact. hollywood is finnicky, go down your movie. >> want to get to a call of calls, gopro gets an upgrade with a 13 target they are talking about vastly better execution, better asps --

>> yeah. >> stock is up 6%. >> makes sense makes sense. i think there was a lot of negativity about the new iteration, but i look at the stuff that my stepson does on go pro, he's a surfer, it never went out of style. the new iterations with respect good enough but now it's coming back things that aren't coming back, i have to mention, allergan, continues to drip down maybe i was too critical of jamie ruben at goldman, sell on j and j. >> what was the negative argument >> because they lost that restasis patent, 1.7 billion, stock dropped 12 billion on that and there's also a belief that there's really nothing very exciting of all of the acquisitions that brent has done i look at their central nervous system drug on the cover of "time" not that long ago and look at their migraine posture, they are doing a lot of great

stuff but it's a hated stock brist ol myers gets a nice word today. upgraded merck but there's no one supporting allergan with any conviction this is the level that brent saunders bought stock and my charitable trust came in and said you have to buy it with brent saunders it went up to 250 and now it's incredible shrinking drug stock. i think brent is better than the stock. >> it's been a rough road since the pfizer deal. >> glad you brought that up. >> i did want to mention the health insurers, anthem in particular, which is i believe the largest player in the exchanges, up over 5%. i would assume that's on the hopes and beliefs that this alexander murray bipartisan effort to reinstate the subsidies that the president has cut per his executive order will be success fful. they've had great years.

cigna is up 42%. >> as you said yesterday, trump was right, it was a giveaway -- >> going to start its own pbm, which is important, i know you're -- you know all of these anthem, that's a great thing for anthem express scripts, takes too big a cut. >> by the way, president tweets about a minute ago, i'm supportive of lamar, he means alexander as a person and also of the process but i can never support bailing out insurance companies who made a fortune with obamacare. >> what does that even mean? >> i've got tweeting president and i've got holy cow, my partner, agreeing entirely with the president. >> will you stop putting words in my mouth. you just stop it. >> tbh, david. >> i was speaking specifically about our health plan. here >> i think. >> at our beloved company. >> hr is on the phone right now. >> the president took -- you

obviously -- >> a real risk to my career here. >> you said it 9:42 and then he just tweeted, he said i'm running with the fake media here. >> we're not fake media. >> we're the real media. >> damn right we are. >> that's probably why he's tweeting david, dark side welcome >> you think the insurance companies are deplorable >> don't answer that. >> i think the level of coverage we have is -- is an abomination. >> you punted. you punted on that. >> i didn't punt i said something that's going to get me fired >> dow is up 113 ibm best gain on earnings since '02. >> since they owned -- >> bob pisani is on the floor. good morning, bob. >> good morning, lively discussion there great start. this started over in europe. we had programs come through

look at the european names across the board earlier today, we had the banks up and autd toes up and food stocks up draghi was talking about economic reforms and monetary policy and accommodative and window of opportunity and markets lifted and bond yields went up. this spilled into our market we had very nice preopen trading and heavier than usual volume and number of names, ibm was there and avid had earnings and helped lift the drug stocks and merck was up, they are up nicely facebook and netflix and apple, good volume in the preopen overall nice open here regional banks helping if you look at the sectors, we have reporting from the regional bank semis are strong again there's a big market leader, biotech helping and laggards, staples, utilities, telecom all lagging for a while now. you heard a lot about ibm. i'll make it simple, the hope is the revenue declines are finally stopping look at the third quarter

reported year over year, only fractional revenue declines. look at the declines in prior quarters year over year. the hope is for the fourth quarter that is going to be zero or somehow miraculously positive that's a simple way to understand the ibm story obviously a little complex than that but that's a simple way to understand it. let's talk about the market, secretary mnuchin making comments they are anticipating tax cuts, but that's not the reason the markets are at new highs. stocks trade an on estimate of forward earnings you can argue about what the multiple should be, everyone does, but we are at record highs on the earnings. and that's what matters, here's the q3 numbers for 2017. it's a little lower. that's partly because of the hurricanes and effect on insurance companies and numbers are down there you can see the estimates going forward are generally higher yes they are nor optimistic and tends to lower them but we're still at record highs. global economy expanding keeping earnings numbers high and that's the reason we're holding on. these numbers are not

incorporating tax cuts for 2017 or 2018. we do, we could all three or four points, pick your number more if we get tax cuts. it depends on what they look like there is an emotional premium there in the markets but not in the earnings numbers now, look, we've had three separate rallies going on, a 5,000 point rally in 18 months the first part was the earnings recovery in mid 2016 and stopped with the recession and everything went positive and market went up prior to the elections and november, we had what we now call the trump rally in retrospect, all about higher spending and now we're in the third plags of this reflation trade, higher rates and tax cuts but you'll notice, tax cuts are sort of in this mix that people are talking about. there is some kind of premium in the market for tax cuts, i believe but it's not reflected in the earnings, at least not yet. finally ipos, the fourth quarter is looking to be the biggest fourth quarter in a long time.

