tcng to geico. 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 redwood shores, california, 11:00 a.m.

on wall street, and "squawk alley" is live ♪ ♪ good friday morning, welcome to "squawk alley." i'm carl quintanilla with john fortt, morgan brennan is at post 9 for the hour, sara eisen is off. s&p 500 tech sector is the best performer this year by a long shot, up almost 40%. the question is, will this continue into the new year mark mahaney joins us to start off the hour, just published his 2018 internet sector outlook mark, always good to get your take happy friday >> good morning, carl. >> what's the headline on this

one? >> going into '18 we have three constant and one change. at least for the internet aspect, they've been extraordinarily consistent and we think those revenue growth trends can continue into next year second, the multiples are the same they haven't changed over the last three years, which should mean the outperformance we've seen in the stocks to date, it's all bottom line driven or revenue growth driven. there's less downside risk, despite the outperformance going into '18 and the third thing, still expect heavy investments from these names top picks for the year going ahead are facebook, best growth valuation across all of technology, second netflix, and third amazon >> you have a 230 target on facebook, 250 target on netflix, 1,200 on amazon. the recent -- very tactical weakness in tech as this tax

bill has come to the floor, is that a reason to be cautious in '18, at least the start of '18 >> we went through the same thing last year, carl, i know you know this well in the last two months of '16 we had a down draft away from tech and people were looking for other areas for growth growth did not change at tech with the leading tech assets like the fang names, and growth also didn't change in the rest of the economy, and that's why investors swirled back to buying growth at reasonable prices. i think the same thing is going to happen here at some point along the way, this growth overvalue trade will end i don't have a near term reason for it to end, possible it does in '18, but barring a major portfolio shift, no reason the fundamentals and current valuations of at least the high quality internet names shouldn't set up the stocks for outperformance in '18. >> mark, a lot of focus here on tax plans potential for tax

reform, but what about europe? amazon settled a dispute in italy, europe looking to rewrite tax rules for the big tech companies. how closely should investors be watching that next year? >> they should be absolutely watching this. two things to watch out for, government footsteps, which is greater regulatory pressure and the regulatory pressure is most severe in europe, especially for a name like google, but also the secondthing is the changing ta structures all in these companies, these multinational tech names won't see as much tax relief if the current tax plans go into effect as the rest of corporate america, but they are still going to benefit from it it's a tail wind for them, and that probably offsets, you know, heightened tax collections in europe net-net, large cap tax are still neutral to positive going into 2018, not negative >> mark, you mentioned the internet as being a major and important continuing trend

i'm wondering are there any dark sides to that, either in terms of costs as we see some of the major video providers trying to link up, disney/fox, or in bubbles? you know, we have a number of companies producing video that seem to be going under the digital media space. is that a risk for companies relying on that video? >> i tell you, it should be an opportunity for one group of people there are three, four, five megacap large balance sheet bidders for content today, so for content creators, this should be a golden era when you have that kind of buying power out there. amongst those buyers, i'm talking about facebook, netflix, amazons, googles of the world, there's heightened competition, but that's always been the case and it probably means whoever has the most scale is probably going to have an easier time winning. and that's probably netflix. you have 100 million people paying you $10 a month and rising that's a lot of purchasing power that nobody else has anywhere close to those subscribers and purchasing power, so it probably

separates the winners and losers in terms of the buyers' side there is an outside risk that disney/fox could cause rising costs for netflix, but i think that's an outlier and i don't think that's a material negative risk for near term >> finally, mark, we know what's happened to cash balances at the 20 biggest tech companies this year, and you mention disney/fox what does the large cap m & a picture look like in '18 >> one thing, carl, i hope -- i know you're talking about m & a, i'm hoping it means more share returns to shareholders. cash returns to shareholders great to see a rising level of share repurchases, especially at google $100 billion in cash, please, return more than $7 billion a year, especially since you're generating $20 billion plus in free cash flow, so investors first want to see that and maybe a dividend payer in here ebay or priceline would be a healthy thing. then, you know, it's probable that you'll see more m & a and

