trial. it gives an opportunity to show he's delivering for his voters and especially on a day they are rolling out the tax bill the president will use this as an argument and ammunition that his policies are making the united states business friendly again. that's also central to his appeal out on the campaign trail. >> thanks for wrapping that up power hundred lunch begins now weav're counting down on president trump's decision on who he will choose to be the next head of the federal reserve. we have full team coverage every base, every angle will get reaction from d.c. look at what impact it could have on housing the economy. the wealthy, small businesses and your investments >> thanks. stocks holding steady following the release of that tax plan the dow shifting between some gains and losses nasdaq down by the first time in

four days. the story here, home builders and housing. home builder stocks getting it hard on the proposal to slash the mortgage cap in half we're going to give you more on that coming up with somebody angry about it as well three big stocks we're watching this hour. apple, company getting set to release its earnings tonight a lot of questions about the iphone 8 and x facebook shares down after mark zuckerberg said he is serious about facebook's russia response and he will boost spending to police content that's raising concern about future profit and margins. time warner taking a hit much more on these three stocks ahead. >> let's get straight to this big tax plan we have our oreporters covering every angle for you. >> there's going to be four tax wrack ets.

for households that earn over a million dollars of income. the next tax rate will be 35%. that will apply to income between 260,000 and a million dollars. the 25% tax rate will apply for income between 90,000 and 260,000. the 12% rate, the lowest rate applies to income between 24,000 and $90,000. below $24,000, you don't owe any federal income tax the child tax credit will be increased from $1,000 to 1600 there are. there's also a new $300 family credit that can be used toward other dependents republicans keep saying this is a middle class tax cut the corporate rate will go to 20% immediately and it will be permanent. lit be a 12% repatriarepatriati

on cash. that's a lot of numbers but one number we still do not have yet is how much is this all going to cost house ways and means chairman says he thinks this plan will cost $1.51 trillion. that would put them at the maximum amount allowed under the special rules they want to use to fast track this bill. we are expecting to get an official score from the joint committee on taxization later on today. we'll let you know if and when that comes through >> critical to the expedited process. thank you. let's get to eamon he's at the white house with reaction from the president. >> the president expressing some enthusiasm this morning and also some realism about the process we heard from the president a few moments ago in the oval office giving a bit of a cheer leading speech for the tax cut here's what he had to say

>> we are giving them a big, beautiful christmas present in the form of a tremendous tax cut. it will be the biggest cut in history of our country it will also be tax reform and create jobs. today the house ways and means committee unveiled a historic tax reform bill that will create tremendous prosperity for our nation >> reporter: the white house issuing a statement from the president which expressed a bit of skepticism here in terms of the process. take a listen to this line here. the president saying the special interest will distort the facts. the lobbyists will try to save their special deals and some in the media will unfairly report on our efforts the president giving a bit of a prediction for how the process will go from here on out this is not a final product. this is the beginning of a long negotiation. we'll see how this looks when this bill passes or doesn't pass >> long way to go on this. long way to go a big part of the bill involves

housing, property taxes and the mortgage interest deduction. it may affect more households in america than any other part of this bill. >> you're right. the housing sector doesn't like it all stocks of the builders and suppliers down across the board because the house plan takes away some financial incentives for homeownership. the popular mortgage interest deduction. that was cut in half but only for new purchases. if you already own a home you're still capped at a million. there may be far fewer people itemizing and taking that deduction given the doubling of the standard deduction currently about 21% of households claim the mortgage interest deduction that could fall to 4% from estimates from the tax policy center then to property taxes the house plan caps at $10,000 this will hit the northeast

hard it will hurt less for states in the south where tax rates and home prices are low. hawaii does have the lowest property tax rate and d.c.'s rate is low as well. how many prices are high it's kind of a mixed bag california has comparatively low property taxes but home prices are some of the highest in the nation it could hit them as well. the realtors and home builders say the plan puts home values at risk will these tax changes mean for the economy overall? hi, steve. >> you know what you have is a white house and the council of economic advisors say they expect the corporate tax cuts to create a boom to productivitproy it will lead to huge gains on the other side of that you have people sort of saying, you know what, the white house has been overstating this amount and we had a good debate on that in the last hour. i think we will continue to

debate this issue of how much workers really pay of the corporate taxes. there's the issue of how much the middle class gets. the wealthy will be more likely to save it and the middle class will spend it. that could boost economic growth >> got it. a lot of discussions going to focus on whether this bill helps or hurt the rich >> the big discussion is going to be is this a big tax cut for the rich or the middle class it's kind of a bit of both the wealthy get a big tax cut if you're one kind of wealthy for others it will be a tax increase it all depends on where you live and how you earn that income the big winners here are going to be inheritors because we have the estate tax fading out and the big earners in low tax states especially those who own their own companies or llcs. those who made big corporate salaries in new york, new jersey, california, illinois

will hear have big tax increase. your rate will still be at 39.6%. you won't be able to deduct as much state and local taxes that person will see their taxes go up by about 50 grand. if you earn around $400,000 in any state your rates also going to go up from 33 to 35% and by the way, you also won't be able to deduct your estate and local income taxes they will get a big increase if you own a company or an independent contractor, your rate will drop to 25% from 39.6 even if you're in high tax state you'll see a big tax cut from that rich families get a break on the estate tax it goes away in 2024 one thing i'd add a lot of debate over carried interest, they will now see a better break than they would have had

interest gone away because they will get the pass through income rate of 25%. hedge fund guys are liking this as well. >> they have influence in washington >> the high income earner is the one hurt here. it's the high income earner that will get burned here you hear people say every democrat is going on tv. they've said this is tax cut for the rich it's true but it's misleading. as we all know, if you know taxes, you pay taxes on every dollar of your income. if you make a million tlars of income, you still get a tax cut on the middle class portion. technically it's true but it's the most misleading thing. >> the way to sum up this bill is wealthy and affluent earners are paying for a corporate tax cut. that's what's happening here they are the ones that pay the taxes and cut corporate taxes, somebody's got to pay for it

