1.4% now off by 0.5%. cac off 0.3% the ftse is positive and what's been happen with treasures? the ten-year at this point is yielding 2.3 i'm guessing 2.3 -- >> 2.4 big difference championships like ohio state, wisconsin, auburn and georgia and cincinnati xavier basketball tomorrow >> so a full weekend >> a lot going on. >> see you later >> where are you going >> headed to china ♪ ♪ good morning welcome to "squawk on the street." i'm david faber. he is jim cramer we've live from the new york stock exchange our colleague carl has the day off.

let's look at futures as we set up for the last trading day of the week quite a day yesterday, wasn't it maybe open slightly lower. there's a look at the statistically meaningless dow jones as well, which is showing a little bit of green. european markets, let's take a look and see how we fared, particularly what it was like to look at spain and italy. the ftse the only winner right now. the dax down almost 0.5% and that ten-year note yield has been creeping up a bit over the last week or so. but hanging right in there at the 2.4 level. another big story is wti and brent 58 out of the opec meeting in vienna. >> yeah. >> the question was about russia >> you follow that guy >> yeah. >> he's like a great reporter. wow. is he good >> let's get to our road map this morning and it starts with that rally and maybe a bit of a pause futures are flat you saw that just now. investors await, of course, what is going to come out of d.c. in

regards to those tax cuts. plus, tripped up by triggers senate republicans are scrambling to find hundreds of billions in revenue to reach that tax deal. and meet the needs of the deficit hawks. and amazon pharmacy coming soon the e-commerce giant in early exploratory talks with generic drugmakers you'll want to hear our additional reporting on what is really behind that and what is more likely to happen. let's start with optimism surrounding tax reform which resulted in that big finish in november for stocks. the dow and s&p each posted record highs and eight straight months of gains. for november, up 3.8%. the s&p up 2.8% and the tech-heavy nasdaq -- >> take laden. >> tech laden, almost 2.2% telecom staples and consumer

discretionary among the strongest. energy, tech i mean, tech tech and materials, how do you say just tech? >> you can't do that anymore >> it involves so much we have to figure out a new label there. there's your leaders there's some of your laggards. >> you know what yesterday was about? real companies that make real money. not companies that delve out stock to their employees but companies that buy back stock. very little supply industrials. not the companies that are doing things that are hard to understand that people buy on momentum telecom. very easy to understand. and so what happened yesterday was kind of a revenge of theers ins day. it was caterpillar, boeing, united technologies. it was easy to understand capital equipment and industrial companies, and a lot of it was deeply related to the tax bill and that's why we can be down big if they don't get this done. >> you think we could be down? >> down 500. >> not getting it done, though, is a difficult thing to --

>> i mean -- >> fail. >> aca-like -- >> yes, aca. i'm sorry. i'm sorry i -- i misspoke. aca failures, dow down 500 a delay is fine. and they are the ones who put the gun to their head. but i think what is -- i have to be careful saying this because i've been criticized for this what's in the bill is good for the stock market as people say, well, oh, that means you're rich, jim, because -- no. it's good for the stock market and there's a lot of things in here that are just, point blank, positive >> and to your point, a lot of those companies that are -- the multinationals, not as much benefit -- >> that's in tech. the tech companies are international companies that we always thought of them as like a cisco when we had chuck robins >> they'll be able to bring a lot of cash back if they want to we're in the belief, and i

listened to him and to others. it's not going to -- sorry it's not going to result in huge investments. they are going to buy back a lot of stock, increase the dividend. that's what it's going to be right? >> yes we're still an expensive place to build things. you'd rather build it in mexico, but then again you have tim cook saying we're going to do -- we're going to build stuff here with corning there's ways to be able to do it but a company like cisco is asset light and in that sense, the -- >> companies going to transfer that intellectual property which they've moved overseas to these low tax jurisdictions. none of them are bringing it back because of a 20% or 22% tax break. >> you may want to start a plan here if the president continues to emphasize this because the president has a lot of swas

persuasion i've been a big believer that the money coming back in is to buy back stock and boost dividends which is why i said it's good for the stock market not necessarily good for the american worker. the american worker costs too much >> also the territorial system which we need to but that doesn't necessarily mean you're going to -- you're still going to benefit from those tax rates which is below what ours will be under the new plan >> look at mexico. i understand why the president wants to change nafta. if the pace is 18 to the dollar, that's a totally unfair advantage, and it's wrong. it was 4-1 when they created nafta. i don't think people understand it's the currency that gives them the real edge you paid $5 an hour in mexico. the state controls health care, and there's not a lot of pollution control laws where would you rather build a plant and the forkforce is 100%. they never -- the workforce is

100% there's no absentee. no union >> back to the market before we get to tax reform. what are your expectations here? we'll get an update on what's going on on the hills of capitol hill you look at some of the names that have been rallying lately even verizon look at verizon. >> now they would love to believe that's because of their plans on 5g getting everybody's attention. >> that's a nice thing nice people. >> that stock has gone 44 to fift. >> we've had -- caterpillar no one thought could get through 138, 140 boeing was up yesterday. goldman sa goldman sachs was up >> these are all companies that buy back stock >> ge -- >> you had to go there

i gave a speech yesterday trying to think about one company, and i came up with a way to be able to break up the ge oil ge is an oil company you can sell the mapping business to core labs, the refinery business to -- people that want to buy everything. flour would like to buy it cbi. don't give it away don't just sell it to the stock market >> let's get an update on what's going on on capitol hill and then we'll talk about amazon >> oh, my god, yes >> but let's get to that push for tax reform continues she has the latest for us. >> fresh momentum here senator ron johnson confirming to us that he will support this tax bill and what won him over was an increase in the pass-through deduction. originally going from 17.4% to 20%. now it's going up to 23% and this is something that was negotiated overnight with gop

leadership it also won over senator steve daines of montana who announced his support earlier this morning. one thing, however, that is still unclear about this deal is how they're going to pay for it. and what that could mean for deficit hawks like senator bob corker and also senator jeff flake of arizona they'd run into a snafu last night when the compromise that they had worked out with republican leadership over creating a fiscal trigger that would automatically increase taxes if federal revenues fell below a certain level, they learned last night that that is not allowed by the senate rules. republicans have been scrambling to come up with an alternative fix. still no word on what that solution will be, but right now, tax reform is getting an added boost with both ron johnson and senator steve daines saying they support this bill. the senate will convene in just about an hour. we're hoping for a final vote

later this evening but clearly senators have a lot to discuss and debate over the next few hours. back to you guys >> ylan, so possible nos are who? collins and who else corker and that's it >> still undecided are susan collins of maine she's concerned about the deduction for state and local property and income taxes. there's also bob corker and jeff flake who are worried about the deficit. senator james langford of oklahoma is another deficit hawk but he has not been quite as vocal as the others about that so perhaps he's someone whom leadership could win over. >> yeah, okay. ylan mui keeping us up to date on the ever-moving bill and the efforts to pass it thank you. you said it already. if it's a fail but -- >> more like t.a.r.p >> i think the question -- the question now is, what's the impact going to be if and when we get it? >> you have been talking a lot

about the way things are depreciated. that turns out to be the most important thing that i've seen that was something that you said was determinant for industry more than anything else. as i go through the bill, which is difficult, that's the theme >> although when i think about the original blueprint from the house ways and means committee and where this thing is now, i mean, they are completely different. and that one made so much more sense. so much more complete. i mean, i know the border adjustment tax drove people crazy to a certain extent but in some ways it made a lot of sense and raised a lot of revenue. >> no, no, i mean, i think -- is it a budget buster obviously, if the economy does great -- >> you saw the latest. $10 trillion over ten years. >> deficit hawks >> raise about $458 billion in economic growth but that's not enough >> no. you've got it totally right. >> we'll see

>> you've been dead right the whole way about the real impact. >> i wondered whether this would really pass. it does appear -- >> it was obviously not in the market, but we have to stay close to capital gains because a lot of individual investors. >> we do we'll stay close to this market. more on amazon's potentialfora into devices, not pharms, plus allan simpson. we'll hear his take on the tax reform bill.