we'll talk about qudian, look at the shares, $24 they priced at, 19 to 22 is the price talk, backed by alibaba, several chinese ipos will come out this week they've done very well this year, particularly in the education space. speaking by -- speaking of china, another one will be pricing friday on the nyse, that's a big china leader we'll see. price talk, 12 to 14 as well the dow 23,111 we'll pass that easily. >> thanks for that, bob. rick santelli at the cme, good morning, rick. >> good morning, carl. let's take a quick gaze to what's occurred, housing starts and permits down close to 5% bob nailed it. he talked about draghi and

comments coming out of europe and what did they do i'll show you what they did. they put in a two-day charter bund yields now that and of itself isn't amazing, what is amazing, lowest yield close in bund since 11th of september and come into our time zone and there's pressure our data isn't good, that usually means lower and look the our two day of tens and 30s on the long end they moved smartly twos and fives are higher but not as high as bunds but maybe more important, the difference between tens and b d bunds continues to widen even though of course bund yields are at a low legal when whe move higher we pay attention. that's an important dynamic to watch. all of this rate movement is having a positive effect on the dollar so we're right back up as the next chart shows for mid august to that 94 area. a violation there will catch many traders off position so

they say so it's important technical area to pay attention to. carl, jim and david, back to you. >> see you in a bit. still to come this morning, sports agent drew ross the anth controversy. we'll talk about what's at stake for the business of football as we get ratings ing for the first six weeks of the season. dow is up 111. s&p, 2561. today, innovation in the finger lakes is helping build the new new york. once home to the world's image center, new york state is now a leader in optics, photonics and imaging. fueled by strong university partnerships, providing the world's best talent. and supported with workforce development to create even more opportunities. all across new york state, we're building the new new york. to grow your business with us in new york state,

visit esd.ny.gov.

to grow your business with us in new york state, 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. ibm. financials are helping the dow with record highs for the blue chips. the s&p, and the nasdaq. we're back in a minute more great camera features and more power. and more than just unlimited data, we give you unlimited plans with hbo included for life. because you deserve more entertainment. and more spokespeople. talking like this, saying the word more. at&t. it's time for more. am i too close? i feel like i'm too close.

get the iphone 8 and with all at&t unlimited plans, get hbo for life. only from at&t. ♪fly ♪e to the moon ♪and let me play amon-- (ding)

(bell mnemonic)

let's get to jim and "stop trading. >> a host of downgrades and negativity, including an incredibly horrible note by jpmorgan on ge and a huge cut in ulta beauty downgrade. young people not wearing the same amount of makeup. i come back to chipotle, no turn at hand. guys, disappointing. remember, they had a whole new set of social media and it's just playing a terrible role i agree with the bears now, as i

said, once you add another recycle of bad news, you know, kind of health care stuff, hey, what can i tell you? america has -- they're about to reset after december 2015, but all the new negativity is coming back i have to say, are they a little too negative 10% downside on labor costs. >> talking labor costs target, 285. >> mcdonald's has labor stock and look at that stock that goes up every day ever since m-science upgraded it. they said it was going to miss at 1 gix i like to talk about m-science because they were wrong about children's place they were very wrong, i think, about domino's you want to buy it, and let's just say, they were really wrong about mcdonald's, but they're right on a lot of things, too. i should say that. we have jj who has an unbelievable product portfolio, and martin scroeter.

>> you're all in >> i'm in all. i'm all in yeah, he underpromised, he overdelivered. not unlike a 5-1 team that i know in the nfl. underpromise, overdeliver. >> as you told the eagles to do. >> i went to them, i said it and coach pederson has been faveful ever since, and i'm playing nelson agholor in fantasy. i just told the player personnel director >> we'll see you tonight >> when we come back, ali baba making its debut we'll talk to the ceo in a minute [ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b

medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they pick up some of what medicare doesn't pay and could save you in out-of-pocket medical costs. call today to request a free decision guide to help you better understand what medicare is all about and which aarp medicare supplement plan works best for you. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and virtually no referrals needed. there's a range of plans to choose from, too, and they all travel with you anywhere in the country. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations...

and provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. ♪ call today. remember, medicare supplement insurance helps cover some of what medicare doesn't pay. expenses that could really add up. these kinds of plans could save you in out-of-pocket medical costs. you'll be able to choose any doctor who accepts medicare patients. and there are virtually no referrals needed. so don't wait. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. this easy-to-understand guide will answer some of your questions and help you find the aarp medicare supplement plan that's right for you. i've asked chase sapphire reserve cardmembers to find my next vacation. uganda, what are you up to? that's a real silverback gorilla. i'm freaking out!