>> i'm looking at one of the brackets that's very interesting to me. under current law anyone earning over $470,000, that was the break point at which the 39.6 rate kicked in and it went all the way up it does not begin to touch you until you get above a million. on all of that income there that used to be taxed at 39.6, it's now going to be taxed at 35% that's a significant cut for that group on that income between 470 and a million. >> that's right for those who live in low tax states >> the question is whether that rate decline more than off set whatever is lost >> it's very complicated >> that's what i want to get to with our next guest. that's the question of

simplification i was going to say commissioner. i'm going to give you a promotion to commissioner of cnbc i'm looking at a very nice thing. subtitle b simplification simplification and reform. simplification and reform of deduction. i go on the next page. i don't see much simplification in here. where's it simpler >> if you're going to put a bunch of caps in that's not headaching it simple at all even for the people itemizing it's going to get a lot more complicated. the thing that makes the tax code not simple there's too many nots in this sentence

it's not the rates that make the tax code complicated, it's the fact you have to have all these definitions of what counts as income and what qualifies for deductions and what are the caps i think the biggest problem that republicans are going to face with this tax bill is what's in it when people actually start looking at it, there are going to be hundreds of thousands, if not millions of middle class people who say wait a second i actually am in a circumstance that my taxes are going to go up they are prerepealing the intert deductibility of student loans you're going to find people who don't have health insurance that have large medical expenses and they're going to say my taxes just went up i make $50,000 a year. my taxes just went up by thousands of dollars >> under current law if your medical expenses exceeds 7.5% of the of your income, you could

cut them p it may or may not be a tax reduction. you look at the windows of people currently being taxed at 15% will now see their rates go down to 12%. that's a large swath of people from 18,000 to 90,000. that embraces a lot of middle class wage earners one thing you cannot dispute here is that the corporate tax cut from 35 to 20% is not going to be fazed in it's not going to be fazed out it's permanent and that is a real tax cut for corporations. >> here's the thing. as i've been talking to people, i think there's an expectation that 20% corporate tax cut is not going to last the process, will not last through the senate at the end of the day that 20% corporate tax cut will be a number higher than 20%

i think closer to 30 than 20 and or it will be temporary and or fazed in. i do not think at the end of the day you're getting an immediate and permanent corporate tax cut down to 20% which really deflates the growth potential. they can't lose the money. >> you're willing to say that it feels like it is the president has been very firm on it though. >> i realize first they wanted 15 they said willing to accept 20 the money's not there. i realize this house bill does have a 20% cut permanent, immediate. as i've been talking to people and if you look at the numbers,

think at the end of the day it's going to be 20% unless they bring back some new way to pay for all this interesting that the cost of the corporate tax cut is whether the adjustment tax was supposed to raise. that's gone. when that died so were the prospects for a very deep, permanent tax cut. >> i'm so confused your discussion about so many people are going to pay you bring up what's going to happen for couples who are filing the standard deduction gets doubled. that eliminates a lot of people. >> some. >> the brackets get much bigger. these are the joint filers 90,000, up to $90,000 your tax rate is 12% the it's only the wealthy austin that are going to end up paying more i would think you would love that

>> there will be thousands, if not millions of individual people who are in circumstances that their taxes go up, not done >> the that a majority of people >> i think it's a majority >> there's no tax plan that will ben fiefit everybody >> i think they're going to have the problem that if you cut the taxes on billionaire estates and you cut the taxes by trillions -- >> 4,700 out of a hundred million households >> you know i'm right and that's why you won't let me finish the sentence >> austin, i want you to answer me one question. the vast majority of americans under this plan will pay higher taxes or lower >> i think the vast majority will pay pretty much exactly the same as what they pay now. >> the bottom brackets are getting great breaks here.

they are the vast majority of the people to bryan's point. >> the vast majority pay more in payroll tax than income tax. changes the income tax will have a very small impact on their total tax bill >> they do >> republicans have a deep ideology cal commitment. >> it's like too shawl to even discuss, in my opinion here's the thing every tax cut on the middle class can also be classified as a tax cut on the rich because we pay income on all our income no matter how much money. the democrats will say that a thousands times today. ultimately, does this pass

>> what we just saw today? >> this thing. >> it does not let's assume something passes, you'll have to see a higher corporate tax rate you'll have to see more significant and obvious middle class tax rates. the change might be significant if this thing passes >> thank you very much we solved it right we got it solved don't have to talk about this anymore. >> except our next guest will talk about that. it could cause a housing recession. the impact of this bill on housing. next on "power lunch."

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before the break you heard diana lay out the potential of the tax. literally cutting it in half that's value of the home it only applies to new purchases. if you're sitting on a mortgage already that's more than that, it won't impact you. as you might imagine, housing stocks, which need new buyers getting hit hard in that proposal your next guest changes for tax breaks for housing could cause a

bigger recession you're frowning. i imagine this is not a good day. a lot of things we're reading about about this bill totally disincentivize moving. honestly, i don't know if you own a home if you'd move again because you're losing benefits what are your con stistituents saying >> they are afraid this will be a revisit of 1996. this bill is problematic in as much as there's seven million homes on the market right now. that are over $500,000 those houses will be automatically be devalued. that's in select markets around the country. when house markets start to go down in one market, it spreads to the next market and the market after that. next thing you know you have a housing recession. the people who are counting on

the equity in their homes had better sit tight for a few years before trying to cash it out that has our members irate >> if you have a $700,000 mortgage and i know it sounds like a lot to a lot of people but if you're in massachusetts or california, that's a middle class home you're deducting all that interest now any new home you buy, you can only deduct the 500,000. that increases your payment. have you done any analysis to show how much the tax deduction factors into people's decision to buy a home. >> it factors into people's decisions at the entry level and the middle level the upper level not so much which is why we propose to the house republican leadership changing the mortgage interest deduction to a credit which would have been feared at the middle income going ba going to your previous guest point, a tax credit.

it would have buoyed against this very situation that this terrible bill is causing >> i would think for entry level homes there's not much of an impact because the mortgage is much smaller we're seeing that play out in the markets. that's only off by a fraction of percent. you have toll brothers that focuses on the luxury high end that's down about 5% is that the case you're saying on the high end it doesn't make a difference. >> what happens is when you start to see house prices devalue in market, it first spreads to every level of that particular market and goes to the other markets. it's a snowball effect that for our industry we're only at 66% of the capacity from the last recession. to put us at risk like this when we're such an important component of the gdp and when we offer them a revenue neutral alternative, it's mind boggling to me. our members are irate.

