it was ki tea not chai. >> i thought the worst thing was can i get a check, which i don't pronounce very well. >> embarrassing, alligator, i can't -- short arms. >> we'll see everybody tomorrow. right now it's time for "squawk on the street. ♪ >> good wednesday morning, welcome to "squawk on the street" i'm carl quintanilla with david faber and jim cramer. japan was down about 2%, worst day in eight months as they watch the tax bill negotiations and expected decision to use the u.s. embassy to jerusalem. adp right in line, 190 ki

productivity washington helping drive stocks lower. >> bitcoin boom, the cryptocurrency surging past $12,000 for the first time ever. >> and the buyback trade, home depot announces a $15 billion repurchase plan as congress looks on track to pass major corporate tax reform mute you' futures moving lower three day losing street for first time since august. data from adp, the private sector added exactly 190,000 jobs that was the estimate in fact. the year to date average now, 209, which is better than last year's 181 we'll see what friday brings. >> look, i think we're in one of those moments when i used to trade professionally where you would come in and say it wants to go down i was watching will and morgan this morning japan is down. i said to you on cross talk, copper had a bad day

you know, there's a belief that maybe tech is slowing down, which i can't find -- i ask everybody -- there isn't a big firm where is tech slowing down, can't come up with it. but the market wants to go lower and it's okay. if we had reasons for it, it would be more acceptable but i think there's a worldwide profit taking moment and i can't find -- after a certain point when you're racking your brain and looking at it, it's like bitcoin, i said something negative about bitcoin so i'm marred for life. i can't come up with anything, maybe there is nothing. >> you told the troll on twitter to stay focused. >> told sparky to stay focused why do you get up at 3:30 every morning? do homework. why at 10:00 still doing homework. >> because of clowns like sparky who tell me i don't know bitcoin. i meant to call him mr. clown. sorry. >> no problem.

i don't know him. >> that's all right. >> we mentioned buybacks, home depot and b of a at 5. the era of buybacks? >> look, it's very funny i got like this little thing -- i love the t-mobile buy back, such a wild man. did a little program how wild he is, but i've been going over home depot and reading a key peace and key does a lot of good work talking about the possibility that's all that's happening that they are doing what we thought they were going to do. >> right >> they are doing what we thought they were going -- that's not good enough i mean, this is the premiere retailer in this country what did people expect they just reported recently. do they think in the last 18 days like something happened at home depot to make it so their business is even better than we thought? we saw this with restoration

hardware yesterday they preannounced and did the number you can't just suddenly say, you know what, here's what we know, in the last 48 hours, we sold more snow shovels than we ever thought. there's nothing. so sell? >> yeah. >> i mean one person told me that morgan stanley is looking for 14 to 15% margin -- operating margin, couldn't come in at 14.4 they are looking for 14 -- if it was 14.6, would the stock be up three. we're just as we went up ir r e irrational irrationally, we're having profit taking. i worked on adobe because i couldn't believe why it was down nine i realized it was down nine because it's down nine >> it is what it is. >> yeah. >> stock was up a lot. >> some others weighing in overnight, carlisle's david rub rubenstein gave a dinner and

talked about what there is to worry about in the market next year and in 2019. >> the only thing we have to worry about in 2018 or 2019 is some unanticipated geopolitical event, so-called black swan. if i told you that tomorrow north korea launched a missile into south korea, that would have an effect on the economy. if there was a 9/11 event that would have an effect short of those dined kind of things the think the economy is in reasonably good shape and spurred on by the tax bill. >> in the event of thermo nuclear war i don't want to buy dave and buster's up three. >> you want to get shelter. >> you might want to buy kraft heinz, most of their stuff can last through nuclear war. >> we didn't have a fallout shelter on our block we were one of the poor people it was filled with velveeta,

there's a piece called built from scratch that's called build to last. if there is a black swan -- >> do you agree there's nothing to worry about other than that >> every day i wake up and i'm worried. i'm worried every day. i'm worried about the planet but you know what, i'm worried about the planet but that doesn't make me want to sell health care or riot laugh chain. >> riot laugh chain -- block chain. >> i did work on block chain between the eagles loss, all that mattered. >> did work on block chain myself i really did. >> did you read block chain for dummies, i tried to read those things. >> i read the whole thing. i felt like a dummy. >> i don't understand it yet. >> most important thing since galil galileeo. >> i think he wants to talk about bitcoin and block chain. as far as bitcoin goes, there

seems to be no stopping the cryptocurrency, surpassing 12 k for first time, on track for the strongest quarter since 2013 people hate it when we compare it to market cap, but if we did, it would be bigger than all about 16 s&p -- >> why doesn't it just get to amazon -- >> apple levels. >> apple is inaccesinsepperable >> you don't have a bitcoin watch, do you? >> i found out i was reading the gambling over again because i wanted to see other than double zero, bitcoin is so much like -- who knew that would be the handbook for bitcoin trading. >> are you going to read too >> what are we talking here? >> the idea that it's double -- it could be black or red on a given day. a little ball spins around is there more to it that i don't know >> that's take great question. i don't know the answer either i do know that that guy you're calling sparky, if he owned any

bitcoin like six years ago, he could probably buy and sell you. >> i've been bought and sold so many times it gets tiresome. >> the way this thing has gone and those who believed in it a number of years ago are smart enough to have held on to bitcoin, many of them are millionaires i melt an old friend yesterday who is like, yep, i've got new wealth. >> what does it mean -- >> i watch -- i was on the toll brothers call and they are saying don't worry about the tax code should we just say -- i bought a house and i killed it. so what? i bought bitcoin -- >> i'm busy trying to figure out the valiant balance sheet. am i i throwback >> how about jeff strecker, we may be stupid for not being first on futures i don't have the answers, i wish i knew how they were going to

evolve this is a rather sophisticated observer. >> i like that they are doing -- as is any top, they are issuing different futures. i'm waiting for an etf that does absolutely nothing except forbid bitcoin up into theetf. >> i think we can sit here and talk about the price of this particular crypto currency at this point, but then people talk about block chain, under lying technology and how important it's going to be and talk about ee theer yum these millennials, they like this stuff. >> they like protein too. >> they do. >> they don't like velveeta. >> like to do instagrams. >> don't like chemicals in their food or deodorant. >> do they like buybacks >> i'm not trying to be facetious, the value added, like sara fryer who worked at sales

force and goldman comes on "mad money" cfo of square the square is -- it's not a bitcoin story. don't ever think that it's going to be a bit coin story, it's not even important then like what, 48 hours jack dorsey says it's the most important thing -- the single most important initiative for square now, i don't know. help me. >> how many ways would you like me to help you >> i don't know. i think you need -- i think you need psychopharma work. >> i think you have to cut back, you were on adobe, reading about block chain, little overbooked. >> worried about trading revenues. >> re-reading duskesque ski if the middle of it all. >> he used the word fraud. >> he did, right >> i'm going to send him a copy of block chain for dummies and

see what he thinks. >> that's what i'm giving as my christmas gift, sure. >> thanks. >> honestly, this is what you need that will get you through. >> there's a big thursday night game, what value added do i have whether the saints are going to win or not i'm talking about trying to get us back to where we can have value added and it's really hard to have value added with bitcoin. >> fine, go back to tax reform and stock buybacks, going to be a lot more of that. >> i like to talk about disney and fox but i guess we should be talking about bitcoin. >> it's right here when we come back, the latest on the potential deal between disney and fox we'll check in with david. tomorrow we have an exclusive with lulu's ceo, what he has to say about the quarter and holiday shopping season. watching the sell-off overnight around the globe and we'll see how futures shape up when the

