2000 indexes all notching record intraday highs tech is the best performing sector in the s&p, up over a percent. paypal also a big winner the payments company expanding its partnership with facebook. that does it for this hour of "squawk on the street. let's send it downtown for the start of "squawk alley," guys, back over to you >> thanks, dom good morning, it's 10:00 a.m. at at&t headquarters in dallas, texas, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ good tuesday morning,

welcome to "squawk alley." i'm carl quintanilla with john fortt, sara eisen of post 9 of the new york stock exchange. the s&p, the nasdaq, the russell all hitting record highs the dow is very close to a record of its own. we're in a period of time here seasonally the markets tend to do well. it's been about two weeks since we saw not only intraday highs, but even back-to-back gains on the dow and s&p. >> technology is in the lead with some familiar names dom pointed to paypal, chip makers, technology stocks. the best performing sector of the year continues to plow this market forward deals are also a big theme, and the question this morning is how many of them are going to get blocked. $200 billion worth of deal this is month, according to deal logic. that is actually a record high for the month, and a lot of it they paint in the backdrop of amazons, facebooks, and googles, john, just getting bigger and disrupting industries and leaving companies figuring out the next step. >> meanwhile, this big

regulatory question mark hanging over all of that as we see the doj moving to block at&t/time warner we'll see if that throws cold water on any of this, but not today. >> doj is, in fact, filing a suit to block the merger of at&t and time warner, citing concerns over competition that at&t could, quote, use its control of time warner's popular programming as a weapon to harm competition. earlier on "squawk on the street," at&t's council argued against those claims here's what he said. >> why in the world would at&t purchase time warner to restrict viewership, to restrict distribution >> only if it thought it could get a lot more people to subscribe to at&t wireless >> the problem with that theory is it does not work. you would have to lose so many subscribers and they would have to go to one service, ie directv

to make up for the immediate and substantial loss of revenues, advertising revenues the whole theory makes no sense. >> joining us, paul dennis, partner at deckert and former doj antitrust lawyer thanks for joining us. >> good morning. >> what do you make of the complaint, and does the deal include dynamics that traditional consent decrees can't handle >> this deal is very different we haven't seen a challenge involving a merger between a distributor and content supplier in the modern era of antitrust, so it's much more difficult to deal with. >> is he right >> well, this isn't a matter of precedent. the government has always

evaluated these merger transactions that involve suppliers and distributors, comcast/nbc transaction is one of them, so it's not unprecedented for the government to evaluate them, it's not unprecedented for the government to seek relief against competitive problems they perceive from the deal, but it is unprecedented to have a litigated challenge. >> paul, does the government basically have to make the case that the remedies that were imposed in previous vertical mergers didn't work and, therefore, now they just have to block this altogether? because it seems like, as you mentioned, our own parent company buying nbcuniversal, that that's the way it's been handled in the past. >> the government does have the burden of proof here, john, but they don't have to litigate, essentially, the comcast deal all over again they have to prove this deal on the merits, come up with a credible explanation of how

competition is going to be hurt, and, frankly, it doesn't really matter to their case whether the comcast deal worked out in a particular way or not. >> so what do you think at&t needs to prove as far as its argument that this is going to be better for consumers? the outside lawyer, the law firm that at&t is working with, was on "squawk on the street" earlier and he actually said you're going to see lower prices for consumers. how do they show that? >> well, first of all, they don't have to prove that if i was them, i would be making the same argument, because you want a positive story if you're representing the defendants in one of these merger cases. what they are going to need to show is by working together, directv and the time warner channels will be able to put together a lower cost product for their customers. it's a more efficient way of delivering service that ought to be a positive part of their story >> speaking of parts of the story, what's not necessarily

positive is the argument that somehow the complaint is politically motivated, that it descends from some sort of influence out of the white house. if discovery helped bear that out, would you chase that theme? >> i would not chase that theme. i mean, this is going to be tried before a federal judge, not a jury, so it's going to have to be a very fact-based argument i spent a few years at the justice department it's a very a political organization, and this investigation pre-dated the trump administration the deal, you'll recall, was announced in october and the investigation went on for months before any of the trump appointees were in office. so there's certainly a basis for this i'm not saying whether i know there's political influence, but historically antitrust division has been very apolitical >> you don't think it makes the job of the appointees harder, what trump has said about cnn? >> i'm sure that they read it,

