competitive are very interesting and have validity to them but i'm not sure the extent. i think the simplification and getting rid of deductions is generally a good thing. >> leisman -- >> may hurt in the blue states. >> he mentioned the penn model, i think what a school. right, sorkin? >> pretty good. >> what a school what an incredible xoschool. >> right now it's time for "squawk on the street. ♪ >> good friday morning, welcome to "squawk on the street." i'm here with jim cramer and david faber. futures suggest it's going to be close. we expect a reconciled house senate bill today.

and europe's weak again, dax down for a fourth consecutive day and empire, our first december number comes in soft, raising eyebrows, a five-month low. movement on tax plans, we're awaiting this morning to see the combined conference bill and details behind which cuts and deductions survived. >> plus the latest on disney and fox, including the bid the murdochs said no to. >> a busy morning f stocks on track to erase thursday's losses. yesterday's worries about a setback were sparked by senator rubio saying he's a no vote unless the child tax credit is expanded they are trying to find ways to pay for maybe that additional deductions, it's going to cost $200 billion, perhaps they let some individual breaks expire here early we'll see. >> it's very interesting that the market went down and dow went down 70 points on worries

about rubio, maybe something else or other senators now there really is great uncertainty and the market is going back up. the uncertainty right now is higher than it was when the market dropped now, either when we're going to hear it because e of fabulous reporti reporting, look, we should not rule out the fact this may not be a done deal may not be a done deal. >> the math is tough if you get -- if corker stays where he is, i guess and rubio were to maintain the stance and flake is a question mark. >> mike lee is undecided, on the child tax credit. >> do you think it could be an aca? do you think it suddenly falls apart. >> mccain's health, all of that said, most people still think it will pass. >> people felt aca was going to pass. >> rubio's protests were taken

with skepticism. >> indeed. >> the street in fact pointed out that the russell is down all but three days in two weeks. is this selling on news? is it selling on uncertainty >> i think it's selling on news. i did work with my friend ken fisher and it doesn't -- it makes sense to sell on news. do you know the average corporate tax increase has produced better results in the following year than the average corporate tax cut? >> i did not know that. >> it's actually common strabl it seems counter intuitive but it's true. i think the sell on the news on the tax cut and there was a sense that in history, it's a lot of different instances, big chunk of time. okay, that's as good as it's going to get i disagree with that i'm on the ground floor of the conference calls and it's now the substance of the call. now it's asked very high up or mentioned high up. of course we have a 30% tax rate you know, don't forget we have a

36% tax rate so i don't think we should -- if you think this is going to pass, this market is not done. there's too many people raising -- going to raise numbers -- you don't like the suit i'm cold today it's an old suit but i'm freezing. >> i wasn't giving you a dirty look about the suit. but if you want to talk about the suit, we can or how we can change it. >> it's cold out. >> 2018 numbers are too low for most of the -- most of the companies i deal with. i think that's important that's the russell thing is very interesting, i think that's premature. i don't want to sell here. i just don't, you want to sell and read the adobe conference call i may surprise people and have a positive view on oracle. >> let's get to all of that. we got a lot of tech earnings from adobe to oracle and costco nub numbers. they added to the buyback but

cloud revenue misses and guide below consensus again. >> we do have i think what's going to be a powerful interview with josh lip ton later today. i think some of the things you're going to hear, look, they created thisny concept and sounds like byob but it's byol, bring your own license it brought a lot of old money to the old style business they make as many money as the new style. if you aggregate all software, you get pretty powerful numbers. they beat on the revenue, they had 6% revenue it's interesting, if you chriscchrisciscoe, you ended up with a stock that's up i'm not going to say oracle should be up today it shouldn't be down this much a lot of it can be explained but you have to be less of a cloud devotee. and last night adob bee is like, hey, get off my cloud, we've got the best numbers, we are mr.

cloud. and these guys are doing okay. larry by the way with a fat -- ellison with a fabulous blast on amazon services and who uses oracle and who doesn't i was encouraged by the call i thought the stock should have been down a buck. >> we're going to hear from herd in squawk alley and talk to adob bee -- >> he's bee trtraying me he's mine. no, he's amainmazinamazing. be prepared for a better explanation than offered last night and you'll like the interview and josh is great. you know, i think it's going to be one of those things where if you're selling now at 47, you're going to wish you bought it, not sold it. >> costco, really quick, it's a beat, revenues ahead comps up 10.5 and e commerce of 43. >> i slept with the costco conference call last night put it next to my pillow. >> as a cuddling >> because it's the anti-death star

i was sleeping in brooklyn and my wife was in -- probably too much granularty. >> i was sleeping in my costco pajamas. i thought the tie was nice and knew you would make comments on my suit. >> i didn't. >> 16% revenue growth. 10.3% comps. hard lines being good. at one point he says i don't know what these other guys are doing. there's a lot of costs what they are doing. we're doing great. and the membership numbers are terrific this was the quarter that says to me 191? this stock is going to be at 200 in three days. >> it's a far cry when the day whole foods hit, went to 150. >> it was so wrong it is true, the tougher line was fresh foods. fresh foods is not great income tax by the way 30.4%. but same day fresh, at one point by the way, the analysts were

asking questions and said, listen, we've gotten so gran yoular it's almost a distraction. there's spending so many time doing the call they are not running their business. >> do you really believe that? >> we've seen guidance pulled back in so many different industries over the last few years. ten years really. >> what's warren buffett guidance >> we don't get monthlies anymore from barely any of them any longer i'm surprised you think we've gone the other way. >> what do we need 49.4 goes to 49.5 of card holders, gross margins were fabulous which divisions are terrific, how good overseas is how much do you need >> that's a lot but does that really take away from management's day to day focus on the business by having datasets they can give us that are helpful. >> i don't think it's his job to

make the earnings models for the analyst. >> i agree that's the cfo's job. >> cfo -- >> i once called the cfo -- i bought some tires and said i went to sears because costco line -- they have your phone number where exactly did that happen? when did it happen i said this is the greatest company in the world we're not losing a sale to sears. which, by the way, i don't think they have sense the tire purchase -- >> haven't had a sale, yeah. >> what, sears >> yeah, it was a great company. remember sears roebuck >> i do. >> i knew the roebucks. >> you did >> i did it's on sale, it's a good price. where does it stay remember filene's basement >> of course. >> costco, when they talked about expensive electronics less promotional, best buy is up

gigantically since the so-called bad analyst day, best buy goes higher off the costco call. >> retail will be a curious story. the nrf tracking number weekly number wasn't all that great. >> but the adob bee call, $65 trillion data transactions they said it was a fabulous black friday and it's being a great holiday season i think i'll take abobe's evidence more than the federation's let me see, you know canada goose is now at 44 times -- >> you were not here yesterday of course for -- >> i called in at the bottom. >> you did, i missed that. >> i said it should be brought. >> disney and fox should be

bought. >> i want to flatter myself. >> don't flatter yourself. >> thank you. >> day two, analysis will continue on the deal on the antitrust ramifications and streaming business overall so many different areas here something i brought up yesterda was more on the m and a strategy will in any way shape or form our parent company comcast continue to try to compete given that people familiar with the situation indicate comcast value that it was willing to offer was higher than that offered by fox? that's unclear certainly don't expect anything to pop up in what is left of this year but it doesn't mean that during the course of next year as the antitrust goes on, that comcast won't continue to try to figure out a way for leverage and see if there's some opportunity that comes up for it to buy some of these international assets, international being the key it had such a focus on. i do not anticipate that they would make an alternate bid for the assets disney is buying in