>> the revenue neutral one more time is a credit for what, exactly? >> it's a create for all home buyers to take a percentage of their mortgage interest paid over the life of the mortgage, over the life of owning the home it was revenue neutral apply it across the board. didn't pick geographic winners or losers. targeted to the middle class i know chairman brady liked it the house republican leadership did not. >> are you saying there could be a housing recession? you mentioned housing recession in a sentence. we don't want the take that lightly. is that what you're saying >> we're concerned about that. >> really. it's a real possibility? >> we're very concerned. >> how many americans deduct more than 10,000 right now >> i don't know off the top of my head. >> that's a crucial number >> that's the property tax and not the mortgage the property tax provisions in that bill once again pick

geographic winners and losers. there's a lot of people in market that pay more than that >> you could figure it out >> we will figure it out >> 31% of households itemize it's 33 million people itemize how many people own homes, 67% i'm trying to do the math. i'm trying to do the math. it's a big deal. you've got a lot of other things that we don't know yet that might impact the only truly national market which is housing. we got to go we'll see you again. i know you have some fights to fight tonight. probably be on the phone all night. come back and see us soon. >> thank you what do realtors plan to do to reassure would be home buyers great to see you >> hi. thanks for having me sdm you deal wi s >> you deal with a lot of luxury real estate. these price tags are bigger.

the mortgages would be large probably a million or more even. what do you think this will do to the market? >> it's interesting. i just heard before a lot of doom and gloom i have some positive news how i see this this came out today. we're still kind of learning everything to put things into perspective if you have a $2 million loan, you used to deduct a million now you're deducting 500,000 if your interest rate is 30%, you're deducting 500,000 it's affecting the luxury market in that upper class. it's affecting the people in the northeast, new york, new jersey, connecticut, higher home prices in california and here in the luxury market in south florida as well. as far as the middle class, i'm really seeing this is a positive thing because, again, i'm just learning everything, but if they

are getting tax cuts wouldn't that mean they have more disposable income which then means they can put more money into buying a home when rates are still very, very low, it still makes sense to buy a home any which way you cut it, it makes sense over renting in more cities than not. >> say you're sitting in a home. you own a home and it's $2 million. your mortgage is whatever, a million dollars. whatever it may be i'm less inclined to sell. are you worried there's not going to be new inventory on the market people will hold onto their homes? >> it depends on the market. in california, i know people are making a million dollars when they are selling their house yes, you have to go and buy a house again and you're not going to have the same deduction but again, this is just one less incentive. i can give you ten more incentives as to why you should be buying a home it just makes sense again.

not in every market but in many markets. i'm not going to stop buying my properties, my own personal properties because of it when we look back to give an example, when ever mortgage rates go up, earn freaks out it's like are we going to stop buying homes >> we have rises rates plus a new tax plan that could ding you on the mortgage interest deduction at the same time it's a little bit different. >> that is correct as a whole, i do not feel that this is really going to put a damper on things i don't think it's the most fantastic news but i don't think it's so negative and doom and gloom. >> thanks. appreciate it. something else the government may do sending shares of time warner sharply lower we'll explain when power lunch rolls on most etfs only track a benchmark. flexshares etfs are built around the way investors think.

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welcome back dow managing to hold on the gains of 23 points s&p down by four points. nasdaq down by 15. we have individual stocks making big moves. this is a new low for newell brands way fair is down 20% teva cut its outlook blaming pricing pressure in the u.s.

shares of time warner and at&t are in the red after the justice department may be targeting the two in an anti-trust suit over their merger is the deal in danger of being shut down? nobody was expecting this to meet any trouble considering this is a quote unquote vertical integration. >> i think most people thought this wouldn't be a problem in terms of getting approval. this is their job to look at these sorts of acquisitions to make sure they don't hurt consumers. >> what is the possible injury to consumers >> i think the biggest injury is higher prices. you have a combined entity that will have $40 billion worth of death on the balance sheet i don't know how it is that at&t can say we're not going to raise

prices that's the concern for the department of justice. >> can we explain vertical versus horizontal. what exxon is not allowed to do is buy every single gas station in the entire country. that would be horizontal integration. vertical integration when was the last time anything like that was stopped by the doj? >> it's relatively rare. it didn't happen during the obama administration i would be shocked during the trump administration it would happen you just have to look at the consumer you have to make certain it's consumer friendly. >> is this a tactic to try to

extract from the companies >> yeah. i think it's a negotiating tactic i think it's going to go through. i think the department of justice is giving a very serious look at this but ultimately they will give their stamp of approval >> do you see any possibility that the president's peak at cnn has anything to do with the fact the justice department is doing this >> i love the way you're thinking and i love that theory as a possibility i can't see that impacting this analysis in any way. i'd really be shocked. >> okay. andrew thank you. >> thank you to the bond market rick is tracking the action at the cme. >> how's it going? today we are in a holding pattern to some extent most of the session. we're getting a little manufactumore drift now. you can really pick it up on a one week chart yesterday i talked about how 30 minus five spread is at a

ten-year flat. officially join that club today with the curve flattening going on by the long end this is chart going back ten years. finally, the dollar index. it's acting more like a two year note tomorrow's jobs report could be a defining moment for many markets at key positions with reference towards technical levels back to you. >> thank you very much if today was not busy enough already, guess what. apple earnings are coming out tonight. everything you need know before that comes out melissa will have everything you need to know after power lunch rolls on right after this plap

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i'm sue herera attorney general jeff sessions is in new york city delivering remarks on national security he reenforced president trump's call for the creation of a merit based immigration system