♪ welcome back the continuing investigation of the trump administration and the trump campaigns' ties, to, if any, russia. a plea hearing deal for the former national security adviser michael flynn, he was national security adviser for a very short amount of time, of course, before he was dismissed, is scheduled for 10:30 a.m. this according to the special counsel mueller's office the expectation is he will plead guilty and, of course, there has

been a lot of reporting of late indicating his cooperation in the continued probe. let's get to aymeamon javers on more we can expect >> if he's going to plead guilty we'll wait and see what he says in court or if he says anything at all but the implication here would be that what the special counsel wanted from michael flynn was information on somebody further up the food chain. the question is who is that person further up on the food chain and what information does michael flynn have to give to the special counsel in order to trade out, so to speak, for a lower sentence we'll wait and see what he's pleading to. we've got some court documents that are going to be made available momentarily. we'll see some more detail in just a few seconds the presumption is the special counsel wanted michael flynn to talk to him. he'd been putting enormous pressure on michael flynn through his family, through his

son, through the possibility of some significant charges once we see what those are, we'll have a sense of what it was he's traded out in terms of the charges against him. what we won't know is exactly what michael flynn has offered to the special counsel there'd been a lot of spoke about this over the past couple of weeks that flynn may be prepared to cut a deal we've seen reporting that his attorneys stopped communicating with trump's attorneys that was an indication he may be on the verge of cutting a deal that would put the two camps at odds with each other so we'll wait and see more information about exactly where this is all headed but if you're here at the white house this morning, this could be an unwelcome sign. >> eamon, we'll be following that the court filing apparently does say flynn falsely stated he did not ask the russian ambassador to refrain from escalating the situation after the u.s. had

imposed sanctions on russia. again, it's going to be willfully making false statements to the fbi in january of 2017. that according to a filing eamon will be back with more on this let's get to another story this morning as well, though shares of some drugmakers on the move after reporting by our own meg terrell and christina farr that amazon is in talks to reportedly sell generic drugs. and i spoke to meg this morning as well just to catch up with her on it. and she says, listen, this is not necessarily a sign that they're going to do it amazon does lots of things, and they're exploring it but, jim, very important to introduce some other information here because, remember how much some of the drug distributors, the cvss of the world and others in this ecosystem have moved since the idea was first broached that amazon may start distributing drugs through its

system that appears to be highly unlikely much at this point. freedom of information acts for the filings that amazon made in 12 states have at least returned seven states with paperwork that we have which indicates in every single one of those states where amazon was purported to have made a filing to distribute pharmaceuticals, that's not the case the case is as you look at one here, not sure what state that is -- maine or utah or oregon or tennessee or indiana or new hampshire or north carolina or michigan -- the case is they've only asked to distribute devices. medical devices. in other words, that cane that you want that wheelchair. i dont know what else would be under that device role >> so not pacemaker, not -- >> they have made a specific representation to each of these filings, jim, where they have

not checked the box that says we want to distribute pharmaceuticals. now does that mean one day that amazon might not try to figure out a way to compete with the likes of some of the distributors or with the pbms? it's possible but there have been no discussions with the pharmacy benefits managers >> if that's the case, this is a major change from what we thought was going to happen. >> we don't have all states because they didn't all respond to the foia request. where amazon appears only to be able to sell devices, you could make the assumption that's the case for the other five states >> there are a lot of stocks moving on this mckeson is down. people thought they were going to be cut out. this has nothing to do with them and they wouldn't be hurt at all. mylan is flying, that's a mistake on this. >> as always, we're running out of time right now, but we've got

to do more on it, jim. it clearly states their intent is a distributor of prescription durable medical equipment and nothing again is said about pharmaceutical at some point in the future, amazon might not -- >> you shouldn't shoot mylan up. mckesson >> we've got more. a mad dash with the man right next to me an opening bell about 90s nine minutes away stay with us on "squawk on the street." [ 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. ♪ let out your inner child at the lexus december to remember sales event. lease the 2018 es 350 for $319 a month for 36 months. experience amazing at your lexus dealer. your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.

we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. all right. let's get to a mad dash as we count you down to the opening bell where are we headed? >> one of my favorite analysts

on today in the 11:00 hour. "squawk alley. david, western digital is up right now. she lowered the boom on western digital saying flash is going to come under pressure this year. right here is when she said it the stock has come down. let's say she reiterates it on "squawk alley. do you think the stock is going to go up or down when she reiterates her negative call >> i guess down. >> be aware, katie is the acknowledged dean, the ax as we call it and people have been selling mu, micron i think this was a seminal call. i said it on tuesday people ignored it. they've been glomming all over it ever since. beware that she may say, listen, down here i'm getting more interested but if she says flash could go down as much as 30% -- >> why do you think she'll say

that >> there's a huge increase in supply huge amount of capital equipment on flash there's news that could drive the stock, too, but i think people should understand that she caused this stock to go from here to here now when i say she caused, she interpreted it it's not like she came on and said sell this well, she kind of wanted to but she's just warning you after this great run that we to should go to phil lebeau. >> let's get ford auto sales for november >> quickly, guys, ford up 4.7 last month suvs up 13.4% and the f-series strongest monthly series for november since 2001. we'll get the gm numbers shortly. guys, back to you. >> you hear that serious? f-series is the biggest? that's fabulous.

fabulous if you're waiting for stocks to get obliterated by the bad news out of washington or out of korea or out of main street or out of my name is jamir dixon and i'm a locate and mark fieldman for pg&e. most people in the community recognize the blue trucks as pg&e. my truck is something new... it's an 811 truck. when you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you don't hit them when you're digging. 811 is a free service. i'm passionate about it because every time i go on the street i think about my own kids. they're the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then i'll drive it every day of the week. together, we're building a better california.

you're watching cnbc "squawk on the street. the opening bell going to ring in about a minute and a half as

we get started on the final trading day of what's been a fairly momentous week. a lot of it involving what is going to happen in washington, d. d.c., and this morning it's not just about the senate and the tax cut but about the continued advancement in mueller's probe of russia. and its influence on the u.s. election >> what's interesting is the industrials, i think, can still rally. there are two tech stocks that reported unbelievable numbers last night vm ware. these are about going on to the cloud. vm ware often thought to be in a great relationship with amazon nutanics, lots of price races. these are very hard companies to understand they fit the pattern, david, of companies that have not been -- of shares that have not been working. because people say, i don't know public/private cloud, what does it mean? they want capital equipment stocks >> that's what they want capital equipment.