part because i'm not quite sure how that works you could defeat a vote on the disney deal. remember it will require a fox shareholder vote so let's call it 17% of the vote but you don't have a path to get them to accept your bid. not to mention you would be hanging out there for such a long period of time and the antitrust is so significant when it comes to comcast, they will argue differently, always hard to talk about our parent in that way. they were ready to give back six right away because of antitrust i'm told by people working on the deal to spinco we'll see. maybe they try to compete for sky in some way. that 61%, maybe they cause trouble in hulu. my understanding is when time warner bought the 10% stake in hulu they cleaned up some of minority provisions there in terms of the rights and it's more favorable now to the

majority holder which would be disney in hulu but it's certainly something we'll pay close attention to over the next weeks and months, namely because there was frustration in the part of comcast that it was not able to get the audience it hoped forgiven the fact that value was higher. >> we've seen time to time unbelievable deals where the justice department says you've got to get rid of them do the justice department say look, we want all -- we want the comcast sportsnet from philadelphia, very powerful. we want these given away, comcast sports, they have a lot of different rights, more than i realized for the regional. would they ever say -- it's not part of their -- >> not their purview. >> it really would have to do with the networks fx and nat geo and studio and merger of the

transition disney will undergo for this deal. jim stewart wrote about it today. people think it should not be that large an issue, that they should be able to get the deal through. >> i think james is right. >> you'll find dissenting opinion. given time warner, at&t, now the question is this is actually horizontal merger and vertical mergers that are something that is not of view because you can't cure them according to dell rahim. >> the added wrinkle we learned yesterday, the president and murdoch spoke about what this would mean for fox this is what sara huckabee sanders said at the press briefing on thursday >> i know that the president spoke with rupert murdoch earlier today, congratulated him on the deal and thinks that to ugs one of the president's favorite words that this could be a great thing for jobs. and certainly looks forward to in hoping to see a lot more of those created.

>> a skeptic of which i'm not, might say well, cnn, you know, doesn't like that and doesn't watch it according to the correction of the fake news, so-called with -- and a skeptic might say that he is -- likes fox news, therefore he should have the deal go through. >> that's a skeptic. i would say this, i like this new wrinkle. the justice department includes jobs as a decree tear i cancrit >> i don't think so. >> i don't either. >> it's not in the job description. >> i did pretty well at -- i'm going to be really repulsive at harvard law. >> yes. >> i could not get a job at the justice department the justice department jobs, these are legitimate smart people they are using a different doctrine but they are smart and not owned -- you can't get to justice. >> let's get industrial

production which just crossed, rick san telli has the number. >> i have a little surprise on this number. it isn't necessarily industrial production, up two tenths, we're looking for a little more and last month was really strong remember it was released up nine tenth, the good news there, add three more tenth it's up 1.2 it's still pretty solid. here's the surprise. 77.1 that's the capacity what's interesting is our last read at 77, was pretty powerful. this number takes us back to april of '15 before you'll find a higher capacity rate of utilitization. tax reform, should it get passed and reconciled, i think this number is powerful and shows manufacturing is a bright spot ben may get to be a bigger

bright spot. yields haven't moved but we have a soft empire. carl, jim, david, back to you. >> thank you very much. >> consistent with what is a boom. >> empire didn't change reyour view >> no, too limited the wrong focus. if you go by the american electric power and dominions and utilities, just like in china, it's just bullet proof it's the southeast which is just -- it's like the old days when you heard about the new south. i cannot believe the renaissance down there i'm going down there with our team because it's too powerful. >> bring me and david with you >> i would love to we'll go to the steel mill that i know in mississippi. >> awesome. >> you like that >> aren't even paying attention. >> i am, i'm dealing with significant phone issues. >> he is today. >> you have no idea. >> when we come back, short seller jim chanos describes

tesla in one word. shares the csx down on numbers the ceo is taking a leave of absence. dow needs 164 points for a new high, s&p about 20 we'll see if we get it when the opening bell rings in a few minutes. ♪ let out your inner child at the lexus december to remember sales event. lease the 2017 rx 350 for $399 a month for 36 months.

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stocks looking for their fourth weekly gain as we expect to see a reconciled house and senate tax bill later this morning. futures look solid we'll get the countdown to the nus.lln colef up o mite keyboard clacking ] [ 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. talk to one today and see why we're bullish on the future. of emerging markets obsolete? at pgim, we see alpa in the trends, driving specific sectors of out performance. where a rising middle class powers a booming auto industry.

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so, you can do it this way... or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just $4.95 per online u.s. equity trade. fidelity. open an account today. ♪ mad dash on a friday, csx, health issues for the ceo hunter harrison who we know added a lot of value there just by virtue of having taken the job. >> right. >> this is very near term. we should go back -- >> but he's been a big winner, mike ward stepped down and

hunter harrison came in he did close a bunch of yards and get -- the trains running on time so to speak, but northern suffolk is down and union pacific too. these are not competitions if you really think they are overdone but like hunter harrison look at union pacific which is having a good quarter. this man charmed wall street, canadian pacific, is he worth a 10% decline? he gave you about a 25% advance. >> when you go back to june -- take a look -- but yeah. >> there's that move, that original move, january of last year. >> if he was worth this, shouldn't we give back some is the way i should look at it. >> they say they have a good team in place, that all of the things he's instituted, not like

they are going away. no real word on his health he battled and talked about operating out of his home in florida, has everything up there. he can talk to the engineers in his living room. >> is jim foot acting ceo that bad that the stock can decline this much? >> no but csx was not as great until now. >> why do i think norfolk is having pay good quarter. >> union pacific. >> why >> because they have got the west is booming. they own the west. and a lot of this could be even retail auto is doing much better think about what had to be rebuilt in texas it's all union pacific they could be a big winner in this quarter. >> we'll keep an eye on the rails and a bunch of other stocks we have yet to get to and we want to talk more about fox, specific to its future as a public company we've got a lot more "squawk on the street a this.

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as we have our eyes on capitol hill waiting to see what the conference committee has in terms of a reconciled tax plan the president making comments, we're hitting the wires now and will expect tape playback. apparently will make comments about tax reform, roy moore, adding he would like to have russia help with things like north korea. so we'll look for that in terms of our universe, amazon morgan stanley has an interesting piece, u.s. prime membership is plateauing. >> going after the costco quarter, i was thinking they have 90 million people that have their credit card. as long as there are that many with a credit card there could be that many people. i'm not leaving amazon, no way, not with this christmas. this is their selling season and the adobe call about digital selling for the holidays, it's

off the charts do not sell amazon do not sell amazon is my take. it's too good. interest rates went up as much. >> let's get to the s&p at the bottom of the screen, the opening bell at the big board, it's metropolitan commercial bank celebrating the ipo at the nasdaq a commercial real estate services business celebrating its ipo. >> we'll watch csx and oracle and adob bee at the open. >> abobe was a tour de force, delivering an amazing number there was two quarters ago he talked about maybe a possible dip. it never came. there's 25% year on year growth here 40% margins. he talked about the golden age of creativity and design i don't know if you have ever used the actualproducts to design things but they have a lot of artificial intelligence

in it now. they can literally make a sketch of what you have in your head. i'm not kidding. look out, bad guys, the police sketch if they get abobe, you'll be caught. this is amazing. i saw it -- >> you did it on the show, didn't you >> so exciting i have to tell you, they have got the biggest moat, no one will challenge them. it was a pdf at one point. it is the ultimate ecommerce play, if you're looking for one on the backbone of e commerce, not amazon, the ultimate for sales, this is an impressive company, i think the stock can go up more than this this was agreat quarter. maybe their best maybe they are best quarter ever. >> meanwhile, in media, disney is leading the dow and discovery, david, leading the s&p, up almost 5%. >> discovery got a purchase by john malone, 350,000 shares. if you watched the whole thing,