3x points on travel and restaurants. sapphire reserve, from chase. make more of what's yours. good wednesday morning welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david. record highs all around. this time, it's ibm helping out with its bers percentage gain in about 15 years as earning season continues to be busy oil is playing along up half a percent. >> our road for the hour begins with the market milestone. the dow passing 23,000 for the

first time ever yesterday. all three indices hitting fresh record highs today as carl mentioned, the possible risk to the rally straight ahead. >> plus, a warning to wall street the treasury secretary saying if tax reform doesn't get done, a correction is coming >> and we have the largest chinese ipo in the u.s. this year, alibaba backed chinese fin tech company, we're going to speak with the ceoivate ahead. >> first, another rally is under way. the dow, s&p, and nasdaq hitting fresh record highs this morning, but a member of the trump administration sending a warning to wall street in a podcast interview, steven mnuchin says a failure to pass tax reform could derail this record rally listen >> there is no question that the rally in the stock market has based into it reasonably high expectations of us getting tax cuts and tax reform done it also has based into it

optimism on regulatory relief, which they have begun to see and there's expectations so i think to the extent we get the tax deal done, the stock market will go up higher but there's no question in my mind if we don't get it done, you're going to see a reversal of a significant amount of these gains. >> that's causing quite a stir on wall street as the debate rolls on on how much is priced in in terms of expectations for tax reform and what would happen to the market? is the treasury secretary right that it would fall if they can't get it done? >> as we discussed in the last hour, he said there's no question many people would say there's lots of questions as to whether or not that assertion that there's a great deal of premium built into this market as a result of expectations of tax reform is the case i don't hear that typically from investors. it's certainly something they would see as a positive, no doubt. ceos also would, but to jim cramer's point earlier, as well on "squawk on the street," if you listen to conference calls,

ceos are not talking about tax reform as being a lead indicator or a key growth part of their plan or business and in fact, many had frankly abandoned the idea that we would get anything significant this year although the treasury secretary is still talking about potentially this calendar year, seeing something done, carl. >> use the words absolute guarantee, although he's been a little softer in subsequent interviews i always come back to what marianne said last week. it's so vague, what we're looking at in terms of tax reform, she compared it to basically hypotheticals at this point and said it's not pushing at least from an m & a perspective, customers from going one way or another >> you have to look at some of the market indicators that really took off after the election on the hopes of tax reform the small caps, they pay higher tax rates. so theoretically, they would benefit the most doing a little better lately i would also look at the dollar, the classic trump trade, and

yields which are all rising, but it's not quite the same drama and magnitude that we're seeing in the stock market. and a lot of pros would say, that's a story of global growth, of earnings recovery europe, for instance, is set to do a lot better. a lot of exposure in some of the multikeeps it's the dow that has made 50 record closes in 2017. >> and multinationals a big part of it. i hate to in terms of our parent company's stock price, it still had an okay year, but it's given up a lot of gains. comcast, though, was a huge beneficiary in the stock market of the prospects for tax reform very early this year, the stock went up in part because it is also a large domestic taxpayer dereg also a part of it. to be fair to mnuchin, he also mentioned deregulation being beneficial to the market comcast has come down of late because of concerns about the underlying fundamentals of the distribution business and the video part of that business. to your point, it's the fundamentals driving things, not

the expectations >> outpacing the s&p until early sment, not that long ago >> goldman sachs said if we did see the tax reform that the white house is talking about, that would lift 2018 s&p 500 earnings 20% above the baseline forecast you think that's really in the market that's a big -- talk about a fundamental driver for earnings. not sure that's fully there yet. >> we're joined by jack cafry, equity manager, steven wood as well you guys have been listening to what we have been saying in terms of the treasury secretary, is a package priced in what do investors expect right now? >> i think investors are struggling how to handicap the possibility of changes coming out of washington. we have talked a lot about we're going to have deregulation we're seeing signs of that you see the financials trading better because they have been part of the deregulation energy trading better.

we're seeing more concrete steps. we talk about taxes, it continues to be very much a discussion about ideas in terms of principles for tax reform rather than actual programs, actual specifics in terms of who benefits and for every beneficiary we hear about, someone is going to lose something. as that continues to be behind the negotiating standards, people don't know how to price it in. >> if the administration washed its hands of the process and acknowledged they weren't going to get it done, would there argue there would be no negative action >> i'd not say no negative action certainly, investors want change they want a different path, but we have struggled. investors hate -- i would say investors. traders certainly like uncertainty. to the extent you don't know what you're playing for, it's hard to price that in. instead, we're trying to pay attention to what we're coming at today, very good corporate news and a world which seems to be in a much better place than it was six months ago and better six months ago than a year ago

>> steven, i'll give you a take at the tax cut you have been cautious what are you expecting, hoping for? >> i think there's a lot of sd bait going on in washington, d.c. which is appropriate, but is that investable we would take a more guarded view some progress will be made, but we take a more modest view of the progress that can be made and the impact that it's going to have. so when we look at the economic cycle in the u.s., it looks good it's improving earnings quite strong. but the issue that we continue to have is valuations down 23,000 today, as well as u.s. markets, so after an 8 1/2-year bull run in u.s. equities for u.s. dollar based american investor, we think this is a good opportunity to look globally, to rebalance i do agree that global growth story has improved dramatically, we have been saying this for a large number of quarters at russell, and also the valuations in europe, i was there last week, still look attractive. their earlier economic cycle,

their currency and their monetary policy can be more supportive of a globally diversifies and multi-asset strategy not just equities, also multi-asset strategy we think the valuations are a good time to be very disciplined, planful, and look at the global multi-asset strategy at valuations >> just to be clear, when you say rebalance, you mean sell u.s. >> yeah, we would trim into some of these rallies so the opportunity right now to trim or to sell some of these u.s. gains for a u.s.-based investor and just rebalance back to that long-term strategy, this is a better opportunity than not because the fundamentals in the u.s. are good, but they're working harder and harder with each new record that we put in valuations globally can be more attractive for a long-term disciplined investor >> you know, the other trump factor that's moving the markets lately, especially in fixed income, i think, and currency, is this big uncertainty over who