i'm sure they know what president trump has said we'd all be under a rock if we missed it, but they have a job to do, and they are very focused. keep in mind, most of the people there are career staff lawyers and economists they aren't going anywhere with the change in administration >> indeed, and the president actually hasn't commented on the deal itself since, i think, around the time of the inauguration by the way, paul, we're getting a court filing now reuters has this headline that the lawsuit has been reassigned to district court judge richard leon, having been assigned to a different lawyer earlier this morning. really quickly, i wonder some others like mark cuban tweeted out in the past 24 hours that the case actually might put other players on the defensive like facebook and google because part of the arguments that will be made will focus on their market power in relation to at&t's do you agree >> no. i don't see google and facebook

being a big issue in this case they are not going to have to defend themselves. i think the reality of these vertical transactions will certainly be a big part of the trial and i would expect the defense to focus on the wide variety of industries in which suppliers and content distributors have merged and benefited customers by doing so. but i don't see the government putting facebook and google essentially on trial as part of this >> finally, we had a guest on a few moments ago, jim stewart of the "new york times" who thinks there's an 80% chance the deal closes you seem to be less certain. >> no, i think the parties have very strong arguments here these are inorb tantly difficult cases to try for the government, explaining what we call vertical foreclosure in the antitrust circles is hard to do, trying to bring that to bear in a federal court in front of a judge who deals with a wide variety of cases and who's not trained in

antitrust matters will be very challenging for the government the government's going to have to distinguish this particular market situation from the hundreds of other markets in which vertical deals have successfully benefited consumers. >> we're all going to get an educate in antitrust law over the next several months. paul, we hope you'll come back and help us through it thank you. >> i'd be happy to come back in, thank you for having me on when we return this morning, cnbc exclusive with the head of williams-sonoma. then how doj's challenge could be bad news for facebook and google later on, we speak with the man some call the father of virtual reality and get his take on technology, social media, and the growing pressure against silicon valley when "squawk alley" continues feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies,

and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

keeping our eye on stocks here we're looking at a 174-point gain in the dow, inching closer. there we go, record high record high for the russell 2000, for the nasdaq, as well. pretty broad based rally, technology in the lead, 1% gain for the nasdaq, but still signs of strength all over the place, including in health care apple is the biggest winner in the dow. only losers are walmart and nike by just a bit, but walmart has had a pretty strong run lately >> all right and retailers going to be a big part of that rally if it

continues. they are gearing up for the post thanksgiving biggest shopping weekend of the year and in the age of amazon, the battle for e-commerce customers, williams-sonoma is making a big bet on augmented reality announcing plans to buy a 3d scanning company joining us now to explain exclusively, williams-sonoma president and ceo laura alber. laura, welcome >> thank you, good morning >> so, good morning. i'm curious on the impact you expect augmented reality and technology in general to have on margins, because that's one area analysts are concerned, though your guidance was overall pretty strong, there was some fears that gross margins, some discounting that you're doing overshadowed all that. how do you expect this to play out in the next year or two as consumers get their hand on this technology and perhaps find it more convenient to buy >> our focus is on the customer and our highly differentiated

platform that we believe is going to be extended by this acquisition. we know that decorating is hard, and we believe that augmented reality will really help people be able to imagine the products in their own homes and make less mistakes so, for example, one improvement we could see in addition to the improvements in sales and conversion online is less returns, you know, which is such a hassle for customers, particularly when they buy large furniture that doesn't work in their home and makinga better decision is better for them. in the end, obviously, better for our margins. >> so you were working with outward already. what convinced you that you needed to own it what is the extra benefit through efficiency or further technology development that you're going to get not just as a customer of the company, but as an owner of it? >> it's such an exciting collaboration. we've been working with them for three years building a lot of models for our websites so you

can see around a product and spin a sofa and imagine it in different settings but having them as part of our company allows them both to see the needs of a retailer from the inside-out, and for us to see all of the capabilities of this technology and really improving the shopping experience. and we think that this proprietary technology and this marriage will help us to really revolutionize the shopping experience >> furniture is really a difficult category to e-commerce enable it's one of the last categories we've seen amazon move aggressively into. how much of your sales at this point are generated through mobile devices, through technology, and where do you expect that to be in three years? >> yeah, our digital footprint has always been quite large. we have over 53% online and mobile is our fastest growing channel. and, you know, this technology really is mobile enabled and,