didn't use this on tv, much of it, went on for five minutes about the benefits of discovery and the scripps deal would be viewed positively and international assets it was on and on at the end i said why don't you buy more he sort of said, well, maybe i will so he did, not a lot of money, 350,000 shares -- >> not a lot of money for him. >> not a lot of money for him. >> i said yesterday this is the one you want to buy. >> he doesn't do that that often. that was really interesting. >> that was the best interview that you've done this year. >> thank you. >> i learned that -- >> it was an hour long. >> that helps. >> he changed a lot of people's minds about a lot of things, i have been using death star ever since because he -- he coined it he coined it i coined fang, he coined death star. >> death star is a good one. >> discovery, still working of course, we talk about antitrust, there's one you wouldn't think

has a lot of hair on it at all but the process itself takes a long time these days they are working to complete the deal to acquire scripps and expect to have it closed by the end of the first quarter, if not a bit sooner but that just shows you. i think it's the health care team at justice that's been handling the deal. >> if we went down -- they shorthanded -- >> there's a learning curve they need to go through apparently. they are explaining what a bundle is -- >> are you serious >> yeah, that's disappointing. >> yes >> wow that would also explain why they didn't seem to include international for at&t and didn't seem to conclude -- one of the things that when i read that brief, the justice department brief, i mean it was like -- >> it was nothing. >> there's never been amazon or google >> it was thin. >> wasn't it. >> it was thin gruel, yes. >> in retail, guys, costco halo,

meanwhile you've got an upgrade of foot locker -- >> you've got an upgrade of under armour -- >> i love that call. >> a couple of nice things happening. >> underarm our, a very powerful call that says they are getting their act together they have the inventory problem. the most important line in that, they didn't destroy the franchise. i point that out because that is the perception that kevin plank stopped being focused -- >> and the franchise got rundown. they make the case that's not true i know when i spoke to kevin, kevin basically was very apologetic, he basically said okay, it's true. but i'm back and it's not going to happen. the stock was at 11.5, 12, i think he's going to be true to his word you underestimate him at your own peril at this point. i think under armour is right. nike, the analysts are still stuck when they downgraded, don't know what to do.

>> big piece of the foot locker upgrade, up 4%, will almost take you back to the levels of august before the big tumble. >> they have one really bad quarter where they didn't have the right merchandise and everybody panics, similar to how they panicked at macy's at 19 when the ceo was saying, it's okay they don't listen to these people and then they wait and wait until it's too late to tell you it's okay to buy. >> yeah. >> there are going to be people upgrading macy's within the next ten days you'll say where were they at 21. >> will it be time to sell or time to -- >> i think then you'll see the number if you want to sell on the news then. certainly not down here. >> you want to talk a little hess >> i'm glad you asked. >> elliott, been in there for years, getting aggressive -- saying time for john to go long term not a great performer. you remember when --

>> more than 30% this year. >> followed that proxy fight closely at the time. now they come back and say, okay, it's enough with john, right? >> the properties could be worth as much as 70. i don't know if there are any willing buyers they have the southeast asian property that is very -- that could be 3 or $4 billion really they don't want john there. >> they don't. >> and we have a response from board of hess itself -- >> including the two members they control. >> including the two members they have. hess board unanimously including elliott's two directors or the ones that got elected, sports companies current strategy, john hess, while these are challenging times, mr. hess and management team moved aggressively, done an excellent job high grading the portfolio and repositioned the company and identify d one of the industry's largest and most exciting oil discoveries and working with exxon-mobil.

investing $3.4 billion in mature higher cost assets, lowering cash and returning billions in capital shareholders. >> i would say that a multibillion dollar find and exxon is terrific. i would also point out they actually were the -- as a matter of fact, they bought acreage from mr. botkin, they were the first. >> no permeon. >> no, the biggest problem with them, enough pipe to take it. >> so much there goes on and on. >> that's technology but being able to find oil where there was no oil so much natural gas that frankly if they ever freed it, natural gas wouldn't go up on a cold day like today. >> yeah. >> i'm not kidding. >> i know, we're already natural gas -- >> i was talking about southeast, the southeast portion of our country, it's nat gas, nat gas didn't go up on this blast. nat gas is down so much.

we do have the cheapest nat gas in the world, exporting a lot. it doesn't matter. >> president speaking to some reporters on his way to the fbi national academy >> it's a shame what's happened with the fbi -- but we're going to rebuild the fbi, it will be bigger and better than ever. it is very sad when you look at those documents and how they've done that is really, really disgraceful. and you have a lot of angry people that are seeing it. it's a very sad thing to watch i will tell you that i'm going today on behalf of the fbi, their new building and but when i -- everybody, not me, when everybody, the level of anger at what they've been witnessing with respect to the fbi is certainly very sad. >> yes -- >> i think he should he tried i want to support the person running, we need the seat and

like to have the seat. i think we're doing very well on the tax. we'll see what happens but i think we're doing very well. it's something that's going to be monumental. it will be the biggest tax decritical conditid decrease or tax cut in the history of our country as far as roy moore, yeah, it certainly -- i would certainly say he's -- >> you'll have to make that determination, we're hoping for a very -- let's put it this way. there is absolutely no collusion, that has been proven. when you look at the committees and whether it's senate or house, my worst enemies walk out and say, there is no collusion but we'll continue to look they are spending millions and millions of dollars. there's absolutely no collusion. i didn't make a phone calling to russia i have nothing to do with russia everybody knows it that was a democrat hoax, an excuse for losing the election and it should have never been this way, where they spent all of these millions of dollars

even the democrats admit there's no collusion there is no collusion, that's it we've got to get back to running a country. what we have found and what they have found after looking at this really scam is they found tremendous -- whatever you want to call it, you'll have to make up your own determination, but they found tremendous things on the other side, when you look at the hillary clinton investigation it was -- i've been saying it for a long time that was a rigged system, folks. that was a rigged system when you look at what they did with respect to the hillary clinton investigation, it was rigged and there's never been anything like it in this country that we've ever found before. it's very, very sad. very, very, sad. >> mr. president -- >> did michael flynn lie to the fbi? when did you find out? >> what else is there? you know the answer.

how many times has that question been answered. >> can i ask you -- >> when did you find out >> go ahead. >> have you seen the final tax code >> i have seen it. i think it's going to do very, very well. i think we'll be in a position to pass something as early as next week, which will be monumental -- >> i think they will be great, they are great people and want to see it done i know them very well and how they feel. these are great people and they want to see it done and want to see it done properly >> say it. >> we're going to see what happens with north korea we have a lot of support there are a lot of nations that agree with us, almost everybody. we can't let that happen and we're going to see what happens with north korea we hope it works out. >> i think we will i think we will.

child tax credit, so you understand, the democrats have done nothing in terms of children and in terms of child tax credit we're putting in a tremendous child tax credit and it is increasing on a daily basis. >> call with vladimir putin -- >> it was great. he said very nice things about what i've done for this country in terms of the economy and said some negative things in terms of what's going on elsewhere. but the primary point was to talk about north korea because we would love to have his help on north korea. china's helping, russia is not helping, we'd like to have russia's help, very important. >> ask you about michael flynn, would you consider a pardon for michael flynn. >> >> i don't want to talk about pardons po s for mike i wilchae. when you look what's going on with the fbi and justice department, people are very, very angry thank you very much, everybody

thank you. >>. >> that's the president fielding all kinds of questions on his way to the fbi national academy about vladimir putin and fbi says roy moore should concede, no comment on a would be pardon for michael flynn. did say he's open to the idea of increasing the child tax credit which is what senator rubio says he needs -- >> i thought that was the news. >> reporting that mike lee's office has updated on the tax bill saying nothing finalized, still working. so it's going to be a busy weekend. >> the market is saying it's going to get done. and it's difficult to disagree with them, the power of this rally. i know it's early on a friday, but there's a lot of things that are just reacting to positive news, which is kind of saying listen, do what you want with taxes, we're buying stocks the disney move, again, unher d unheralded you've got a deal where both sides are viewed as winners.