>> yeah. >> we count down to the bell the open at the s&p 500. you'll see a mixed bag as we get set to open. at the nasdaq, a diagnostics company. marks world aids day that went very long with the bell very enthusiastic. >> i guess stocks go up, the coordination on how long the bell the ascendancy of the transports this is the key to the market. they're out of control higher. that's historically been fabulous as a single for the market, and it's the rails and the airlines the rails in particular, i urge people to watch norfolk

southern that's the key to this market. >> why jud why is it the key? >> this stock is too expensive >> fang is not expensive in som ways given its growth rate >> my point is norfolk southern at 21 times next year's earnings is not that cheap. versus, say, you are starting to talk about where is -- where is alphabet on 2019 earnings, alphabet and facebook arguably are cheaper than norfolk southern. this whole argument that fang is ridiculous now amazon, we know that's -- a great piece today about amazon and web services, how they're doing. netflix never really an earnings story but we know they've done a great job. but facebook and google are not -- 2019 numbers. when we get to 2018, people will

begin to talk about 2019 numbers. they always do but norfolk southern is too expensive. >> all right talking about transports let's get to phil on gm. got the numbers there as well for november >> general motors sales last month fell 2.9%. that was weaker than the edmonds estimate of an increase of 1.8%. not a huge miss as far as falling below expectations but a miss nonetheless as for the monthly sales rate which everybody watches and general motors is usually accurate about predicting. it believes the monthly sales rate in november for the industry was 17.4 million vehicles roughly in line with expectations we'll get those numbers later on today. guys, back to you. >> thank you >> i wonder if that puts a dent in general motors. $134 long-term potential up side i wonder if that puts a dent in the story.

>> i'm not sure it does. two very different things. a lot of talk about their creation of these taxi -- these fleets of autonomous vehicles and the profitability on that will be far higher than it is on their core business. >> so this is a story to watch gm has sustained itself as doing a fabulous job fiat relying on the wamo technology gm has gotten this glow as a tech auto company. >> i know. which ford has not >> no. ford underspent. the fact is that mary barr has made a few really shrewd moves this is a stock that trades on the near term. maybe should trade on long term but doesn't. >> the evolution of these companies is going to be fascinating to watch. >> i agree >> we move to this autonomous future which is still a ways away we don't ever want to make light of the obstacles that may be in the way of having a lot of

autonomous vehicles on the road. whether it's regulatory, technological. just in general, there are things you can imagine will forestall their ability to put a fleet on the road as soon as 2019 >> when it's safer it's safer than humans humans have too much error human strength humans get tired this stuff doesn't get tired now it's pretty amazing. another thing we've not talked about, oil oil is on fire, so to speak. crude looks like it could take out 60 even though the u.s. is pumping at regular levels. and not talked about except for by you to me, a lot of what's happening is venezuela the butcoin capital of the world. they are having trouble paying having trouble paying service companies. so they are dropping in

production rather fast as faster than we are up -- rampant production in shale in this country >> where are we right now in u.s. production? >> oh, my, back to 9. -- avgi've got the numbers. >> approaching 10? >> we are approaching 10 i check those numbers every day. i'm sorry. i don't mean to stall us here. >> i thought you might have it usually you have all these things immediately available >> i know. i do, i do, i do u.s. production is 9.6 just took out the level that we experienced in 2014 that the saudis are so upset about. we're now at max production. thank you, rusty >> and worldwide demand is going up what? >> well, that's the thing. there's very, very -- opec says it could be up by a million barrels. a very good article today about wind and how wind is -- we don't use oil. that's gas that we use nat gas took out its all-time high in production

natural gas liquids just took out their all-time high and it doesn't matter because it's a combination of demand. venezue venezuela. u rack pumping less and saudi discipline no one thought oil could get up here a lot of people cut -- there are still a lot of guys using oil in their 40s. but the oil stocks are leading us today >> okay. back to amazon for a second and our story earlier. i want to make it clear. one thing is not necessarily indicative of another. amazon talks to everybody. as meg terrell is reporting, talks to genericmakers, exploring the idea, could we ever go down that road what we are reporting as well is that in the states where they've applied for licenses, it has not been to sell pharmaceuticals it's been to sell devices. simple as that >> so, david, i'm going to come back right at you and say why is walgreens, therefore, down about

1.35 >> why are people citing amazon potential entry as a reason why cvs would want to buy aetna. >> that was my next thing. under close scrutiny >> there may be reasons they want to do it but it's not clear the reasons are because amazon is moving in >> walgreens had a -- >> remember when walmart made their big deal about selling stuff and drugs and generics in stores 2006 what happened to that? >> nothing remember when u.p.s. thought about becoming a drug distributor? nothing. this is a hard area. >> we felt prime would be a buying group you don't need a mckesson or cardinal health. that's not their orientation, but a lot of people want it. i think people are surprised at the logic. it made so much sense to use prime. like the v.a. which gets discounts. >> a lot to take into account. do they want to become selling opioids over state lines and

deal with the ramifications of that opens yourself up to a lot of potential difficult situations >> save a fortune for the american people. >> and nothing says that they won't go down that road but having 17 people devoted to the effort over 14 years doesn't mean you're going to do it so far there are no indications they are based on the filings in these states where they are filing to sell medical devices >> i wish people would lynch iso this you better come up with another reason to buy it it's down on what is basically a bogus report a bogus report it's a bulgosity >> they're words that i make up for the show >> we'll have our own "squawk on the street" dictionary i don't know if you saw exalta, no longer being pursued by

nippon paint >> are you kidding >> they couldn't get it together or something so they end their merger talks >> they walked away from another deal because of that deal. >> another question is, will they go back to that and the six months on ppg expires today. ppg wanted to come back for axta, they could axalta is up on that >> something is going on >> philadelphia's own. >> just take away another philadelphia company it's really unbelievable how many -- >> another philadelphia company? it's not taken away? >> you have to go there. >> you go there, comcast, every day. >> comcast has been -- >> these are companies under close scrutiny >> comcast has moved up this week has had a very strong week >> it's domestic and pays -- >> it's a domestic business, and it is a big taxpayer

so it's been a beneficiary as tax reform or tax cuts, as we call them, move forward. >> well, the banks >> and the banks banks have been -- >> up again today, jim >> with taxpayers. now they can do things they have -- there's a lot of different stuff involving their losses from the great recession that may have to offset but the banks are moving in part because of tax you know what else is moving the master limited partnerships. >> why >> i think that they escaped unscathed. >> oh, from the -- from the -- >> owned by rich people typically. you know, the rich get richer. >> that appears to be the case >> unless you're from a couple zip codes. >> yours and mine. >> you're from new jersey, california, new york, illinois maybe. >> i worked in new jersey and new york high tax states. you're not getting a cut

if you're wealthy and from a red state, you are >> you don't have to worry about the estate tax anymore >> that's why people don't pay look i'm grateful for what i've had in this country. i'm grateful what the country has given me if i have to pay more, i'm fine. i'm grateful >> the worry, of course, for these places is the higher paying tax base will start to deport for -- they'll suffer dramatically. >> if i were a corporation, you know -- >> and your ability to get corporations to locate in your region, if you are a high tax, why would you -- are you going to be able to hire the employees you need even ge wanted to come to new york and chose boston in part because tax. >> can we just not talk about ge for 30 seconds let's talk about nutanics. it's a public/private cloud and it had an unbelievable quarter

but you know who didn't have an unbelievable quarter and yet the stock is barely down ulta they dropped the bomb about margins. the stock down 16. now it's only down 4 the rest of the business away from the margins are good. delivers again, a double-digit number and, david, brick and mortar, not bad for them remember, you cannot -- you can't get your hair done and blown out by amazon. >> no. not yet. >> not yet not yet. >> not yet >> someone reporting that amazon blows out here >> not yet >> i've seen a lot of reporting about what amazon is going to do and not going to do. >> a lot of things amazon could do >> don't you think it's interesting? don't you think it's interesting that macy's, strong traffic, leads macy's to hire 7,000 more holiday workers? with a quote from the chief

stores officer, macy's has had a great start with high customer volume across our business due to strong traffic in our stores, we're adding associates. that confirms what they told me on "mad money. pbh doing well this group is defying what we thought, whether it beat kroger against the death star, whether it be macy's against the death star or walgreen's against the death star >> the death star reference to john malone's comments to me in an interview a few weeks ago referring to amazon when the death star moves into your universe speaking of universes, let's get to a difference one on the floor with bob pisani. >> you can see the concerns about the tax cuts definitely moved the markets very easily. let's look at the sectors. energy, oil.