you know, the app that we've built on the tanga phone that will be launching on the apple store is so intuitive, you know, there's been a lot of different a.r. applications built that you have to be an engineer to use, but what we did was build one where the customer can very simply put the mobile device over a room and clear the contents of the room and drop down entire sets of furniture versus the cumbersome drag and drop often you get when you use some of these room planners. >> laura, i wanted to ask you about the broader business your stock got slammed last week on the back of earnings, particularly the outlook disappointed some investors and analysts still comping 11.5%, so that is a bright spot, but what is going on with pottery barn and what do you see going forward? >> i can't ever predict how the stock is going to react. we're building our business long

term and making investments that serve our customer, so everything we've been doing to improve the customer experience from our supply chain investments, digital enhancements like this acquisition, are things that are going to make the difference in this environment over the long haul, and we wanted flexibility in the holiday season, because we know how important it is to our customers to get their products there on time and in perfect condition and we don't want to be hindered. we want to do that at the best quality possible, so we're very optimistic, we're off to a very strong start in the holiday season and we believe the customer is in a great mood to shop this year >> but you're in the same boat as a bunch of other retailers trying to take share in e-commerce and going direct. how should viewers and investors think about margins and where's the -- where does the pain limitation when it comes to dealing with margins and taking those share gains? >> yeah, sure. you know, we have a very -- one

of the highest margins in the industry, and at the same time we're focused on taking market share and making the proper investments. and customers really care about differentiated products. of course, promotions are part of the retail landscape, but we are a different company. we're differentiated in our platform, which is high touch. we have multichannel, these great brands, we have over 60 million names on our house file, and we connect with our customer at all these touch points and that is why we're able to preserve our value -- preserve our margin structure and also drive better value for our customers. the biggest change we made this year versus last year was investing in our shipping proposition and reducing the cost of the customer on our shipping of furniture. we're still charging, but now you can purchase all that you want for a single flat fee, which is different from last year and so that creates some short-term pressure, but over the long haul we have a very, very powerful model that is got

lasting power in its differentiation points and this acquisition is one more extender to that platform >> laura, talk to me about customer acquisition in this digital era. your brands, in my mind, are the classic mall brands where you walk by, maybe look in and perhaps lured into the store millennials, from what i hear, aren't necessarily buying that way. so between facebook, google, snapchat, others, what are the main methods you need to use to bring customers into this experience you're create something. >> we're using all of them the research shows the customer goes back and forth and even the young adults will go to a store to sit on the sofa because of the nature of the product we're selling, but we are very active in our media channels. we have very strong relationships with our neighbors here in silicon valley who are, you know, facebook and pinterest and we were some of the first people who went on to those platforms and really brought our brands in a new way to those

platforms, who are focused on video, and we just are testing our first addressable tv with west elm through our new campaign called house proud, which we're excited about. >> and just one more about the holiday season, which you did refer to as promotional. how would you describe it in terms of the discounts this year versus what we've seen last year and the year before. seems every year we go into this and hear it's going to be another promotional holiday season where bargain hunters are going to get some great yields >> listen, i think the customer wants value, they want transparency, and they also want high quality differentiated products, and so i'm not noticing their step-up promotions at williams-sonoma inc. we're planning to be at the same level we've been at, but the most important thing for us is the service we provide and the quality of products that we're selling, and we're so lucky we have so many exclusive products that we have a design

in-house with our vendor departments and that sets us apart from everyone else who may be selling a line of lines without a brand. >> and that simplified shipping, that's big laura alber, ceo at williams-sonoma joining us from san francisco, thanks. >> thank you when we come back, why the doj's challenge to at&t and time warner could spell trouble for facebook and google. plus, twenty-first century fox's settlement tied to a sexual harassment scandal. all of this and remo with recode's kara swisher. she'll join us on "squawk alley" next ♪

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more breaking news in media. julia boorstin with some details here on new fcc. julia? >> sara, fcc chairman has circulated his draft order to what he calls restore internet freedom and limit heavy handed internet regulations, referring

to the net neutrality regulations that are under place now that regulate the way internet providers give access to the internet. as you see, most of the internet providers are up right now at&t is down just a share. ajit pi saying the federal government will stop micromanaging the internet, instead requiring service providers to be transparent about their practices so consumers can buy the service plan best for them also saying as a result of the proposal the federal trade commission will be once again able to police providers, protect consumers, and promote competition. of course, the tech companies have been very much pushing to maintain rules as they are, saying a free and open internet is the best thing for consumers. the tech companies have not been hurt by this news. this has been very much expected, and this proposal will be voted on at the fcc's open meeting on december 14th guys, back over to you

