week or longer this is not unusual for the pop star she waited a year before allowing any streaming services to carry her other albums, 1989. she could -- she could get a plane for life herself given what's going on with these sales, but i would say the roger deal may be better >> it may be better, even with music. >> make sure you join us tomorrow. >> 100 a year. "squawk on the street" begins right now. ♪ >> good monday morning, i'm david faber along with jim cramer and we're live from post nine at the new york stock exchange carl quintanilla has the day off today. let's look at futures before trading for the week you can see setting up for a lower open after what was first down week in a long time last week of course and it was eight-week winning streak

snapped last week. european markets, let's look at them as well and see how they are faring at this time. you can see down across the board including italy and spain, thanks and france is the worst performer at this hour crude was up a tiny bit, wti kind of a quiet story last week, 56.76 and there's the 10-year yield at 2.38% let's get to our road map this morning on "squawk on the street squt general electric slashes the dividend by 50%. john flannery outlining his new vision and a major corporate revamp plus, wall street pullback, you saw stock futures pointing to a lower open investors still closely watching earnings and any progress on tax reform going on amongst our lawmakers on capitol hill. toy takeover, shares of mattel surged on friday

jim and i will get into that and into the official rejection from qualcomm of broadcom's bid, a lot to get to actually let's get to ge now. its investor day, just getting under way started at 9:00 a.m. the dow component announces it is cutting quarterly dividend in hax half, 12 cents a share, only third time in ge's history it cut the dividend and reducing the number of board members next year, from 18, a very large board of course to 12. and tomorrow on "squawk on the street." we'll have an exclusive interview with john flannery going over all of this giving us more time to go over it too which is always helpful. >> we're really just digesting this right now for you 9:30 eastern tomorrow. let's get to the what we know this morning 50 plus page report that you and i have been going over hasn't seen the light of day for too long. >> no. >> the board, the dividend,

earnings outlooks for 2018 between the dollar and $1.07 a share. i'm thinking of things investors are going to be to immediately be able to digest. industrial free cash flow seen between 6 and $7 billion give me your takes. >> i think that's the suspect number, the 6 to $7 billion, but i think that flannery is approaching this rigorously, why not lower it if that's the case, if it's really four or five. some of the analysts were saying it's only $2 billion maybe the key slide here is page 55, pass the value creation, talking about 2019, because 2018 is going to be really, really difficult. i think very hard to fathom. obviously there are some people who thought there would be a bigger dividend cut. i don't think this thing should sell at 20 times earnings. my charitable trust owns it and i think it should be about 17. >> you're basing it off of a

buck next year sfl. >> yeah, a premium multiple to united technology -- no, deserves a discount. there are some divisions that are not up to snuff. they have alston saying it just bought saying that it's going to be not great engines looks pretty good, military orders look good. there's things in there, health care where john is come look good but divisions being sold, i want to know about oil and gas i understand -- i remember from the verbiage they couldn't just sell it. >> and they can't. they are restricted from starting to significantly eliminate their 63% ownership of baker hughes ge. ge baker hughes, whatever. >> it is repudiation of everything that happened in the last four years in the company and we have to accept that, that there were some suboptimal acquisitions. >> the question will be can this man who is a 30-year veteran of ge, truly turn it around with i

would point out and perhaps even as importantly, a board of directors that's going to have a lot of new faces on it flannery and ed garden are new faces generally. they just joined the board and then you're going to nine members are going to leave and three new ones will come on. so you're going to go from 18 to 12 but a lot of those 12 are going to be new. >> there had been a reputation of a weak kind of a college like board, university like board and obviously the board has to come in and temper -- be more let's just say aggressive but i think flannery will welcome that the people i know know flannery, just considered to be a no nonsense guy obviously he's very open about what's wrong here. it's just that there's a lot that's wrong. >> there's a lot that's wrong. it's good to see -- you could argue the board also taking some responsibility by saying see you later, which they should have done a long time -- >> i would like to say it's

kitchen sink -- >> no. >> that's why i say 17 -- don't want to talk against my kmartable trust but i don't know how it's possible anyone thinks it should be worth 20. >> a first stage in some ways, it's not over yet. the review is -- >> there's too much. united technologies sells at 17 times earnings and much better company than ge. one of the things we have to start saying, ge is not a great company. let's just put it out there. it has some jewels but it's obviously not a great company. it doesn't deserve to sell >> understood. >> honeywell sells at 20 times earnings david cody built an unbelievable company. this is a company that's levered to markets that frankly you don't want to be levered to. oil and garks maybe the awed saudi trouble gets it to 60. when you have a company that has a big power division -- a lot of companies have fledpower because it's too ee more fous

and it's about long term contracts. you want to be in military and engines, up against united technologies, a superior company and health care, i know flannery is from that and health care is a growing business but obviously there are other health care companies that have better growth i'm thinking about -- an abbott. i'm thinking about -- thermo fisher -- >> we don't talk about perhaps enough. >> an excellent company and this company needs toget -- if i were these guys, i would try to poach someone very quickly from thermo fisher and ge loses a lot of business to those let's give flannery his due. that was a horrible division, got it to have organic growth. it's a troubled company that should not be selling this high on a yield basis it should be also at 17. >> right. >> it's going to head there. there's no magic here. you've got to find out -- i was looking for the long term care

issue, we have to address the pension issue. >> obviously going to be taking costs out, already committed previously to that they are talking about simplification, project management, specific to power, back to basics. >> you see that a lot on this. >> shrink to grow. and then obviously we do again the financial profile. >> it's a painful exercise but those kinds of things are more -- you've got to prove it and they are not -- >> yes, that's -- >> ge is not getting the benefit of the doubt. >> it shouldn't. one of the reasons you can't give it the benefit of the doubt, if you go back 18 months to two years, you would have thought on all cylinders hitting on all cylinders and i'm not saying -- i'm saying it wasn't hitting all cylinders and power bought worse the bought oil at the peak when you buy things at the peak and you actually project they are going to go higher and they don't, you're kind of left with a company that has got a lot of

ill advised acquisitions, good for flannery that he's two oit out of three ain't bad engines is great and more than 25%. but power is where i'm worried they admit that power is not good they just kind of -- that's the turbine business -- >> you do have a new management team. >> new faces and considered to be excellent i just still think you've got to take it to 17 or 18, you've got to get where tousa said, that good analyst that i know mr. immelt disagreed with me vehemently on, said he was just a bear. >> the guy from jp morgan, cash flow number you referenced earlier is far lower -- >> that's going to be a clash of the tight ttans. >> is the accounting that difficult -- >> it's very o pak, have their own standards, that doesn't mean the sec obviously blessed them

or they would have stopped it a long time. there's no more glossary go to google, what did they mean by that number it always reads like a tail number from a plane, you know. >> how many years is it going to take if it goes well >> if it goes well, i think two and a half, three years. i mean -- we could be sitting here having a different conversation, a 20 multiple might be warranted. >> oil goes to 70, it looks like you have something that people could could have et but it's too big to be bought by anybody. >> there's no break-up here. you made this point many times, not a way to create value. >> a lot of people thinks it's so easy to break up. there's a corporate allocation that the nut is too big. he has to shrink that and make it more like a danner her, not like a berkshire hajaway, can't make it a holding company.