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it's wednesday, one day potentially closer to fox and disney reaching the deal that we told you is getting much cloers.

could be announced as soon as nextd week wall street journal running a front page story on those kind of stories they do so well there behind the scenes look at what the changes were that have led to the strong possibility that fox is going to part with all of the assets we've gone through so many times and won't bore you with going through them yet a lot does add up to the reporting i did as well in terms of james -- which has been my sense leading the charge about the conversation around scale and whether or not fox really had the scale to compete with the likes of facebook and google and amazon and netflix or needed to go in a potentially different direction. then rupert versus james, lockland who i'm told supports his father for the most part what will happen if and when this deal actually occurs and who will go there. lockland likely to run, fox itself, the possibility as i was bringing up yesterday given the delevering that will take place at what will be left or what

we're calling the spinco, those fox assets that will remain. that delefring could allow the company to go out and buy something, putting the two companies together or take it private. and then the question of james' future there is some speculation that maybe he would go to disney in some fashion. >> what? >> that was in the journal story. >> fte yesterday. >> we'll see i think that's potentially not as likely as some might think but he may go his own way so to speak. >> look, i think this whole notion of scale needs to be explained to people at home. there's a belief that unless -- that bigger is better. i work with -- when i started the street i met with at that point it was 20th century fox. and what was incredible, they were talking about scale from day one. they understood that unless you were a beast around the whole world, you would be beaten by another beast who's around the whole world. and it's still the case except

for now the other guys have unlimited ammo alphabet has unlimited ammo. >> and global distribution, which is a key by the way -- great distribution assets overseas which is another reason why our parent company comcast has been interested in having discussions with it and continued to have discussions and why disney has been interested the 39% ownership in sky, very importantly, star in india, very important distribution platform. given our reporting yesterday, certainly a lot of people out there trying to figure it out all and go through numbers, is fox under valued based on expectations what it may fetch, a taxable trans answer, what would spinco look like that could perhaps $2.5 million and what would be left would be around 22 billion. as i reported yesterday, at least 60 billion of assets in enterprise value going to be sold that's including the assumption of debt and it's at least 60

it depends on the valuation they get. regional networks worth about 20 billion on their own. >> when you look at bamtech, it's a mouth and you have to feed it. that regional sports network would be -- >> if you took 60 billion, that would exceed the total value of disney acquisitions on record. >> right. >> yeah. they've done pixar, lucas and marvel, all fairly large and important deal but all single digits. >> all very true this would -- like i said, this is a narrative changer >> synergies are large, there seems little doubt about that. and i've been getting a lot of questions on sky, don't have the answer yet guys, it's my understanding that sky -- that disney would want to own all of sky, which is why that spread has tightened because fox has been facing problems in getting

british regulators to allow it to purchase that 61% it doesn't own. how that would be structured, how that would be part of the contract when that deal would have to close prior to this deal closing, it's unclear to me. i don't have hey lot more to add on that at this point. but try and understand it. >> do you feel after your unbelievable interview with john malone that it is amazing discovery is down in terms of bit's international distribution in the scale and if you put that in too, such natural -- it's great natural disney programming. >> discovery with disney you think? >> yeah. >> i don't know. they are still figuring out and going to close the scripps deal. not until probably the end of the first quarter next year. >> deals take forever. >> deals take forever. any deal takes forever now it's crazy. >> amazon video was announced it would be available on apple tv at www d.c. back in june and just today announced you can watch amazon prime video on apple tv.

>> just now. >> how about the fact there's a great piece about credit suisse this morning about broadcom wired for success. here's a deal broadcom for qualcomm, that literally is -- i think to some degree meant to take a long time it's a siege it's a siege >> broadcom? >> i want to talk more about that later. >> faber report. >> maybe we'll faber report it it's unclear. >> it feels like one of these great siege battles. >> it's early days because they haven't -- they haven't done much yet they may be -- maybe one or two rocks, believe me. >> hock tan, hock is rock. >> another earnings report tonight. >> qualcomm guys haven't called me during the show. >> when we come back, we'll get cramer's mad dash and count down to the opening bell. take a look at the premarket more "squawk on the street squt straight ahead you always pay

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>> here on hump day, a wednesday here at the nnc, you want to talk amazon and continued death star more? >> the death star had been aimed we thought at auto zone, advanced auto. those stocks have done quite well what the death star is aimed at is what you talked about, medical devices. what we didn't real until morgan stanley with an unbelievably good note, it's denial, going

after dental henry shine consumables and patterson consumables and the morgan stanley note which takes them both to sells, fine companies amazon will be selling the consumables right to dentists david, they can slash -- i'm just saying that this is the next level. >> henry shine, i had -- >> i know you had bergman on. >> and asked about competition and told me not to worry about it but this morgan stanley note -- >> amazon would be selling to the dentist. >> the dental market, other than invisiline, they haven't had more products to sell. they'll spend lesson henry shine. now this is an amazing company, also vet products. i've not seen a stelth move into a market that we didn't think -- >> morgan stanley douwngrades

both of these -- >> breath taking. >> do you have any idea what they actually sell >> they sell the -- i understand the stuff when you go to the dentist and get drilled -- >> that kind of stuff. >> it's remarkable piece for what i say is really great reporting. >> no, it's -- now, did we know this whole time? no, but this just shows you that the death star has moved on from auto parts to doing something that if you can -- think about it, what they can do for doctor's offices and do for lawyers, if this is direction they are going in companies that had unbelievably good margins. i thought this piece was brilliant. >> the death star, where will it go next? opening bell next. stay with us

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on the conference efforts regarding the tax bill bit of a sell-off overnight, some attributed to the decision we're expecting out of the white house today to move the u.s. embassy in israel to jerusalem. >> i've been trying to put that in perspective because it's obviously an emotionally charged issue. again, you get emotionally charged issue, people sell i've also got in the last few days, the tax bill doesn't really help u.s. economy i find a lot of these -- it's pin the tail on the donkey market is going down, let's find a reason the jerusalem thing will make something hotter let's watch the defense stocks let's watch -- they sold off yesterday. >> pope francis this morning, writing about how he hopes the u.s. doesn't do this, reversing several decades of u.s. policy, obviously people argue it can spark violence, embolden and --