>> julia, thank you. let's bring in kara swisher, good morning we were going to start with the big antitrust news of the morning, but now we've got this official, i guess, ruling on how the fcc is going to treat net neutrality which side do you come down on this, which is better for consumers, what ajit is doing or keeping the rules in place >> this is better for comcast and the big cable providers and distributors, not so good with internet companies, which fought hard to put these rules in place under the obama administration, so i think that's really the question, how will the internet companies react to this, because they fought hard to make sure these were in place. you know, this is not a big secret we've done interviews with him a lot. tony rome did a really great podcast. this was coming, they were going to roll back a lot of these rules, because they felt like the internet didn't need to be

regulated. now, internet companies think that these bigger companies are trying to throttle them, so it will go back and forth it's going to be an interesting thing, but definitely a setback for internet companies for sure. >> interestingly, kara, earlier this year reed hastings of netflix in barcelona kind of gave a shrug to the idea of net neutral try protections being rolled back, perhaps because he feels he has enough market power anyway, but isn't this really about competition in broadband all this hyperventilating over net neutrality gets to me, because really what's important is consumers in every area of the country have access to broadband and can make a choice, right? >> presumably that's the idea, where they can make a choice in the prices in most regions there's only one provider that really counts, and i think that's one of the issues and the question is how do you do this and at the same time promote the use of the internet

and growth of these companies. i suspect reed is shrugging because he's got his, right? i think the question is, does this hinder young internet companies if they have to pay more, if there's other lanes, but this is a debate that's gone on for a long time and it's going to go back and forth and back and forth, depending on the administration, is my guess. >> speaking of media regulation, a lot of that is in the news we're tracking the fallout all morning long following the department of justice's decision to challenge at&t's purchase of time warner. billionaire investor and dallas mavericks owner saying i think the big losers of the doj suing to block the deal will be facebook and google. their dominance will be a defense at trial that could create bigger issues for them we've already sort of heard randall stevensons talking about the big google and netflix and amazon threat. is this going to be a problem for them, or is this good for them in that they can just keep

growing their businesses while some of the older schools telecoms get blocked in the way of trying to compete >> well, it's not good when someone is pointing their finger at you saying i'm big, but they are real big i think that's the problem mark's right, very prescient on these things, in order to push their reason they should have this merger go through, at&t is going to point to the fact we have a lot of competitors and they are the big companies, facebook, google, apple, all the companies moving into content and have distribution over the internet are going to be subjected to more scrutiny we talked about this not just on this, but on russia, on fake ads, on privacy, all kinds of things so it's not great when a competitor who's become much more of a competitor is pointing at you and saying that you're a giant utilities or you're big monsters or things like that in order to make the case they have plenty of competition. so it's not good for them and mark is correct in saying it's the excuses they are going to

use. >> kara, if intel can buy alterra, if broadcom can buy qualcomm, and we don't know the answer to that, then how do you make an argument against this vertical merger? doesn't it call a whole lot of stuff that silicon valley has been doing not just in social media into question? >> well, it does i think it's about things being big. of course, that's the argument donald trump made, and then he sort of mucks it up by having personal issues with cnn and other things, so this merger has gotten so politicized. the question is, when is the government going to act on a lot of these things and what's interesting is we've interviewed both sides, the democrats and the republican, both have a real taste for shutting down some of these big americaners and calling attention, especially in technology we had cory booker on talking about this not long ago, so i think it's going to be a refrain over the next year or two, these companies have gotten too big

and they need some sort of regulation, no matter what they are. it may seem unfair at a time, you know, but the comcast-nbc merger was attacked and they had a lot of restrictions and these are even bigger, so it's going to be interesting to see where the government comes down and if they put in effective constraints to them, if they let them go, or if they take aim at other companies. it's going to be a harder time being a bigger company, which depending on which side you're on, you think that's good or you think that's bad >> yeah, we got a little taste of it last hour with the missouri a.g. investigating google >> the a.g.s, too, that's another group. >> and he's running for senate very politicized kara swisher, thank you very much for joining us, as always, from recode this morning let's get over to seema mody who joins us with the european close. seema? >> fascinating session, once again european stocks are ignoring what could be a