maybe amazon will do more like they did last year with whole foods. if google cloud doesn't gain enough organic momentum, i don't think they have a choice but to make a strategic acquisition using the cash and equity they have those would be the two areas of m & a i'd be looking for >> that would be a big story mark, thanks so much mark mahaney and last night oracle reporting reporting earnings and estimates, adding $12 billion to its share buyback program, but the cloud guidance is weighing on the company's shares this morning. joining us now on the cnbc newsline, oracle ceo mark hurd always great to have you, good morning. >> thanks, john, how are you doing? >> i'm doing well. your stock is down 4% this morning on this cloud guide. analysts were looking for somewhere closer to 30% growth in the current quarter tell me, is this a speed bump based on things you mentioned on

the call, getting certain customers up and running or have analysts overestimated the speed of growth for oracle and the cloud? >> john, i think it would be helpful if we just started again. let me take you through sort of the headlines of all this. >> tell me the story >> i'm going to tell you the story, i appreciate you asking so, revenue for the quarter was up 6% in total our cloud and software revenue, and that's together, that's our on premise business and our cloud together was up 9% in the quarter. so these are, john let me start with that, these are big, big numbers. our sas growth was, again, significant in the quarter, and so it led to not only revenue growth, but led to income growth of 10%, earnings per share growth to 14%, so line by line it was a very strong quarter one important thing to note that i really just haven't heard a lot of people talking about, which relates to your first

question is that our license performance in the quarter was the best license performance we've had in a long time our license business was flat. you know well we've been doing this transition to the cloud, that's weighed a bit on our license business as we've grown, our cloud business, we introduced in the quarter the concept of bring your own license and, john, i want to make sure i explain this so there's no lack of clarity here. this is where customers now have the flexibility to buy a license the traditional way they bought it and they can literally now take this license and bring it with them to the cloud and now they can bring it to our cloud and then buy infrastructure and software around it. that has caused a higher license number in the quarter. so again, and this is why, john, and you and i talked about this before, i try to talk about the company more in the applications

ecosystem, combining our clouds and application license revenue, and our support. that business in usd was up 15% in the quarter i just want -- >> mark, this is complicated stuff and analysts and investors have gotten used to thinking it being either/or, license or it's cloud. so when they see license growing, they think that's negative for cloud i think what you're saying is the way you have engineered things, people can get that license and it helps them transition to the cloud. but i'm also interested in getting to your outlook for how 2018 is going to go, because people are wondering where there are growth prospects on the call you guys talked about how january is going to be the start of a ramp for database in the cloud you don't have much of the database cloud business growth happening, but now this is going to open up the doors for the autonomous database business to really grow for you. you were talking about it. how quickly is that going to grow, or is it going to take

several quarters for the numbers to get significant >> well, it will be a ramp, but let me make sure i'm clear on the point, because you're right. we'll go into the market imminently, shortly, with our data warehouse autonomous database, and this is a big release, perhaps the most exciting database release we've had since the beginning of the company. you'll seat transaction processing version of that sort of mid year as we go but john, i want to emphasize there very likely will be customers who will choose to take some of the options that are part of getting to that autonomous database, they may very well take them in license so you may continue to see this mix that you're describing by the way, i think you should, you know, also do analyst work on the side, and i think it's likely you may see more of that. whereas if you looked at our guide for q3, the implication is

licenses, again, will be more of what you saw in q2 similarly you'll see that in q3. that is, again, for our business model and investors, not a bad thing. it's flexibility for our customers and it's opportunities for us both models for us, the cloud model and the traditional model are, as you well know, very attractive for us and for our investors. >> so, mark, what is the number that investors should be tracking to understand growth overall, though? you're saying it's not just the cloud number, it's also going to be the license sometimes is there kind of a lagging number where we get to see how that license growth translates into cloud over time >> let me try one more time, john, because i really want to get this through we call this thing the ecosystem metric, and it is look at our total applications and just look at our total database business,

our total tech business, if you will i think that the obsession with what line on the pnl it shows up in is just a question of we're gaining share in the database business, we're gaining share in the applications business. >> right i guess investors have gotten used to one legacy business and one growth business and they don't want to mix the two, but let's move on from that. talk to me about who you're seeing in the marketplace. i heard you say a couple of quarters ago you don't talk about google, because you don't see google i've been hearing a bit more about google since then. is that a company that, you know, from a customer perspective, i'm sure they are buying stuff from you, is becoming more significant either in the way they are buying your stuff for use in the cloud or competing with you in the cloud, as well? >> well, listen, i don't know who you talk to, john, so i'm sure you talk to all kinds of people i can tell you what we see, and