>> i hope it doesn't but we'll -- i don't want to get into the politics of it other than the fact that it comes from left field like you didn't hear israel advocating for it. >> there's the opening bell and s&p at the bottom of the screen of the big board it's digital realty trust, a data center ret, cme group celebrating its 15th anniversary. jim, you did mention financials a while ago and both jp and b off a expect trading revenues down. >> goldman is in a similar situation. there's not a lot of volatility. we want to take these up because of rate hikes. but we forget core businesses often relying on how to hedge, about things that are happening that in currencies that nobody expected and everything -- when it's calm, they kind of have no -- these divisions have no reason for being and the divisions are filled

with people very well paid so the gross margins go down. >> they also were beneficiaries in the runup to the vote on the tax bill. >> right and also there's no brexit. >> we need a new brexit. >> why >> well, i mean, brexit caused a lot of volatility. they don't have any. >> year to date trading revenues at the five big banks are down 4.4. that's a decent number given we've seen double digit declines. >> it should direct money back too. are the drug stocks, the one area we've kind of forgotten, no longer in the cross hairs of anybody, having pretty good numbers. i'd look for that group. i think united tellth that group is great amidst disney may spend on fox and with united health, have we

focused on the amount of money aetna ceos might get. >> $500 million, a lot of it is already -- is options or stock that he owns. >> then forget it. >> if you tell me that, it's like 400 million then. >> he's going to become a wealthier man if this deal closes i'm glad you mentioned aetna, because the spread on this deal is enormous. >> incredible. and the old risk guard community is not happy that spread is like at least 26 bucks. >> what do you make of that? >> i guess concerns over antitrust, that's all i can come up with. >> a lot of people trying to figure out, will it be ftc or doj. ftc would be more favorable, doj dealing with dell rahim again. man who went after time warner, at&t we'll see but -- by the way, time warner and at&t, it's

been -- and this is such an enormous deal. you don't have enough money to attack that spread because it's such a very large deal >> well and cvs a lot feel was about the death star, about amazon, i don't know i do think that when i see $500 million bertolini, this is not the moment -- whatever i can never begrudge anyone for make ing a lot of money it feels at the moment he probably wishes the number were not out there. >> no, i'm sure he doesn't i'm sure he'll come up with different ways to explain the comp. >> very self-ee facing man. >> he is. >> moved aetna to new york city. >> he could have bought bitcoin but moved to new york city i don't know >> going to be paying higher taxes. >> speaking of which there's a lot of attention being paid to either changing -- some representatives still trying to restore the deduction on salt or

allow you to use the cap for income and property. >> please. >> it's a bigger deal in california than it is in new york or illinois. >> can't we just not -- >> please read what doug yearly and bob toll had to say about how it's not affecting california buying. that what's -- >> i don't think people know yet, jim they haven't done the math only in the last day or two in new york talking to people and saying do you know how much your income is going down >> it's a black swan. >> 4 or 5% increa$4 or 5% incre tax, which is what is going to be in new york what they weren't focused on it. >> toll brothers is betting they won't be because of other changes they do better. >> when they suddenly realize they are making less money than previously. >> they mention that people like the sun. >> i like the sun too. >> well, that's -- they actually mentioned it not going to live california. >> california's weather is more important. >> nevada has got a lot of sun. >> i'm pointing out what they said

they didn't mention nevada. >> they focused on california. >> nevada. nevada >> you say nevada -- >> i should say nevada, i said nevada >> they were asked to address this multiple times and said people move where they want to move i agree with you -- >> you think the economy in the state of new york and california won't be hurt by this? >> no, i think you have to match it down to value of your property, particularly in a school district. >> carl was mentioning kevin mccarthy is trying to get a $10,000 deduction applied either to property or state and local. >> or even sales tax some some cases. >> something >> that's where the brunt of the revenue is being raised for this bill, the only place it seems to be being raisedfrom that increase. >> my daughter lives in southern oregon there's a real interesting arbitrage going on there people moving right to oregon, just right there, not a lot of business in northern california but just why could you not do

it pennsylvania, i mean, you know, bucks county, these are the moves that i expect to see that i mentioned bucks county because toll brothers is there they are from horsham and the home market should be doing well they said new jersey is good and they actually united statsed thm crushing it in hoboken. >> talk to me in a year. >> we'll see. >> if salt -- >> we'll probably still be talking about t-mobile but i wanted to follow up on yesterday and beginning of the show carl was talking about buybacks, 1.5 billion was the headline number from t-mobile in terms of the buyback but they also are talking about deutsche telecom which owns 61.5%, increasing its stake and they say -- they understand deutsch telecom is considering plans to purchase additional shares and shuch would take place through

december 31st 2018 in accordance with sec rules and so forth. they didn't take the leverage up as much as some people thought they would they are about three to four times leveraged right now. >> that was a stock that has -- i don't want to hear that. you shrink the float -- shrink the market capitalization or buyback stock and you have deutsche bank -- deutsche tell buy more i want to watch fang there are a number of positive notes about members of fang. there's a netflix piper piece saying that netflix is signing up more people, there's a lot in the paper about how alphabet is hiring 10,000 people, which would therefore make people feel -- you know what, i feel more courageous if i advertise there because i know there's going to be someone -- one of the 10,000 people looking at what my ads are against. these are positives. i don't want to lose sight of

the fact that this is the group that let us down fangs started us down. therefore, fangs should lead us back up. >> and as far as netflix goes the crown begins a new season on friday called its most efficient season in terms of i think driving subs and attention -- >> is that true? >> what do you mean the most -- it was the best? >> those were his words, of their original series, the most effective. >> or efficient. >> it was great. did you guys watch it at all >> will is watching it for me, sent me a memo. >> i liked it. >> busy doing homework on bitcoin. >> reading about blockchain, listening to the toll call -- >> more important than the forward pass more important than the forward pass all ground game before block chain. >> going to change the game. >> let's get to bertha coombs.

>> good morning, we've got the dow in the red zone so to speak and we're seeing modest declines across the board last week's initial exuberance has given way to caution as details need to be ishroned outo see who the real winners and losers will be here. dollar has been weaker for much of the week, big gainers would be seen as benefitting from a lower corporate tax rate, utilities today higher but they've been down for the week, small caps also down for the week a big source continues to be large cap tech, the losers there, the nasdaq down three days starting in the red again today. a negative start to the month. microsoft already down about 3% for this week. and the chip sector which has been the real driving force in the nasdaq is now the source of pain you're seeing amd and nvidia, all time highs, seeing the biggest losses this week, big

selling there, source of capital. health care, higher this morning and m and a continues to be hot in the sector here at year end you talked about the davita selling united clinics to united health for 4.9 billion in cash they struggled with the unit reporting that $5 million third quarter operating loss to be the plans to use the cash for significant buybacks they say. and also paying down debt. for united this marks the fourth deal of the year expanding is already very large opt in services national footprint. cvs and aetna are down on the week after announcing their proposed $60 billion integrated health care merger on monday rival walgreens taking a stake in chinese pharmacy for 400 million. they are not just looking to expand here in the u.s. but also looking abroad also this morning, edison