>> a merit based system would be a boon to our economy and our wages of that i have no doubt. it's not just an issue of economic security. it's an issue of national security a merit based system, by definition would be safer than a lottery or even an extended family based system. >> a man suspected of walking into a suburban denver walmart and opening fire with a handgun killing three was arrested this morning. 14 hours after fleeing the store. 47-year-old scott austrom was seen on surveillance video his motive is unknown. research for ma hssachusett general hospital show a high fiber diet may reduce the risk of dying from colon cancer you're up to date. that's the news update this hour back over to you

apple gets ready for its release of the new iphone x tomorrow what should investors expect welcome. good to have you with us take us through some of the numbers and how your numbers on this iphone x and the other new products they have have changed in recent months and why >> i think the change in recent months has been maybe a little bit lower unit expectations particularly short term because of some of the supply issues average selling price expectations are going up because it looks like the mix of the ten will be rather high. nobody knows yet we think could be 35 to 40%. that's a thousands dollar plus priced phone we'll be looking for clues from the company in what the preorders look like. >> you also want to see some progress being made in china

the iphone, the 8 and the x are supposed to be big draws in asia what number would you like to see. we're looking for lessing declines and maybe about increases to come. that sounds like a big number but they've had two down years we think a lot of people have been waiting for the new form factor with the ten. our survey suggests there's a fir amount of demand there we're looking for confidence they will see growth over the next year. >> you seem pretty confident you've raised the price. you also moved your gross margin target up to 28.5% for the full year what kind of mix do you need to see in order to hit the numbers? >> we need to see a mix of 35 to

40% for the x. the seven plus was maybe 5%. 200 there are more 35 to 40% is a pretty good number it's clear people are going for the phone, face id works might even give you a higher gross margin even if units don't completely blow out, the higher average selling price should get us to 1150 in earnings and we think our target price of 180. >> what are the production bottlenecks with that iphone x why do you see fewer units reaching the channel here and just bottom line me here, fewer units, higher selling price. how does that translate spoo earnings per share >> we just recently took our units down a little bit. we took our asps up and took our net earnings up. that asp really dus drive the gross margin and revenue as

well it appears the 3-d sensing that plays into the face id recognition has been an issue. i don't think these supply problems are quite as acute as some of the headlines. there's been reports that the 8 is having supply from apple. we don't think that's the case clearly this is a complicated product. apple admitted they locked into face id a year ago they went all in on this for them it seems to be working. >> a lot of people i've been talking to have noted the performance of their older iphones, iphone 6, 6s has gone down, has degraded battery life shorter slower results on searches and e-mails and so forth they suspect it has to do with system updates that were sent out by apple have you heard anything about that >> there was kind of a meme going around about planned

obselescence you put the new version of the operationing system on and it can be more demanding of the battery. i notice my battery is starting to tank quickly. i've got my preorder in for the ten. i'm not sure it's a plot we think is a python -- the pig and the python where there's a lot of people who bought a phone three years ago and ready to upgrade. >> the interview tim cook had with lester holt, they talk about profits. if apple were to bring cash back at a lower tax rate, what would you like it to do with the cash. you think apple needs to do something. this is a stock at report highs that se and seems to be hitting on all cylinders. >> the company's claim that

bringing cash back doesn't change the approach. i think they will buy back stock. the cfo has been pretty consistent in viewing the stock as under valued. that could really boost your eps number i do expect them to continue to do acquisitions. i'm not looking for a rouge con tent deal. the question is where is apple going next >> do you have an idea that's the question for investor who are at this cross road where apple is hitting on all cylinders. it wants to know what the next big thing will be. >> right they talk a lot about augmented reality. i view that as iphone centric but wearables, like the watch will do well i think it will become health centric. apple has been going into health it could be must haves where as today they are nice to haves

transformation unclear i'd say health is what i would look for first >> thanks for your time. >> thank you so much a busy news day about to get even busier. president trump expected to nominate jay powell as the next chair of the fed what would a powell led fed mean for the markets? interest rates and your money. a little analysis to help you get smarter, ahead [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.

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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 major announcement coming from white house president trump will announce the head of the federal reserve. it's widely expected to be jay powell we'll take you live to the white house for that announcement which is expected to happen 1:10:33. shares of tesla are taking a big hit. they are below 300 bucks a share for the first time in six months are production problema ors sht

term issue can the company get past them? power lunch will be right back 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.

yeah, i got some financialbody guidance a while ago. how'd that go? he kept spelling my name with an 'i' but it's bryan with a 'y.' yeah, since birth. that drives me crazy. yes. it's on all your email. yes. they should know this? yeah. the guy was my brother-in-law. that's ridiculous. well, i happen to know some people. do they listen? what? they're amazing listeners. nice. guidance from professionals who take their time to get to know you.

shares of tesla is getting wrecked today. the company is scaling back because of production bottle

next lets bring in colin rush, he's got a performance on this. join. >> we are looking at so much price issues around model x and model s. the new issue that we brought up is where sources for dc permanent magnet motor they used model 3. and looking for what technology and others are using is similar to this. there is a limited supply with of pricing sorts in termn the ce seems to be some hesitation on the part of musk to reaffirm 10,000 unit target by the end of the year did you get the sense and did it throw in the question of the timing of the three in total

>> what they are working through now is understanding what the problems are they have a good feel for how they could get to 5,000 and those are real serious challenges moving past the 10,000, i don't think they really know what the issues are going to be once they get up and running a little high volume that's normal of the process that's something that i am not sure investors really appreciate with the complexity of what they are up to. >> can we mind deeper of the whole of the earth medals here you mention china of being the issue, is it not enough of capacity to get it off the ground or china allowing it to be exported as they try to build their electric market? >> i think it is all of the above. if we look at existing capacity and moving into the materials, there is a limited amount of supply which has been pretty flat here for the last number of years. 2011, there is a dispute between

china and japan, we saw tenfold increase in metal prices which could turn into an issue from sovereign perspective. as we look forward, there is a lot of actual materiald that woe some materials in the mountain past deposits here in the u.s. you know you have to wrap those capacities and turn actual metal into materials we know there is a lot of work being done on that and there is a lot of work to eliminate the materials on the side of motors. >> they issue any number of security whether it is the high issue debt or the net or raising equity >> the reason i am mentioning that is not only the cash burn, in the tax bill, it limits the amount of deductibility to no more than 30% of the company

so that's new so that should reduce economically to issue debt how long until they are out of money? >> so this company has not had an extraordinary access to capital market they still have 55 million in market cap right now they have access to equity at this point i think as a real concern for folks is if model three does not ramp up. the cash flow for the company does not hit even. if we push it out, you start to run into real issues i would not be surprise for them to raise capital and it depends on progress of what they are making >> the first quarter could be looking at delusion again. >> colin rusch >> thank you, it has been more than once, have they >> at this point, you see some of the free passes