$58. that's finally helping oil banks generally up this week but they're flat and semis have had a tough week. we're down 5%, 6% in semiconductor index. retail has finally turned down a little we've been up 5% this week, almost every day in the retail space. take a look at the futures here. this is a big day. closer to the tax bill passing despite all these floaters we were down 2630s earlier on. and it rose as the chances look better ron johnson turned around. so you can see the thing moving around here on the prospects of whether this is going to go through. what's next? there are certain assumptions that traders are making about tax cuts right now first is that the cuts will be effective in 2018. and the corporate rate is not going to be 20%. the models are based mostly around 20% that influences the earnings and this is what this is all about this is how you understand why

the market moves on tax cuts right now without tax cuts, analysts estimate the earnings will be up 8% on the s&p next year but the top down guys are saying those strategists are estimating with tax cuts, depending on the model, it could go up 11% to 15%. that's why the market moves on tax cuts where are you on that 11%, 15% it doesn't matter. it's higher with the tax cuts in there. now the big issue is the market is pricey. if you get the tax cuts, look at them now almost 19 times forward earnings that's pricey. people are right it's pricey but with tax cuts you can say the market multiple is much lower. in the 17 and low 18 now more reasonable territory. that's why tax cuts matter what happens next? let's assume we get tax cuts do you sell on the news? that's the biggest debate right now. i don't have an answer i think it could likely happen for the short term then next is what -- what side of the equation you're on. on global growth in 2018 and the fed's aggressiveness

if you think global growth will be 3 and the u.s. 2.5, stocks could go up. if you think powell will continue yellen's, fine. but if the expansion is going to stall out if you think powell is going to step on the pedal, it will be four rate hikes, now you have a problem the market is definitely going to stall out want to point out two exchanges. historic highs the cboe and chicago mercantile exchange at highs. key point here, u.s. regulators are going to allow them to trade bitcoin since they got the approval from the futures commodity trading. and the cboe has simply said it will be soon but i anticipate it will be around that time now the next thing is when will we get etfs? b bitcoin etfs this is regulated by a difference group the s.e.c. regulates this. and the s.e.c. has already

turned down these. have the presence of a futures contracts created a regulated market for the s.e.c. to allow that i can assure you the minute this is happening, there's going to be applications put back in over at the s.e.c that's what we have to watch moving down a bit here, down 47 points on the dow. >> bob pisani, thank you let's join rick santelli at the cme group. >> morning, david. what a week it's been. as i look at the board at 179, two years are up, one on the day, four on the week. ten-year at 239. up two on the day, up five on the week a correlation is changing. this is something you really need to ask yourself we've been in this one world, one market for quite a long time primarily due to the activity of central banks. but things are starting to change a bit look at the intraday of tens one week of tens gives you a better picture

you see that thinly traded run-up we're filling that in and holding. it's significant to know that 244.5, 245 is where we settled last year and 233 is the average price for the year those are two levels we could see a lot november the last month of trading looking at one week of booms this is my correlation the next start will really explain it this is a mid-april of this year chart of our ten-year minus the european ten-year, the bund. it's at the highest since april of this year why is that important? because the fact that bund is moving down in the past his created buying in the arbitrage on the relative value trade bringing our rates down. but our economy seems to have shifted from second to third equities have been on a tear all year fixed income markets are taking note i know legislation on taxes is going to figure in promptent inially, but it's something to consider when you look at the dax moving one way and many of

the u.s. stock markets moving in aggression fashion more northerly. key point. now the pound has been the big stellar performer this week. it's taking a little break now on a friday. makes sense. look at one week of the pound/dollar it's turning a little bit. maybe the most important trade is the pound versus euro and that still looks awfully strong let's see, david, back to you, but also, hopefully everybody will watch at 10:30 eastern. we'll have senator alan simpson. never a loss for a colorful phrase i think it will be an interesting view >> it certainly will always good to hear from senator simpson. >> i go back to the cvs. the st. louis post dispatch story, i'm sorry, st. louis -- >> that's correct. >> and cvs, one of my favorite companies, i stopped supporting it entirely because the story that they wrote was that it was pharmaceutical >> that's why we're correcting the record here in terms of looking at the actual filings to

see it's devices, not pharmaceuticals. >> from that story -- >> it went down a lot. >> it was crushed. so you get the numbers this went from 78 to 67. i'm glad you cleared the record up because that number destroyed the stocks >> that was the main reason we wanted to follow up. and wapted to follow up. others have followed up as well. other reporting being done >> i'm telling you, that story made me say get out of cvs >> yeah. meanwhile, we may have a deal with aetna and cvs very, very soon still to come here, share of vm wear up more than 50%. the ceo is going to explain how his company's cloud strategy is paying off we'll be right back.

not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. [lagale force winds,s absolute chaos out here!

accumulations up to 8 inches... ...don't know if you can hear me, but [monica] what's he doing? [lance] can we get a shot of this cold front, right here. winter has arrived. whooo! hahaha [vo] progress is an unstoppable force. brace yourself for the season of audi sales event. audi will cover your first month's lease payment on select models during the season of audi sales event. not enough to keep up as the saudis keep a lid on production. there's a ok awtlot i. we're back after this.

i'm here to talk to you about how at&t gives you more.

and so am i. like how when you buy the amazing new iphone 8 you get another one on us. see we give you more phones and more spokespeople. are you guys doing a spokesperson thing right now? yes. awesome, can i be in it? well, it's kind of like a two-phone deal. so two spokespeople. got it. k. thanks. at&t it's time for more. it's time for more. buy the amazing iphone 8 at at&t and get a second one to gift, on us.

live binge dvr'd shows,te sport, while painting your toes. on demand laughs, during long bubble baths. tv on every screen is awesome. the xfinity stream app. all your tv at home. the most on demand, your entire dvr, top networks and live sports on the go. included with xfinity tv. xfinity. the future of awesome. man, i feel like mr. rogers. the time goes fast and it's time to say good-bye. >> not before we talk about lamer research, down in a straight line.

they make the capital equipment for companies like micron. they make the capital equipment for all the semis. you have to ask katie about what the heck is happening. >> what do we have on "mad"? >> we're going to focus on why the stock is down because stanley bergmann is a very smart man. >> have a good weekend >> my wife said it's going to be a surprise i said the surprise is wisconsin versus ohio state. surprise is auburn the surprise is the eagles but i think i'm going to be surprised negatively going to be a downside surprise. >> no, it won't. >> we'll have the etlaest from tt tol hill when we come back onhacontinued push for tax reform [ mouse clicks, keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] [ mouse clicking ] [ keyboard clacking ] ♪ 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.

your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.

welcome back to "squawk on the street." i'm david faber look with michelle caruso-cabrera. carl and sara are off this morning. economic data crossing the tape. let's get to rick on those numbers. >> on october construction, up