international, southern california unit says service is being affected by the wildfires in california and haven't had a chance yet because of the fires to really assess how much damage they may be facing david? >> bertha, thank you bertha coombs on the floor. >> when cramer requests a faber report, i deliver. >> thank you. >> let's talk about broadcom and qualcomm i think it's important that we note, that deal is getting close to being -- having regulatory approval, reports today or last night about the eu, it's coming along and may be as soon as a couple of weeks, quite a fete -- >> i think that they will -- they will likely have their approvals in place by year end if not, it may just tip over to next year. but that's not important from a timing standpoint as much as it's important for us to now

focus on what we first visited -- i don't even know how many months ago, which is the idea that nxp, if it were to trade on an independent basis would be above $110 a share. and you can see of course nxp at 114. it's been maintaining that level for some time. what is qualcomm going to do in order to get the 80% of the vote it neets to be tendered to it until dutch law. could go down to 70% that could make things a bit more complex it's dealing with elliott, it's dealing with pentwater and number of large firms that have a lot of stock here and want a higher price and question will be what will the price be can they clear the market at 120? 125? >> they keep telling me 110 period. >> elliott tells you much higher elliott is a key in terms of what the desire will be.

we know they are willing -- >> but hock tan doesn't want them to buy nxp. >> hock tan is not going to have a role here because this deal is going to be in a position to either close or not close long prior to anything hock tan will have to say about it clearly you're right, i think broadcom would prefer that the nxp deal did not happen. >> i actually disagree with -- >> it will be massively akreetive to the company -- >> i disagree with hock tan. >> add enormously to the earnings and not being fully appreciated in the current qualcomm stock price nor by the way to a lot of other things let's get to broadcom. >> i know that you are -- you're -- you like hock tan. you think well of him. >> i respect him and i think he's built an amazing company. >> what i don't know about him is his ability as a tack tigs when it comes to m and a, rights now i'm not seeing much of

anything. >> he's going to report -- >> did you think that was a really good board they put out the other day? the 11 people they nominated, did you think that was impressive, an impressive group? >> i think it could have been more impressive than it was. >> silverlake was all over that thing. how about michael dell, why not have him on the board? that would have been interesting. >> look, is it a board that jumps out at me as having the titans of tech no >> but here's the thing on broadcom, what we're going to be waiting for and what we'll keep hearing from qualcomm. they are going to talk about antitrust all day long because every deal takes forever to get approved think nxp, that was a relatively simple deal. this will be a complex one broadcom does seem willing to do asset divest tours and rationalization which might make the road a bit easier for them but it's still going to be hard. what kind of assurances women you give to qualcomm

shareholders if you want the keys to the company at the march annual meeting you're going to be asking for them by saying replace this current board with our nominees or at least enough of them for us to say -- to get a negotiation and buy the company. obviously raising the price but they'll wit on doing that as long as they can importantly, they haven't begun a tender offer they need to do that to get the regulatory clock moving in at least china and eu in the states it's a little less clear but more or less you deem to put a tender offer out there to get things going you'll hear financing, they aren't paying for financing, a lot of companies don't do that they believe they can get the financing when they need the financing and that's another issue. my point is they haven't checked any boxes at all doesn't mean they won't go hell or high water on antitrust it doesn't mean they won't sign up their financing and start the tender on the regulatory clock and means -- we expect they will

raise the price. the final point on the whole apple thing, which you like to bring up a lot. >> yes. >> all of the apple litigation will be long done prior to any close of any deal. >> that's so important -- >> that's taking place next year, all of it. this deal would never close in -- >> but, david, if qualcomm loses, remember qualcomm was before broadcom? >> yes. >> if qualcomm loses and hock tan says you know what, 65 -- >> no or he says 80 or 80 something then take that off the table if you lose. however, if they win, or if they lose and they win and he doesn't get to own the company, i mean are you willing to take the risk that they are not going to be able to close the deal >> let me see tonight, i like to see how they do tonight if they report. >> right. >> to me that's the most -- >> see if he has anything to say. >> the nxp, you're so right. >> it's coming to decision time,

we're getting to decision time. >> qualcomm would become far less beholden to samsung and particularly apple it would be much more like an analog devices or texas instruments and it's such an important deal for them. it really is and it's brilliant for them. i hear you i've been thinking that was i too harsh about the board members? because if i was in the world maybe i would see people and say that was smart but -- >> we'll see let's get to rick santelli now and check in on the bontd r bond market take it away. >> thanks, david if you're a fixed income person, today is your day. if you're wondering where yields are going to be at the end of the year, we have big clues today. and it's not necessarily from here it's from across the pond. look at a one week of bund yields, see the way they've drifted and 29, 30 basis points, subtle inl ter day violations, open the chart up to june 1st

we have not closed below 30 since the third week in june we're trading 29 basis points now. this is a big deal because if you're watching the spread, it looked as though it would widen, 205, 206 basis points between our tens and bunds but that's not going to happen and many traders played it to be more of a rubber band than a break, snap back. now closer to 200 basis points again because we're linked and there is an arbitrage and international buyers ours look pretty darn good and this is huge if you look at our curve, parallel shift, that should already be something to pay attention to, whether looking at twos or 30s, that means something, sort of equilibrium october 1st to our 10-year, we're not as developed to the downside as bunds but nonetheless knocking at the low 30s. we settle at 27 basis points the end of 2015.

it's an area traders remember. quickly, one week of the dollar index, it keeps knocking on the 93.5 level but can't seem quisq strong enough to pop through the pound seems like it's giving things back. november 1st, pound versus dollar, pretty big giveback there but higher for the period. if you look at pound versus euro, smaller giveback and important relationship to pay attention to carl, jim, david, back to you. >> a nice summation of good stories going on all around the world, thanks. >> when we come back, alan greenspan from the changing of the guard at the fed to bitcoin, muted gains up 4 points and s&p slightly negative. back after a break

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time for cramer and "stop trading. >> not aunch you get a guy down when the stock goes up thas happening with dave and busters. they had storm damage in houston, damage in hpuerto rico, but why is this company doing so well why is it so exciting for people they do eat, they do play. they do experience experience equals millennials. this is a remarkable -- i happen to love dave and busters >> of course >> it's working and it's working because it's an experience it's not just a chance to have beer and it's not just a chance to be able to go to a gathering place and watch sports they have all sorts of new video games, and they have virtual reality games coming so i just point out that they guided down, a lot of people shorted the stock, took it down. no, they have a core business. they're going to go to small format if anyone has never been to one with their kids, go, because it's one of the most exciting

places on earth. >> my kids have been >> it is expanding they're telling a good story steve king, who runs it, is a great manager. look at what happens even when you don't have a raised number, if you have a great story. dave and busters reminderer that not everything is bitcoin >> what's tonight on "mad" >> bitcoin i am going to run the sarah fryer tape which says it's not important to square. i have u.s. concrete, a company doing well, because as we know, everybody is building new headquarters away from new york, new jersey, and california then ron shaich, who made panera into one of the greatest stories ever told and then sold it i love ron he has tremendous insight into more than just that. everyone greatest program in history. i'm a member are you a member

>> no. >> see you tonight, jim. ph.d. 6:00 p.m when we return, lots to talk about with alan greenspan. dow down eight ♪ the moment a fish is pulled out from the water, it's a race against time. and keeping it in the right conditions is the best way to get that fish to your plate safely. bacteria can multiply to high enough levels that even cooking it will not destroy all of them. it's definitely the most important thing in my business. how fresh is the fish? where it comes from? how it gets here.