he's starting off with what you could -- the best you could hope, which is here it is, warts and all. the problem is there's a lot of warts. like huge number of warts like get me to a dermatologist now. >> yeah. >> or maybe a plastic surgeon, maybe something more serious. >> flannery began speaking to the meeting moments ago said he understands it's been extremely painful. >> but how do you get a higher multiple -- you can't give it a higher multiple than united technologies. >> let's listen in to flannery for a moment as he makes this presentation. >> simpler, and easier to operate, complexity hurts us, has hurt us. the complex of talking portfolio is simpler and more focused ge we're focused on strong end markets in areas where we have competitive advantages areas where there's opportunity for digital disruption and areas

where we can earn premium returns, that's where we want to concentrate our resources going forward. in that context, there's a lot of optionalty in upside and other assets in the foportfolio. we talked about $20 billion of acid value of divest tour and give more color on that today. a stand alone entity in baker hughes ge. this is a good company we've just appointed a committee of our board, new committee of our board that finance and capital allocation committee and the first thing i've tasked them to work on is evaluating our exit options on baker hughes i'll talk more about that later. i know there's a lot of curiosity about our portfolio moves, i get questions all the time, what about this and that i would just say it's a deliberate process it's in a context of creating

shareholder value and we'll do it and move it and do it in a form that makes sense for our owners and share that with you as we go forward so let me give you background on the process that we've been through. >> that is john flannery of course chairman and ceo of ge, addressing the investor community on this important day for the company where he is resetting and after a four-month review, sort of presenting his vision of what this company can be but not what it is right now as you've been pointing out, of course we have a 50% cut in the dividend and have a significant -- no growth whatsoever in terms of earnings per share, 17 to 18. we've got free cash flow roughly $7 billion is what they are anticipating for next year and we've got a lot of work that needs to be done at the likes of the power business. >> he did say he's going to be able to address baker hughes, that overhang and have to sell that to raise the capital to fund growth if you favor growth.

it's got to be really critical about one thing. this is the time for the industrial conglomerates and they are raising dividends sharply. the health care companies are raising dividends sharply. the aerospace, hals ontime for aerospace. the turbine business has been terrible for a long time and it's been i think opaque to see how bad it is and that's a very critical -- i'm being critical about them you did think that turbine was doing better than this. >> we'll revisit ge many times throughout the show right now we're going to move on coming up we'll talk m and a, qualcomm rejects broadcom's bid and bit more about hasbro's early attempts to buy mattel

we'll talk about the market. generally, more "squawk on the street" coming back from post nine right after this. [ keyboard clacking ] [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. our advisors can help you find both. talk to one today and see why we're bullish on the future. yours. talk to one today and see why we're bullish on the future. 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

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>> qualcomm's board rejecting

broadcom's takeover bid, not in interest of shareholders, under values the company and they use the word dramatically under valuing the company, significantly came along with their description of regulatory risk, which they say is significant, jim no surprise here at all. as i've been reporting the next real step will be does as appears likely, though not certain, broadcom put up a slate to try to seat directors at the march meeting, you need to do that by december 8th, which is fast approaching and as i reported last week, they are interviewing candidates for that slate and my latest checks were unless something changes they are likely to do that but we'll see. they say at qualcomm, they came at us an opportune time for them and offered a premium above that we think even if apple were to

go badly, money will start coming in again. we'll have a high $3 range right now and nxp will be extremely akreetive up to 1.50 a share we deserve a 15-year multiple to get to a $7 number in a few years is what they are going to be saying and directors are thinking about off a 15 number that gets us closer to 100. >> i won't disagree with that. nxp is a terrific company because it's got fabulous auto, communications and nice diverse fiction to make it so qualcomm is not hostage qualcomm was 80 before the lawsuits began -- >> with apple. >> no one has ever requequestiod their technology it is not falling down during this period. many feel it's impossible to duplicate, i'm with qualcomm on this even hock tan is terrific, i

think you have to pay 80. >> starting at 70, they might be prepared to pay 80. >> i happen to be a huge believer of what hock tan has put together and i think this would be -- this would be the capstone of his career to put this together. i'm not as concerned about regulatory issues. i'm concerned that this could go on forever and could distract broadcom, certainty don't want that. >> they have good technology but their largest player in apple. >> want to bring it to fruition sooner rather than later if they do put pressure on the march meeting, it would be interesting for shareholders to say yes to new directors without having an antitrust judgment which we will not have one thing we'll know by march, whether nxp happens or not it makes your head spin. >> nxp, well above where qualcomm thinks it can buy it but not willing to do a poison

pill. >> no, they are not going to >> why is that >> they don't think that's appropriate. >> well, good, that's a stand-up thing to do. i think you would be a bit ashamed of that, decided to overpay for something they repeatedly told you-- >> then they might have shareholders to face shareholders at the march meeting. jim, we'll get to hasbro and t mattel up next we have jim's mad dash and counting down to the opening bell tomorrow we'll have that exclusive interview with ge's chairman and ceo, john flannery. here's a look at futures, setting up for a lower open. more "squawk on the street" right of this.

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>> we're thinking pineapples all of these young people with the lays around their neck let's get to a mad dash on a monday what do you want to talk about >> morgan stanley on amazon talking about possible trillion, i'm not going to disagree with it it's the sum of the parts but when i was out incalifornia last week and we had got to see each other, a lot of people talk about amazon web services being the most valuable property in technology, which is rather amazing, this stock shouldn't be down it's part of the s&p but david, i think 600 billion for retail, maybe 270 billion for amazon web services, i think that undervalues. >> get to a trillion dollars, what time period was it? >> 2022 was it >> here's what's important i was out with diane green last week -- >> ceo of the google web services, these businesses are

the best businesses in the word right now. >> why >> because you read by walmart today and how walmart is doing different pricing but it's all web services i mean it's really -- that's who -- in the cloud you have to use one of only three companies really ibm is good because they are private cloud but it's going to be amazon, which is by far an unbelievably great company but the analytics some people are thinking are subpar, unless you add sales force on top of it google last week on top of it and microsoft azure, don't need anything on top it of. satya a vicious competitor against all of these and doesn't like sales force. >> all right, we'll be keeping an eye on amazon shares this morning. and we'll get some m and a, opening bell a few minutes away.

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recommend nis about our conversations of many years when i asked what the key to the market is. i mean in all seriousness when i ask it this time as we get started trading here what are you keeping an eye on that would give a sense for investors as to the overall feel in terms of the market >> goldman sachs has a note about ups conviction buy i want to stay with the amazon theme, alibaba had numbers -- i think people felt they were in line with singles day but this is the season where people are just going to say, it's e commerce christmas, i like ups very much out of goldman i was going to select intel because there was a note from bar clay's, re-val yauation of intel, they were behind last week nordstrom and penny's coles, it is the essence what's

going on in tech and retail. i like ups, good investment into the holiday season. >> all right, you hear the building as we get ready to have the opening bell and we take a look big board, alexander baldwin, hawaii based company celebrating its conversion -- >> a lot of value there. >> i want to talk about the rets in a minute. the alzheimer's foundation in america doing great work at the nasdaq in terms of helping people suffering from the disease and trying to augment a cure. >> very hard to beat you get with people like j and j, where i had alex gorski, this is one of the toughest and the companies that say they have something don't give people hope don't give them hope it's that difficult. >> alzheimer's has proved to be very difficult, if and when they get there, the market --