1.4. that's like three times what we were expecting and really shows we're getting a spat of good numbers. now for november read on ism, nationwide, we knew chicago was hot, hot, hot. this one is pretty good. about as expected actually at 58.2 it follows 58.7. and it's the lowest read since july, which was 56.3 but these are still hugely lofty numbers. and if we think about 60.8, which was september, that was the fourth best read, the fourth best read in 44 years. so we're still lofty, but we have come down a bit let's go through some of the internals on prices paid 65.5, cooler than 68.5 maybe the most look, new orders. new orders at 64 a little over a half percent higher than our last look. and finally, employment, 59.7, that's about in line, a lateral move with last month, which was 59.8 we backed away from the 240

issue in tens, we're at 238, and still up on the day, up on the week david back to you. >> thank you, rick rick santelli. >> markets are down a bit this morning following yesterday's large rally. the dow capping its eighth straight month of gains. its lawnest winning stream in 22 years. crossing 24,000 for the first time, less than a year from when it crossed 20,000. of course, the differences get smaller and smaller. i should say the 1,000 point differences percentage wise are clearly smaller. >> a lot of large numbers. >> yes i picked that one up along the way. let's get thoughts from barry banister and david rosenberg chief economist and strategist barry, let me start with you we have seen a bit of arotation lately names that will benefit from tax cuts, tax reform, have come to life do you expect that to continue >> sure. if you think about it, looser

monetary policy and tighter fiscal are opposites so as you loosen up the fiscal side with tax cuts, you're likely to get slightly tighter monetary policy. and also you're getting some reflationary traction, and i have a forecast at the ten-year yield heads higher here. >> you have us getting almost 3% by the first quarter of '18, don't you? >> yeah, i expect a bear steepener. you're seeing some reduction of qe abroad, particularly in europe, and that has the tendency to lift the yields that are artificially repressed that raises the floor for u.s. yields and of course, you're going to see better growth in the u.s. in 2018 going into the first quarter, if we have a good holiday sales season we just had great auto numbers a few minutes ago. so yeah, i'm expecting a higher yield as we enter the year >> david, how does the likelihood or at least growing prospect of adding some kind of

tax cut stimulus to a u.s. economy that already really seems to be humming right here, do you have to kind of adjust how you're thinking next year plays out at this point? >> i think maybe it affects some of the timing. so if we get the tax cuts through, of course, that's going to leave through the withholding taxes more money in individual pockets. we'll probably see some cap x response to the accelerated appreciation aallowances, i really thinkas we move through the year, we're not going to be talking about tax cuts anymore we'll be talking about the midterm elections. we'll be talking about the rising prospect that the democrats take the house and what that's going to mean going forward. but i think that if there's anybody who has said anything reasonable in the past while, it was bill dudley from the new york fed who said yesterday that we don't really need tax cuts right now. this is what's been muddled. it's not really tax reform at all. tax reform would mean that you cut the top marginal corporate

rate and you broaden the base. you make it revenue neutral. this, to me, is basically, you know, deficit finance tax cuts and heading into the ninth year of expansion with a 4% unemployment rate to me is irresponsible fiscal policy. how does the fed respond if you remember, ronald reagan cut the top marginal personal rate in 1981 the fed did not accommodate that tax cut. they raised interest rates, and to a lot of people's surprise add the time, we started a recession in the summer of 1981 that lasted six quarters to me, the big question is how does the fed respond to stimulus like this with a 4% unemployment rate >> which is why maybe barry was talking about higher interest rates. if i could shift the conversation a little bit. we had a huge rally, telling us tax reform hadn't been priced in that idea was on we were going to get it today. we're seeing the markets come up is there anything in this that

might be related to general michael flynn doing some kind of plea deal today? we think around 10:30, and whether or not that gets us any closer to president trump and his office and the mueller investigation and whether there's stability within his presidency is that something we might be seeing today or is the market not worried about that >> no, i don't think so at all i think it's just digesting some of the recent gains. and as you look at tax policy, we have to do something for business and i know it's late in the cycle because we need the investment, the productivity and the real wage growth bush cut capital gains and dividend taxes to stimulate capital formation. reagan cut income taxes after the bracket creep in the '70s. i think the tax policy is logical, albeit late, but keep in mind, yellen is leaving probably with a zero percent real rate. everything is happening in slow motion this has been a slow motion recovery from a great recession. >> barry, what do you think?

do we sell on the news, though >> no, no. i wouldn't sell on the news. i think there's a little bit higher you have this advantage of a slightly higher rate, but still very low much better cyclical earnings in early '18, and it's a little early to be bearish. markets usually finish with a bang i don't think it's quite done yet. >> david, if you think that the fed might have to get a little bit more aggressive here, obviously, everybody has been looking at the treasury yield curve now down below 60 basis points between the two and ten-year but you have this alternative school that says, look, it's a long time before we get to a flat yield curve, before we have to worry about a recession or something. how does that play out >> well, you're barely three hikes away from the yield curve inverting, so and that's basically what the current fed dot plots. and the current fed forecast doesn't have fiscal stimulus in there, so the fed may well go further. you know, this talk about 3% or

higher ten-year note yields, i have only heard that about a million times this entire cycle. you know, we have had so many opportunities with the animal spirits and the narrative for ten-year note yields to break above 3% the question for the bond bea r bearers is why hasn't it happened yet this tax cut, how isn't it priced in at this point? it's all we read about day in and day out. i think there's still a lot of secular deflationary forces at play that transcend late cycle stimulus that's going to prevent bond yields from going up much i'm not saying it's calling bluff on the tax cuts. it might be calling bluff on the extent of what the gdp impact is really going to be considering that we're coming into this with a deficit of 3.5% of gdp gross public debt is over 100% of gdp if you look historically, it's not linear the higher the debts, the less

stimulus you get from easing the fiscal policy. if fiscal stimulus was really the great answer to, you know, other structural impediments to the economy, then how come it took so long for japan to get out of it. >> greece would be the wealthiest nation in the world, to that point, david yeah, everybody gets that point. thank you, guys. >> thank you >> david and barry all right, news to get out of washington this morning we mentioned it earlier. former national security adviser michael flynn will plead guilty to making a false statement to the fbi in connection to the russia investigation eamon javers with the latest >> reuters is reporting flynn, the former trump national security adviser has turned himself in to the fbi. we're expecting him to appear in federal court in about a half hour's time, where the special counsel's office says he will plead guilty to a single count of lying to the fbi, specifically the criminal information that was released by the special counsel's office says that he lied to the fbi

about his conversations with the russian ambassador back in december of 2016 before he took office as the national security adviser here at the white house. and of course, before president trump was inaugurated. that interview with the fbi took place in january of 2017 and i can tell you, i just got off the phone with a high ranking former fbi official who told me a couple of things to watch for today. one is that at 10:30, we might get a plea agreement, which may spell out in black and white whether or not flynn, the former national security adviser, is cooperating with the special counsel's office in their investigation of whether or not there was collusion with russia in the 2016 election it may not reveal that information specifically, so that's something to watch for in the next half hour this former fbi official also telling me of this charge, which is known as 1,001. it's a charge you can do time on, but it's typically used by the fbi and by prosecutors as a leverage point, to get somebody to cooperate

what this former fbi official suggested to me is that there might be a situation in which michael flynn would be cooperating in exchange for a lesser charge. this is viewed as a lower level charge, particularly given the speculation about turkey lobbying and some of the other things that have been floating around out there, reporting wise, that flynn could be charged on if that's the case, then the speculation will turn to who would michael flynn flip on if he is indeed flipping and cooperating with the special counsel. there are a number of officials here at the white house, up to and including the president himself, that flynn might have information on that the special counsel would want all that is speculative, though. the next piece of information we'll get is at 10:30 this morning at which point we may learn whether or not he's cooperating with the special counsel. we'll watch for that we have cameras at the courthouse now we'll bring you any information as soon as we have it. >> as you mentioned, a lot of speculation, maybe he would go down for the logan act or the foreign agent registration act