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good wednesday morning welcome back to "squawk on the street." i'm carl quintanilla with david faber, michelle caruso-cabrera is here with us at post nine of the new york stock exchange. sara eisen is off. the market trying to buck the wave of selling that happened overnight as hong kong, japan, were each down about 2%. barely hanging on to some gains with the ten-year at 2.31. >> some talk that maybe this selling was related to the president deciding that he was going to move the u.s. embassy from tel aviv to jerusalem >> we'll talk about that we'll talk to alan greenspan geopolitics and tax reform greenspan is with us >> and bitcoin, it soared past yet another record high. we'll also speak to the co-founder of another crypto currency >> plus, powerful winds are fueling wildfires in southern california we'll bring you up to speed on the latest >> get straight to the markets

obviously mixed at the moment after all three indices opened in the red the s&p and nasdaq in the midst of a three-day losing streak for the first time since august. also, the private sector added 190,000 jobs in november, which was right on target and sort of a presucursor, as always, to th jobs number on friday. jim earlier said you have to watch faang. the group that let us down, and trying to attract some bids today. >> yeah, i mean, the theory being that if they're what led us higher, they led us down now. if they're going to come back, they're going to retain their market leadership position that we have seen so far this year. >> some of the recent leaders lagging. banks amongst them not down sharply at all. yesterday, we got insight into the trading quarters which have not been particularly good the lack of volatility hitting the banks. they had been beneficiaries most recentry of the market's positive feelings about the tax

cuts and the benefits that would be construed on domestic taxpayers, many of which are the banks. >> jim also said last hour, watch the defense stocks in the wake of the president's decision to move the embassy from jerusalem to tel aviv. we see them higher by 1% >> for the economy and more, we're joined by alan greenspan and a cnbc exclusive dr. greenspan, always good to see you. good morning >> good morning. >> we want to cover so many things bitcoin, powell, balance sheet runoff, entitlements, debt but let's start with the tax bill since it's in the news and we're watching it go through conference what's been your overall characterization of what it appears intended to do >> end of what >> as the tax bill, as it appears right now, and there's a lot of questions about what's going to happen in conference, but how will it impact growth,

equities, the economy? >> no, i was mishearing you, and i couldn't believe it, but i got it look, this particular period, as alan simpson and his colleague wrote in "the washington post" recently, this is a terrible fiscal situation we got ourselves into the administration is doing a tax cut and a spending decrease but he's doing them in the wrong order. what we need right now is a focus wholly on reducing the debt even the debt increase right now, we're in a stage, if nothing is changed, we're about to go from stagnation to

stagflation, with a significant rise in inflation, and a wholly significant imbalance in the economy, which is very difficult to anticipate at this stage. but the outlook is not exactly terrific >> you have been on this path for a while now. we have been waiting for tth the flation part of your theory and forecast where is it? unit labor costs today, down .2. we'll see what the wage number tells us on friday, but are you saying we're closer to that, that forecast you have been giving >> no, i'm saying basically that is the next stage. we are seeing some buoyancy in the economy in some areas. but remember, the fourth quarter gdp is going to be significantly slower than the second and the third quarter. on the data we already have

combined on a weekly basis and a lot of other information, slow down to close to 2% annual rate of growth seems pretty much assured at this stage. that basically makes it very difficult to find a solution to the fiscal problem but we cannot basically deal with it the way we are how it's going to come out, i don't have a clue. that inflation will ultimately emerge, i'm sure the question is, it is very difficult to tell when, but all of the force is in place critical issue is real, long-term interest rates they are abnormally low. and they are running the shop, so to speak. >> mr. greenspan, we got a note that you want to talk about bitcoin. what do you think of it?

>> well, i'm in the process of jointly writing a book about american history and all i can say to you is bitcoin looks like the history of money in the united states and elsewhere going back to 1789 if you look, for example, at how the continental, which was issued in 1775, and a couple hundred million dollars, and by 1782, it was worthless but before it was worthless, george washington was able to buy a lot of armament, basically all sorts of costs and owned the period, a significant share of that

worthless, ultimately worthless currency was creating real goods and services that's what i think is happening with bitcoin >> so should we conclude that bitcoin is going to be, in your opinion, ultimately worthless? >> no. depends on how they handle the issue of the amount of the quantity that's being put into the market in the continental and the greenback in civil war, in all cases, the amount of fiat currency kept rising and it's very difficult to tell to what extent bitcoin is fundamentally different from that, but i am saying that there are very considerable similarities, that what's holding the prices up is the supply is down, and look, human

beings buy all sorts of things that aren't worth anything but they do it anyway. people gamble in casinos when the odds are against them. it has never stopped anybody >> i was thinking, i have been thinking about crypto currencies a lot in the context of monetary policy because the fillphilosopa begins of bitcoin were about creating a store of value because stores around the world were playorofligate, but it sugs the supply could be limitless, and hence, bitcoin as a particular story of value maybe is questionable. >> look, the question is the value of bitcoin can never be negative so there's only one thing it can be it's either zero or plus and the way human beings

estimate value, you're going to get a number of people always consider it a plus and you happen to be bitcoin and get in early on, you create a huge potential market. but it's not an accident that virtually all of these crypto currencies that have some semblance of control with them and the mathematics are correct, are doing reasonably well. >> chairman greenspan, back to the tax cuts for a moment. you know, i'm curious, a lot of other economists, of course, have weighed in with their expectations of what level of economic growth it will contribute to our economy. where are you on that? do you believe it will contribute economic growth, and if so, how much? >> very little the tax cut, remember, at the

same time increases the deficit. and all of the metrics i have seen over the years tells me that when you increase the deficit and you increase the demand for funds, you're crowding out capital investment. and capital investment is the key statistic determining what output per hour is that's productivity. so essentially, i'm not at all convinced that the way to come at this is the way that they're doing it now i am a maverick right at the moment i would like to see us move not towards a tax cut but create a surplus, because if we can cut entitlements and allow the funds that are saved to go back into the market, the data show that will create a significant increase in capital investment

and economic activity, quite similar to what occurred in the year 2000-2001, for example. >> right and when it comes to the behavior of corporations, which obviously you have also studied over time, what are your expectations in terms of what they're going to do with the additional capital they conceivably have, both either from taking it from overseas for those multinationals that have large amounts of cash, or even simply those who benefit from a lower tax rate do you see them increasing their investments, their capital investments, or simply perhaps buying back stock or increasing the dividend >> more of the latter. remember, i, over my private sector years, was always stuck into the committees which engendered the capital investment process and while company by company differed, they had all one thing in common. that the issue of raising the

funds was quite secondary to the analysis of whether the investment in itself was profitable so the question of getting significant availability, for example, foreign affiliate funds, which are held abroad, move to the united states, that is not going to significantly increase effective capital investment what has got to be there is that the outlook is positive, and unless the outlook is positive, i don't care how much money you throw at it. it's not going to significantly increase outlooks. >> one more question about bitcoin, if i might. there was a twitter spat between neal cash kerry and peter bookvar, where mr. bookvarargues bitcoin is the direct result of qe around the world. that's driven people to bitcoin. do you see any connection between monetary policy over the last few years and the rise of bitcoin? >> i doubt it very much.