i'm talking about it from a customer lens perspective, we compete, one, in the application space, so generally who do we see? people particularly legacy companies, older nonmodern applications, we'll see them, see people newer sas companies, that's who we'd see in the space. in the database space it's us and a blizzard of smaller competitors and that's who we see. then on the infrastructure space, more often than not we would see amazon that's one of the reasons why you would hear larry talk about amazon as you do, perhaps, on the calls. but those are the primary people that we see when you asked about it in aggregate. >> what's your expectation should we -- for how the cloud business model holds up under that scenario versus how the previous model did in other words, is there slower growth that perhaps the cloud

gets faced with, or does that in some way accelerate a move to the cloud? how are you modeling that once we get out of this global growth tide that seems to be lifting all boats? >> in the end, i think the winners are still the companies that have the best ip. the companies that have the best ip at the end of the day win if you have the best applications, you win. if you have the best tools, the best databases, et cetera, you win. >> is it a softer hit? is it a softer hit if we go into a downturn because of the cloud model, or likely to be just the same as it ever was in enterprise software, you know, if there's a recession that hits somewhere that's significant for you businesswise >> well, remember -- certainly, if you look at it from an oracle point of view, and, of course, i happen to often, a big percentage of our business is now recurring. so our recurring revenue as a

percent of our business is now high let me give you an example, of our total system, more than 80% of that is now recurring revenue. so it's a very -- and by the way, adding to that, john, this isn't just about infrastructure replacing a computer in storage. when you have applications and you have database capability with the years of programming and the features we have, this is really sticky, sticky stuff so the substitution capability of just raw infrastructure, relatively high. the substitutability of applications, database, and tools, very low. by the way, let me just add our contract lengths of our products, they are actually lengthened, not shortened. you see that show up in our growth what we reported last night, as well >> all right so i guess we'll see how that plays out. eventually, who knows. but mark hurd, thank you >> john, john -- could i say one

thing? i wanted to give a quick shoutout and tell him how -- >> absolutely, and she speaks so fondly of her dad so often when she and i speak. glad to hear he's tuning in. >> he's tuning in and he's listening, so hello. >> thank you for joining us, mark hurd, oracle ceo. >> newly elected to the disney board, by the way. keep that in mind, as well still ahead, another cnbc exclusive, ceo of adobe will join us to talk about the company's latest earnings report republicans hammering out tax reform, counting their votes live in washington with the latest and facebook hitting back at chamath who called the social media giant out right here on cnbc "squawk alley" is back in a minute at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value.

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welcome back to "squawk alley. we're getting updates on tax reform this morning. let's get straight to washington, d.c. a leaked document with changes, what are you learning? >> well, some of the details of the final version of the tax bill are as follows. the top rate will be 37%, but will apply to individuals earning $500,000 or more or joint filers earning $600,000 of

income or more and there are seven individual rates altogether we're also learning that the estate tax will be kept in the final version of the bill, but the exemption for qualifying for the estate tax before it kicks in is doubled. we also are seeing that the medical expense deduction will be expanded. that was something that was very important to senator susan collins of maine, who has remained an undecided vote on this bill. also some other details we previously reported confirmed by this document, the corporate rate will be 21%, it will take effect immediately, and the corporate alternative minimum tax would be out this document also confirms something that representative kristi noem, a republican on the committee told reporters earlier today, that the refundable portion of the child tax credit would increase from $1,100 to $1,400, and that was a concession made to try to win over senator marco rubio of florida, who has threatened to

vote no on this bill unless we saw a more significant expansion. now, the last that we heard from his office is they had not seen the final numbers in the bill yet. he has still reserved judgment, so no official word on where he stands again, some of the final details of this bill now starting to leak out back over to you guys. >> ylan, that comes after some reports that rubio was a yes and that did cause the s&p to spike and hit a record high. softened just a bit from there i guess rubio thing we're waiting for a firm answer. the other thing we're hearing is it really is about the senate bill, the senate version winning out, right no question about that >> that's right. the senate here is sort of the framework for the bill with some changes that were important to house members. again, the corporate rate taking effect immediately, the deduction for state and local taxes being in the final version of the bill, so the senate is a framework, but the house certainly had a lot of input >> so in light of all of this,