correct me if i'm wrong. guidelines on lying to the feds is five years in jail, but if you strike a plea agreement, obviously, it goes down. >> yeah, that could be mitigated down later when the fbi would come into court and say look, this guy cooperated with us. he did everything he could to help the government. therefore, we're recommending a lesser sentence. you can do time on this. what this former fib official said is they lock you in when you're cooperating with a charge, a lower level charge, and then they have sort of stair step higher level charges they have in their hip pocket that if they feel you as the defendant are not cooperating fully, along with the agreement, then they can charge you with other things to ratchet up the pressure so the advice that attorneys generally give to cooperating witnesses is put it all out there on the table, once you take the deal, don't hold anything back, but this is a dance between two teams of attorneys. >> got it. thank you. when we come back, billionaire real estate developer rick caruso, no relation, at least i don't think so, is with us

pas take on taxes, amazon's imct on brick and mortar and much more. alerts -- wouldn't you like one from the market when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

every day, we talk about amazon shaking up the retail sector our next guest, however, thinks e-commerce giant doesn't have to

mean the end for traditional brick and mortar billionaire mall owner rick caruso developing a new concept, shopping village, to better capitalize on e-commerce growth. he's the founder and ceo of caruso affiliated. we're not related, right >> we have to check that out good morning >> first, i want to ask you about the tax bill if indeed it does happen, what are you going to do with the extra money? is it good for you, good for business >> good for me, good for business, good for our employees, good for the consumer i think business grows more money will go back to the economy. >> what would you do >> reinvest. more properties, more projects we're bullish on the economy and bullish on retail. we'll put more into it >> almost nobody is bullish on retail you own malls. malls are dying. they're dead they're the past not the future >> i don't own a mall. i don't own one mall >> what do you own >> these great places that the community comes and enjoys i own these shopping districts that are part of a fabric of the

community. and our business is skyrocketing, best year ever i'm a big believer in brick and mortar and a big believer in online, and a combination it's creating and it's making for an unbelievable opportunity in retail, i think. >> why >> because there's going to be a hybrid model it's moving to a hybrid model. you have brick and mortar stores they have to be compelling, authentic, relevant. and you have to have great online whether somebody walks into a nike store and buys in the nike store or sees the product and goes online and buys it, the question, is nike doing better not is the brick and mortar doing better than the online so what i want to have in our properties, which we do have, is really smart merchants that really know their customers. why do i love amazon they know their customers. and the good merchants are learning from amazon know your customer and serve them well. give them what they want

>> you were quick to say you don't own any malls. a lot of people do own malls is their decline a direct opportunity for you? do you see opportunities in redeveloping them? you know, i think there's an argument that says it's going to be kind of this blight in a lot of towns that you have this sort of vacant piece of property. >> sure, i think it depends on the town i predicted four years ago the demise of the indoor mall. let's define mall. you know, the indoor mall, to me, is an anachronism. it was a point in time, and it's going to go away their foot traffic every year declines they're not going to be able to turn it around i mean, i sort of compare it to the titanic. you can keep changing the deck chairs, but the ship is going to sink unless they reinvent themselves. i don't see the future for the mall itself, but some of the underlying real estate is fantastic. and it will get redeveloped, whether it's housing, whether it's outdoor shopping, whether it's other things. they have some good real estate. >> we have teased this as you

putting together shopping areas that can capitalize on the rise in people buying online. does that mean you're going to put in amazon lockers, for example, so people can come pick stuff up or return things? that kind of stuff >> we may put in amazon lockers. we're certainly going to put in amazon stores. we're going to put in amazon book stores. amazon is coming up, i would think, with a whole lot of brick and mortar opportunities for us to do business with. the huge growth, we run 100% occupied on every property we own. we have a waiting list to get into our properties. we're very unique. the biggest demand are the online retailers that want to open brick and mortder, the warby parkers of the world, the amazons of the world >> the old omni channel. are you then making decisions? who do you think is doing the best job when it comes to that we talk all the time, retail is doing all right, but it's challenged, without a doubt. those who are not embracing the strategy you're discussing have

suffered the most, it would seem who's in the best position >> the best position are the retailer s that are not form ulaic, that tailor their stores to the community they serve, that are doing things that are unique, providing a great service, and the whole word that everybody throws out now, experience, which i have been talking about for 20 years, is overused and it's getting sort of washed out. adding a coffee shop inside a store does not create the experience i think there's multiple levels of what you want to create in a store that makes it compelling and one of the things is all of us are constrained by time what's the one thing we want that we can't buy? it's time. and so stores that curate for you and make the experience exciting and fun, they create an emotional attraction, and that drives revenue >> what about gyms and spas and rooms full of bouncies and trampolines for kids to get them to come? >> i'm not into all that

i'm just -- those are space fillers. the challenge the indoor malls have is every quarter, they have to report earnings they have to fill space. it becomes a carnival of retail. we have to curate space. i want to have the consumer with the family, but i want to have the primary shopper. attracted and come into our properties feeling happy when you feel happy, because we're in the business of making people feel happy. when you feel happy, you spend more money and stay on the property longer. >> a lot of this would seem to be dependent on having a very talented sales community within these stores >> of course >> quality people who need to be paid well. >> 100%, absolutely. >> without that, you're not going anywhere we all have had experiences where we're like why did i bother coming to the store when nobody knew anything >> where do you gravitate when you go to shop and grab a bite you walk in the store where they greet you, they know you hey, david, thank you for coming back you bought that sweater last week i have a few more sweaters maybe you would like

isn't that what amazon does just in a fancy way through online? that's the way much nlts used to be that's the future of retail. and the retailers that are doing that are doing exceptionally well on our properties, we're seeing a 20% growth this year sephora, nike, top shop. >> 20% growth in what? >> in sales. >> they're having 20%, really? >> out of that group, year over year our properties are increasing in volume over 20% this year. but those stores are connected to their consumer. and we're putting them in an environment that all of you want to hang out, and if you want to hang out, you're going to spend money. >> we play a game here every day, what's amazon going to buy next or do with their money. have you done that game in your head when you talk about how, when they have purchased whole foods, have made it clear. it's not just online it's also brick and mortar >> you gotta be both >> what could they do next would you sell to them >> i wouldn't sell to them because i'm not a seller

i like owning and building and growing. >> we have to cut you off. breaking news. >> taking a look at michael flynn, of course, entering the courthouse for potentially a plea deal. >> did michael cut me off? >> he did. yes, the russia investigation continues. rick, and of course, today is a momentous day. robert mueller taking in that plea deal from mr. flynn we're not sure what he's going to be sharing or what he's done potentially to lessen the charges against him, but he is going to be pleading to -- >> called the false statements crime. generally the guidelines are sentencing five years in jail, but if you strike a plea deal, not necessarily going to have to serve that amount of time. as eamon highlighted earlier, there are other potential outstanding charges. from what we know of the whole process and things that have been leaked, there's the palt of the logan act, the foreign agent registration act was he acting on behalf of a foreign government without

registering or trying to negotiate on behalf of the united states when he was still a private citizen. all of the stuff that we're talking about right now was before he was officially national security adviser, in december of 2016, after donald trump has won the election but has not yet been president at this point conversations he had with sergey kislyak last december. >> the charges specifically are about a january 24, 2017 conversation in which he knowingly made materially false statements he was in the white house at that time. >> that's true, and specifically, what they're saying is that flynn told them he did not ask the government of russia's ambassador to the united states to refrain from escalating a situation in response to sanctions at the u.s. had imposed and flynn said he didn't recall that the russian ambassador subsequently told him that russia had told to moderate its response to those sanctions as a result of his request. >> all right mr. caruso, thank you.

very much appreciate it. up 10% to 20% in the stores. pretty impressive. >> it's been awesome >> rick caruso joining us. coming up, we have changes to the gop tax bill where am i inthere i am. we'll go over here we try to get to the 50 votes. we'll get more on that after the break. not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential.