i think bitcoin is really a fascinating example of how human beings create value. or estimate or judge value and it's not always rational you cannot tell me that you can create out of nothing something which has a medium of exchange value. without bringing into the analysis the fact that sometimes people are a little bewildered but it is not -- it is not a rational currency in that sense. but that does not mean it will not trade because so long as people believe they can sell it to somebody else or unload it on somebody else, that's all you need to create a market. >> finally, dr. greenspan, just a question short-term, medium-term view on equities a lot of analysts are revising

higher their s & earnings targets for next year. we had the found of carlisle last night who said the only things to worry about in the next two years are a north korea strike or an attack on america it has been a long time since janet yellen said portions of equities are overvalued. what do you see now? >> first, what we do is instead of looking at price earnings ratios, we structure our analysis in terms of earnings price ratios, and then we can get various factors, which added up, give the total the major change in the valuation process in the last ten years has been a dramatic decline in the real long-term interest rates essentially the ten-year treasury note adjusted for expected inflation that level, as you know, is very

low at this particular stage equity premiums, the big part of the analysis, is about normal. but with real interest rates so low, markets are quite vulnerable to a rise in interest rates. and i would say that real interest rates, long-term interest rates, i should point out, is the most important statistic to watch if you're evaluating equities at this stage. i don't think that there's an imbalance other than in that area, but that's enough to create very major changes in the s&p 500. >> dr. greenspan, we always love hearing from you thanks for joining us today, kicking off the hour alan greenspan joining us this morning. thanks so much as mentioned a couple times, president trump expected to

announce today that the united states will recognize jerusalem as the capital of israel and will move the embassy there. the president informed aybar leaders yesterday that he intends to move the embassy from tel aviv the leaders of palestine, jordan, egypt, and saudi arabia warn the president that unilateral steps would derail a u.s.-led peace effort and unleash turmoil in the region. there was a conference call last night with journalists and senior officials who argue this is an acknowledgment of what was already true and also delivering on a campaign promise from president trump. speaking with foreign policy folks last night, a lot of them said, yes, saudi arabia came out and said what it said. jordan said what it said but they suspect that behind closed doors, they probably said, it's all right move ahead with this but they have to proverbially say all that stuff out loud to cater to their bases at home, but in fact, not much of an issue to them. >> we'll see we'll see what the president says

he has a cabinet meeting in about an hour and then we expect a statement on jerusalem at 1:00 p.m. eastern time. when we come back, tom mcclellan is with us why he suz the bull run is not over quite yet >> later on, a deep dive into the world of crypto currencies as bitcoin surges past a new record high. joe lubin wi jn lloius we'll be back with the dow down 32 it's a small finger...a worm! like, a dagger? a tiny sword? bread...breadstick? a matchstick! a lamppost! coin slot! no? uhhh... 10 seconds. a stick! a walking stick! eiffel tower, mount kilimanjaro! (ding) time! sorry, it's a tandem bicycle. what? what?! as long as sloths are slow, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance.

story out of southern california this massive wildfire continues to burn out of control tearing through the santa clarita area officials say the blaze is just 5% contained more than 1,000 homes have been evacuated and schools in the area have been closed. the fire has destroyed at least 150 structures and scorched roughly 11,000 acres of land luckily, at this time, no injuries have been reported. but we're hearing about stretches of interstate highways being closed as the l.a. times, i think, said this morning, really the only fire line in some parts is the pacific ocean. having crossed the 101 >> yeah, the pictures are extraordinary, as we look at them live right now. unbelievable >> so u.s. stocks are largely

flat this hour the s&p and nasdaq are in the midst of a three-day losing streak investors closely watching for signs of progress on tax reform in washington. also watching bitcoin surging past 12,000. for more, wee joined by tom mcclellan, editor of the mcclellan market report. good to have you here. you sent us a couple charts i want you to explain us the first is the dow jones industrial average trading from april of this year to year to date, thas the top line in the orange you have compared it to the traditional seasonal pattern, the blue line, would be the average move of the dow jones industrial average from 1976 to 2016 what is this telling us? >> very well explained december, everyone knows, is a strong month seasonally, but strength in december is concentrated into the last half of the month so right now, we're in a little seasonal pause that's very normal

it's a time to consolidate and digest the gains we saw in late november november has pretty much the same pattern, sideways for the first half of the month and then the big gains come late in the month. we're doing it again now in december, and everything is tracking well according to that seasonal pattern, so i expect it to continue working. look for a bottom around the 15th of the month, and then nice uptrend into the end of the year >> so bull market not done, in other words. >> not done, not due to be done until probably march of 2018 it will be a time to trade and protect assets in the middle of 2018, but not right now. right now is the time to ride the up trend >> we have two other charts. a heavy bitcoin show today, if people aren't happy with that, i'm sorry about that, but you have sent us a chart of bitcoin versus the dow jones industrial average, while they sit right on top of each other, and then you have also sent us bitcoin mapped against the ten-year yield of china. why?

why should i care about these two charts what are they telling us >> well, bitcoin has, of course, had an impressive run. it has gone up ten fold since the beginning of the year, but it hasn't been in a straight line there has been texture to it that texture of bitcoin's run matches the texture of the dow, so their point is that if you're trading bitcoin, you're really trading the dow with a leverage factor of about 50 or a beta of 50 we get worried about two and three times leveraged etfs, you have bitcoin which is about a 50 times leverage on whatever the stock market is doing. as long as you know that's the game you're playing, have a fun time china's relationship is a little more important, because as chinese yields go up, that's a sign that chinese debt investors are less confident in that debt, and they turn to bitcoin in the same time. so as chinese yields go up, bitcoin goes up. as chinese yields come back down a little bit, bitcoin comes back down just slightly so it's the same game you're

playing. the vacillation of human emotion that affects all price movements. you're just seeing it morme magnified with bitcoin >> we talked some of the show to the degree to which it's a global phenomenon. some have told us searches for bitcoin on google largely don't come from the u.s. they come from countries like the netherlands and south africa do you think that the creation of futures around it lend credence to it, and some stability, or is that really not related to what the overall price may do >> well, you know, humans around the globe are all subject to falling into bubbles we have seen many bubbles in the history of currency. this is yet another one. just because we know it's a bubble doesn't mean it's done being a bubble and yes, other people in other countries especially who haven't seen our real estate bubble and have that in their memory, may be more interested in chasing this one because they don't have that memory. bitcoin really doesn't have any fundamentals to drive behind it.