this is a great narrative. >> it's happening with shanghai at a four-month low. >> yes. >> nikkei is back to levels five weeks ago. the dax down four days in a row. are you sensing money coming back to the states >> i think there's individual situations that are rallying because the retail sales, the consumer is a little stronger than we thought. that's a nice under current. it was interesting that putin is following the u.s. economy i didn't know he was that engrossed with that. >> might as well, it's a lot bigger than his own. >> it is many, many multiples. >> the russians historically have been a -- were a great friend of north korea. i don't know it's really the commerce is with china but i just think when i look at disney, it's the tale of we have to get in, this one is down 15 you know what, that's a good price. >> you guys mentioned disney fox also, so strong, up another 3% real quickly on that we'll have plenty of time to

talk about it. here you're trying to make a decision, what is $2.8 billion of -- almost all of it coming from the fox news channel by the way. that is the key fuel engine behind the cash flow production of the company you could have leverages as low as two times this fif they havea 2.8 billion in tax reform. you can conceivably i'm told by those close to the country, have a hefty dividend put in place at fox, given the cash flow characteristics and free cash flow that approaches as much as a buck a share in the not too distant future certainly it seems in the last couple of days investors understand more of the deal and ramifications what the company will look like on its own, they are coming to a conclusion that it was worth more than it was before trading began yesterday just worth noting to your point that both stocks are up, which is of course the bankers and management teams and boards love

to see that. >> this is -- went over the transcript yesterday, all of the news stories today and they all read the same, which is that disney is no longer going to be second fiddle to the n in fang that disney will have the half we forget india, tim cook has worked on me over and over again, talk about india. india is 9 great growth story. we talk about china. d indian numbers cricket. >> huge, carl is an important part of that. >> $1.3 billion for star india. >> that's the secret -- he and tim cook and of course he knows apple very well, they both have centered on where the puck is going, which is india. china matters but india as they get infrastructure and more let's say more milton freedman like so to speak, this is where you want to be you want to be in india. we don't talk enough about it.

it's our bad. >> let's get to bob pisani. >> happy friday, everybody a strong open. i'm with jim, the market believes the tax bill will go through. look at the futures. yesterday when rubio came out and said he was a no, the market just lost all of the energy. we just drifted lower throughout the day. we're up today, i think jim is right, they believe it's going to happen. we go through these fits in the middle of the day. sectors, slightly more defensive, consumer staples, banks, up slightly here. nine out of ten of the sectors on the upside, very strong open here we talk about companies that are going to benefit from tax rates and mention the banks. many of the dow components would do very well a lot depends how you slice and dice the time periods. here's one we used which is the medium effective tax rate in the last five quarters, some of these pay very high taxes and median we've used in the past 26% on the average some pay very little taxes,

below 20% include pfizer and microsoft and ibm, and ge also pays a fairly low number a lot of other low tax companies around, some are semiconductor names, micron, nvidia as well. we'll keep an eye on all of that bear in mind, this is not an equal distribution that we're talking about. bitcoin, well, look at bitcoin for the week it's been a fairly calm week we've been around 65 or so we notice we're up here today due to the introduction of the advanced introduction of cme futures, remember cbo launched their futures contract on sunday we've had a week of that trading now and now going to have the cme futures launching, nasdaq will be coming in the first half of 2017. cme will be launching the bitcoin futures contracts that will be on sunday night. we'll have more bitcoin futures coming fairly soon i think the important thing is contract is fairly small for

the -- cme is a much bigger futures exchange i anticipate more volume and more open interest all of this will serve more people in, more contracts out there and possibly, possibly more stability one thing i want to mention on monday, that's going to be happening, one big initial coin offering we've had discussions about the icos but icos are simply put, ways of rarzing funds for a crypto currency invention. there will be one on monday. it's getting a lot of attention because it's going to be a block chain based in exchange for icos and traditional securities this is one of the holy grails out there. in the future, they hope all trading will be done on block chain and these crypto exchanges will take share of products away from the traditional exchanges and trade stocks and bonds we'll see. that's very much an open question right now these are only open

for a accredited investors, that means you have to have a certain amount of money. the people who are behind this are the overstock people the overstock since this has been out and talking about this, yearstock stock ha overstock stock has gone from $20 to almost $60, as you see there. a lot of interest in this on the street up 120 points in the dow carl, back to you. >> thank you very much bob. >> let's get to the bond pits as well rick santelli at the cme group already a busy morning >> a busy morning. interestingidaty points. soft empire, pretty strong capacity we have had a lot of volatility this week. this week, we had interesting solid retail sales every central bank of meaning seems to have met, and yet, as you look add an intra day of ten-year, it's so fascinating. it did respond actually to some of the stronger data that was released around 9:15 as you see on the chart, opened up to a 0-year starting in

sment. this is what you want to pay attention to a 30-year bond just losing it a bit. hovering at the lowest level since september. and granted, it's not falling apart, but the short end is strong the lawn end isn't the curve flattening is bringing in all kinds of discussions and it probably will continue because jay powell likely will take the same course and there won't be signs of a change until he gets into the thick of the job, late in the first quarter, so we want to pay attention. boons, look at the chart of boons. huchberring around 30. lots of volatility nothing really changes with mario draghi hovering at the lowest levels since early june here's a chart i find quite interesting. one week of the euro versus the dollar why do i find this interesting because considering everything that's going to happen and all the positive things our central bank is doing and the euro bank, european central bank, not as much, the euro is still on an upward trajectory. one week of the dollar index, it isn't. and finally, september 1st, the

dollar index, why is this chart important? because it shows that 94 even area is very technically significant to many traders. they're getting a bit negative to make a long story very easy finally, at about 10:35, 1 10:foertd, i'll talk to jean-claude trichet. hope everyone joins us back to you. >> we will see you then. rick santelli at the cme dow up 105, off slightly from the opening highs. we'll "sget top trading" with jim in a moment. don't go away. zar: one of our investors was in his late 50s

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time for jim and "stop trading. >> i want to talk about a name, waste management here you go, this is what happens. waste management boosts its dividend to 46 cents, people had thought maybe it would be 44 they do a $1.4 billion byeback people buy it. that's like the old days where you would buy a stock because they boosted a dividend. i'm talking like the '80s. this market likes simple things.

simple things like a buyback and a dividend boost why it likes fox there could be big buyback and a gigantic dividend. this is what people want now it's reverted to a different kind of market a more positive market >> what's on "mad" tonight >> two companies that are on fire centene, which did well when they decided, when the aca didn't get scrapped. then, atlassian, people feel this is the ultimate enterprise software company all of these companies, cloud companies, are trying to do vmware i'm so impressed with these amazing technology companies just impressed adobe, wow bias >> are you as bullish on nick foles? >> i wish nick the best. i have to tell you, anyone who roots against carson wentz trying to get back from this acl, he is -- he's a blessed man. and i like him very much

>> i don't think you'll have too much trouble with the giants >> don't say that. why don't you just put a jinx on me wheen the suit and the jinx. >> we'll see you tonight >> when we return, keeping an eye on developments regarding tax reform also, adobe with that earnings beat and that guidance, stock up more than 70% this year. dow is up 102.