who should we be watching most closely in terms of lawmakers right now? >> we definitely want to hear an official word from senator rubio. also at least five other senators who remained undecided on the bill. senator bob corker is one of them he had voted against the initial senate version of the bill, but in conversations with him over the past few days, he said he's undecided on the final version he wants to see how all of this plays out. and also still up in the air is exactly which chamber is going to vote first, house or senate there are a lot of moving pieces depending which senators might be absent, which might be present, and some of the sort of very arcane parliamentary rules of congress. back over to you guys. >> ylan, busy day for you. russell up more than a percent this morning, close to session highs. that tells you something about what the market thinks about the prospects for the bill when we come back, facebook hitting back at their former executive who says the social

media giant service is eroding society. he said it right here on cnbc. the company's response when "squawk alley" returns as we go to reak, check out th markets, awfully close to session highs on the dow, s&p is up almt os20 and russell session highs, as well back in a minute 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. the more i know, the better. sometimes the product arrives and the cold chain has been interrupted,

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welcome back facebook hitting back at former executive chamath, let's get to julia boorstin with more what is facebook's response? >> well, morgan, remember earlier this week he attacked facebook and other social media giants take a listen to what he said on cnbc >> i think the tools that have been created today are starting to erode the social fabric of how society works. >> today facebook defending itself in a blog post saying they want facebook to be a place for meaningful interactions, which actually improve people's health and happiness, saying, "our research and other academic literature suggests it's about

how you use social media that matters when it comes to well being. going on to say we supply social psychologists, sociologists to better understand well being and work to make facebook a place that contributes in a positive way. to that end facebook is announcing changes, prioritizing posts from friends and demoting click bait headlines, allowing people to snooze or hide a person also introducing a tool called take a break to enable users to hide their exes, also introducing new suicide prevention tools and last night chamath walked back his critique on facebook, posting on facebook, "i generally believe that facebook is a force for good in the world, so i'd like to expand on my comments. going on to say, "facebook has made tremendous strides in coming to terms with its unforeseen influence and more so than any of its peers. the team there has taken real steps to course correct.

saying he meant to start an important conversation, especially how to empower younger generations to use these social tools responsibly, and he certainly has started quite a conversation carl, back over to you >> indeed, he has. thank you very much, julia julia boorstin on that facebook news elon musk's spacex launched its first rocket this morning out of cape canaveral, carrying nearly 2.5 tons of equipment and supplies to the international space station. shy of eight minutes later it lands back on the platform it was spacex's 17th launch of the year i think we also have some video of musk himself standing and monitoring the launch at the command center in cape canaveral. tweeted a link to the web cast, so he was paying very close attention, as you might expect >> yeah, this is a big deal. this is a recycled rocket, specifically the main engines, first stage booster. first time that we've seen that go up for nasa or for a

government customer, although it is the fourth time they've reused one of those first stage boosters this year also, this is the 20th time they've actually relanded one of those boosters this is really key to the reusability concept, because a huge percentage of the costs of making a rocket and going to space are tied up in that first stage booster. >> the most exciting part was seeing that land again you're saying this is number 20? this is becoming routine for them >> this is becoming routine for them >> how many have they blown up >> two, i believe. >> that's a pretty good -- >> with the falcon 9 in recent years. >> this was the first launch at this complex since the explosion in 2016. >> yes and now what's going to happen is, you're going to have the dragon capsule, also flown before, rendezvous on the international space station sunday, but all eyes on the falcon heavy, the next generation rocket. and that is expected to happen in january, and he is sending

up, musk is sending up, his red tesla on that launch >> all right everybody get ready to move to mars still ahead, shares of adobe on the move this morning not up as much as they were after hours, but still positive. the company posting a beat and some positive guidance the ceo shantanu narayen joins us in a cnbc exclusive for more on the latest quarter and plans ahead when "squawk alley" returns. i used to have more hair. i used to have more color.