>> biggest addressable market. >> and only getting bigger and bigger. >> people like biogen so much and you have to hope that someone conquers this one, especially kt demographic in the world in our country together. >> there's real interesting stuff, david that's happening and i think we've got to talk about hazmat, which is not going to be the name of the combined company. i had to do that before you did it i didn't even think of it. >> hasbro and mattel late on friday the wall street journal reporting hasbro approached mattel and stock price is up dramatically on that news. i can confirm same at this point, not that it's of any great help to anybody, an approach was made though it's been determined to me it's fairly early sometimes it even is early on these things, we'll see how it goes, no response at this point from mattel and don't have specifics as to the nature of

the approach in terms of price but mattel stock is up a lot it has come down dramatically over the last few years. i've been doing this so long, i can remember when mattel made an unsolicited bid for hasbro, could be almost 20 years ago at this point and then hasbro was able to fight them off because of antitrusantitrust, which was significant risk given the market share of the two companies in the so-called toy market that's different now. >> oh, yeah, i mean, look, interactive at toy company is apple a toy whp with what you can do with it i totally agree with you toys "r" us is behind this toys "r" us brought hasbro down. they were having a very good year if you go over the last quarter, they are december natured by toys "r" us and no one saw that coming. >> in the sense of toys "r" us'

bankruptcy. >> no one was really ready and not that there will be a good time for the largest customer. overseas mattel was doing quite well this was a very open tunistic idea the characters are terrific. and i think if they can get this, hasbro should go drat m t maltmalt mattically higher, it's once in a lifetime that middle of the -- not toy season, ahead of the holidays, toys "r" us wrecked everybody's quarter and mattel is a great asset. >> and over long periods of time, respective change in market caps, ma tell was far larger than hasbro. >> amazing, they've done remarkable things with customer outreach about what people want. i think tommy is a big brand,

the tank engine, barbie is not nearly as bad. that really hurt by toys "r" us, if has bro gets it you pay 120 for hasbro, it's that good. >> we don't have a lot more to sharon that but we'll be watching it closely. last week time warner certainly took precedence as a news story for many of us, the expected opposition of the department of justice. friday was a res pit, stocks down again today time warner shares off another 2 plus percent, you can see it there, trading well below the implied price after it did close meaningfully on friday as hopes seemed to spring eternal there would not be a meeting in court. don't have a lot to offer, a number of different press reports over the weekend citing things that happened a long time ago, frankly i was well aware of, not that it matters, jared kushner calling up jeff zucker telling him runs cnn, i can't use what they actually said on

tv we're a family show. >> like arthur blank -- >> zucker doesn't like to be told what or that he can do. and he knows the president well, don't forget, very well. >> very true you know, david, on the other side of entertainment, i did not get to talk to you, i like the disney quarter. >> you did >> yes i did. >> why >> because i think this bam tech offering for those of us who like sports, is kind of like individualized sports, going to be very, very significant for people i know that they've been able to shift what people talk about when it comes to disney. that's what i've been waiting for. this was a call about how all of the other properties are doing so well. we have so much cash flow. that was one of my big takeaways, they bought so much stock, the star wars franchise is great, many reasons why they are correct to be up and the number was really obscured by hurricanes but i did think this

company has the wherewithal to create a solo business, i really do, based around you getting to see all of the sports that they paid for that's what's big -- what's really interesting david, they paid for so many different rights but you only get to see one game. >> the streaming service would encompass a lot of things tha pay for that we don't see typically. >> and we watch it -- >> and people would be willing to pay for that. >> well, sometimes you think about yourself, if was up at esp yesterday and in the war room where you get to watch everything and thank you adam for allowing me to be up there and fabulous people at espn. i think they have a lot more content than you see i'm on their site every day and do fantasy on the site i always say i know they've got so much programming. i don't think the tv is the way to watch that programming. i think it's your pc or hand held you're on the go and i just like the acquisition very much.

i think they've got it very cheap. >> hope to have more on disney fox at some point. nothing more to share than what i did on friday. when it comes to the other offering, entertainment phase, we discussed this many times why disney would certainly benefit if they were to be able to complete a deal to acquire those entertainment assets. >> that would be so good for them obviously it's up to fox but then you would have that critical mass, i'm not going to watch my -- i'm going to watch my smart tv. look at roku, that's a bit of a short squeeze but i feel disney can chart its own path the theme parks are really remarkable in terms of repeat revenue that gotten so much bigger you make -- what people talk about to be bam tech and not espn, i wish they would change the name and call it solo, like hans solo, the new movie and that's not going to happen but i do think that there's a

lot to it and i like the combination very much. >> want to get back to our lead story this morning which is of course is ge which continues to have its presentation to the investment community on really what is -- this is a word immelt used after -- after the crisis, this is a reset but this is a reset for the company and always jim, in terms of the dividend, which was cut 50% as you see there. john flannery saying we understand how important the dividend is, especially the people who use it as current income the reduction he says is a product of where we are as a company. ultimately this will help us grow the dividend growing forward -- >> it is a true shrink to grow we cut it in half, therefore we can grow, of course the cash flow is not in a position to meet the needs of the dividend -- >> that's the issue. >> you were speaking earlier where you think fair value is based on the multiple it

deserves and buck to 1.07 it's pointing to. ge is down 3%. >> what are you going to do, united technology, 17.8, i think eaton is a better company than ge, inger sol rand, 18 times, if you got a thermo fisher multiple for health care, you could get up to 25 or 26 there's no sustainability to where this stock is at 19. it should not be where everything else is you know, look, you're hoping that the great install base, there is synergy there, they've got smart people there's a difficult long cycle process to closing so it's been disappointing and below expectations, that is the new news which makes me not want to pay. if it was 1.20, i could -- if it's $1 and they could make a $1, you should pay 17 for it. >> okay. and that is off the 18 number. >> my charitable trust owns --

>> you should have sold this a long time ago, jim. >> i said it's one of the biggest mistakes of my career and kept thinking flannery would come in and people would say it would be better. i did not know how bad things were, few did, john had a good -- some analysts did a very good job do you know who jeremy jordan is >> no, i don't. >> super girl star he was hospitalized by eating at chipotle and now running jihad against chipotle, we're committed to make him feel better -- whatever, come under fire -- >> jeremy jordan if it was the hamilton cast i would probably not get lower but -- >> star of newsies on broadway. >> you've got to get to more broadway. >> you won't get sick. it's great he looked fairly pale. >> they are down on this >> it really is.

well, i don't know, i mean that's -- we have to get -- we should get is bill ackman on today? i want to get to rets, one of the great wins was general growth property and that stock is up. this was in the journal last week and then i guess a lot of it got leaked there but they did come out and say this morning brookfield which owns 34% of the company, big real estate owner, canadian, they want to offer 23 in cash or .9656, one of their limited partnership units for each share of ggp. stock trading above the implied value, expectations are to buy the other 66%. they don't already own, brookfield will need to increase its offer and thoughts that brockfield itself is undervalued. >> there's a lot to talk about >> in a significant way. >> we have a lot of retail this

week. >> there's the semianl you'semil meetings going on, a lot of people missed mas rich, to have taken a significant stake. that company was pursued a few years back by simon properties. >> right. >> just some questions here in terms of the raet areas whether we see consolidation. >> a malls are getting good rents, a shopping centers frt, done wood on recently and they are raising rents. there are mixed use player simon is doing better than people think david, i still come back to the fact that in the end these guys are challenged and you need an ecom strategy that works and that's walmart when they saw they were raising prices on the ecom items, that's good a good job on macy's, i think kohl's could have done a better

job. buy online, pick up in store guys, come on, don't make that sound like a great thing come up with a better name. >> did you bopus, i don't like . i'm going to bopus on amazon they don't have good narratives, but cash flow, macy's has assets that we know could be monetized, i don't have a good story for j.c. penney other than sephora >> bopus, i pick the up one, salt, state and local income taxes, talking about the prospects for the tax bill which also prominently features in our market moves these days. let's get to bob bpisani.