look forward to your 401k plan. right in the heart of the was in his financial crisis, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it is really the value of a financial advisor.

on the tax bill as they try to whip this vote in the senate ylan is in washington with information that is important to our audience >> new tails on the deal reached with senator johnson to increase the deduction for passthrough bszs the offsets expected to cost $160 billion the offsets will come from the corporate side and are expected to include higher rates for repatriated assets those are 10% for cash and 5% for noncash assets those could go up under those bill reached to apiece senator danes and senator johnson. senator bob corker, the holdout

because of the deficit, he tells nbc he thinks republicans have the votes to pass this tax bill without him. also, bloomberg reporting that senator hatch says he believes senator collins and senator lankford, two of the other holdouts on this bill, will get onboard. so republicans once again coming closer to that 50-vote line they need to get this passed, and there could be big implications for businesses if that deemed repatriation rate increases. back over to you, michelle >> how much higher, do we know >> we don't know yet what we do know is that the house version of the bill is already higher it's 7% and 12%, so there is a discrepancy between the two bills. this could just bring them in line >> got it. yeah, super important, especially to the tech industry. thank you, ylan. >> all right, president trump says the house senate tax proposals will cost him a fortune. but our next guest says that as the real estate investor in chief, the proposals are tailor

made to enrich him joining us, jim stewart. an expert on the tax code. what i think of you as, given the time you have spent on it. and we have all made note, i think, of the president saying this and not being true >> it's preposterous i mean, this tax code, as the proposals now stand, is the biggest giveaway to commercial real estate interests in the history of taxes as far as i'm concerned. i thought the existing tax code couldn't create any more loopholes than they already had to benefit real estate developers, and this one does. in another life, we should all come back as real estate developers >> why >> i'll give you an example. let's say you buy an office building you borrow 90% of the money. you can detukt all the interest. others will not be able to deduct interest, but real estate is a carve-out you can depreciate it, which is a noncash charge at an accelerated rate under the senate version of bill then, you take a big loss on it,

and you deduct that against your regular income, which only real estate developers can do then you deduct the maintenance. you keep it in tip-top shape, deduct all those costs so the value holds. it goes up you sell it at a big profit, and then, you buy something else, let's say a cattle ranch in montana, you don't pay any tax on that. then when you die, once the estate tax is gone, there's no tax at all you never pay anything on the gains, even though you took all those depreciation and interest deductions along the way it's brithtaking by the way, it will lead to overbuilding >> it would seem to. that was my question i started to think about china, for example. very different reasons, but the idea of just creating incredible overcapacity given the changes in the law you're describing. >> it's astonishing to me. and of course, it benefits trump tremendously those aren't the only things either you know, the passthrough rate thing which a lot of real estate developers get is being slashed.

that will benefit him hugely getting rid of the alternative minimum tax will benefit him hugely so, you know, i still hold out a teeny tiny bit of hope that congress will come to its senses and do something about these they're looking to raise more revenue. a, close the loopholes b, if you're not going to close the loopholes, bring back the amt. the whole point was so people couldn't use loopholes to get out of paying any tax. you get rid of the amt if you get rid of the loopholes that would bring the budget into much better align lt i don't see any chance of this because the democrats aren't saying a word about this either. the real estate lobby, the commercial real estate lobby is so powerful, you don't even need trump in the white house everybody is just sitting on their hands. >> real estate has such a hold on the mine share of almost every politician out there we heard from one of our reporters this morning during the call, the real estate lobby actually isn't one of the biggest but it is certainly the most influential, this idea of home ownership in america is so

built in when you were talking, we talk about trump, i reminded me of what i thought was one of his most authentic moments during the debate one of the debates where he says under his breath, listen, nobody who has ever run for president before knows the tax code better than me. and why? because there are so many places for real estate developers to use it >> which makes it, to me, all the more astonishing that he's out there publicly saying he's going to take a big hit on this thing. nobody i talk to, conservative, liberal, in the middle, nobody can fathom any way in which that happens. >> could you say if you have an ordinary high income, you could pay more in taxes? >> yes, but he doesn't have ordinary income. >> we have no idea because we have never seen his tax returns. >> that's true >> most likely, it's passthrough income >> over 500 passthrough entities in his assets. almost all of his assets are in passthroughs but the weird quirk about him is

what little we have seen of his tax returns, he was already paying little or nothing certainly, if you took the amt away, i believe in '95 we saw it return, he was down to only 4% now, it is hard to lower that much more, if you're already paying so little, but i honestly do think this code would do it which kind of takes my breath away >> you could have the government pay you at the end of the year >> yeah, when you add all those breaks, it almost is as if the government is saying, we will pay you to go out and buy a building >> the honor of income taxes >> i think i know what i'm going to do for the next year. time to get into real istate jim, thank you jim stewart. >> let's get right over to contessa brewer for a cnbc news update at this hour. >> hi, there here's what happening right now. islamic militants stormed a provincial government complex for agricultural research in pakistan and killed 12 people, wounded 35 others. police and military troops killed three attackers during the firefight. a taliban militant group claims

responsibility chinese officials say ten people have died in a fire in a mixed residential office building in a northern chinese port city. the fire broke out early this morning. it was extinguished in fewer than three hours one perb is being held as part of an investigation. >> pope francis hosted an interfaith peace meeting alongside muslim, hindu, and other leaders in bangladesh. he spoke about religious freedom and praised bangladesh >> hundreds of royal fans, some carrying british and american flags, lined the streets of nottingham to welcome prince harry and his fiancee meghan markle to nottingham it's their first official commitment since they announced their engagement there's a lot of interest on this side of the pond. that's our cnbc news update for this hour. i'll send it back to you >> contessa, a big hit i'm sure when it happens. when we come back, the ceo mmd ontinental resources harol ha will be with us when "squawk on the street" comes

right back well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. when trying to save for the big things in life...

we tend to start small. less of this. cut back on that. but if it feels like a lot of effort for a little gain... change that. start with something that makes a big difference... your student loans. refinancing with sofi saves over $22,000 on average. it's an easier way to reach your life goals sooner. we've helped over 195,000 people. we want to help you too. find out how much you can save in just two minutes at sofi.com/save

opec and non-opec producers agreeing to extend oil output cuts until the end of 2018 eia data showed u.s. crude had the biggest fall in inventory in eight years. joining us, harold hamm. good to have you here, mr. hamm. >> good morning, michelle. good to be with you. >> before we get to oil, can we talk about taxes looks like we're getting there step by step, that we might actually see corporate taxes cut in the united states what do you think that would do for your business and for the country? >> well, you know, we talked about trump rally about a year ago. and absolutely, what business is

feeling today is complete renaissance in our economy and taxes, you know, we work in taxes. tax reform and that would just be icing on the cake here for what business needs in america to turn it loose. and i think that's what we're seeing in the stock market today. this new renaissance that's come about. it looks to me like it's going to happen today. and we're very hopeful that -- >> what would you do with the extra money? >> well, you know, last three years, we haven't had to worry about that we haven't had a lot of profit in our sector of the business. but perhaps going forward, maybe we could have some profits to look at, and you know, opec yesterday acted very responsibly, and those of us that follow this very closely,

we wasn't surprised we're seeing ary balan r rebalancing of the market. 1.7 million barrels of new oil demand per year, per day and so that's very positive. with the economy doing what it is around the world. that's very good but you know, the supply and demand situation hasn't balanced quite yet. and that's what opec and other countries that have joined in to make those cuts realize. so they did the right thing. >> mr. hamm, you say opec acted responsibly. how is the u.s. production business treating this market right now? in other words, is it supply discipline is it capital discipline that's the rule right now or are we basically running flat out, as some of the production numbers seem to show >> well, no, we're not running flat out what we're seeing is the industry being very disciplined.