it doesn't have a fair value, so it's worth what anybody thinks they should pay for it and that's unlike -- it's just like any other bubble, when you see the problem of bitcoin starting to fall, i think it's going to have some contagion into the rest of the financial markets as people start to take losses and have to cover those losses in bitcoin may not be able to sell their bitcoin for what they think they need to, so they turn to other things to cover their loss we saw that in the crash of 1987 when gold was up and gold stocks were initially up, and then people couldn't sell what they wanted, so they sold what they had to i think that will be the story for 2018 the creation of futures will create more of a market, the ability to short it much more easily we have seen this play out over and over 2006 was the creation of the slv, the silver etf, and market for silver bouillon for a year and a half because everybody bought up in advance of it and tried to digest that so we're likely to see the same

thing happen in bitcoin, but not right away >> thank you, tom. thanks for those historical insights >> good to be with you >> when we come back, major decision that's changing the medal stand at the winter olymcs 'lgedeilon that after the break. 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.

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welcome back to "squawk on the street." i'm morgan brennan check out shares of aerovironment, up 30%, after they posted a surprise profit. 29 cents per share versus what analysts had expected to be a loss of 6 cents per share. revenue also better than expected, though the company did just reiterate guidance for the full year. nonetheless, shares of this small cap company are up 31% for the day. they have now more than doubled for the year, and it's help leading the ita air space and defense etf higher today as well back over to you >> morgan, thank you major decision is out from the international olympic committee. they are banning the russian delegation from the games in south korea. the move follows a months-long investigation into a program of orchestrated doping by russia at

the 2014 games in sochi. they said some russians will be allowed to compete if they meet several requirements they would be designated olympic athletes from russia but without their flag or anthem vladimir putin said the kremlin will analyze the ban before taking any steps if one of those athletes manage to win a medal, they would just play the olympic theme rather than the russian national anthem >> putin saying just now he won't stop anybody in the country who wants to participate at this point. this comes after some of these whistleblowers came forward from russia, spoke with "the new york times" and revealed incredibly systemic from the top down anti-doping or - >> no, obfuscation of doping >> right, exactly. >> incredible. incredible operation i mean, just in terms of like shipping the urine from russia, i mean >> extraordinary stuff and from the top down. >> yeah.

>> by the way, ap also today says putin has declared his intention to seek re-election. >> is that what they call it >> yes >> okay. let's get over to sue herera fo a news update. >> good morning, everyone. here's what's happening at this hour iranian leader ayatollah khomeini commanding an decision from trump which would recognize jerusalem as israel's capital. he warned serious repercussions awaited the united states and the muslim world would not remain silent. >> in brussels, rex tillerson says the trump administration continues to believe there's a good opportunity to achieve peace in the middle east >> the president's very committed to the middle east peace process. he has a team he put in place almost immediately upon entering the white house. that team has been working very diligently on new approaches to the peace process. they have been engaged in a

quiet way with many in the region around that process >> here at home, the thomas fire in southern california continues to grow. now reaching the pacific ocean overnight. and a new fire erupting in los angeles before dawn, flames exploding down the sepulveda pass in the mountains which caused parts of heavily traveled interstate 405 to be closed. that is the news update this hour going to send it over to dominic chu with the eia inventory report >> good morning, sue we have a lot of similar themes from last night's american petroleum institute data bigger than expected draw with regard to crude inventories. down 5.6 million barrels an ls on average looked for a 3.4 million barrel draw. we also saw a rise in gasoline inventories by about 6.8 million barrels and dislets by 1.7 million barrels. so very much the same theme as last night oil prices are fluctuated a little bit but still holding around $57 a barrel for the wti

price. back over to you >> dom, thank you. >> when we come back, we'll hear from the co-founder of ethereum. he'll explain bitcoin's big run and a lot more >> still a muted trangandi rge dow down five points we'll be right back.

bitcoin, as you may know by now, blowing past 12k, getting closer to 13-k, look at ether, the crypto currency. joe lubin joins us at post nine. good to have you for those who don't know, you want to explain ethereum and how it fits in the crypto kerr aengs universe >> 2008, they invented three things, one was the bitcoin application, the money, the payment cystment, store value. that application was the first application built on the second invention, the block chain, the block chain is a shared trust

worthy infrastructure that lots of different actors can use and be certain that no minority set of actors can cheat the system, basically. the third is cryptoeconomics, which marries the first two. it enables incentivization of a whole lot of people to run these systems. enables a system like bitcoin to be of the people, by the people, for the people so ethereum took that second invention, the block chain, the trustful infrastructure, and enabled software developers to build anything they want on it, not just the money application >> explain where we are in that chapter of building incentives for people to use it and does the price now reflect it >> yeah, so it's early days still for this technology. but i think the promise of the technology, the promise of building shared infrastructure rather than siloed i.t. systems, instead of a company building

i.t. systems for themselves on old style databases, we have this new shared trustworthy infrastructure, so sectors, value chains like supply chains, whole industries can start to build shared nonredundant infrastructure for themselves. >> we had a crypto currency expert, not you, a different one, on the show a couple days ago. and he says he's asked how many crypto currencies can there be he says hundreds because the currency is the block chain, right? a company can have its own block chain that it uses for customers, et cetera, et cetera. so back to my question to alan greenspan a couple blocks ago. if you have so much supply, doesn't that ultimately hurt the value of bitcoin there's just too much of it. the idea is that there's going to be a constrained amount of bitcoin, right but if there's lots of cryptocurrencies then there's no constraint on supply bl we're already seeing bitcoin forks, so there are now three major bitcoin systems and 61

million bitcoins i think we're undergoing a qualitative change in the nature of these value tokens where we have hundreds of thousands of state issued currencies. currently, many tens of thousands of shares. we're going to see these tokens become ubiquitous really we're going to see different projects issuing their own tokens nation states will issue tokens in this technology it gives us the ability to form projects, to define goals, to issue a token, to fund those -- the execution of those goals >> to me, that sounds dilutive to the value of bitcoin. >> so when you -- when you grow an infrastructure, and you grow different activities on that infrastructure, you're essentially creating lots of

different value growth engines, so i would argue that the more projects that are built on ethereum, especially because it can support lots of different applications, and that will translate also to bitcoin. the more we grow this economy, the more in demand those foundational protocol tokens will be. >> do you own any bitcoin? >> i own some bitcoin. >> have you owned it a long time >> i have owned it for a while >> going to sell it? >> i have used a bunch of the bitcoin to pay people at our company. >> but they're happy about that. >> so far. >> some of them are, sure. absolutely >> when you talk about these projects, is there a -- can you describe one that would change the game we're talking infrastructure >> we have a lot -- we have 20 or so different platforms that we're building we're building a supply chain platform we're building decentralized