the next fed chair is going to be we hear that president trump is going to make a decision november 3rd before his hawaii/asia trip how much is that influencing the market if it's true that he really, according to reports, was impressed by john taylor, couldn't that be a paradigm shift at the fed >> what i heard john taylor's name mentioned, i'm thinking a fairly doctrinaire economist and a much higher interest rate environment than we're currently operating with, and i'm trying to score that with the comment, i'm a low-rate guy when i heard john taylor moving to the front, i thought that was a particularly interesting bit of news. certainly, the two-year has been backing up more than the ten-year, so the shorter end of the curve is responding. >> i had since 2008 this morning. >> we wind up with a strangely flat curve, but the end which is most sensitive to monetary policy shifts is the one that's responding >> i saw an estimate that taylor rule would take the fed rate to

3.7 right now, assuming other inputs don't change. >> i was thinking closer to 4, but certainly, that would be - >> that's a big deal >> well, helpful for the banks >> you think stock market doesn't believe he's a real contender? >> i think unfortunately it's been a merry go round. this week, it's yellen, the week after that, we're back to taylor i think there's one person who knows but they're probably at 1600 pennsylvania avenue, and we're going to find out as testimony, as events unfold and people make their case >> steven, really quick, a last word on the fed. the search for a fed chair >> well, i think we've got serious names. i would not be at all surprised if janet yellen is a serious contender as well. but also, this is a global low rate, global monetary policy paradigm i agree with sara. it would be a paradigm shift i don't think we're at that paradigm shift the u.s. at 235 on the ten-year is competing with 40 beens on the boon

6 on the jgb this is a lower, longer rate vierlt for investors, they need a multiasset strategy because the yield will be closer to low than moving up in the near future >> steven wood, jack cafry, guys thank very much. good to see you. by the way, we're hearing some excitement over at post eight, where indications are now 32 to 35 the fifth ipo to come out of china to the nyse this year. >> biggest one since sin tech. we await the opening trade and we'll talk to the ceo when that happens. speaking of this market, tomorrow actually marks three decades since the black monday market crash our dominic chu is with us with a look at whether that could happen today what did you find? >> let's take you through some of the arguments on both sides about whether it could happen again. bad news first yes, another black monday could happen could being the key operative word there among the reasons why, we have

already had recent precedent for it like the flash crash of may 6, 2010, the dow dropping nearly 1,000 points before recovering skrx that big pullback in august of 2015 on fears of a possible chinese economic slowdown among other things there's a lot more emphasis on electronic trading with more participants these days and this creates the possibility of flash crashes. the huge evilation of index based trading and etf market, that's also big. some believe that creates a herd mentality for investing which could lead to big moves lower if everyone exits the same investments at the same time so what about the no no, another black friday could not happen trading curves and circuit breakers are now much more efficient and sophisticated than they were in 1987. retail investors and institutional managers have cash available to take advantage of pullbacks like the recent trend of shallower pullbacks being bought and much more market liquidity thanks in large part

to the unprecedented amount of cash sloshing around in the system from the central banks all around the world you could say anything is possible, but the prevailing feeling is we aren't likely to see anything close to black monday again, at least not any time soon. those are just of course a few of the arguments made on both sides of the equation, guys. back over to you >> dom, thank you very much. when we come back, big blue beats ibm on the move. sharply higher today, up 9% after reporting better than expected results we'll discuss that next. >> plus, alibaba backed ipoqudian about to start trading. that range now 32 to 35. eooistrong open, the c jns us straight ahead on "squawk on the street." want a snack?

sure! alright, looks like we've got chips, popcorn, pretzels? pretzels! plain, sourdough, spicy, sesame, honey mustard,

chocolate covered, peanut butter filled, this one's in german, it says, "reindfleisch?" plain. great. so what are we gonna watch? oh! show me fall tv. check out the best of the best hand-picked fall shows on xfinity x1, online, and the xfinity stream app. thirsty?

post eight this morning. a chinese ipo, qudian, in the fin tech space, indication 32 to 35 we're going to talk a lot more about the hypergrowth this company has had after being founded just a few years ago 2014, 34-year-old ceo, which at current levels might have a market cap of $10 billion to $11 billion. that's coming up in the meantime, watching ibm. jumping on better than expected results. company beats on the top and

bottom lines still, the 22nd quarter of revenue declines the company cfo addressed the declines on the earnings call last night >> as we said at the start of the year and reiterated again in july we would see improved trajectories in the second half of the year relative to the first half and talked about the drivers of that change our third quarter performance certainly re-enforced that, and while we have more to get done in the fourth, it shows we're on the right course and it also shows quite frankly that our confidence in our strategy is well placed. >> sure, there's going to be on mad money at 6:00 p.m. eastern time but john ford is here to tell us what is important to know about what some are calling an inflection point >> i know ibm bulls hope it's an inflection point here's the most important thing in this report that jumped out to me. free cash flow grew to $2.5 billion. that's up $100 million from back a year ago ibm still thinks that free cash