>> more defensive tone to the market once again today, take a look right now consumer staples doing a little bit better, utilities doing a little better and banks and industrials, semiconductors and old market leader lagging a little bit that's what i say when i say more defense and the russell is still underperforming again today day after day. we were talking about -- everyone talking about general electric, see it down about 3%, it's down 37% this year, far and away the worst performer in the dow jones industrial average but believe it or not, down 37% is only 80 points in the dow because ge is such a low priced stock, even in january only a $30 stock. remember higher price, wig biggr influence and all of that this year only about 80 points to the downside on the dow. people were asking me how big a dividend cut it's $4.1 billion and in terms of the dollar value this would make it the eighth largest dividend cut in history.

interestingly, largest in history was general electric in 2009 they cut the dividend by $8.8 billion, bank of america cut theirs twice in 2008 and then in 2009, jp morgan cut it in 2009 you go down the list, you can see wells fargo also cut, citigroup, pfizer, you'll notice something important. this is all the financial crisis, 2008 and 2009. you've got to now go to ge at 2017 for the largest one outside of the financial crisis. there were a few others after that kinder morgan cut in 2015, conoco phillips in 2016. right now outside the financial crisis, ge has the largest dividend cut in history in dollar terms not many companies that cut their dividends that often only been a few, dow dupont and mow sayic cut twice and mattel cut twice and zeer ox and progressive cut as well. i'll show you how rare it is for

companies to cut their dividends, this 310 companies in the s&p that increase the dividend this year, adding $38 billion, there's only been nine in a decreased it, losing 1.9 billion. not including ge there's ten and add the numbers, you've got about $6 billion, fairly rare for companies to decrease their dividends let's talk about where the flows are, got a lot of concerns over the weekend about fund flows there have definitely been outflows in the last five or six weeks from high yield funds. we saw this particularly last week there have been outflows from the russell 2000 as well at the same time there have been inflows into standard corporate bond funds like the lqb and broad bond funds like the agg and b and d. what does it mean? it's obviously people are trading up on the risk curve a lot of this is concerns over the tax bill, we talked a lot about limiting interest deductions for corporates and i

think that's de definitely weign on them. you see high yield down and russell 2000 down and corporate bond etf, that's lqd and barclay's agg, the biggest and broadest corporate bond etf trading to the upside. until we get information clearly resolved on these tax issues, i think we're going to see pressure clearly on the russell 2000 and high yield funds. the dow down 34 points >> bob pisani on the floor bob nardelli, we'll get his take on the ge dividend cult and plan for growth and tomorrow we'll have an exclusive interview with ge's chairman and ceo john flannery presenting this morning in front of investors, as we head to break, here's a look at the treasuries this morning.

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alibaba reporting another successful singles day it generated a report $25 billion in sales that doubles 2016 black friday and cyber monday sales combined to just put that in some perspective. the stock, as you see, not reacting particularly in any particular way >> everyone felt this was going to be a big number i have no desire to really need the stock. jd did better. >> jd actually is benefitting, not the alibaba, but another large online retailer. >> sorry to interrupt, but have you noticed some of the short squeezes going on. >> tell me >> universal display, which deserves to be high because that's apple, roku

we have not seen these kinds of short squeezes in a long time. i think people should know at least that's what they're buying, they're getting involved in situation where there were shorts that were really kind of cut. i know oled, it's a great company. it should never have been kept down, i felt, because it's got such great technology, but roku is good, but they reported good quarter out of the box >> i don't know why we keep showing alibaba's video. varexciting to look at >> we had a report saying columbia sports wear, which is a regular company that comes on "mad money" all the time, had gigantic numbers but it was on a percentage basis that's a company that should be higher on earnings >> by the way, roku is up another 11%. >> people have to understand there are a lot of people who thought they were going to miss their quarter. >> they went up foirt% or 50% on the day. >> that's why i opponented out short squeezes are occurring all over the place >> we're going to get st s from

you. already that time. >> we need some gin and vodka. >> it goes so fast >> feel like mr. rogers. going to put on the sweater and sing the good-bye song >> i don't have switeaters they're itchy. >> a lot more "squawk on the street." time's up, insufficient prenatal care. and administrative paperwork, your days of drowning people are numbered. same goes for you, budget overruns. and rising costs, wipe that smile off your face. we're coming for you too. at optum, we're partnering across the health system to tackle its biggest challenges.

let's get to jim and "stop trading. >> ge determined positions tyson foods bault pillsure, that became a protein company when i had them on "mad money," they told you this is a combination that is incredible millennials, by the way, love protein. they're making their food much more natural and organic i know it's hard big supplies to mcdonald's this stock deserves to sell higher the combination, i have to admit i was critical of a combination. >> it was a very, very high multiple a high valuation but those are not -- it's not typically a reflection on whether a deal will be succe successful or not. if you'rebuying a growth company or if it's going to enable you to grow faster. >> tom hayes did a good job. a delightful guy who really has put together a fantastic food business that's outside the

center outside the center, and it's a growth business. i have to hand it to him he had a better vision that i did. >> what do we have on mad tonight? >> dct, one of these weeks that's really involved with e-commerce, a fantastic business that's why i keep coming back to e-commerce all of retail is up. it's funny, nothing really happened other than walmart's news and amazon, but i like retail going into the holiday season if amazon and walmart are up, because they drive the whole group, because of these stupid etfs >> thanks, jim see you back tomorrow. coming up, more on that big story of the day, speaking of gm it did cut its dividend in half. be sure to watch that exclusive interview we're going to have tomorrow john flannery will join us live on "squawk on the street" at 9:30 a.m. eastern. me, jim, i think carl is back, too. we have a lot more "squawk on the street" after this [ keyboard clacking ]

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good morning welcome to monday morning. welcome back to "squawk on the street." i'm david faber along with michelle caruso cabrera. carl and sara both have the day off. let's give you a look at the markets. we have started the day lower, though just barely on the dow. there's a look at oil, though, which continues its assent this morning after last week's rise as well. >> getting close to $57. our road map starts with ge announcing it's cutting its dividend in half, making big changes to its core businesses we'll take you live to its investor day and speak to a form executive of the company >> plus, a possible deal in toyland. has bro makes a takeover offer for mattel we'll have details and reaction from the streets straight ahead. >> and stocks kicking off the week slightly in the red as worries over tax reform perhaps hit wall street. we'll discuss the odds of getting it done before the end of the year.