>> right >> they're saying management has to stop promising and under deliveri delivering the president nominating the next chair of the federal reserve. we do expect it to be jerome powell, we'll find out for sure, coming up, stay with us.

welcome back to the second hour of "power lunch." >> we are one hour away of president trump's big decision of the next head federal reserve and the latest of the republican tax plans, critics and supporters are coming out. i am ryan sullivan, "power lunch" begins right now. >> meantime, lets get a check on the mark, stocks have been moving between gains and losses all morning long the nasdaq has been and remain one of the worst as we follow right there. facebook in the red. facebook following earnings of investors concerned of a big increase in security spending.

stocks on the move yum brands earnings on the move and cheesecake factory is moving lower following weeks' results hanes brands sink and l brands soars better than expected steve liesman is at the white house with more. >> reporter: michelle, as you know, we have been reporting all the king's sources and the king's men is messaging and telegraphing and using telepathic mean it will be jerome powell, the current governor as you know who was appointed in 2012. he was a republican appointed by president obama. investment banker for many years and had some government

experience he goes back a very long way i thought tit would be useful t listen to powell in his own words and what he says o f fed policies since the 2008 fed crisis >> aftthe economy is close to fl employment, the problems that some commentators precindicted d not come to pass >> rather, it helped restore full employment and returning inflation closer to the 2% call. >> so now lets look at where he thinks about various issues pouring over to these speeches and interviews we have done here on cnbc. on the issues of the path, a gradual increase or the fed is laid out a slow deduction is in favor of key aspects and monetary

policies he really has supported the bulk of the post crisis regulations but have said it is appropriate to do time adjustments and the fed ought to be rethinking some of the things that's done. that says more in line of the president on deregulation, on the economy, the market is very strong and he used the term "full employment." that would backup the idea of raising interest rates in a gradual way. on inflation being too slow, it is a mystery but allows the fed to be. >> if jerome powell is federal reserve, interest rates today would be higher or lower or the same >> it is an interesting question i have not considered that exact type of hypothetical if the fed could have gotten through the taper tantrum without a tantrum, the fed maybe

a little bit further along the real reaction of the market to the notion of the end of quantitative easing and some of the other tightening discussed really sent the feds back six months or so had that been finesse without that kind of market reaction or maybe the feds maybe further along. i don't think the consensus is different from where the fed is now, michelle. >> it is a committee and powell challenges is not so much of what he thinks, bringing the committee along is what he thinks >> steve liesman lets bring in rebecca patterson and dennis garment, welcome to you all. rebecca, i will pick up with you saying it is not just one person and not going to be jay powell that's going to be the fed chair. there is going to be a vice chair appointed as well as some

governors. in total, the market seems to be accepting the notion that if jay powell's name fed chair, things will go as plan by janet yellen, pretty much. >> yes, agreeing with that we got the fed over the next 12 or 10 months, you have the vice chair position which we'll get a nomination over the coming weeks and the end of next year considering number three, the new york fed president, william dudley permissive going to retire at some point where is the cumulative fed take policy one thing that steve mentions with the taper tantrum just real quick is an important point. how the feds communicate with the markets? you can get things way in advance, you have less disruption from that point of view, drone palette in great candidate we have seen it over and over again in speeches and things

he's read. i think that's going to be helpful from the market from a broad perspective. >> jeff, it does seem the market brought a drone health chair pick, the pick of john taylor for vice chair have we entertained that nouwe don't get him in the vice chair position >> i don't think the market knows how to price that. i agree in terms of jay powell and that's expectations and agreed with rebecca. i want to make one other point is it raises the importance of other members on the board, this is be the first chair of three decades without a monetary policy background and raises the importance of the staff and how powell ambulances those influences in making policy very different. one of those influences is not just the vice chair position but the rest o the board positions

and who fills them that's going to be the next part of the conversation around the fed, makeup is what the rest of the board looks like >> dennis, a guy that does not have a phd is going to ruin the fed, refreshing or dangerous >> thii think it is a good choi. he would not have been my first choice but this is a very good choice the fact that he does not have an phd in economic, i think it is an important facet, it is a plus >> why >> he will not be tied to the feds' old models that's illogical and poor over the past several years. the fact that he does not have a phd is a plus. >> rebecca, what's your interpretation of the feds mayor may not do, if we get whatever plan that's in place passed, could it change the course of the fed as we understand to be today? >> i think it absolutely could our base case right now and it

is just an educated guess is that we don't get any tax reform if we get anything until next year we think the target for this year is more a holk. the fed may actually feel it may need to speed uptightening and what happens to non financial corporate debt when they start to see higher cost stimulus in some way may push the feds going faster. then we get tax reform that's less, i think how this tax story plays out in the coming moing ms could be meaningful for the feds you got this huge bill, again, we burn all the trees and new jersey to print this paper with all these unknowns, potential capping of corporate

debt issues which could hurt buy backs and hurt the market. all these unknowns, jay powell, an unknown, the market does not seem to care at all. why? >> well, today is like a blender, i mean there are so many things. >> yes, there are hands thrown in >> jay powell is a known, he's been on the feds since 2012. we know what he's about. i am not surprise that the market's comment about, you got a lot of tax bill stuff who knows where it goes and you got a ton of earnings and bank of england raising interest rates today for the first time in decades. there are a lot of moving pieces all mixed together there is a lot going on under the headline for the market, brian. you got big winner ans an and lr stocks there >> it is kale juice, it is very good for me. [ laughter ] >> jeff, how much higher do you

think interest rates maybe a year from now than they are today? >> well, i want to echo what rebecca just said about the importance of what kind of tax plan comes out of what we just got today in terms of details. dictates and answering to your question, are we talking about short run or demand side stimulus and potentially accelerating the pace of interest rates, are we talking about supply side reform that extends the cycle and extends the pathway for fed normalization because you are increasing the product size. right now we are doing a lot of extrapolation to say the fed s s going to proceed in a manner you are looking at 50 to 75 basis point raises next year of

2018 and you add to the ten year of the slope steepening is where we are going to look at. >> what does it mean for the markets? >> i cannot see being overtly beneficial here we have a chairman of the fed who has the wind on her back and wonderful moving the stock market to all extended levels. i would be hesitant of becoming the fed chairman because i think there is likely to be a recession in the not too distant future and the weaker stock prices over sometimes and the course of the next several years. mr. powell, will be holding the ball and be given the blame for it i may object one or two comments and you will see the over night feds fund rates to 100 to 150 rather than 75 to 100 base points that's my greatest fear.