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welcome back to "squawk on the street." i'm carl quintanilla kayla tausche is here with us at post 9 of the new york stock exchange david faber. sara is off today. markets doing okay slightly off the highs of the morning, but dows up 100 points. going for four straight weeks of gains, the dow and s&p our road map begins with taxes does the gop have the votes? plus, a look at the big winners and losers as the tax bill makes its way through congress >> and more on the massive disney/fox deal. >> and a big morning for

earnings movers. oracle and adobe in focus as we get ready to hear from the ceos just about an hour from now. we'll dig through the reports and bring you good analysis. >> first up, we are expecting movement on tax reform this morning. let's get straight to washington ylan is our eyes and ears. a lot of moving pieces today >> we're waiting for members of the tax bill's conference committee to walk down the hallway here in statuary hall and head over to representative kevin brady's office to sign the final version of the legislation. we have about two hours to put their signature down, and once a majority of members sign that bill, it will become final no additional changes will be allowed. republicans will only be allowed to vote up or down on that final version of the bill. we are still trying to find out whether they have the votes to actually pass that legislation especially after senator marco rubio came out with a surprise threat to oppose the bill if the child tax credit was not

expanded 51 republican senators, including rubio, had voted for a previous version of the bill so if rubio flips his vote to a no, republicans will need vice president mike pence to step in and to break the tie we know of at least five other republican senators who say they are still undecided this bill. one of them is mike lee of utah, who had worked with rubio to expand the child tax credit. we reached out to his office this morning to check on his stance what they told him was simply, nothing finalized, stim working. also concerned about the health of senator john mccain he's missed votes this week and has been receiving medical treatment. still unclear when he will return to work in the senate this is definitely coming down to the wire. back over to you >> do you get the sense they will wait for senator mccain to return before scheduling this vote >> unclear how they will proceed next week. originally, republicans had hoped to hold a vote in the snats as soon as monday and have

the house take up the legislation after that now, that plan is getting scrambled, perhaps the house would go first and then the senate to give mccain some time to heal and get back to work, but all of that is still in flux right now, kayla >> all right, thanks so much, ylan, on capitol hill. >> for hoar on the tax plan, we're joined by michael, morgan stanley's u.s. public policy strategist, and jared bernstein, the center on budget policy priorities, senior fellow and former chief economist to vice president biden. welcome to both of you michael, i'll start with you, because as we have seen the bill evolve, we have heard so much about additions to the bill. but we haven't heard about pay-fors is that what we're going to get in the 11th hour >> yes so at this point, it looks like we're not going to know anything until after the close today. what we do know is they made some changes that key senators have asked for in terms of credits and other issues we don't know exactly how they're going to pay for them.

there has been talk of shortening the length of the personal tax cut talk of removing other provisions this is obviously something we're going to pay attention to quite a bit because one of the critical uncertainty physical you're trying to think about this frauz an investment stand point is how big is the deficit going to be next year and how much affect would that have on gdp. the last bill we saw was not a major deficit expansion. not something that got us excited about a big boost to growth, but we'll have to see if there's surprises from the conference bill later today. >> jared, we just saw a list of the senators who are undecided so far but senator rubio seems to be the only one who has come out and said he will be a no if the changes to the child tax care credit aren't included are you surprised there aren't more senators trying to horse trade at the last minute and what do you think the outcome will be? will they all fall in line >> it's a good question. i think they'll fall in line,

probably your leverage point is a very good one every senator when you're down to such a razor thin margin has a ton of leverage. i guess i was surprised marco rubio wasn't pressing his case sooner ylan correctly pointed out rubio is pitching for an expansion in the child tax credit i want to point out that expansion goes down the income scale. the way that child tax credit is set up is it's very beneficial for higher income families, but it does nothing to add on to the credit for the lowest income families and to his credit, rubio and lee have been really very good on this what they want to do is start the credit kicking in at the first dollar of earnings the way it's set up right now, it only starts after $3,000 of earnings they want to have a 15% credit starting at dollar one, which would increase the credit for, say, a very low-income family by maybe, you know, over $400 that's a great deal, relative to what's in the plan right now

>> and we'll see exactly what that meshed version looks like later this afternoon, but michael, one of the questions continues to be, what impact will this actually have on the economy. former new york city mayor mike bloomberg tweeted earlier this morning it will not lead ceos to invest more. we heard lloyd blakefine saying it's stimulus at the wrong time and it could overheat the economy. do you fall on this? >> yeah, we think context matters a lot here whether or not this is a policy improvement over the long term is not necessarily material to whether investors should do today. it's more about what happens to gdp next year, and if this extends the economic cycle in a meaningful way we generally agree that in the current economic context, this isn't something that provides a meaningful gdp boost again,thosis two uncertainties we have are how much does it expand the deficit and provide fiscal stimulus in the near term the versions we have seen so far

suggests not so much and how much does it incentivize corporations returning some of the tax dollars they're going to get returned to them into the economy. and here we have a lot of questions because, for example, the immediate expensing p provision doesn't look different fran the current bonus provision, and the most dollars are going back to the companies thereat are already not capital constrained and effectively don't necessarily need dollars to change their mind or change their incentives to put money into the economy we're not looking at this as being a substantial boost to gdp next year. >> can i weigh in? >> final word to you >> i think that the bill probably will add to the deficit next year, as mike was saying. and that will maybe increase gdp growth 15 or 20 basis points would be my guess, but the problem with the bill when you connect it to the economy is that while the economy is growing, it's really not reaching the bottom half i know that's not a huge issue for investors, but i think it's a huge issue for a lot of the public who's concerned about this plan, and the problem is

the plan really exacerbates this inequality problem the extent it does move growth, my concern is it doesn't reach the bottom that's why they rubio improvement is so important to working families >> we will see exactly what those details are when we get them for now, michael, jared, our thanks to both of you. have a great weekend >> thank you sticking with tax reform, dominic chu is back at hk looking at an increasingly important screen, which is companies with the highest tax bills. >> the ones who stand to benefit the most possibly from any kind of corporate tax legislation that lowers rates are the companies that already pay a lot in taxes the ones that do pay the most right now are on the capital intensive more at least industrial side of things. the folks at goldman sachs took a look at those companies and sectors that pay the most in effective tax rates in the last five years inagy pays the most.

a 35% tax rate number nine is cetelecom, 33% number eight is industrials, 32%. and consumer discretionary, 30%. the biggest taxpayers may be the most benefit the next stack there, consumer staples. 30%. financials, 28%. health care, 26% some of the lower relative taxpayers, and the least amount of taxes on a sector basis are paid by the technology companies generally speaking in the s&p 500, they estimate around 24% in terms of the median effective tax rate over the last five years. so as we talk about what the beneficiaries could be, it might be see some investors going toward stocks in industrials, enemy, telecom, because they're the ones who could have the biggest impact from any kind of a tax cut. back over to you, david. >> okay. thank you, dom dominic chu. >> it's day two, of course, after the massive deal under which disney will acquire so many assets from 21st century fox, and the market continues to have a positive response to the deal you can see, of course, the

currency in this is disney stock. as it moves up, so does the implied value of the overall deal for 21st century fox. investors also seem enthusiastic about the company's future as an independent entity, meaning what will be left of fox. our parent company competed vigorously, that being comcast, for these assets as well, but was unable to convince management and the board that it would be a better suiter, even though i'm told comcast did offer a value that was higher for the assets in question antitrust certainly figured prominently into the decision that the board management made in terms of why disney was a better fit also, i'm told, the murdoch family felt more strongly about having disney stock as opposed to comcast stock for a variety of reasons comcast did, i'm told by people close to fox, have to, for example, even say that they would not acquire six of the rsns when it comes to the antitrust implications of a potential deal so more and more of the assets that would need to go with the

spinco meant less of a premium on overall, giving less you're selling, the less of a premian you're getting we'll see what comcast chooses to do from here, what leverage it can try to apply as it continues to at least focus on that possibility that these incredible in its view international assets are for sale and it certainly would have liked to have been able to participate in the purchase of them and back to fox again, day two, up almost 2% it's tax, taxes come into the fore for it, too $8.5 billion is the tax liability for fox in this deal, but it could go down to as lee as $6.5 billion if you get the taxes in the plan close to passing in washington. it would be an underlevered company. it would have a good amount of blassheet capacity so there are a variety of reasons, guys, that it is being viewed certainly with a new lens in terms of value. at this point.