flow is on target to be flat for the full year. the reason why that's important is this is an incredibly dense, difficult company to understand. between all the marketing speak and the legacy businesses and frankly the financial engineering, it can be really tough to parse what's really going on here. free cash flow, one clear indicator. but also take a look at the chart. it's had a rough year compared to its peers in the enterprise, in tech, in general. but as an investor, i feel like you can't get trapped in sort of like the bad news, this isn't going anywhere cycle of expectation take a look at box there's a stock that has cracked $20 a share for the first time since days after it went public. yelp, similar. these are stocks that a lot of people had given up for dead so the question on ibm is, can you parse this talk of strategic imperatives which aren't businesses so much as they're areas within other businesses

and understand when that point comes when the growth areas of cloud, of mobile, of analytics actually start to outpace those traditional businesses that aren't growing at a rate that's predictable. >> that's why a lot of people are pointing to the software revenue, right growing for the first time in 13, after 13 consecutive quarters of decline. the question is, can that continue will it be fast enough and can they do that without pressuring margins given the competitive environment of the cloud? >> what does software mean anymore is another piece you have all this legacy software lumped in with newer stuff like this relationship with apple, building software for mobile on top of ios, which they used to talk about all the time, but apple, ios, the ipad didn't get mentioned once in the earning calls. they only mentioned mobile a couple times in passing. something is hot to talk about for a couple quarters and then it kind of goes away here. >> the other big question analysts are asking is whether or not it's all being

camouflaged by the strength in hardware, in mainframes, which when it bounces makes the needle move, but it's a highly cyclical business >> i think what's key here, we're seeing in the enterprise among so many companies, you look at amazon, oracle, what google is trying to do it's about the data center it's about artificial intelligence, having data and being able to crunch that data for customers in a way that's going to help them grow their business ibm has had bits of that story for a long time. we have been watching watson on jeopardy for what feels like more than a decade now, but when do they start to turn that into a revenue stream that we can understand without so many of the marketing buzz words you know, up 9% today. that certainly gives investors hope >> we're going to see they pointed out, best percentage gain since gursner was making way for paul masono.

that's multiple tenures ago. >> yeah, and it's one day, so you want to continue to watch the stock. again, you can't assume that this is dead money remember box, remember yelp. maybe ibm has something here >> analysts are still on hold for the most part. haven't seen much of a move there. >> but you know analysts >> they're late to the party >> john, thank you we'll see you next hour. >> when we come back, it's the largest chinese ipo of 2017. the u.s. alibaba-backed qudian getting ready to open at the new york stock exchange. as soon as it happens, we'll speak with the ceo "squawk on the street" will be right back still looking at a strong market here, record highs on the dow, s&p, the nasdaq is lagging all three. but we'll keep you arippsed of the news when we come right back

i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise ...from godaddy! in fact, 68% of people who have built their... ...website using gocentral, did it in under an hour, and you can too. build a better website - in under an hour. with gocentral from godaddy.

♪ it's not just a car, it's your daily treat. ♪ go ahead, spoil yourself. the es and es hybrid. experience amazing.

still waiting for shares of qudian to open the largest chinese ipo listing here on the nyc this year. a provider of online credit products in fact, they say they're the largest online provider of small cash credit products in china in terms of the number of active

borrowers. the range had been as low as 19 to 22, but it did price at 24. you can see, of course, i'm hearing now behind me, 34 being mentioned as a potential price, as they get more excited, as that opening nears >> when we come back, the treasury secretary's warning to wall street when it comes to tax reform we're going to talk about that >> and we're about an hour into the trading session. we did hit record highs across the board. dow up an even 100 points and s&p at 2560. back in a moment

question. what is an answer and how can you measure the value of one? today trusted answers from trusted sources are rare and precious commodities. they're out there but finding them on your own has never been harder. it's why at thomson reuters we provide you with the intelligence, technology, and human expertise you need to find trusted answers. the answer company.

thomson reuters. good morning, everyone i'm sue herera here's your news update at this hour president trump meeting with democrats and republicans on the senate finance committee today that, of course, is the panel responsible for writing tax law. the president working to drum up support for the gop's upcoming tax plan chinese president sxi jinping

opened with a pledge to build a new communist party for the new era. he used the phrase new era 36 times in his speech which lasts nearly three and a half hours. he's expected to consolidate his grasp on power this week >> firefighters struggle to put out a fire at a refinery in southern california last night it sent a pillar of smoke into the sky over the city of el segun segundo. they used foam to knock down the flames and the cause of the fire has not been determined. >> yankees mounting a comeback in game four of the american league championship series rallying from a four-run deficit to defeat the houston astros 6-4. the series is now tied at two games apiece game five this afternoon in the bronx. traffic alert. that's the news update this hour i'll send it back downtown back to you. >> all right, sue, thank you as sue mentioned, president trump set to meet with the senate finance committee in the nux hour to discuss tax reform

efforts as steve mnuchin warned failure to pax tax reform could spell trouble for the markets. >> there is no question that the rally in the stock market has based into it reasonably high expectations of us getting tax cuts and tax reform done it also has based into it optimism on regulatory relieve which they have begun to see and there's expectations i think to the extent we get the tax deal done, the stock market will go up higher. but there's no question in my mind if we don't get it done, you're going to see a reversal of a significant amount of these gains. >> for more, let's bring in michael, u.s. public policy strategist at morgan stanley, and maya mcguiness, president of the committee for responsible federal budget welcome to both of you michael, as someone who spends time answering a lot of investor questions on this topic, how did the secretary do in terms of his equity strategy as to what's