watershed moment for germany following the collapse of coalition talks, chancellor merkel now faces potentially a snap election. but as you can see, the german dax ending the session high, recooping its losses for the month, about 1.6% away from its record high, helped by the auto sector volkswagon on gains yesterday, bmw, daimler seeing sizable gains almost as much as 2% cars to airlines, easy jet posting better than expected results, but really helped by a decline in competition as we see more consolidation in that sector air france-klm, ryanair in the green today. let's switch to politics more strategists are warning tensions with the united states could cloud turkey's economic outlook. look at the turkish lira hitting a record low against the u.s. dollar today

turkey central bank moved to adjust borrowing limits, which is once again a negative for the banking sector there and sticking with geopolitics now, putin finishing his call with president trump syria, iran, ukraine were among the topics discussed i would point out, guys, when you look at emerging markets, which have done well this year, russia a key laggard, yet up 10% in the past six months >> there you go. >> seema, thank you very much. seema mody let's get over to sue herera, as well, get an update at hq. >> good morning, carl, good morning, everyone. here's what's happening at this hour uber is being slapped with a $9 million fine by the state of colorado state regulators say an investigation found the ride-sharing service allowed 57 drivers with criminal records or motor vehicle offenses to drive for the company, issues which should have kept them from being hired. all hail the queen, beyonce,

that is, she's topping the list of the highest paid women in music. raking in $105 million before taxes, edging out adele in second place, followed by taylor swift. it is crunch time for performers part of macy's thanksgiving day parade. the rockettes and jimmy fallon were outside late last night tweaking their performances. the parade steps off at 9:00 a.m. eastern time on thanksgiving day and a consumer group is releasing its annual list of the most dangerous toys. the report includes the fidget spinners, some of which have high levels of lead, and bluetooth-enabled dolls, which the group says could become a target for hackers you are up to date, that's the update this hour back downtown to you guys. john, i'll send it to you. >> thank you, sue. dangerous toys, good band name as we head to break, watching the markets, the dow, s&p, nasdaq, and russell all hitting record highs

we're going to speak to art cashim when "squawk alley" comes right back

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we've got a rally under way on wall street record highs right now for the nasdaq, s&p 500, and the russell 2000 joining us at post 9, director of floor operations art cashin welcome. this is strength we saw start overseas is that the driver here? >> yes, to some degree you had strong markets in asia, particularly strong in china

some feeling that they are going to come to grips with some of the dead issues in a manner that will not be disrupted, but more importantly, the move in europe led by the german dax, and the gossip around on the trading desk is that there is some feeling that merkel may be pulling an absolutely wonderful bluff here, saying i guess we're going to have to go for elections. she's scaring all those other parties the potential counterparties in the coalition government >> to force them to make a coalition? >> to have them -- well, the gossip is that the big winner in any new election would be the afd, the somewhat right-wing party, and that would mean many of these other parties would lose seats so if this is a bluff, then the market thinks there's an outside chance it may be, it could be a very clever move >> her line was pretty clear,

minority government is not part of my plans, i'm certain new elections are the better way, right? >> if you're going to bluff, you don't say i have a pretty good hand i think she wanted to sound as direct as possible it's still possible that we do go to an election, but for now the markets are looking at the less fearsome side and i hesitate to say it, the other thing that could be at play here is a seasonal pattern. they haven't worked at all this year, but thanksgiving is usually proceeded by a bit of a rally. we had momentum, we're moving on there is a sense that the republicans have come to the conclusion that they will make any deal, settle anywhere they can, to get the votes in the senate that they need. they are going to trade up and try and get in and that is the belief that has been helping us, even though they are not in session anymore, that they think behind the scenes some of these guys are planning on what will it take, carl, to get your vote in here