>> but first, let's get breaking news out of ge of course, the company this morning announcing it is cutting its dividend in half thas the first cut since 2009 in the dividend plus, making some big changes to its core businesses and giving some guidance in terms of its financial expectations for next year morgan brennan is outside ge's investor day, and she joins us with the very latest morgan >> reporter: hey, david. that's right so let me start with telling you why the stock is trading about 3% lower right now it's not the dividend cut. it is the 2018 financial guidance specifically, new eps guidance $1 to $1.07 per share. that's 50% lower than the initial target for 2018. more importantly, it's lower than street expectations of $1.14 per share. not to be overlooked, free cash flow next year may be worse than this year. they're forecasting $6 billion to $7 billion. just to put that in perspective, they're borrowing $6 million

next year to voluntarily fund the pension program. to an audience of 300 people, flannery, new ceo john flannery saying this is base upon which we can grow earnings and cash flow going forward his vision, a simple, more focused ge he said we have to focus on creating value we'll do it a critical, analytic dispassionate eye. focusing on power, aviation, health care. we'll exit over a billion, also ten smaller units on ge's biggest business, power, he says it's a challenge business. we'll take a heavy lift to turn around but that is essential infrastructure, and it can improve in one to two years. also, admitting the aslts they purchased a few years ago not performing as expected the focus, cash, cash, cash. on aviation, saying growth is robust on health care, a lot of digital

disruption on digital, which has been a big push within ge, quote, massively important. secret ingredient of the company boug but a lot is changing. on the dividend cut, he said we understand this is extremely painful for the shareholder and the affect it has on people, but it is a reflection of where ge as a company right now lastly, he's looking to make the company culture more transparent. that's going to include bonuses tied to performance. compensation that is much more tied to equity also, the board is shrinking it's moving down to 12 seats from 18, and three of those are going to be up for grabs starting next year this meeting is still going on upstairs right now flannery has kicked it off, but we're hearing from a number of ge executives including jamie miller also the ceos of aviation and power. we're going to continue to bring you these headlines as they come over the next couple hours back over to you >> yeah, a lot to handle there, morgan thank you for going through so much of it for us.

morgan brennan >> for more on these changes coming to ge, we're joined by robert nar deli. he held a number of executive positions in the company under jack welsh including ceo of ge power systems and transportation it's a while back. he's the founder and adviser of a new firm let me get your take on the management side of this. and the challenge that flannery has given your expertise in that area talking about changing culture, talking about a lot of different things that it would seem to me will take quite some time to achieve. what are your thoughts >> well, david, good morning and obviously, it's very painful, as i have said before, to watch the dismantling of this legendary company, whichi had the privilege of working at with jack for so many years i continue to get hundreds of e-mails and texts about what's going on i think john has no choice but

to push it all to the center of the table and kind of let the chips fall where they are given the situation which certainly sounds more dire, david, than any of us had been led to believe. i think, you know, some of your comments about earlier this morning about driving accountability within the culture, you know, my experience is a lot of people want authority. less want responsibility and almost no one wants accountability i think that's probably what has to happen. you know, john did the deal, so he probably is very well aware of what needs to happen. i think acquisition integration needs to be a core competency, and if it is, it's a competitive advantage. if not, it's a disaster, right that's been my experience of what's going on. i see where the board is being reduced, which is probably appropriate given the downsizing of the business. i just hope that they get

somebody on the board with industrial experience. it would be very ben afinancial >> we don't know who would be going on the board, going from 18 down to 9 up to 12, so they'll have 12 at the april meeting, bob give me your sense as the timeline in terms of this is a reset. in terms of turning this company around, if it is successful. if flannery does make the right moves, when will we have a sense? how long will it take? >> yeah, well, the unfortunate thing, david, is that we saw the dismantling of this company over, as you said earlier, the last seven to eight years. why would you sell nbc right before a presidential election when revenues are typically higher as a result of that you know, again, it's painful to see oil and gas. i recall when we started that business with jack buying a company, growing it to $11

billion. i think the issue here is there are a lot of conglomerates you mentioned it on the show earlier this morning certainly out there that have been successful. yet, i think the wonderful thing about when jack and the team were there is our ability to run these conglomerates in a cohesive way, and to be able to support one another if, you know, seasonality or oil prices were down. jim mcnerney would jump in or i would jump in to help medical. and you know, john's not going to have the flexibility to do that if he's down to three businesses so it's going to be even, i think, more challenging environment for him, but i think he's doing the right thing open the kimono, put it all out there, and work like heck to try to bring it back >> hi, bob michelle here. as david mentioned earlier, you ran ge power, and reminding viewers you also ran ge transportation you mentioned the company is going to get a lot smaller backing off transportation do you think that's a good idea?

also in their release, right before the investor meeting, they say ge power is fixable you ran power. is it fixable? >> yeah, listen, again, i was very fortunate when i went into power. we went from worst to first. and so i believe it's totally fixable. now, i don't know what hand has been dealt to the power system team from the allstrom acquisition. there was a luof give and take on work rules and promises not to reduce work force in europe, particularly in france some of the things on nuclear. so i don't know if steve bolls who was running it kind of had his hands tied for the last couple years and we'll see what happens, but power is a great business i ean, it's fundamental to any economy, and i got to believe with focus and discipline and accountability, you could bring power systems back it's a great business that customers out there were great i loved working with them. had an unbelievable team

so yeah, i'm absolutely confident with the right focus, with the right discipline, with the right strategic oversight, it can come back, michelle >> and bob, in addition to power, so the new core is going to be aviation and health care do you likewise think there's other businesses, have their franchises in tact, are they still leaders in their area? this new company is going to have three businesses, long cycles you want to be sure essentially they are one of the best competitors in each one. >> yeah. well, again, there was a comment made this morning that they're giving the aircraft turbines away let me say underneath jack, that was not allowed. and you know, we created separate units within power that served just the oem equipment, new equipment, and then the service is after market so there was no quid pro quo or giving away they all the to stand on their

own and be profitable. if you start trading, you know, the assets for the aftermarket, you've got additional time lag in there, so hopefully they'll bring that back and make the turbines profit nl the long term service agreements which we introduced there were really valuable during the downturn and kept a lot of cash flow coming into the company in '07, '08, and '09. >> finally, i made this point earlier. we have been critical to a large extent of mr. immelt's track record in terms of buying and selling assets too often buying at highs and selling at lows. it does appear there has also been a deterioration in the management acumen or the ge way that you know well and i know having been an employee of the company for so many years as well is that your sense i know you're far removed from the company, but you do speak to a lot of people. has that special sauce been lost >> well, again, i think it would

be unfair to just point the finger at jeff i mean, there was an 18-person board that reviewed and approved all of those things. i think there's a lot of opportunity for culpability over the last seven to eight years, david, to see the dismantling of the company to try to, if you will, provide financial support or cash to prop it up. i do think the magic when jack and the team was there was the culture. you know, very collegiate. we all supported one another we had unbelievable laser focus on accountability and delivery not only the top line but the bottom line. and again, i think that went through the entire organization from the business leaders down to the shop floor. and hopefully john can get that culture back of accountability and delivering on your commitments, david it's going to be critical for him to do that >> yeah. a lot of things on his critical list bob, thanks for joining us