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hi there, i'm contessa brewer here's your cnbc news update at this hour. a new study finds more than a quarter of canadian companies could move part of their operations to the united states. this comes amid uncertainty over the future of nafta. carl icahn is stepping up its stand against sandridge, calling on shareholders to vote against the company's plan to buy bonanza creek. sandridge is icahn's biggest stockholder. star wars opens nationwide last night, already it is smashing records i feel like it's all people want to talk about. you go to a party, it's all star wars and may the force be with you.

fandango says the disney film is now the top advanced ticket seller of the year hey, check this out, a traffic cop in the philippines was spotted dancing and wearing a santa claus costume on the job. now that is spirit he says traffic is terrible and it's his way of bringing joy to the people of the world. the cop also noticed that motorists started paying more attention to him, which is helpful. they were looking at his hand signals if he danced, as opposed to ignoring it hey, maybe we'll see more police officers -- carl, new york city santa traffic cops >> maybe thanks, contessa >> seems dangerous to me >> dow just hit a record high, up 163 let's get the european close, as well, with dominic chu hey, dom >> carl, not quite as good as what's happening in the u.s. right now. modest moves for european stocks in today's session despite gains in telecom and utilities, retailers among

today's biggest decliners, especially when it comes to the fashion side of things check this out, h&m sliding to levels not seen since 2009 the swedish company citing fewer shoppers visiting its stores, saying it plans to close more stores, boost online efforts as it grapples with what the retailer calls a challenging market situation also down sharply, the luxury goods company warning it will remain in a turnaround phase for 2018, adding it cannot confirm targets it had set for the next three years. and in brussels, european union leaders have given formal approval to the opening of the second phase of brexit negotiations, which will focus on a transition period and future trading relationship between britain and the eu the approval, though, is a signal efficient progress has been made in the talks, but the pound still falling after commission president juncker

said the second phase of brexit will be more difficult than the first and that the quote, unquote, real negotiations will not begin until march. that pound's decline, as you can see here, helping to give a lift to uk exporters, resulting in the better week for the ftse a positive one, that index outperforming the german dax and french 40, carl, back to you >> thank you very much, dom. stocks are at session highs. one stock not moving higher is csx, announcing hunter harrison is taking a medical leave of absence. morgan, you were on the call and know more about this story >> as we're seeing stocks rally to session highs, that's been the case for the transports, only component in the red, down 7% right now hunter harrison taking a medical leave of absence, csx ceo jim foot is taking over as acting ceo. no details in the press release released last night, no details on the call today on the illness or medical leave or when he

might return, saying only harrison had a complication after a multiday internal meeting and continues to improve every day, that it's too soon to talk about succession plans. foot really stressing the, quote, battlefield has returned. critical talent is also in place and, quote, no reason to diminish our expectations concerning the pace and magnitude of our future progress also that it's been astonishing how fast harrison was able to put these changes in place at csx. he took the helm as ceo back in march. he's been able to do that versus a process that took years at canadian national, 18 months at canadian pacific and that the performance metrics are starting to show that, but expected to get this rescheduled investor meeting in march now. in the meantime, we get earnings next month a lot of uncertainty and you're seeing that in the stock before today it was up 60% year to date. >> yeah, big jump in january/february it looks like

and now it's taking a dive, perhaps as you said on this uncertainty. see where it goes from here. >> yeah. >> we'll watch that, as well as the overall tape, which, of course, is quite strong. when we come back, ceo of adobe is going to join us in a cnbc exclusive "squawk alley" returns in a moment rick santelli, you have a lot to watch today. >> absolutely do a lot of market relationships, even structural relationships between us and some of our counterparts in europe are changing rather dramatically, so we're going to talk about reversal of some distortions right 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. adobe reporting better than expected fourth quarter earnings take a look at the stock right now up over 1%, but it's been on a run up almost 70% for the last 12 months. joining us now, adobe ceo shantanu narayen great to have you. >> great to be on your show, john >> shantanu, some changes coming next year. you're changing the name of your marketing business, and you've got some strong projections for the cloud, but on pure percentage point terms, perhaps expectedly not as strong as in the past tell us where we are in the growth of cloud for you guys is it maturing to any degree and how do you continue to fuel growth