baked in and what would happen to the markets if they don't get it done? >> our equity strategists disagree there was a handoff in markets in march where you had after trump's election cyclical sectors and midcaps outperforming, and after the first health care vote, skepticism seeped in about the u.s. legislative agenda. we can tell from the clients we talk to and surveys we have done that we think expectations are relatively low around tax reform at the moment. >> what about corporate tax cuts specifically >> i think, again, the expectations are relatively low. it's one of those situations where investors are assuming it's good if we get it not a necessary condition for kind of the macro economic view. from our perspective, looking at potential feedbacks of this, we think the reform on the table isn't necessarily going to be a big gdp boost next year. the expectations are appropriately low at the moment. >> maya, as far as the details

we have gotten so far from the white house and republicans, do you agree with the analysis that it's pretty far off still? >> i focus more on the sustainable economic growth gains we want to get from tax reform, and less on the immediate market responses, and where would say the structure of the tax reform that has been laid out has a lot of things to like the objective of trying to modernize our corporate tax code to make us more globally competitive and help contribute to growth because we need to do everything we can to grow the economy with our aging population, those are some very desirable features as well as the individual simplification portion. but, and it's a big but, there are a lot of things that are still troubling out there. one, the expensing that's part of the corporate tax reform is only for five years and temporary. that doesn't make sense. two, all of the efforts to try to offset to cost to simplify the tax code by getting rid of tax breaks, the lobbyists are lining up in droves to oppose those, and that's going to be hard because that's how you

simplify and improve the tax code, and the final big question and problem is this plan has it's structured is not paid for it it will add tothe debt very significantly. that will undermine the growth effects which will undermine the very purpose of tax reform, so there's big ifs that are out there that we still need to work on >> and maybe huge political sticking point for members of the president's own republican party. do you see this increasing the deficit? and if so, how much? >> well, i think maya's right, if what's on paper absolutely would increase the deficit it would increase the deficit in a way where you're looking at in excess of two percentage points of gdp, you look at the bond market and think yields are going to rise substantially. what we think is going to happen is you have to put the senate budget rules in place where you have to moderate the bill in terms of its expansion potent l potential. >> how do you do nat >> you have to have rate cuts. the rate cuts are going to phase

in >> despite them saying that that's not for discussion or negotiation? >> so the way we thing about it is, you have to fit within the budget allowance framework that the senate has provided. there are limited ways to do that this is one way to do it if you go in the opposite direction where you want to set up a basically a bill that massively increases the deficit a la the framework laid out, you probably increase the possibility of failure, that you're not going to have the votes in the senate to do this although the trajectory of the republican party has been to embrace deficits, there's still a cohort of three to five senate republicans and that's all you need, who want to hold the line on being purists on the senate budget rules and being deficit hawks. that effectively constrains the process. >> maya, you go along with that? are there pivots they could make here in these last whafrb, couple dozen days we have left, working for the remainder of the year that could bring some of these republicans around >> yeah, i agree with that assessment because the framework as it's laid out right now has

way too big a gap. and the administration hasn't been filled in that's true. looking forward to having them filled in. but the senate budget resolution is about to be voted on, would still allow for $1.5 trillion in tax cuts and that's a far cry from the original plan that this was going to be revenue neutral tax reform, and all the gains from growth actually were going to go to bringing down the debt, which i think was a very good plan the house budget doesn't actually allow for tax cuts. they still have to work out those differences. and that's to this political point which is there are a lot of members of the republican party, unfortunately, fewer and fewer, but still a lot who do care about not overseeing a massive run-up in the national debt and the balancing point is going to be to get a plan where the pay-fors are so difficult politicians aren't willing to do them, but isn't leaving such a huge gap that it runs up the debt i believe it's fundamentally critical that they do offset the

costs so the original idea of tax reform, paying off the debt, is realized. i don't think that's going to sit well with them >> we're out of time very quick, last word, michael >> if a month or two time, we haven't seen the plan moderated, the key takeaway is you're setting up for a much more dramatic moment for the bond market kind of an all or nothing vote on deficit the plan if it doesn't get moderated will be a curve for investors. >> thank you guys for joining us on tax reform. michael and maya >> when we return, we are waiting for qudian to open for trade at the nyc indication, $32 to $35 we'll talk to the ceo. the president going after the nfl on twitter again this morning, as owners hold meetings in new york over issues obviously that are impacting the league and ratings we'll discuss that with sports endr renusn a minute

stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. the strikingly designed impolexus nx turbore. and hybrid. lease the 2017 nx turbo for $299 a month for 36 months. experience amazing at your lexus dealer.