>> thank you very much >> sure thing. bob nardelli we'll have a chance to ask these questions directly of mr. flannery who is going to be nice enough to join us tomorrow morning, 9:30 on "squawk on the street" exclusively. >> looking forward to that let's transition to the markets. the dow and s&p coming off their first negative week in nine. stocks rebounding. finally in positive territory this morning for now, we're joined by chief economic strategist david. slowdown in the markets in november what's the problem, is it the tax reform plan in congress, high yield seems to be rolling over here. what's up? >> i think once again it's as bob ferrell famously told us, rapidly rising markets don't typically correct by going sideways we have come through the past 12 months, the most calm markets we've had in the past 54 years so you have to take a look at everything that's happening in a matter of a few days or a couple weeks in that context. plus, let's face it, an

eight-year bull market that's become very extended people don't like to say, well, i don't pay attention to valuation. not great market timing devices, that much is true, but how far is this market going to go up. how far are earnings going to have to travel us through. what is your metric that would tell you this is not at the very least a fully priced market? >> you know, dave, the response to that probably for a lot of people as well, sure, forward returns probably aren't going to look so great over the next ten years perhaps, but while it's working, it can still work and i guess the point of the calm markets we've had, all these studies show that usually they don't turn on a dime and create the big peak when they have been this calm. so how do you navigate all that? >> the big peak, if we're talking about the onset of a bear market, not even a small correction, which we haven't seen in almost forever, but you do need a recession to call for a bear market. for my lens, and i have done a lot of work on this, and i think it behooved the economist to tell investors where do you

think we are in the investor cycle? the first, second, third inning. i think we're between the seventh inning stretch and the ninth inning >> did it get reset at the election when there was so much optimism about deregulation and if they cut corporate taxes, the e goes up in the pe, right >> how much of that is priced? how many earnings have priced into a market with a 22 trailing multiple you mentioned before the election, tell me, consensus earnings estimates, have they gone up or down since the election of last year? consensus earning estimates have gone down fractionally from last year people call this an earnings-led stock market no, it's actually been primarily a multiple-led market. it remains that way. i think that actually the price you're paying to get in the market right now is extremely high you're taking a look at the incei investors intelligence poll. 60% bulls. you look at the traders report,

over 30,000 long positions in the future of options pits right now. it hasn't been that high in month. if you have a little contrarianism in you, you have long spec positions. >> so -- >> well, that's where we get back to sell you can print the portfolio wows having to sell you can buy some volatility, which is very cheap. you don't have to outright sell, but you're asking me right now would i be stepping up quality of the portfolio yes, i would would i focus on liquidity, yes, i would. and i think at the same time, i would want to be investing in parts of the market that have a longer runway for growth there were 90% of the way through the cycle. there's no politics that can change that. ronald reagan came in, he came in in '81, he cut the top marginal personal rate from 70% to 60% the next month, we had a recession because of what the central bank's response was. let's say we get the big -- it's not even a corporate tax reform.

it will be a tax cut the elephant in the room is the fed. people talk about fiscal policy. the monetary policy, what the fed does is so much more important because ultimately, liquidity is the life blood of the markets. nobody anticipated in the eve of a huge tax cut, we're going to have a recession, i'm not saying we're going through a recession, but don't take your eye off the ball eight years into an expansion with a 4% unemployment rate. >> and what do we make of that anything, and high yield seems to be coming more of a concern >> that's right. >> is that a tell? >> the bond market right now is caught in a range. to me, the big story isn't, oh, well, we have gone all the way from 2%, which was way overbought to 2.40, now the big question for the year, if you're the big reflationist, the big pro-trump portfolio, why isn't the ten-year note have a three handle already record high stock market, all the inflation talk, oil bouncing

back the way that it has, unemployment at 4% supposedly a great economy in our hands, although it didn't show up with general electric. had its tentacles all over the economy. my point is what is it telling you? why is it so low spreads are widening out if you're looking at where there is a bubble, it's probably in the high-yield market, not just here but globally. that's the canary in the coal mine because all of those markets correlate to each other. if there's a problem, make no mistake, that will show its way through the financials have the financials been outperforming or underperforming? underperforming. small caps the same. high yield spreads and a flattening yield curve, that is telling you to be a little cautious >> note some caution thank you for joining us on set. >> same. >> president trump announcing he's nominated a health and human services secretary happy to announce i'm nominated alex asar to be the next hhs secretary.

he'll be a star for better health care and prices also, president of eli lilly, usa. >> when we come back, china's singles day smashes records. we'll give you the details and results from the world's largest single day of shopping plus, a possible tie-up in toyland. hasbro makes an offer for rival mattel certainly makes an approach. we'll discuss what that means for the dury quk t seet" will be right back reporting blow out sas

eunice yoon joins us to break down the numbers morning, eunice. >> good morning, i think what we learned over the weekend is how massive singles day is, and also that jd is becoming a serious competitor when you look at the numbers, alibaba said $25 billion were racked up in sales jd said $19 billion. there's some interesting patterns that emerged from these numbers. first of all, alibaba said international companies were participating like never before. 60,000 international brands were selling to the chinese, and there are a lot of american brands amongalibaba's sides and their much wants nike as well as p&g. when you broke down the numbers further to look at the categories apple was number one within its category nike, number one within its category with new balance following suit.

skechers, estee lauder, and american tourister, all of them were among the top five within their category we saw a similar pattern with jd as well. with jd, again, apple topped the list number one in mobile phones. north face or vfc was up 400%. columbia sportswear up 800%. p&g's olay, beauty products, yet again sales were twice as much as last year and bose, the audio gear company, said its sales were outpaced last year's single day sales in just ten minutes. that was all on jd, and jd also said they noticed other patterns, and one is that chinese consumers are choosing more authentic, higher quality goods like never before. they said that was the reason why they saw a lot of interest in specialty items so more than 20,000 tons of fresh food was bought on their site, including 2 million harry

crabs, which are currently in season in china. also, luxury goods were favored items. 400,000 watches were sold on jd's sites the other trend jd saw was more women are also shopping. so jd has traditionally here been kind of known for more of their gadgets and selling to guys they have been trying to change all that, and they have been quite successful this time women were some of the biggest shoppers, buying everything frame luxury items, apparel, and they also said household items and 1.5 billion diapers a lot of diapers >> a lot of something. >> a fast gaining window on the taste of the chinese consumer right now. euni eunice yoon, thank you >> that's a lot of diapers a look at qualcomm and broadcom. we're telling you qualcomm has officially rejected broadcom's

cash and stock offer for the company. worth roughly $103 billion in cash and stock at the time it was made they cite that it dramatically underval ued the company and significant regulatory risk as well associated with the deal. the next move, well, it's going to be broadcom's and it's likely they will try to assemble a slate of directors to challenge for the board. h.ey need to do that by december 8t >> "squawk on the street" will be right back. i just finished months of chemo. but i don't want to talk about months. i want to talk about years. treatments have gotten better, so... i'm hoping for good years ahead. that's thanks to research funded by the american cancer society. the same folks giving me free rides to treatments, insurance advice,and a place to stay during chemo.