there's some new dynamics in the market, you know, we have long advocated we shouldn't just do everything we can do, you know, growth at any cost that doesn't work. it doesn't work for any industry it certainly doesn't work in this one so that's not the deal anymore and finally, you know, the analysts and everybody else caught on. shareholders caught on and said, we're not going to put money in there just for growth's sake we want a return, a good return on capital employed. so that's where it's at today. that new dynamic as entered into the market it's affecting everybody out here and thank god it's there so we have seen a flat, pretty flat count let's look at what happened with the rate count it went from about 2,000 rigs down to 450. since recovered somewhat into

the 800s but it's been pretty much flat overall, you know, for the last several months >> all right, so let's go out to 2018 it's fast approaching, mr. hamm. you know, people are talking about what demand growing by as much as 1.2 to 1.5 million barrels a day. can the u.s. meet that are the saudis going to be in an even better position as 2018 comes to an end to try to meet that excess demand, so to speak? >> i think really what's set up for 2018 with the demand that we just talked about, 1.7 million barrels of new oil per each year here going forward, and i think we should expect the same thing in 2018 that we have seen in 2017 as far as demand goes so looking out, i think we'll see continued rebalancing of the supply and demand situation out

there. yeah here in america, we can oversupply the market. i thought it was interesting yesterday when the oil minister said that there had been a lot of fearmongering, a lot of talk about how high, you know, the production could go here in the u.s. it seems like eia and some other people are more enamored on new technology and new records being set and everything else, other than doing their job and predicting what -- and forecasting what oil production is today >> mr. hamm, i don't know if you have insights into what's going on with sit co, there's been a massive purge by the venezuelan government where they're putting people in jail, individuals who hold u.s. passports, dual citizens their production is down, and it keeps declining. that's good for you when it

comes to oil coming off the market, right? any other thoughts about what's going on there >> well, yes you know, that company, country and company that you mentioned is in total disarray and you know, corruption is rampant. inflation is, you know, triple digits you know, every year and so we're seeing a meltdown in venezuela in oil production and in fact, it cost that entire country under the ruler that's in power there today so you've always got some country coming on with new production that's one thing opec did this time, was brought in libya and nigeria, two countries that have had terrible disruptions but have put a cap on their production so that's a new element. something that needed to be done

that is never wanted >> always good to have you from oklahoma city. >> it's good to be with you. thank you. >> thanks, harold. see you later. >> as we go to break, take a look at shares of blue apron, the company announcing its ceo is stepping down he's being replaced by the cfo at the company following what is, of course, been just a straight line down since the ipo last summer.

with the dow 24,000 in the rear view mirror, what stocks could take us dow 25,000 find out at tradingnation.cnbc.com more "squawk on the street" coming up.

let's get right out to the

cme group in chicago, where rick santelli has a special edition of his santelli exchange >> thank you, mike i would like to welcome alan simpson, former republican senator from the great state of wyoming, and currently attorney at berger simpson. senator, thank you for taking the time today >> well, i'm right here. you usually are up to a lot of tricks and i always enjoy visiting with you. >> excellent >> here i am in the wild, beautiful day. high blue sky, about 40 degrees. can't beat it. >> i am a big fan of wyoming, montana as well. senator, when i look at the tax plan, here's what i see. our current system, in my opinion, is nothing terrific i like the corporate side of this i'm not enamers with the individual side. when they get the kinks out and pass it, i don't think the country is worse off for it, and i think there are benefits even though it isn't perfect. your thoughts, specifically, on the tax reform proposals that

are being woven into final legislation. >> well, i think it's like i used to say. you can't get anywhere unless you get a horse on the track they've got to get -- they've got to get two bills they have the one in the house they can get the one in the senate you go lots of things that take place that you and i will never dream, but in the course of it, i think they've given up anything called revenue neutrality, and i agree totally with the corporate thing. people may get mad at that or furious, but let me tell you, we saw that is a very punitive thing. you have to pull that down, go to a territorial system where you don't have to get a tax twice. and that's the real core of this baby right here. but i'm with you on the corporate. i don't know the individual stuff. obviously, when only 1% of the person people are putting in this many bucks and 5%, you get all those figures and go crazy

hell, you can confiscate the wealth of anybody that makes over $500,000 a year and run the country for nine months, for god's sake >> okay. now let's get to what i think, and i don't want to speak for you, but i think you'll agree, that the real issue here regarding the debt isn't tax collection, even though it could be better. we take in record amounts almost every year lately. the real issue is, that most of the spending outside the discretionary spending is on autopilot and eating up all the bucks. your thoughts? >> there isn't one of these guys in congress that doesn't babble into the vapors all day long about cuts spending and you give them their little toy in their play pen and they'll fight till the death to keep it in there, and that's exactly what's happening. it's the same thing when you think of the tax code and the tax expenditures, which are all loop holes in any other way and up comes, you know, whatever it is hurricane, a this, a that, or

this, 2 billion, 4 billion, they'll vote for it every time and never blink an eye, and that's where they are, that's what it is >> i guess in the end, for those of us really concerned about the debt and how it impacts growth in a negative fashion over time, what hope is there it doesn't seem as though the democrats, independents, and republicans are going to say we need to tackle and raise the age for retirement or do something about various programs, whether it's disability, or look at health care in a different way how can we get to that intersection before it's a crisis, which seems to be the only way we ever deal with these car accidents. >> well, the trouble is, that's what happens it gets to a crisis, and the real pincher is when the debt goes to $21 trillion and interest rates goes from, what is it now, 240, 50 billion, to $750 billion, and guess what that takes money away from, all the discretionary programs that people babble about all day.

education, infrastructure, defense, and when you take your interest, what you have to pay out, which is totally unproductive, just down the rat hole, and it goes to other countries so they can do something with their education, their infrastructure, their defense, that is nuts. somebody ought to grab the aarp by the throat, who care only about people over 50 and don't give a whip about their grandchildren or their children. that's the saddest outfit in the world today. >> you know, i think you just nailed it in your last comment every little splinter group has their issues, and all of them have good issues, but you can't let the goose that lays the golden eggs keep shrinking in size and think that you can address your social agenda it's about the economy first, and once you make the money, spend it any way you want. senator, thank you i always love listening to your thoughts and your phrases regarding -- >> rick, it's the old people

going to get goosed. that's going to be who gets the goose. >> i know, and it's really sad >> it sure is. >> david faber, back to you. >> okay, thank you, rick always enjoy hearing from senator simpson. let's head over to john fortt to get a look at what's coming up on "squawk alley." john >> it's been a big week for the cloud and we're going to close it out by talking to a big player in the cloud. stock's up 4.5% right now. that's coming up on "squawk alley" ♪

[alarm beeps] let our your inner child at the lexus december to remember sales event. lease the 2018 nx 300 for $319/month for 36 months. experience amazing at your lexus dealer.

we're in the green on two of the three major averages you can see, of course, reversing what had been some losses in the early going of the session. a lot of the potential beneficiaries of tax cuts are up and up dramatically. again, this morning. when we come back, ceo of vm ware is going to be with us on the heels of that company's earnings report. stock up about 5%. "squawk alley" coming up next.

not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.

welcome back to "squawk on the street." i'm dominic chu. energy is the best performing sector in the s&p so far today standout names, range resources, as well as apache, so certainly a sector to watch. that does it for this hour of "squawk on the street. let's send it back downtown for the start of "squawk alley." guys, back over to you >> all right, thank you, dom