token exchanges. one that is really exciting that we're starting to use is called open law you can see demos on youtube open law enables us to build legally enforceable agreements on the block chain they have some clauses, they're hybrid agreements. some clauses are pros. some clauses are programs. so you can escrow money into a living agreement you can send data into these problematic clauses. you can have these programmatic clauses act based on conditions met. we're going to start using them for mdas virtually immediately and employment agreements, et cetera >> contracts that are alive inside, essentially. >> we're going to run our business on these thing. >> dynamic and there was a recent piece from morgan stanley on the freight industry, for example, saying it could be transformed by block chain over time >> absolutely. >> do you believe that would be the case given you could have immediate agreement, i guess >> absolutely. as we move on the foundational elements our society, which are

filled with friction, so things like identity reputation, agreements, money, as we move them all into native digital form, tokenize them, we essentially remove the friction, we remove the delays from all the transactions involving those things, and so we can move -- we can build layers and layers of software on top of these tokenized things we can shrink settlements of all the transaction involving those things into the instance of a transaction. just like compounding interest, we can compound these value creation events more closely in time and create much greater, faster growth. >> and your company gets paid just from creating -- as a typical software company >> we do many things we write software. we launch tokens, both tokenized securities and utility tokens that wouldn't be deemed securities we do education. we do consulting for companies and governments. >> we hope to have you back

soon thank you very much. joe lubin joining us, talking bitcoin and ethereum >> we have a lot more questions where those came from. when we come back, we'll speak to the president and ceo of kohler why he's betting bick on brick and mortar "squawk on the street" will be right back usaa to me means

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something rather unprecedented is happening under the market surface we'll explain what it is and what it means for your money at tradingnation.cnbc.com for more "squawk on the street" coming up.

and high-dividend strategies. sure, these are investments. but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they wanted out of life, and maybe even more. ♪ now, let's get to the cme group in chicago rick santelli with the santelli exchange >> thank you, michelle i would like to welcome peter book var, always an interesting guest. thanks for taking the time >> thank you >> so this morning, i looked at boon yields, i looked at shots yields both are moving lower, but the

boon really exemplifies the notion that we're teamed with other sovereigns on a relative value trade, and they're moving lower. they could have the lowest yield close in darn close to six months your thought on the boons, your thought on sovereign long end around the globe going into year end, peter >> what's most interesting is that each day that now passes into year end, we get one day closer to the ecb cutting their purchases in half. just to quickly quantify, the ecb has been buying seven times the net issuance of european government seven times. that's why they have been able to collapse european yields. now they're dramatically stepping their foot off that pedal, and it's ironic that yields are back to their recent lows heading into that event the market to me is no longer discounting. it's very reactive i wouldn't be surprised if we got a different reaction in boons come january >> interesting so it could be one of these binary trades where you think you know what's going on, and then after december 31st, everything changes there could be a lot of that

going on between tax policy, some of the demand even for our u.s. treasuries and corporates being affected by the tax plan let's go to another topic. everybody is talking about it, peter. the minneapolis fed president and peter going back and forth on bitcoin neil is kind of part of the cast he was there during the crisis you know, for the government but in my opinion, your debate was about whether quantitative easing created bitcoin i'm sure it didn't because i think it existed in some form, it was registered in '08 you could argue it was on the thought process earlier, but i think all the demand it's had of late certainly probably goes to the notion that money is a managed commodity. your thoughts. >> right when the concept with bitcoin and these others is they can't be printed willy-nilly theoretically, there could be an infinite amount of crypto currencies but on paper, central

banks have debased fiat currencies in the sense of printing money willy-nilly the swiss national bank, 85 billion of stocks with money printed out of thin air, that let's create an alternative that is outside the realm of government, that could be contained in terms of supply, just as gold obviously has carried that throne for 4,000 or 5,000 years. this is obviously the digital version of that. >> you know, a lot of writing about how much activity could be traced to korea and japan. i would like to stick with japan for a second how ironic, peter, that the country most manipulative for decades, who has the biggest purchases in a variety of sectors, is the place where the activity is taking place in large part is that because the participants in japan believe, as you do, that so much is manipulated, that's their alternative >> the ironic thing with japan

is over the past 25 years, they have had price stability because inflation is averaged about zero i think they got into qe and couldn't get themselves out. and just like vietnam, if we just throw in a few more troops, we're going to win that vietnai a few more troops we win, if we lower rates further that will turn the needle. the whole irony, just imagine if japan has higher inflation what is that going to do to the japanese bond market, a country shrinking in population if you see higher cost of living. >> you talk about a demographic time i agree. we're out of time. i have to run. david faber. >> send it to jon fortt for what's coming up on "squawk alley. john. >> we've got new york investors kevin ryan, who you might know from mongo db, business insider to talk about how government

policy might affect tech, get veis some of this media and adrting stuff going on in the market as well that's coming up on "squawk alley.

for on state of retail and

retailers competing with amazon bring in david koehler, a privately held company that focuses on kitchens and baths. thank you for being here. >> thank you for having me. >> in this country where we're so house obsessed, there's few things people love more than a newly renovated bathroom. >> we like to think so. >> before we move it showrooms and why you're expanding to retail front, can you tell us, what do you think about tax plan, effective tax rate, is it going to be good for you >> we're certainly going to benefit greatly from the tax plan like all c corp.s will. we remain concerned about income inequality, the deficit we're building and how we build the workforce for tomorrow and focus on education, infrastructure

this is a benefit but we have a lot of issues ahead as a country to face and work through as we go forward. >> you're opening store front. when i think of your products, i would assume a lot of individuals go through a contractor to pick their appliances and their fixtures, et cetera. why in this day and age when people are moving away from a physical retail space, you're actually embracing it? >> it's really important we think the omni channel experience is critical e-commerce is certainly our fastest growing channel around the world here in the u.s. and also in china. but you really need a more immersive experience particularly in our category that's why we're building sit stores as well as kohler experience centers where people can say the array and colors we have, work with an expert staff that can help them through the

specifications and experience products that's what makes this venue unique you can actually use products. >> did i read you can take a shower >> yeah. you can absolutely take a shower and use other products as well so retail without a purpose for being there really doesn't make sense. you need a value proposition for why physical bricks and mortar should play a role in the market today. there's nothing like this venue actually in the world where you can see and experience the products and also purchase them. >> we always have discussions about what categories are impervious or resistant to e-commerce because of their size and weight you think about a toilet, these things are heavy, expensive to ship that does that affect how much they are adopted on e-commerce >> it certainly makes a bit of difference, carl actually if you look at the numbers, our numbers and look at major players like home depot

and lowe's, the e-commerce channel is very strong it's very strong in the plumbing business as well but there are more complicated projects big remodeling projects, a new home specification where you're going to want expertise and you're going to want to see a variety of products in situ in display showing a full bathroom or kitchen so you're going to want to go in and work with experts and see everything that's possible that's why these experience centers we're building around the world are critically important for that not only for consumers but also designers and architectures. >> do you want the massage showerhead, rain showerhead. david, thank you so much for joining us we appreciate it. >> thank you, michelle thank you. > quk le icoe. >>"sawaly"s ming up next you always pay

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