>> that's almost a two-year high >> yeah. >> going back to early '15 thanks very much, david. when we come back, a lot more on the fox/disney deal with jim stewart of "the new york times. a lock at antitrust and rupert murdoch's relationship with the white house. >> also, the founder of usa networks with us dow is up 103. "squawk on the street" will continue after this short break. their experience is coveted. their leadership is instinctive. they're experts in things you haven't heard of -

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disney reaching that deal to buy a majority of 21st century

fox assets for just over $52 billion. bob iger joined david yesterday, talked about the potential regulatory challenges of that deal >> we think that this is very consumer friendly. the aim of this combined company is to create even more high-quality content and then to distribute it in ways that consumers prefer and consumers demand in today's world. we think that this combination is going to enable even more of that we hope regulatory authorities both here in the united states look at it with a computer -- with a consumer in mind. >> antitrust issues the subject of our next guest's column titled the disney-fox deal has friends in high places joining us at post 9, "new york times" columnist jim stewart good to have you back. we talked a lot yesterday about sports being an issue in antitrust. now the president's conversation with murdoch what's your take >> it's borderline unbelievable

that the president would call the chief executive of one of the companies in a big merger that is facing antitrust scrutiny and make any comment about it at all, let alone congratulated him and saying how great it will be for jobs. by the way, a very dubious proposition since mergers almost always lead to fewer jobs, but let's put that aside i was also struck listening to iger, if you close your eyes and act like you're listening to randall stephenson, that's almost word for word what at&t/time warner said, yet they're getting blocked with the big antitrust case of course, time warner owns cnn, a punching bag of the president, and many people thought this whole case was some attempt to punish them. everybody said no, no, it's not. now we have the opposite situation where if not the best friend of the president, a very good friend of the president, is there, and is the antitrust division going to doilities job? are we in a world of crony capitalism where your deal gets approved if you're a friend of the president, and if you're not, it doesn't?

>> how does the structure of the deal play into it? because the news assets aren't included in what disney would buy, unlike the at&t deal. >> no, they're not >> does it headache make it bet worse? >> it doesn't matter because fox news is the best media friend the president has. that remains under the control of the murdoch family and rupert murdoch. if the president wants to reward news channels that favor him, what is he going to do he will approve this deal as a thank you. and as by the way, an encouragement to fox news to stay on the team here. so there's a blatant conflict in my view. >> jim, in reading your column, one conclusion was certainly you think there should be a vigorous review of this deal and questions about whether or not there is too much power and concentration in certain areas but the other is that the misguided approach of the department of justice with time warner and at&t. >> exactly i mean, what i advocate is consistency and the rule of law.

in other words, if you're going to block at&t and time warner because you don't want a vertical combination, then you should be blocking this one. i'm not saying that's the right way to go. honestly, i think you should probably let the at&t/time warner deal go through and probably let this deal go through too. the government is trying to stand in the way of this sort of tsunami of change in the technology and media world is going to be futile exercise in my view, but the at&t/time warner deal, the government is all worried that time warner might withhold some content from distribution channels. disney is already withholding. they are pulling the disney stuff away from netflix. they're going to terminate other deals. they have announced that and now, they will surely -- >> we have this weird situation yesterday where we had experts come on and say now the government doesn't like vertical deals but horizontal deals are okay, which is turning antitrust on its head, but they're saying this deal is going to be all right because it's horizontal, not vertical >> that's totally turning on its

head it is a vertical deal as well. that's why the idea that this thing would just breeze through is pretty startling. and again, the horizontal thing, i think under traditional measures, it would probably barely pass muster but there's a price here, and if you care about diversity in media and entertainment, this is a real problem look at the golden globes. fox just blew that one out of the park they got a host of golden globes awards disney got hardly any. for a lot of these non-super hero adult independent interesting movies and word is that disney is going to try to clamp all that and shut that off. they don't care about that i hope that's not the case, but you know, that's a blow to culture, if you take all those offerings and suddenly fox won't be making them >> on a much smaller footprint, there were reports that the purchase of sinclair broadcasting by tribune was also said to be approved. would you categorize that in this debate we're having because obviously, sinclair has also been extremely friendly in

its coverage of the president? >> i'm not that intimately familiar with the antitrust situation with sinclair. i don't think it necessarily posed antitrust issues if you start to see a pattern where the friends and idealogical allies of the president get what they want and his idealogical opponents get lawsuits blocking their deals, if that pattern continues, it looks terrible >> jim, we're going to talk more about it, obviously, on both the time warner/at&t side, and disney/fox as the things make their way through the channels good to see you again. >> fun to see what happens jim stewart. by the way, s&p record high right ow >> yet again when we come back, two big movers, oracle and adobe, reporting earnings and later on "squawk alley," we'll speak with both of those ceos, orcon's rkma hurd, and shat anew narayen. we'll be right back.

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with earnings. oracle sinking thout the morning. jon fortt is with us for more. it seems like cloud this time went in the other direction. >> for oracle, it did.

for adobe, it went in the same direction it's been going, up and steady the tale of two clouds first, on oracle, the guide in the cloud was weak, at least based on what an ls were hoping for. and really, this is coming as oracle is trying to shift to a new gear in the cloud. on the call, larry ellison, mark hurd, all saying they expect the beginning of 2018 is going to be the real shift of database to the cloud. some of the autonomous database technologies they brought out t open world when we of course talked to mark hurd about that just a couple months ago, those will start to kick in. complicated licensing acrobatics happening as companies figure out what license they're going to use in order to manage their move to the cloud, whether they want to do it all at once or gradually at a different pace. that's one issue another issue, related to the hybrid transition. some customers are getting oracle cloud appliances on

premise that allows them to manage their transition from on premise to the cloud oracle manages those they have to physically go and hook them up and oracle is saying that process taking a bit longer than expected so the revenue flow from that piece of the business also taking a bit longer. so one of the things that we're going to ask mark hurd when he joins us next hour is how much is this just a speed bump because there's a surge of cloud revenue coming in 2018, or how much of this is perhaps analys s s getting ahead of themselves as far as how quickly the transition is going to take place. when it comes to adobe, first $2 billion quarter for adobe. first time they're crossing $5 billion in annualized recurring revenue, and they're redefining some things in the cloud they put out their projection for 2018 i believe off the top of my head, i don't have it in front of me, as i will next hour,

they're projecting close to $9 billion in revenue for their overall business coming next year getting awfully close to $10 billion. strong growth, i believe 15% in the digital experience business. around 23% in the creative cloud business, which is their juggernaut so the growth rate is coming down a bit, but they're getting so much bigger, so consistently, that wall street is still positive on them this morning. just marginally, though. up a bit more than that after hours. >> look forward to talking at 11:00 a.m. >> when we come back, that fox/disney deal shaking up the media space. we'll talk to the founder and former ceo of usa network on what it means for consumers and content creators record high s&p at 2670. back in a moment ♪ ♪