>> does that stem from mulvaney on the sunday shows saying they'll pull out the individual mandate provision if needed? >> among several things. they think that johnson and others might be easy to get back with the small token, and that will be it but that is what the markets are believing, that this thing has some real potential to pass now. and hopefully it will have -- >> does the market only care about the corporate tax cut, or is there any focus on the individual side and what that could mean forspending and the economy? >> right now the market is somewhat obsessed with the corporate tax side >> higher earnings >> and does the -- is the market believing in santa claus here? whether you look at merkel or the tax situation, sounds like we're set up for the belief it's all going to work out. what if one or both of those doesn't work out >> that's what we call a surprise and i think it could have a problem. if the -- if the tax bill

primarily got into serious trouble, then i think that would have the most damning effect the merkel thing, they want to see -- they don't want to see her basically lose power and create a vacuum in europe. you know, she's been the -- come to the forefront leader whenever there was a problem. they went to merkel, what do you say, and she managed to get them through. they see her as continuing to be important, but i think of the two, the tax bill would be the most damning >> now today we're getting year-end '18 targets out of goldman, 2850. do you think next year we're going to start talking about what '18 looks like pretty soon. >> you will, but hopefully you'll have a better angle on the tax bill and all those upward projections will just fall into place. the only thing i'm concerned about is that these rallies to

record highs have been coming with negative breath the mechanics and entrails of the market are not as strong as the headline numbers are, so being an old fogey, i keep an eye on the technicals, too >> also worry in the bond market, of course, again, lower yields today and the flattening of the yield curve and wondering what the junk selloff was about last week. how close are you watching that? >> very closely. i think the yield curve gets flatter and flatter. heaven forbid we invert, because an inverted curve is always the predecessor to a recession so that would definitely get the market's attention, but for now, you know, i think john's right they are looking at it, everything's goldilocks for now, not too hot, not too cold, everything is right. we'll stick with that. >> art cashin, thank you, always good to talk about the market rally. when we come back, why the

growing pressure against silicon valley may come to a head in 2018 and what one silicon valley pioneer has to say about that. jaron joins us in a bit. what are you watching today? te> specifically, the seven-year nowhy? you'll find out after the break. in every town, across 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, this saturday get up, get out, and shop small.

i'm scott walker coming up today top of the hour, the biggest question facing investors, how much is really

riding on the gop tax plan will goldman sachs making a new prediction today that everyone needs to see before putting money to work. in the market now, plus, the chip name options traders are piling into today, saying that stock is about to cross a big milestone. and a widely followed analyst makes a stunning call on tesla today. where adam jonas says the stock could go and what might happen next carl, see you at noon, about 15 minutes away >> look forward to it, scott, thanks let's get to the santelli exchange at the cme group, rick? >> hi, carl. you know, when it comes to trading, making money, controlling your losses, keeping some of your capital dry, powdered dry, so you can make other investors should your strategy not work out exactly as you had planned, but in the end, what i've always found most fascinating about trading is that perception is reality now, you heard art cashin, sage of an investor, adviser, is ever

talked on cnbc what was he talking about today? the yield curve. that's pretty much what everybody on this trading floor is talking about and globally. there's a lot of interest to not only our yield curve, but yield curves of different developed economies, intramarket yield curves between the euro zone and the u.s., but at the end of the day i like to keep things simple that's why we're going to start on the last day of 2016. now as you look at this chart, something important is going on today. and it's not that it hasn't happened before, but it's of particular importance today. we settled the seven year at the end of last year, 225. that's exactly where it is today. so that is now the fulcrum i want to pay closest attention to the yield curve and its inversions are discussed widely. let's go to the wideboard, two, three, five, seven, ten, 30. here's where they settled 2016, here's where they are at now, here's where the difference is

you know all this. basically until you get out to the seven year, short maturities are higher, long are lower, but since perception is reality and investors are looking for anything to pull the trigger on trades because they are a bit nervous, there's anxiety out there and it's been around for a while, you've heard different ways to describe it, but what i'm pointing to is the notion sevens and tens are ten basis points apart if you look at tens minus fives, they are only about 25 basis points apart one would say if we get inversion between seven and tens, which could happen easily, get a move on either one, you're inverted the point is, is that even though that may not be the type of inversion traders fear, once any inversion on the curve happens, the talk about it is going to ramp up exponentially, so you want to watch these maturities many curves, even the chinese curve has abnormalities and

inversions, but when it comes to the u.s. continuing the tightening process, it is going to be tantamount to be prepared for what may be a big deal about something that normally isn't a big deal john fortt, back to you. >> thank you, rick santelli. still to come, jaron lanie was a pioneer in the early days of virtual reality, now he's raising red flags about the future of the internet as we know it. "squawk alley" is back after this at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value.