>> almost there. >> you are getting close to it you have moved the yield curve to wonderfully positively slope. >> all right, thank you all. dennis gartman, rebecca patterson and jeff rosenberg >> here is what's coming up, confuse of the tax bill? you are not alone. we talk to tax experts and home builders are getting hit hard on the bill of what's in it who are the winners and losers in housing we are counting down the reveal of the next chair federal reserve, we are just talking about it we'll talk a little bit more when "power lunch" comes back.

the gop is unveiling its plan giving a look at what stays and what goes. i l ylan mui >> reporter: it is going to be permanent. this tax bill establishes ways for repatrioted earnings and 12% for cash and 5% for all assets on the individual side, the top rate ils going to stay at 39.6%. it is only applying household that makes more than a million

dollars. house speaker paul ryan says the political commitment to this bill in the house is ironclad but over in the senate we are hearing a little bit of grumbling. marco rubio of florida disappointed that the child tax credit is bigger he wanted it to be a $2,000. the house bill settles on $1,600 >> senator susan collins of maine says she will not vote any bill we are far done from this. >> all right, ylan, thank you very much. the former assistant, secretary division, current director of the tax policy mark, you had a full head of hair since this morning began. >> i don't envy your job at all

buddy. >> reductions -- sports stadium that are taxed and exemptible. what has stuck out to you so far that's not necessarily been in the big bold fun on the top of the web page >> one would be to take the business tax and apply to multi national firms and moving into territorial systems like much of the world has. u.s. firms are essentially untaxed. that's part of a shift in the u.s. corporate tax a second -- >> hold on, mark >> dissect each one. >> sure. >> that one uh-uh sayou just sa

dubl dublin, ireland, to moving their headquarters back to the united states >> you should not focus on that one. tl one the one by itself would say in the interest of the u.s. company earnings from profit abroad. it kind of moves you in the opposite direction there is a lot of details in the bill that talks about profit shifting and guard rails that are put in place to prevent that kind of shift from a current that's one of the big structural changes. >> it is a hard one because really taxes not the driving factor for where you are going to locate a business and largely you want to be close to market and you want to have a talented work force that you can count on tax is a small component of that and at the margin, it could move

you one where than the other >> mark, i am sorry to erupt >> applicants are randomly are selected in an annual lottery. people putting in the lottery is not the country's finest the program presents significant vulnerabilities to our national security it is an unsafe program for our country and we'll not allow for it to happen i think congress will take it up quickly. so we can have a system that's security based and not the way it is now. we want a system that's married base so we can help the system to grow our country and be safe on our country

we want to select people of the ability to connect to our country and not choose people randomly or based on extended family connections you have people bringing in 24, 25 or 26 people when they come in we have to end chanin migration with that being said, it is a big tax cut day. i want to thank some of the people naturally paul, for the great conversation you just had. >> thank you >> paul ryan has led an effort and he had some awfully good health you mind calling diane black and you came through diane [ laughter ] >> lets wait about a month and a half [ laughter ] >> or could be less. peter, are is peter? you were fantastic today and we appreciate it very much. i know how hard you worked and kevin mccarthy, we just did one,

one of the top companies, it is a fortune 100 company. we just had a news conference with kevin mccarthy. hello kevin, it is been a long time >> i know. [ laughter ] kelly, you have been fantastic >> he does not stop. we really appreciate it and i have to tell you it is really a great team. we have a great team and it is a team that loves what they are doing and love the american people and love this country and they are dpoigoing to get it doe it is tax cuts and reform d we added the word jobs. it is all about jobs we'll have tremendous number of jobs pouring in. a few days, i will be traveling to asia to advance america's economic national security

i will miss you folks and i will miss everyone in the table i will be back in 11 days and i know things will go well there is a great spirit and top lairly of what we do in this country. they want it and we need it and they have to have it it is been terrific. i am counting all of you on helping on the momentum of the tax cuts and reform during that time i i hahave no doubt that you wie able to do it. i will talk to taxpayers and focusing on the regional media we do nicely with regional i love regional media. these folks. my economic team will remain totally focused on tax reform and work closely with all of

you. >> we'll be with you all the way and also have a bill on my desk, hopefully, kevin by thanksgiving if it is possible. i want everybody in this room standing by me and we'll add some boaothers as we sign. thank you again for the incredible job you have all done some of the tax cuts and simply occasi simply -- simplications work that we are doing, more income is taxed at the zero rate. the first $24,000 for a married couple and $12,000 for single will be completely income with tax-free so that's something. that's a tremendous thing right there we are going to be having a big zero in term of a lot s o people working very hard and

they cannot make ends meet repeal the alternative minimum tax and the estate tax where's the debt tax we have a lot of things that are important generators in our economy. most americans will be able to file taxes on a single sheet of paper. what do you think about that are you still there? >> there you go. >> don't lose it it is yours. [ laughter ] >> thank you, we'll think we'll be able to do that as well as we

have it the way it is now. that's what we are going to do life is very simple. the only people that are not going to like it is h&r block. that's the only company in the country that's not going to be thrilled we'll make america globally competitive again. corporate tax rate is 60% higher than competition thaus o that's one of the big things in the bill and that's tremendous success of companies and jobs. for five years, expense the full cost of new equipment in the year you buy it. something that i have not heard about in terms of when i was a businessman and fact, that's a great incentive for everybody that want to be business people. that's going to be one of the greats and people talk about the different elements, they don't talk about that. that's one of the great

solutions of this bill expensive one year we'll move from a worldwide system to a territorial system, tremendous change. in 2016, american multi magicnal company kept 71% of their profits over seas. we are imposing tax to bring back all of that corporate money. now, we think it we'll afford millions of dollars and brought back into our economy and country and that'll produce tremendous growths and jobs and a lot of other things. the council of economic advisers estimates that the corporate tax reform would increase and average council income by $4,000 we are reducing tax rates for corporations and partnership and really affects on large percentage of our people and our taxpayers. if the growth rate gdp and 1%,