taking a look at stocks that have gone nowhere this year. if any of them is finally poised to bak o areutt tradingnation.cnbc.com more "squawk on the street" coming up. [vo] when it comes to investing, 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. stocks dow now on track for its biggest monthly gain since february. let's go out to the group in chicago. rick santelli with the santelli exschanj morning, rick. >> good morning, and thank you, sara like to welcome my guest andy brenner. welcome. thank you for taking the time. >> rick, always a pleasure to see you, buddy >> all right now, here's the setting the table for you. yesterday, we settled ten-year boon yields at 36. last time we were that low on a close was 9/11 we'll call it 5 1/2 weeks. there has been a separation in the difference between r-10s and boons. it's been widening we see today that the curve finally steepened. is all that connected? andy, when you look at what's going on with rates, how much

attention do you pay to the long end with respect to how it's interconnected to europe and european rates, if at all? >> it's absolutely very much interconnected you know, what you have, and i think you talked about it yesterday, is the fact that the ecb is going to move much more slowly i mean, draghi clearly is going to kick the can down the road as long as he can, and given how well europeans are for soccer players, we expects he'll continue it to probably december of '18 the fed, meanwhile, wants to be aggressive that's going to affect the short end. that's going to affect the general rates. then we'll have to see how the economy does and whether the tax plan gets any kind of push forward, and that will affect the long end >> i'm with you. so there's so many distortions that the yield curve while it moves might be because of the proactive forces being central banks on the short end, but it could be proactive forces of policy of central banks, particularly those still doing purchases. okay, so let's move to that. in a global setting, it's

impossible for our central bank to do things, a tree falling in a forest that no one hears if they're normalizing, there's going to be great pressure for other central banks. what if this all ends up being calibrated wrong and we don't grab those other central banks what does that do globally for policy, what does it do specifically to our markets? >> wow, i mean, it's going to be a real -- it's going to be a real problem, rick, if it goes like that. historically, you can look and you can say that ten years really start to move after the fed raises rates six times but this is the first time that we're in a situation where both you have the ecb, the bank of japan still easing and still doing qe so it's really going to make it difficult. if they get it wrong, i mean, look at rates in europe. you really want to lend money to portugal, a bb credit at the same yield as u.s. ten-years are right now, or you want negative yields you could really have a big, big upheaval here, and it could end

very badly but it's not going to happen this year. it's a 2018 phenomena, and that could lead to a stock market correction, which will happen at some time. >> i got you we only have a little time left, so very quickly, andy, how is all that going to filter through to the foreign exchange market do you think the dollar has enough horsepower to break through some of the resistance, and like i said, the last answer, sir. >> i think the dollar's got a renewed strength i don't know so much as it's a renewed strength because the tax package will help it as much as it's a renewed weakness out of europe merkel still can't get her act together as far as her coalition and government you still have the problems in catalonia, and i still don't think the problems at the european banks are solved by any means. so i think you've got a long way to go, but i think it's going to be european weakness >> andy, a very interesting answer i thank you for your thoughts today. david, back to you >> okay, thank you very much,

mr. santelli we, of course, are awaiting the open of qudian.com which lends as little as an average of $136 to chinese consumers, all mobile. these sort of very small credit installments that are paid back quickly. it has grown very quickly. and so far so good in terms of its opening price, in a range of $19 to $22 john, what do you have coming up on the "squawk alley"? >> e-commerce is driving the rise of that company ipo'ing it's also driving the rise of rents for warehouse space in urban areas. we're going to talk to the ceo of one of the biggest companies in that arena. get some insight into what's at cining in e-commerce and wh'somg next that's coming next in "squawk alley.

i've been thinking. think of all the things that think these days. businesses are thinking. factories are thinking. even your toaster is thinking. honey, clive owen's in our kitchen. i'm leaving. oh nevermind, he's leaving. but what if a business could turn all that thinking... thinking... endless thinking into doing. to make better decisions. make a difference. make the future. not next week while you think about it a little more. but right now. is there a company that can help you do all that? ( ♪ ) i can think of one. your kids go to college and you start trading. >>yeah, 5 years already. 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade.

the action this morning really is at post eight, as we see an indication of $32 to $35 on qudian. we talked about the growth prosspektds, about fin tech. imagine the growth prospects of fin tech in china where they're based. the larjest online provider of small cash credit products in china. just a few years old very young ceo whom we hope to

talk to shortly after this opens for trade. >> yeah, we have been waiting. the trading pretty much all hour, but it does appear to be strong they originally planned to raise up to $950 million clearly, that's above that range at the price of $24 a share. it's an adr, it is the biggest what looks like chinese ipo here october has been a fairly busy month for listing. >> certainly for chinese this is the fifth one of the year while we await that opening, i did want to get back to news we were covering earlier today and have been over the last few days namely, those negotiations that have reached a deal between charter, one of the largest chabl companies in the country, and viacom, the media and entertainment company. the deal itself on charter's spectrum network, 17 million households, was reached, but it's always a question of, well, what is in the details i can share at least some of what we have been able to ascertain, which is one of the key questions, would they be

tiering any of the main viacom networks in other words, not making them available in what is basically called a basic package, what spectrum called their select package. the big six at viacom, and we're talking about b.e.t., mtv, nickelodeon, nick jr., comedy central, and the renamed paramount, used to be spike network. all will be available on the select or the basic package that you get as a spectrum subscriber that perhaps seen as a positive. now, as for rate, the question has been will there be a rollback i'm hearing, yeah, there was, but at the same time, don't forget, viacom has been saying at least publicly that the offers they have made would cost charter less than they pay today because essentially the lower rates would be commensurate with the larger scale charter has, having bought time warner cable not that long ago. certainly, this is the first