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record highs for the nasdaq, but in global backlash against big team looms ahead according to "the economist" latest issues says, quote, across the rich world politicians will turn on the technology giants, facebook, google and amazon in particular as quasi-monopolists whose behavior is weakening democracy, suppressing competition and destroying jobs there. will even be talk of breaking them up. this adds to exist willing concerns around antitrust, of course and big tech's use of data joining us is jared lanier, a virtual reality pioneer and formerly with microsoft and an author who witnessed tech revolution over three decades. good to have you with us an on or for us. thank you for your time. >> the on zor mine just to be clear presently with microsoft so factor that into anything i say though i'm not representing the company. >> is "the economist" overstating this >> i don't know. we're going to see i can understand why people are upset. i think this perception that the

tech companies played a role in election tampering by bad actors doesn't help i would like to share a perspective as i could about how we got into this mess because i -- >> please. >> so what i think happened, and was part of it so i remember this pretty clearly. there was a very kind of a pure-hearted activism coming from the left actually as the dawn of the internet age saying everything should be free. we should have free e-mail, free social networking, free, free, free, free news, but at the same time we love entrepreneurs we love tech companies, we love steve jobs we love bill gates, so we have to combine these two things and if you say you want both of those things, the only option left is advertising. there's no other business plan that gives you both of those together, but then the problem is that because of the nature of interactive digital technology, especially on smartphones, advertising gradually turns into something totally different as it gets more advanced. it turns into direct behavior

modification where everybody is seeing customized information that's tied immediately to what they are doing hand what they have done in their past and their personality, and people start getting pulled apart because they don't see the same news anymore, and i think it destroys society, and i think it creates a lot of bad feeling, understandably so if we want to fix it, i don't think breaking up the companies fixes it i don't think regulation can really fix it. i think we have to change the financial incentives and let the companies actually have to charge for their services, but even more important people who contribute a lot of value to a social network, they have to have a chance to earn money back from it so they feel there's some kind of equity in paying for the service in the first place. we have to create a real digital economy instead of a fake one, and i think that would solve a lot of our problems. i realize not a lot of people are with me on this yet, but if you just follow the logic, i think that's the conclusion that you'll agree is really where we have to go >> talk about tech's impact on society. about seven years ago there was

a big story about a couple in korea who let their baby die from neglect while they played a video game. >> yeah. >> now, that was on a tv screen. virtual reality seems it has much more potential to suck us in, and you have some ideas about how the lines between reality and virtual reality ought to be drawn. >> look, there's no question that whenever technology becomes more advanced, both the upside and the downside get bigger and bigger, so for me, you know, the upside is incredible three decades ago i had the honor of being able to procreate the first surgical simulator with a surgeon at stanford medicine, and lastyear my wife who suffered from cancer had an incredibly important and successful procedure that was conducted by a procedure designed in a virtual reality surgical simulator by somebody who trained with somebody who trained with my old collaborator so this is the stuff of life we can't just say, oh, enough of this technology. we need this stuff, you know,

but there's no question you can kind of -- you can use virtual reality to make the ultimate behavior modification device it can be really evil and creepy fundamentally we need to have a tech business where the incentives are not to manipulate people but to get productivity from those people to grow the economy which is a totally opposite agenda. if we don't get the incentives right, we really will creep ourselves into a crazy space that we might not survive. >> you do say you worry that vr may -- may happen to it, the same thing that happens to social networks. it becomes the ultimate way to capture someone inside an advertisement. >> yeah. sounds like something i would say. listen, i don't want to sugar coat the downside of this. you know, for years ago, decades ago, i and many others in the computer science field warned about the downside of social media and similar designs and a lot of people thought come on, you're crazy

that's just too dark it happened. you have to take these warnings seriously. >> jaron, i do want to mention your book, of course, "the dawn of the new everything. >> yeah. >> it's out today. recommended by adela thanks for your time. >> thanks for having me on. >> "squawk alley" is back in a moment ♪ i'm done. i'm done. i'm done. done with figuring it out for myself. i'm done with surprises. if you're on medicare,

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not much time left before we to go to "the half" other than to say record highs across the board. we'll see what volume, if it holds up tomorrow in advance of the holiday. let's get to the judge and "the half." and welcome to "the halftime report." i'm scott wapner our top trade this hour, the new prediction of how much is really riding on the republican tax plan and what happens to stocks and your money if it doesn't pass with us for the hour, joe terranova, the brothers najarian and jim lebenthal and aaroerin, lot depends on the t