>> well, john, some things remain the same and some things are changing what remains the same is our mission of continuing to empower anybody who has a story to tell, to create that story and helping businesses transform i think what's changing actually is we're targeting a much larger opportunity in the enterprise, and that's the expedience business opportunities so to your point, we're renaming the digital marketing segment, the digital experience business, because it's a much larger opportunity. we've identified that it's a 53 billion addressable opportunity in 2020, and we're the clear leader in that new, emerging category as it relates to both the document crowd and creative cloud -- the momentum continues. >> i want to stop you there, because marketing is a term people understand better than experience, so what's new that you see in that opportunity that's going to go beyond what we've come to understand as marketing? >> well, we targeted marketing as the first end, because we thought that unlike other

enterprise software functions that were automated, we wanted to really bring to bear our great technology on helping people deal with both art and science. however, it's become a much larger opportunity, because every digital touchpoint that exists, people are now really focused on ensuring that the engagement that they have with customers, whether that be through the internet of devices, whether that be through digital screens and retail stores, whether that be through autonomous cars, is a personalized engaged experience, and we've identified that as one of the big growth opportunities for us so thinking about not just how you do marketing and visitor acquisition, but thinking about that engagement in a deep and fundamental way is how we think that this opportunity is different. >> so are you becoming more of a data and analytics company for corporate data that goes beyond just the idea of marketing and acquiring customers and knowing whether they are looking or not, going even deeper into the

enterprise that way? is that what i should understand >> absolutely. we process over 160 trillion transactions in the trailing four quarters, and that was the reason why at adobe summit, john, we announced we're going to take the analytics, which is the central nervous system of an enterprise, and pull that out, so it can be the core intelligence of an entire enterprise and i think sas has delivered a great amount of value, but the upside is even more up ahead, and we've moved from just collecting that data, to providing action and insight, and that's a leadership opportunity that we think exists for adobe. >> and shantanu, let's talk taxes for a moment, because on the call last night you talked about potential tax reform, the proposition to more freely access foreign cash. what would you do with that? >> well, i think we continue to make sure that, you know, we are really good custodians of all

the financial assets that we have with respect to the foreign cash specifically, we've already paid a lot of that in terms of accruing it, and so if the tax law passes at 14%, we will bring all of that back, and whether that's stock buyback or looking at dividends, but more importantly, i think focusing on the continued opportunities that we have as a company in terms of addressable markets. you know, we will look at all of that but i think we first have to wait and make sure that the reconciliation happens and get the exact specifics of what we can do with that cash. that's, as you know, for us predominantly offshore >> you mention buybacks and dividends, but a lot of people might not know you already have a building expansion planned in san jose you guys are building bigger facilities, adding more people, does the governmental picture and tax policy change that plan at all, expand it, or perhaps you are already expecting some

change in taxes, or is that completely independent of whatever happens in washington >> i think anything that makes our, you know, country more competitive from our perspective, john, is a good thing. but we're really focused on a multiyear growth imperative for adobe, and as it relates to our own growth and hiding plans, it's completely determined based on the opportunities that we see ahead of us. you saw we had our first $2 billion quarter. each of the different clouds had record revenue, and, you know, there are very few companies that have the profile we have, which are growing the top line and bottom line at the margins at which we have and with everything we're doing around artificial intelligence and adobe sensing, now is the time to really double down on the opportunities that the company has and to extend our lead so, i think that the tax reform will help us with respect to providing a better financial environment, but we're really focused on customers and the

growth opportunities that we identified as our analysts meet. >> congratulations on your first $2 billion quarter i remember your first $1 billion year, that's how long you and i have been doing this, but i appreciate you joining us exclusively on cnbc this morning. >> thanks for having me. let's get to the cme group this morning, check in with rick santelli and get the santelli exchange hey, rick. >> hey, carl you know, if we look at the last couple of months, what we started to see, of course, is that we're going to have a handoff with regard to our central bank head and that's going to happen next year. path seems to be clear removal of stimulus, we could debate whether it started too late, whether it's going too slow, but you know what, you've got to give a double thumbs up it's not easy. it's not easy, central bankers if they go down the wrong road in their loss, i don't see them saying, oh, we did something wrong. the stability that central banks supposedly bring to the table