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welcome back to "squawk on the street." the search is on for the next president of the federal reserve of new york. a position that some say is the second most important job at the fed. steve liesman joins us now with more on some of the possible candidates >> yeah, we're going to name some names first, let's talk about the issues replacing bill dudley comes at a time when the federal reserve is under pressure to bring more diversity into the ranks of bank presidents of the 135 presidents in the history of the fed, the brookings institution counts six women and just three non-whites. also the question about whether or not they should appoint an economist, which dudley is presidential president, you

remember, nominated jerome powell he's not an economist, whether this should be an economist at an important position. finally, the new york fed on unwinding the $4.5 trillion balance sheet. the perfect resume, someone with strong banking and market experience that is beholden to neither. here are some of the names mentioned call it around town. peter blair henry. a dean, moderates a lot of jackson hole conferences sandio conner. knows powell, has worked with powell brian sack is the de shaw chief economist, former new york fed markets group head peter fisher, top jobs in the treasury and at the fed, and seth carpenter, also a former treasury person now. three other names have come up from people at the new york fed

now. among them, excuse me one second, the fed governor, robert kaplan, and simon potter who was sort of the number two at the new york fed right now running the markets group. this search is going to take six to nine months it's headed by sarah horowits, the head of the board of directors and private equity director who also sits on the board. they have hired two search firms. one is one who specializes in diversity. mike >> all right steve, wall street watching this very closely thanks very much venezuela's foreign debt renegotiation committee will meet with creditors or at least some of them in caracas today. michelle has been covering this. >> normally with a country does a massive debt restructuring, what happens every banker, lawyer worth their salt gets on a plane all the investors go to the capital, you can't do that in

this case because the venezuelan government has put two individuals in charge of the restructuring who are on the sanctions list by the u.s. government so in theory, you can't even meet with them the vice president of the country, but the u.s. doj believes he's a drug runner and running a drug empire. and then you see him, the other is simone delgado, and almost as to emphasize he was in charge of the process, he's the one who tweeted out over the weekend where the location of the meeting would be now, people who are involved in venezuelan debts say they have gotten called from the venezuelan government. don't worry. neither one of those two individuals will actually be at the meeting, but still, compliance officers are saying, isn't he still in charge of the debt notionation it's really problematic at this point to figure out what to do, and then there's all this criticism, oh, nobody is going to show up almost on purpose, it seems, the venezuelan government sent out a mass e-mail and publicly cc'd

every single bond holder who rsvp'd for the meeting all 194 of them, as almost to suggest you said nobody would show up, but look at all these people they're mostly gmail accounts and hotmail accounts almost no actual real institutions you wonder if people are using their individual accounts also because of compliance issues >> how much debt are we talking about? >> that's the question, right? the publicly traded new york governed law which is about $45 billion, but they estimate there's maybe $150 billion because they borrowed from the russians, they borrowed from the chinese. they have promissory notes out to halliburton, baker hughes, et cetera, and big pension hold for their oil company. there's a big number out there that's all going to go in the pot. >> it's going to be messier than argentina or greece by a long shot the first time the chinese will actually really be involved in a

debt renegotiation >> interesting thanks, michelle >> let's send it over to sue herera for a cnbc news update. >> good morning, everybody here's what's happening at this hour president trump wrapping up his asian tour in the philippines. he spoke before the south east asian summit in manila calling for peace and security in the region >> we want our partners in the region to be strong, independent, and prosperous. in control of their own destinies, and satellites to no one. these are the principles behind our vision for a free and open indo-pacific >> more than 400 people were killed with thousands more injured as a powerful 7.3 earthquake struck in iraq on the border with iran the quake was centered 19 miles outside the eastern iraqi city of huh lujob, and felt as far west as the mediterranean coast. >> liz smith died of natural

causes on sunday for more than half a century, she chronicled the highs and lows of new york celebrities her column was among the most widely read in the world liz smith was 94 years old >> you're up to date that's the news update this hour i'll send it back downtown to you. >> okay, sue thank you very much. >> as we head to a quick break, let's look at stocks to this hour dow to the green, overcoming ge's losses, but very minimal changes. "squawk on the street" will be right back stay with us cross america. cross america. small businesses show their love to you. with some friendly advice, a genuine smile and a warm welcome they make your town... well, your town. that's why american express is proud to be the founding partner of small business saturday. a day where you get to return that love, because shopping small makes a big difference. so, on november 25th get up, get out, and shop small.

gop members of congress are pushing to get tax reform voted on by the end of the week, despite over 300 amendments and discrepancies between the house version and senate version of the bill what's going to happen let's find out james is american enterprise institute fellow gentlemen, good to have you here >> all right, so i guess we can figure out now that the

corporate tax cut will not be retroactive to 2017, but the senate wants to delay it to 2019 the house wants it in 2018 where is it going to end up, do you think? >> i think actually the bigger question is, is that tax cut going to be permanent at all that is the big decision they have to figure out in the senate this week, what parts of that tax bill are going to be temporary and what parts are going to be permanent, because right now, they cannot pay for it according to budget rules so a one-year delay, if you're really excited about the corporate tax cut, the one-year delay may be the least of your issues >> got it, if they solve it, jimmy, then what >> if they solve that problem? >> if they solve the pay-fors, in '18 or '19? >> i think you're going to get '18. >> okay. >> terry, where are we on this, just in general in terms of where the votes are and what the likelihood is? i have people talking to me about s.a.l.t., state and local taxes. here in new york, we're watching

that part of this debate very closely. but there are a lot of reps from high-tax states who are republicans, too and you know, certainly people wonder about those votes >> well, yeah. let me say two things. one is i think the 20% rate ends up in 2018 i have been consistent on that i continue to think that is the case the calculus here is do an imperfect bill through the senate, write this bill in conference, and then every issue is about the pay-for and how to get the most out of the aggressive tax rate you possibly can. that's where this is going on s.a.l.t. deduction, where you end up is you end up, you know, the house and senate, the house would repeal the deduction with a carve-out for property taxes the senate would repeal it entirely i think you end up with a carve hp out, and that's as much for northeastern and california votes as everything else but the important thing is, don't overrate how many of those votes there are. there's only low 30s out of 240

in the house and you know, arguably no blue state senator, save somebody like susan collins, in the entire senate. so i think some sort of s.a.l.t. repeal is going to happen. >> listen, every time you hear the word carve-out, every time you hear private equity people, they don't like interest provisions that raises the odds that we do not in the end talk about a 20% rate it starts creeping forwards to something closer to 30 and then 20 that's a real possibility here >> terry, within the last half hour or so, the president tweeting, why don't we throw repealing the individual mandate for health care into this and treat it essentially as a tax cut? maybe use some of that potential to help the middle class so do you think complicates things if that were to go ahead? or does this somehow make it easier on some of these votes? >> i would never say never on the individual mandate repeal. but i think that's highly

unlikely you know, clearly, neither the house nor the senate are interested in doing that and only if every other pay-for absolutely fell apart i think would they entertain it. and bottom line is that i think that's almost certainly not going to happen. >> doesn't save that much money? >> exactly >> and we're still at 75% that this happens in the first quarter of '18 but there's a growing likelihood it could get done before the new year >> do i look at this correctly do i look at the whole setup and see that, you know, we're talking about the deductibility of interest in general that it just seems to be a push away from borrowing? instead of using the tax code to incentivize borrowing as we have across so many sectors of the economy, they're just encouraging less of it does that make sense, terry? >> yeah, i thing in the abstract i think in the more practical sense, what they're talking about here is, you know, as people like ryan and brady say in particular, is look, we're

doubling the standard deductions we're doing a whole lot of things so we don't have to engage in this more specialist type of behavior, i guess i would call it. but i see your point, michelle absolutely >> jimmy >> you have said a couple things, which is one, you think the rate may have to go higher for corporates, and two, it might not even be permanent. you can't not have a permanent corporate tax cut. corporations will tell you all the time, we can't plan. all the things we need to do, if we think something is going to expire after whatever it would be, nine, ten years. >> i think the river boat gamble that republicans are engaging in is saying there's no way that after ten years democrats could revert that from 20% to 35%. it's not much of a gamble. maybe it ends up bouncing back to 24%, 25%. is that that big of a deal they're either going to have to make those parts temporary, make the personal cuts temporary, which looks terrible, or hope they can do last-minute

parliamentarian deja vu which is unlikely one is going to anger companies. the other just looks really bad for this new populist republican party. >> all right, gentlemen, we'll see how the sausage gets made. thank you so mitch, terry and jimmy. >> thank you >> when we come back, hasbro has made an approach to toy maker rival mattel to try to buy it. we'll give you details and reaction from wall street. >> also, a quick programming note we're going to tell you this a few more times most likely, but 9:30 a.m., john flannery, chairman and ceo of ge will be our guest on "squawk on the street." this, of course, following today's announcements of restructurings and the plan for the company intothe future of course, the dividend cut featuring so prominently in trading today. the stock down another 3.5%. "squawk on the street" will be right back