♪ ♪ what we do every night is like something out of a strange dream. except that the next morning... it all makes sense. fedex powers global commerce with vast, far-reaching networks... deep knowledge of industries... and, yes... maybe a little magic. ♪

i'm contessa brewer. here's your news update at this

hour csx ceo is taking a medical leave of absence he was hired in march after an activist investor pressures the company to make some changes 'tis the season for giving, for some americans, it means paying for holiday shopping well into the new year a new poll found 25% of consumers will take up to six months to pay off their holiday debt hey, it's official we have a wedding date kensington palace confirming prince harry will marry meghan markle on may 19th of next year. the wedding will be held in st. george's castle. >> the buffalo bills are trying to get ready for this weekend's nfl game against the dolphins. they means they have to clear the stadium of snow. lots of it they invited the fans to come and help they're paying volunteers $11 an hour to shovel, but you also get game tickets you know, you have to sit

outside in buffalo if you're going to watch the football, but look, the green bay packer fans do it all the time buffalo bills fans, nothing to them why not pitch in and help out? that's our news update at this hour back to you. get your snow shovel out >> thank you very much >> we're seeing some pretty sensitive swings to various reports about the tax bill, who may be in or out, as we approach what we hope will be the first view of a reconciled bill. cowen is out this morning doing math possibly, you end up with a 49/49 tie, which is one reason perhaps the vice president is delaying the trip to the middle east overall, you see underlying trends as well regarding retail. under armour up 13% on this upgrade this morning so a lot going on. >> but the four who are not senator marco rubio who are listed as undecided, they have generally come around on these votes, and there have been several issues that have been wined for them susan collins in an earlier draft got the property tax deduction she was looking for,

so there have been some changes along the way to win them over, but the seems like many people are reserving judgment until they see the final bill. though the prospects are positive >> $1.5 trillion continues to be the number, right, that they have to keep it under. >> correct >> even though they're trying to solve everybody's issues, which typically means more money >> but now, speaker ryan suggested they would use 2018 reconcilization, the vehicle where they only need republican votes to reform medicaid, medicare, and social security in the new year, so perhaps that is where you get some of that money from >> well, it does seem to be having a positive impact on the market, at least, the idea that they're getting closer and closer to having the votes they need we continue to watch, of course, disney and fox 21st century fox, after yesterday's more than $52 billion all-stock deal under which disney is buying so many of those fox assets. the potential impact on the streaming landscape, on so many of the players who provide and distribute media around the world.

former wall disney studios ceo joined "squawk box" earlier to give his take on the deal. >> there's an offensive one, which i haven't heard anybody really speculate about right now which is that bob iger wants to double down if not triple down on hulu. if in fact -- and to have a competitive full offering, you know, not separate from disney, separate from espn, but a more adult offering in which case, he will be a buyer for content. he'll want the output from comcast, nbc >> interesting that, of course, a reference to hulo, which disney will own 60% of and have majority control of if and when this deal is completed. joining us now is kate koplovitz, the founder and ceo of usa network you were one of the early pioneers to a certain extent, of course, in creating the bundle that is now falling apart all over the place and leading to these historic deals

what is your take in terms of disney's efforts here and direct to consumer and what it's going to mean for the landscape? >> well, i think that, you know, it's really looking to the future, and when you look at what is evolving in the marketplace and has been for the last several years, it's mobile and video. and i think bob iger really understands that, and i think he's creating product that -- a future for his product that can go direct to consumer. that's a different kind of model. technology always changes industries and our industry in media is really changing rapidly right now. i think there's not enough really thought about what this really means on a global basis, because we have here in the united states, what, 350 million households in europe, about the samework but there are billions of other people around the world, and they are getting their product on mobile and video. and i think that this is a future that bob iger sees. he wants control of his product. it's going to be a longer term play this is not a short-term play for him.

it's not only about hulu and netfl netflix, yes, it is about streaming video, but i think we really should understand there are billions of people around the world that can be reached with these products. and upsold on a lot of the merchandise and products that come off of these movies, these series, these television networks >> yeah, scale, of course, such an important part. we pointed out the international distribution assets here played a keel role in disney's appetite, not to mention our parent company's, although comcast of course did not come up with them, when it comes to the direct consumer offering here in the united states, kay, they're starting from zero at disney amazing brands you put fox in there, even more so, but nonetheless, netflix has 100 million subscribers around the world. do you think they can be successful at disney >> well, i don't think there's just one player. i think that, you know, there are going to be other players in the marketplace, and yes, netflix has moved aggressively and their international

subscribership is really very remarkable i think, at this point in time, but i don't think that there's only one player out there. and especially when someone is paying, whether it is $10 a month, let's say, for something like netflix, and you're going around the world and the pricing is very different. a lot of places in the world, people don't pay for this product. it is really advertising dependent. and a lot of different countries around the world that's a long-term play. the short' term, i don't think there's only one, and i think people are going to mix and match bundles. that's what's going to happen. i have thought for a long time that sports was going to go off into sort of a more pay environment. espn has long-term contracts they more recently signed ten years with cable operators and distributors, but there are a lot of other programs and this fox package comes with a lot of regional sports as well. i think there are a lot of different ways the distribution will be divided and people will pick and choose among those they

really want to see >> i want you to stand by for a moment we want to get to news breaking in terms of a space launch >> this time, a used rocket. morgan brennan is at post 9. you know -- you have forgotten more than most people know >> this is spacex, mission for nasa, and it is taking off right now. i think we should go ahead and listen in. as this launch gets ready to take off >> liftoff of the falcon 9 rocket and dragon spacecraft, filled with science and supplies for humanities research outpost in the international spa space spagz. >> the propulsion engineer calls out propulsion events. the range coordinator calls out air force satellite control network acquisition and loss of signal, and the ground expert

calls out acquisition and loss of signal. at 1:05 after liftoff, falcon 9 reaches transsonic speed the vehicle will pass through an area of maximum dynamic pressure known as max q >> this is spacex, elon musk's spacex making history again this year two ways the main engines on this rocket, this is a recycled falcon 9 rocket it's the fourth time they have reflown a rocket this year the first time for the government this is the first time the government has done anything like this with a commercial company. the other way they're making history right now, this is their 17th launch of 2017. as far as i know, this is the most launches by a commercial company ever in one year >> after getting delayed for weather, it's hard to imagine a more piercingly beautiful day than the one we're seeing in that shot. not a cloud in the sky >> in just a few minutes, this recycles booster is going to drop off, it's going to come back down to earth, and it's going to attempt to land at cape

canaveral air force station again. that is going to create a sonic boom when it does that >> talk about some of the math and physics behind landing these, because it's probably underappreciated just how hard it is to do. >> i'm not a rocket scientist, but what i can say is this is part of the reason spacex is now valued at $21.5 billion, making it one of the most valuable privately held companies in the world. because of the fact that these engines can basically take themselves back down to land or to these drone ships that spacex has in sea, and this whole concept of reusability, this really is the future of space exploration and spacex has very much been on the forefront of it it's also worth noting this launch took place from cape cunaveeral's launch complex 40 this is where last september that falcon 9 rocket from spacex exploded on the launch pad what a difference a little over a year makes >> musk, of course, has been

tweeting he tweeted a link to the live webcast of this. being awfully vocal with trolls in the past 24 hours some people critical of him. he wrote back, you're an idiot so his maverick style continues. even as we talk, david, about tesla and some other cases keeping a short on closing bill yesterday. >> james chainose making no qualms about his idea it's going to go to zero. it is what he said >> i think what is underreported in just how much elon musk or jeff bezos with his space start-up, blue origin, just how much the technology they develop in the space companies can be leveraged into companies like tesla. >> thanks for helping us set that up. morgan brennan at post 9 as we watch falcon >> meanwhile, getting breaking news on tax reform dow up 117 ylan is watching that. >> one of the republican members of the tax bill's conference committee just told reporters that the child tax credit has

been increased in the final version of the bill. it went from $1100 being refundable to $1400 being refundable that's from representative christy nome will that increase be enough to win over florida senator marco rubio? what she told reporters was i think we're in a good spot and should be able to earn this support. now, senator rubio is in florida right now. he's not here in washington, and just about half an hour ago, his office told me they had not seen final numbers yet. but that he was looking for a meaningful increase in the refundability of that child tax credit so the final bill is done. it's 503 pages long, and we'll see if this is enough to win marco rubio's support. back over to you >> okay, thank you, ylan ylan mui keeping us up to date on minute by minute developments >> let's get back to disney and fox. kay koplovitz has joined us. the founder and ceo of usa network.