we are talking about $2.5 trillion and millions of jobs if we go up to four as an example, we are talking about $2.5 trillion. >> last quarter, we did three and that took off, i think you can figure at least a point for hurricanes we had five hurricanes essentially and we hit, we actually hit the three number. when we started, we were at one. we were a little bit more than one. now we are at three or two people are predicting four for next quarter we'll see. i have always said it could have been higher. we have a lot of rules and regulations. in the history of your country, no president during the entire term have cut more regulations than we have cut we have cut that in ten months

and we have a lot more to do we have some statutory requirements that we have toll give notice. you know what this is, diane, you give 30 days and 90 days and 120 days notice and then you can start thinking about it. we have a lot of cutting left. we probably cut out of 48% and we'll be quite a bit higher than that one of the reason that is we are doing these as well, the stock market market has hit a new high, close to 60 times during the course of this presidency and this administration and thi group of people sitting around we are close to 60 and that's something that is very special and i have not looked today but perhaps we'll make it an extra one because i hear we are doing very well today. a lot of that is having to do with optimism and tremendous optimism and the highest they have had and this is a manufacture and optimism is the

highest. what's going to happen is the one element that's missing is taxes. we are one of the highest tax countries in the world and we are going to get really down to be one of the lower tax. it won't be the lowest but we'll get it next time we'll be competitive against the rest of the world. if you look at china, there is 15% and some countries, they are quite lower than that. at a 20%, we are competitive with the rest of the world we'll seek growth and jobs and you are going to see really wages growing up and something we are seeing now for the first time in a long time, wages are starting to rise with people in some cases, they have been 18 to 21 years without a real salary increase, wage increase a lot of good things are happening. this is the final tax cuts and

reform it is an honor to work with my fellow republicans, i think we are going to actually have some democratic support i think it is going to be very, very hard for them not to support it there was a certain newspaper that wrote today that your competition is out there it is for the rich, it is for the rich which they say routinely it turned out they were telling the truth and the paper actually quote them on it. they're not telling the truth. it was shocking to me. it was a middle income tax deduction and it is a very big one. it will be the biggest of tax reduction of our history >> thank you, everybody. president trump meeting with gop leadership, they're talking about immigration but mostly

focusing on the tax plan that was unveiled by gop leadership earlier today. making reference to washington post story at the very end about whether or not the democrats are talking truth about what the level of taxation would be for the middle class i wish you can see what's happening as he was talking about the simplications of the tax code and holding up that postcard, melissa lee says h&r block is off 3% and literally seconds later president trump says h&r block is taking a hit which is telling >> it is >> h&r block are going to have to deal with customers things could get simpler for a large percentage of more thanes. >> how many still file a paper return >> i am a little biassed because my mother works in insurance

block for 15 years >> this will still bring people to to the account >> that's a lot of pages >> if you double the deductions. >> tax credits it is just taxes are scary and complicated. remember, i am not defending h&r block. it is business now and collecting loans and refunds before you get them. miss caruso-cabrera, i will give you 750 today. >> as oppose to 7,000 tomorrow

i hello everyone, i am sue herrera, robert mercer is resigning from his role. he would cut his ties to breitbart news and selling his estate to his daughter a major interstate was shut down in alabama this morning take a look at that when an 18

wheeler caught on fire the truck driver was taken to the hospital with minor injuries the recall involves two styles and the plastic handle and the push button extinguisher, a full list dated back on 1973 could be found on kkidde website >> pope francis was marking catholics all souls day which commemorates the dead. he lays flowers on the graves among 770 dead in the cemetery that's the news at this hour, back to you, sumichelle thank you, sue diana is joining us from dc. >> right now mortgage deduction

is capped at $1 million in mortgage debt. the new tax plan cuts it in half only for new home purchases. if you already own your home, ru still capped at a million. there is still few people itemizing it currently about 21% of household claims the mortgage deduction, that could fall to 4% according to estimates from the tax policy center the house cap them at $10,000. this will hit the northeast heart. new jersey and new york and cut cut which has the highest tax rate and the highest tax rates for homes. hawaii does have the lowest tax rates and dc is lower, too it is kind of a mix bag, looking at california, compare to low property tax rate but home prices in some highest price areas are very high.

home builders say plans could hurt home values >> our constituents are afraid that this is a revisit of 1986 there was a significant housing recession. >> still others argue that doubling the standard deduction may put more money in lower income taxpayers' pockets helping them to save for a down payment. a lot more online, check out cnbc.com >> thank you, very much diane olick. >> thanks tyler. how are you doing today? >> apple's stock is up about 5% this week. apple has added like 80 billion in market capital a month. the iphone 10 is rolling out we'll give you a trade on apple, ahead of their earnings coming up a big interview, representative steny hoyer, we'll talk about whe democratic reaction and y

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steny hoyer is joining us now, what have you been able to

see and how much have you been able to digest of it congressman hoyer? >> very little at this point in time there are some things that are still in place from the original proposal they are obviously trying to get votes for it i think the cursory overview is a bill that helps the wealthy and not the middle class it is a bill that puts a real hole in the debt here is the part of the balancing budget in ten years and physical is the responsibility and producing a bill that admittedly by then increases up 1.5 trillion and we think substantially more than the national debt which means kids are going to pay for it and it is also a bill which we

believe is going to be done. it gives the public no opportunities for in puput and it through democrats were in charge of the house when ronald reagan were in charge of the state. they took months to consider the proposal over 450 witnesses testified and we are not going to have any witnesses testify here and so not only i think it is a bad bill -- >> there won't be any hearings, forgive me for binterrupting, there is certainly not a mark up a hearing is when you ask the public come in and say what do you think and how does this impact you and etcetera, a mark up is when you have committee members marking up the bill for

final approve by the committee and send it to the house floor i would bet that's going to be done in a partisan fashion and which you are going to see a bill come without no democratic support and republicans are going to try to jam it through the house and the senate >> it is exactly what they did with a i fordable care act and that process was not a good process and did not work and repeating it with the tax cut. no one surprises you as one of the democratic leaders is skeptical of this bill let me ask you specifically about corporate tax cuts and cutting cu cutting the rate, it seems to be a good argument that the corporate tax rate of the highest marginal right there that i grant that a lot of companies don't pay at 35%, it is not competitive of other major keconomy in the world do you have a problem with the idea that we need to reduce our corporate tax rate to mange