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hasbro has approached one of it chief rivals in the toy business, mattel, to discuss whether it could buy it. let's get more and bring in jamie katz on this jamie, does it make sense to you from the perspective of the two companies together >> well, i think given the share price and mattel's struggle to turn around the business in recent periods, hasbro would be picking mattel up at a steal price right now. there's still a lot of good brands between the two businesses so they would be a real powerhouse together >> and of course, mattel's shares are up rather sharply, but what do you think would be an appropriate price it's not clear they have gotten that far at this point of course, the approach was first reported by the journal late friday. but what makes sense for you from your perspective in terms of a bid that hasbro might make

that would get the board and shareholders to say yes? >> i think, you know, from our perspective, we thing the normalized earnings power of this business is significantly higher than what is currently portrayed in their earnings releases recently. so i think $18 is a lot higher than where shares have been trading, but our fair value is $26, so we think there's a lot more upside. for some significant shareholders there are two that have more than 10% stakes right now that are passive investors i think they would probably expect the share price to be a little higher than what the market is implying currently >> can hasbro solve what ails mattel >> i think mattel's new management team has a pretty decent plan to turn the business around, taking out some underproductive brands and trimming a lot of expenses so it really depends on how they would want to run the business going forward. mattel obviously is still currently producing a lot of

their products inhouse they have 50% of their manufacturing done themselves, where hasbro has none. so i think it really depends on what the deal looks like and what the business is going to look like to determine how fast a turnaround would really happen and whether a tie-up would make sense. >> big picture in terms of the toy business do we view this as secular decline here you have toys "r" us, in bankruptcy protection. a lot of pressure on the demand side i guess that's both a question in itself but also probably goes into whether there would be trust opposition if you view the toy business not just as a traditional toy business here, if these two guys are just kind of part of a secular decline, maybe they can get together from regulators' perspective. >> i think the retailers are probably in secular decline, as we have seen across a lot of other retail businesses. but the toy space still has a lot of growth both internationally and domestically, i think they can

achieve probably a single digit growth rate. secul secularly, slower maybe than in the past, but still growth available. if you look at some of hasbro's performance in recent years. they're still putting up pretty nice growth on the top line that indicates when you have the right products and the right merchandise, the demand comes to you. >> right all right, but to mike's point, 20 years ago, not to date myself, i can remember when mattel made a bear hug for hasbro then, they could hide behind anti-trust there was a reasonable expectation that regulators would stop that. you don't think that exists any longer >> i think it depends on how the regulators look at it. if they look at just the domestic environment, they may say the share is a little bit too high we think it will maybe crimp competition a little bit, or if they drill down really granularly, maybe the doll category will be very penetrated and hard for others to compete in that. but perhapsif they take a look on a more global basis, it's

still a very fragmented industry the competitive threats to the landscape might be a little bit lighter if the business is being assessed on a more global basis. >> all right, one assessment that's worth watching is hasbro shareholders sending that stock up dramatically as well. thank you for your time. jamie, thank you for your time >> thanks for having me. >> never in my life thought we'd ask seriously are toys in secular decline. that's an amazing statement, isn't it now a look at what's coming up on "squawk alley." john >> well, softbank buying a big chunk of uber, up to $10 billion worth, but the terms, it's all in the terms, how much is uber valued, how much stock are employees going to get to sell what about travis kalanick and the board? that's all coming up on "squawk alley"

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welcome back to "squawk on the street." an old headache is back for the airline industry higher fuel costs. our phil lebeau joins us with more on how the airlines are dealing with that. phil >> mike, this is something we haven't seen for a couple of years for the airlines, the fact they are going to have to confront higher fuel costs and raises the question whether or not we could see higher air fares. these costs are well below what

the industry dealt with six, seven years ago, but since october 1st the industry has noticed a nice increase, maybe not so nice depending on your perspective of 10% in jet fuel prices that is the highest since 2015 it raises the question, will we see higher air fares the holiday air fares for the most part are mainly locked in you're not going to see a big change over the nextsix, seven weeks. it's the first and second quarter things could change. fourth quarter passenger revenue for seat mile, that's the metric everybody focuses on, it's expected to be mixed some airlines like delta and american have said, look, we expect to be slightly positive in the fourth quarter, and yet the airline stocks we're showing you delta, american, southwest, they've all been under pressure since, really, the second or third week of october. that's when these guys all reported earnings. it was a mixed earnings report for the third quarter. demand is going to be strong, but this is what people are going to be watching on the cost side of the ledger

>> certain ly, absolutely thank you, phil. the price of bitcoin plunged 15% before bouncing back, and that's notable, because bitcoin doesn't have the same circuit breaker protections as a traditional u.s. stock index, which would have halted after an extreme drop a lot of this volatility because of the civil war going on in bitcoin. one group wanted to do a split, which would make it easier to produce, making it cheaper and faster than the original, you know, hard core originalists want to keep it the same, because that would be increasing the money supply, which would be inflationary, very interesting this happening >> making up the rules as it goes along by definition, no central authority, so it becomes kind of chaos. >> it does >> or totally free market, depending how you think about it >> where does it all end up? >> i don't know. i think at some point you have a regulator who can make the thing live or die. >> interesting since the cme wants to list futures on

bitcoin. they have to figure how to do that the futures potentially would have this circuit breaker price limits, so how do you deal with the underlying >> and what is the underlying asset? you have all the different splits of currencies >> there's actually not -- you're not really buying -- >> the stuff >> for future delivery of bitcoin necessarily. just an on paper thing i was joking the slip of paper people write their secret bitcoin number on. >> do you know anybody who has bitcoin? >> i know a couple of younger people >> yeah, by definition, right? they have multiple usbs stored in saves and things like that. >> you want the air gap, need it to be -- it's got to be the air gap. >> big drama >> between wherever you store it and the internet, i guess. >> we're all too old, i think. when we come back, a very big deal for uber. the company reaching a major agreement with softbank worth billions, putting the company closer to an ipo

we'll discuss that and much more on "squawk alley." it's coming up next. don't go away. 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

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welcome back i'm kate rogers. markets coming off early lows, but health care remains one of the day's worst performing sectors after a jpmorgan analyst highlighted challenges for drug makers and specialty pharmaceutical companies regeneron, mylan, and celgene all lower on the day that does it for "squawk on the street," back downtown for the start of "squawk alley." >> thank you good morning, it's 11:00 in midtown manhattan where ge is holding investor day, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