renegotiation they have done since those two companies were combined again, you can see viacom shares coming back after having been down 2.5% on concern about tiering itself as for the rest of their networks, and there are many names in which frankly most people don't know, they franklyt people don't know, they may end up in various places the overall economics of the deal itself will be very hard to come by. these are not typically shared marketing dpreemts, reselling of advertisements there's various ways they can make it look better otherwise economics, the provider mainly of content doesn't have to redo any of their deals with other cable providers under these so-called most favorite nation deals in place those are the basics it as we've been able to get it. viacom has retraced some of the losses it had. big six will be on charter's select package, which is its main package, carl, for delivering video. >> thanks, david meantime we're watching red

flags for nfl. through the first six weeks of the season, total viewership is down .5% that's compared to the first six weeks of last season more than 18% compared to 2015 among the challenges, ongoing player protest during national anthem, which pitted nfl with the president. after a league meeting between players and the commissioner roger goodell, the big takeaway, the nfl will not penalize players for kneeling yet the president saying nfl has decided it will not force players to stand for the playing of our national anthem total disrespect for our great country. is this the right call for our league >> definitely. the president has it wrong no one is trying to disrespect the country in the national football league. no one by any means is negative

towards military, flag, anthem, or in any capacity this great count country. what is going on in the nfl, there are players who are using their stage, their platform to protest what they feel are inequalities in american society today. they are using their platform as an nfl player to take a stand to change this country for the better it's not disrespectful to the military or the country. so president trump has it wrong. the nfl has it right it's freedom of speech, and it's what's great about our country that we're trying to make progress there are a select group of players in the nfl that believe there are social inequalities. >> forgive me for the disruption, drew, as you're trying to make a lucid point, we have trade here, hence, the bells in the background.

2 points talk to the ceo. hyper gross, fifth at the nyc. get you a live shot. a very large crowd. >> i think they are watching the price action, which the stock now is 46% a lot of oohs and ahs. >> give us an update what you see. >> the ceo banging on the bell, very happy faces as well they should be. we were talking a little while ago $19 or $20, priced at $24, opened at $34.35 what is this all about i'll make it simple, micro lending in china it's about the consumer. it's about figuring out a way to get into the chinese consumer. chinese consumers are desperately underserved in the credit markets in china. there are new companies that are coming in offering micro

lending. we're not talking about a lot of money here we're talking about a kid who wants to borrow $100 to buy a pair of sneakers and pay it back over six months. literally that's the kind of examples we're using here. number two, backed bially aliba. they at least know alibaba is behind them and they have a record one thing we don't know a lot about, long-term consumer record over in china. right now very, very low delinquency rates there. but we don't know what's going to happen in the long-term what we do know is a lot of people are trying to figure how to get access to the chinese consumer and this is one way to do it right now. $34.35 $34.35 at the open, $34.29 right now. got to say success for chinese ipos going to have several of them this week. we'll be all over that in the next couple days back to you. >> bob, thank you.

we'll talk to the ceo in a few moments. drew, i apologize for that interruption back to our discussion your point is the players are using their platform to protest injustice. whether or not -- we've had this discussion before about whether or not we could do that on this desk as company time, which people see it as an analog to doing it on the field. that aside viewers say there will ab penalty here, that's changing the channel and selling the seats. do you not agree there will ab price to pay in terms of ratings. >> if there is, it's worth it. the players have the right to express themselves i believe the nfl is a great product and the fans has enjoy the game should not allow this to impact their watching or their viewership this should not be viewed as a negative it's not anti-american it's not anti-military many of the guys protesting are from military families

either not against the anthem or the flag it's about social injustice, african-american players who feel -- and many whites who support them, white players -- who feel there are a lot of imbalances in this country, and they want changes. they want there to be respect and attention. this shouldn't affect viewership this has got nothing to do with the games. the product is great if there is a dip now, it's not going to last forever. people will come back. >> yeah, to carl's point about the broader sort of business model, the economic model of the nfl, for so long it was the juggernaut in these huge tv and media deals. they were dependable, they were successful, and they were guaranteed has any of that changed or is that at risk >> absolutely not. they are still the highest rated program on the planet. that's not going to change maybe the ratings are down some. others would argue they are up

in some time periods but the games are still the most watched thing in our country that's not going to change this is something that is very important to the players it's bigger than the game itself in many respects it's bigger than ratings that's why there were owners that came to meet with the players yesterday. that's why i guess there were 13 players and 11 owners. this is something that's significant, and i'm glad to see that the nfl, the commissioner, the union are backing the players here the president can say what he wants, but the president of the teams, they need to support the players. they are doing that. >> drew, we really appreciate your insight on it obviously you know a lot more about it than most please come back drew rosenhaus talking nfl today. by the way, we do expect a news conference after 1:00 p.m. on day two of the meeting there's a look at qudian up 36%

as it opens nyc. we'll talk to the ceo when "squawk alley" begins in a moment

your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health,

every step of the way. you may need more physical therapy. ugh... am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies see it- and see it through-with digital.