kay, thanks for standing by there. you were talking about, of course, this changing landscape, which is made so clear by this decision by both disney and fox to enter into this deal. what about the other, i hate to use the term, but old media companies or those who have still very much dependent on the bundle for the main part of their revenues does this change the landscape in an even more negative way for them >> well, it changes the landscape, no doubt about that i think that each of them, the larger, whether it's comcast or viacom or any of the others that are out there, are going to have to really think hard about where they're going to align they have product. they have content. they have different distribution systems and they're going to be leveraging what they have as well the pipe to the home is really still going to be relevant until 5g is really out there, when wireless may take over more of the distribution, and eliminate the pipes. but that's going to be a while, i think.

and these companies are going to have to decide, are they going to align with one path or another or are they going to stay ubiquitous in the marketplace and try to sell their product across all platforms. i think we're going to see that when we see these skinny bundles. somebody like viacom is certainly going to have to condense the number of networks they have. they're not going to get distribution for all of their, you know, almost 20 networks they're going to have to choose and consolidate. i think you're going to see smaller players eliminated from the marketplace because they won't get the distribution >> like who, kay who would you imagine to be one of the smaller players who gets elimina eliminated i know after a merger, anyone who is an employee of any of these companies or divisions is wondering what it means for them and the future of their job. >> of course, there are two factors in play. there are going to be some eliminations of small networks i hate to name, say these networks will be eliminated, but we have small distribution network out there, inspire, you

know, networks like that some of the spin-offs of many mtv networks i think will be consolidated or eliminated i think amc has some you'll see some of this in the marketplace be challenged. and it will be interesting to see how they scramble to get the distribution on the other hand, the streaming media may offer them a different model, business model, which will be somewhat challenging, but an opportunity, perhaps, to reach more homes so it's going to be a tradeoff for them a fairly difficult one to man v maneuver, but it's not possible. >> thank you for sharing your insights this morning. we appreciate it kay koplovitz joining us when we come back, former ecb president jean-claude trichet will join us csx having pressure today as hunter harrison goes on medical leave, complications from a

recent unspecified illness "squawk on the street" will be right back don't go away.

be flashing a warning sign we'll tell you what it is and what it might mean at tradingnation.cnbc.com more "squawk on the street" coming up.

let's get to the cme group rick santelli and the santelli exchange hey, rick. >> thank you i would like to welcome my very special guest, former ecb president jean-claude trichet. considering there's a delay and he's in paris, i thought this spot would be about relationships, mr. trichet relationship number one i would like to discuss is the relationship between u.s. tax rates, assuming that things pass and our corporate rate is much lower, versus eu tax rates i know france has tried to make a move to lower theirs how will that tax difference

affect different aspects from central banking to just structural reform in europe? >> i would say first that, of course, if passed, the new legislation in the united states will augment quite considerably the profitability of the invested capital if we are at the level of 21%, which is what is in perspective. and it's a wake-up call, it seems to me, because we ourselves have a permanent need to be more attractive in many, many respects, and to invest more and go faster and it's clear that it will augment the differential between the u.s. and europe. so i expect not only france, frankly speaking, but also a number of other european, who by the way, have very different level of taxation. there is no unity in europe on corporate taxation, on taxation

in general so i think it's a wake-up call and we will see, of course, whether the legislation is passed as is presently planned but again, a very important decision in the u.s. what it changes in terms of monetary policy, i would not elaborate on that. i mean, the monetary policy has its own rules. the goals of it are clear. the price stability and the definition of price stability is clear. the european economy is now growing very, very rapidly, brilliantly. it's more rapid in manufacturing than ever. it was more or less underassessed, underestimated in the past now we have to recognize this economy is going very fast >> all right my second relationship question. interest rate differences. at the end of the year, 2016,

the spread, the difference between boon yields and ten-year yields was about 230 basis points then, in july, hit a drop quite dramatically to 170 basis points, a 60-basis point drop. now we're back close to 210 basis points that interest rate gap is significant. what do you think the effects will be? does mario draghi concern about it, and is it something we should look to continue to widen, considering our central bank has been more aggressive? >> well, my understanding is that the cycle, the economic cycle in europe, is late on the u.s. cycle namely, because we had the sovereign risk crisis, which created an additional burden on the european economy, so we are late it's not abnormal that the

normalizing of the monetary policy is also late in european comparison with the u.s., so i expect, frankly speaking, that we are being now in europe in the episode of the tapering and not yet on the increase of rates and increase of rates which come after tapering, according to all the communication of central bank we have to accept that we are in this period for a certain span of time, and i don't think that it would create drama. the market knows pretty well the reason why there is such a differential the reason why we are in different universe in the u.s. and in europe, and i think the market is living with that, provided the central banks are very clear in their meditation, in their decision, in their reaction function. >> all right my last question, we have about a minute left, mr. trichet, this

is about a relationship that went bad, the uk and the euro zone now things are happening where mr. junker is praising prime minister theresa may, although there are issues involving the courts and say so in uk issues and, of course, other things like trade deals what do you think of the much softer tone the president of the european commission and others have now taken recently with regard to the uk your final thoughts. >> well, first of all, i think it is because there was a difficult issue, which is the amount of money the uk was prepared to put on the table and that's the reason why the tensions was visible now we have something which is appreciated by, i understand, all partners and why the

negotiation will start that does not mean that this new episode in the negotiation is easy it will be very, very tough, very difficult, and we have to expect time. but the first episode, first step, we hope very much, i have to say, and myself i hope very much that at a time the uk will be back. you know, that tony blair says that, a number of very important political men and women in the uk think that. i know that is very unlikely, but i hope, nevertheless, that it might come. >> excellent mr. trichet, thank you for taking the time. i hope you and your family have a very happy holiday and happy new year thank you again. kayla, carl, back to you >> all right, thanks so much, rick santelli. when we come back, the ceo of adobe will break down his

company's breakout quarter >> once again, delivering an amazing number this is an impressive company. i think this stock can go up a lot more than this i really do. this was a great quarter maybe their best

live shot of cape canaveral here, as spacex sends a cargo load to the international space station on a used falcon 9 rocket then, of course, landed once again at cape canaveral moments ago. amazing thing. >> a few steps left in the process, though. you have to dock on i.s.s., get the reusable parts returned to earth, so we'll see how that goes, but very impressive to watch. when we come back, two big interviews ahead, ceos of oracle and adobe join us next on "squawk alley" eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool?

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wow! performance of the night. fifteen minutes could save you fifteen percent or more. welcome back to "squawk on the street." i'm dominic chu. every specter in the green right now, but consumer staples standing out thanks to a better earnings report out of costco. check in with colgate, kroger, and others in the space, as well that does it for this hour of "squawk on the street. back downtown for the exchange and the start of "squawk alley." back to you. >> thanks so much. good morning, 8:00 a.m. at oracle headquarters in