companies more competitive and to make them want to based here and do you have a problem with the idea that there ought to be some way to get companies that are storing a lot of capitol over seas to bring it back and concepti concepti concepti conceptionally speaking. >> let me answer it, conceptually, i agree with both of those items we ought to provide for repatriotion of dollars. to answer your question is, conceptually no, we have no opposition to that you may recall president obama some years ago suggested in a state of union message that it

was necessary to bring the corporate tax rates down so we would be competitive of the rest of the world it is a shame that we are not doing this, because there are clearly something that we could agree. >> representative hoyer, thank you very much for your time, we appreciate it. tyke a look at our charts here for apollo global, you see the drop there of more than 5% decline and impact on kkr and black stone, we'll keep you posted on whether or not we see any reasons for these drobs hpse here >> we didn't see anything in the tax bill >> that's right. this is a recent woos and not sharp >> there you go. >> apple shares is nearly 1% of the company's earnings lets get the next move larry mcdonald, matt megyn kealy

9% gain for apple over the past 20 days, would you be a buyer now? >> there was $125 price target in 2016 and now stocks is 165. you are talking about a company with a market capitalization of $865 billion that's trading close to 15% of above its 200 day moving average. that's something that you want to, not just waulk away but run away with a screaming sale of 17% sales of asia and china deleveraging of 2018 apple got big problems in the next two quarter >> matt, get ready for the tweets, by the way >> matt, do you consider apple stock as a screaming sale? >> certainly not at this level right now. when you look at the chart, it is a great chart higher highs and higher lows

since last year's election the thing is, more recently it has been good. one thing i have been concerned about is every time the stock rally, it did so in lower vine and sold off on bigger vine. the 5% comes off on a pick up environment, that should be good it could pull back the thing is it is going to pull back quite sharply to break the trend of higher on those and higher highs you would have to break below 150. one thing, the fans are doing so well, they get hiccups here and there. apple got by far the cheapest stock and of all those names it could be another candidate. >> so we have it both ways, guys >> big night tonight with apple earnings more trading nation go to tradingnation @cnbc.com. >> what the choice means for

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live picture of the rose guard garden at the white house. we're moments away from the fed pick you can see all the reporters lining up getting ready. kellyanne conway walking in as people get ready for the president to come out. joining us, michael klein, and greg, the "wall street journal's" chief economics commentator, also steve liesman, cnbc's senior economics reporter gentlemen, good to have you here greg, i'm going to start with you. monetary policy has become increasingly political many said the fed over the last eight years kept interest rates way too low, people got yield hungry, invested in things that were far too risky kept companies alive that shouldn't have been. jerome powell, he's a republican but also a centrist. how's he going to navigate that kind of political mine field >> in a sense, the decision has

already been made by donald trump, he obviously heard those criticisms and gave a lot of thoughts to candidates who very much shared them, kevin warsh, former governor, john taylor, an economist an stat stan tordforsd i'd say that if you like the economy, and the policy that you got under janet yellen, but for political reasons just couldn't reappoint her, then you probably got the next closest thing in jay powell >> steve liesman, what do you think? you agree with that? >> i do. i think the decision is more interesting, though, less on the monetary policy side, because i agree with greg, it's a continuation, but more on the regular story sitory side. i was thinking this morning about how political the president's decision was, maybe more political than the other fed chair appointments i covered. i was thinking this is par for the course for the following reason congress passed dodd/frank and gave an awful lot of power to

the federal reserve to regulate not only the regulated banking system but even nonregulated banks and also gave the fed an awful lot of power to write the rules so i think from this point and henceforth, the appointment of the fed chair is going to be a much more political appointment in part because regulation is a much more political issue. and if the president wants to and has a right to express his opinion about the politics of regulating the banks, it is done and will be done through the appointment of the fed chair. >> michael klein, what do you think of jay powell here, both when itle comes to monetary policy, and as steve highlighted very correctly, what's so important in his role as well is regulation of the financial system >> i would agree with both of those points that jay powell is somebody who has voted with the federal reserve, with yellen, and the other members of the board over the last -- last five years since he's been on the board. he's voted for the interest rate increases. i think he is a little bit more

skeptical of banking reform than yellen, but he also is not just somebody who would let banks run amok he's somebody who does understand that there is an important role for regulation. so i wouldn't go too far down that road saying that he's goin to deregulate things >> basically as we understand it, jay powellen is a good successor, michael real technical term. he's good. >> yeah, i think that's pret pretty -- pretty good summing up of what's happening. >> good. >> i talked to people in the fed who have experience with him he's very smart. he's a really good listener. he understands markets even though he's the first fed chairman since the 1970s without an advanced economics degree, the people i know are confident and hopeful with his appointment as chair >> so, so, greg, if mr. powell is as much like miss yellen as we seem to be hearing here with

the exception of maybe a marginal difference with respect to a regulatory approach, why make a change at all >> i think that's a great question i mean, obviously, you look at unemployment at the lowest in 16 years, economic growth picking up, stock market's at records. i think an obvious question that mr. trump would have been, why in the world do you want to monkey around with this, why are you trying to swap out the one person who's most associated with that performance? i think it will be some time before they know the truth there, but as i think we said at the outset, it has become to politicized in some sense it was a fore gone conclusion that even if a different republican were in the white house, this would have been a highly political decision that said, i don't think it's simply we're getting a yellen clone. it will take a few years to see how powell's different approach and the fact he doesn't begin and end with the fundamental economic background. >> we're coming up on this event, greg. we're going to go. thank you so much. we really appreciate it. greg, and michael klein. again, moments away from the president's announcement on the

next fed chair let's bring in bill and kelly on "the closing bell," guys, this could be the most consequential decision of the trump administration for the global markets. >> certainly feels that way. there have been a number of them already. guys, thank you very much. we're moments away from president trump's fed decision i'm kellygriffeth. many expecting the president to nominate jerome powell to replace janet yellen as chair of the federal reserve. we have yet to hear the official word from the president. we're expecting that announcement from the rose garden any minute now. as you've heard. and we will likely hear the nominee speak as well. which is rather rare we have full team coverage right now. our senior economics reporter steve liesman is live there at the white house. you saw earlier. also with us here at the new york stock exchange, larry