means many times they have to stay on a course and when they veer off because they don't think it's working, they have to do it quite slowly this morning i had former ecb president john claude trichet and the topic was differences between things, relationships. we talked about taxes. i'd like to look at that whole topic in a different light feedback loops you know, after the crisis we had, in my opinion, many negative feedback loops, inversions, calibration of tax policy between countries, not calibrated correctly you had regulations growing on all sides of all borders globally, and, of course, we had central banks and lots of stimulus now, forgetting whether we needed them, we should have done them, that was the world we had. and that feedback loop started to grow, because when one something does something where government is growing, productivity is shrinking, makes it easier for other governments to continue. and the crisis was a big reason -- wow, pits are getting busy here. that's a short rate pit. maybe we should be watching the

market, as well, but the distortions reversing, negative feedback loops are turning positive on taxes. you know what, as we lower taxes, other countries on that relationship are going to have to do something, so the positive feedback these other countries that we compete with won't have to make a move. the loop is reversing. on regulations, listen, whether you agree or disagree with the current president, regulations, talk to anybody in manufacturing as we have as guests, it's a good thing and other countries will have to make structural reforms, too france is seeing the light and finally on central banks and stimulus, the conversation has changed. now mario draghi, mr. kuroda, mr. carney, have a baseline of less stimulus by the biggest economy in the form of the u.s all these things are going to happen slowly, am i'm sure all along the way i'll have issues with how it's progress, but in the end the loop is reversed, and the distortions will reverse with it.

jon fortt, back to you. >> thanks, rick. have a great weekend the nasdaq hitting or touching yet another new record for the first time in december the dow and s&p also reaching highs. more when "squawk alley" returns. the smart ones look to fidelity to find them. we give you research and data-visualization tools to help identify potential opportunities. 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. ♪

i'm scott wapner coming up today on "the halftime report." is today's russell rebound something to believe in, or is your best tax trade to go big or go home? we'll debate where your money

will work best under this plan, and the stocks and sectors wall street thinks are most likely to benefit, and the latest on first in and first out industry insiderch on whether that controversial part of the plan will be in the final bill or out you know what our larry kudlow has been reporting over the last 24 hours plus, calling a bottom in under armour that stock beaten up is it finally a buy? one firm thinks so that's why we've made it our call of the day. morgan, we'll see you in about five minutes. >> sounds like another action-packed show looking forward to it. all right. still ahead, "the last jedi" hitting theaters today and the latest picture already breaking records. the numbers when "squawk alley" returns. ♪

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it has been a big week for disney and they are not done, the latest "star wars" film officially hit theaters last night, already breaking some records. at least for 2017. let get back to julia boorstin for more on that hey, julia. >> reporter: carl, last night "the last jedi" grossed $45 million in north american theaters, the second biggest thursday night opening ever after only after "the force

awakens" and the film is on track to bring in over $200 million in north america this weekend bolstered by a rotten tomatoes critics rating and this weekend should be more valuable to disney once the fox deal goes through. fox owns the rights to the original "star wars" trilogy and plus the prequel trilogy characters from the first six films to fuel the consumer products powerhouse projecting $3 billion in licensed "star wars" merchandise sale this year and it could bolster the potential for two star wars land opening in 2019 and it's a win for disney's streaming app launching in 2018. a big win to have all of the "star wars" movies included. back over to you >> julia, have you seen it yet >> reporter: i have seen it, and, you know, carl, i loved it. i am a "star wars" fan i'm happy to admit, and it was

great. i would say it's visually stunning, and i think it will do really well. >> ah, i have not seen it yet. i cannot wait. >> got see it this weekend. >> jon, i know you're going. >> tomorrow. >> fun fact for you. that nasa mission we were just talking about with spacex earlier in the hour, one of the patches they designed for that mission is actually designed by lucas film and it's a "star wars" theme. >> something that's not so fun perhaps for some about disney's growing power, think about they now have the power to gill in emerging technology. remember that blu-ray and hd-tv fight, what they will have if that technology goes through >> there was a huge battle involving sony so we're used to sort of migrations like that get used to this market rally as well dow up, slightly off the session highs and record highs for all three major indices. nasdaq getting its first record high of the month since november 28th as we're getting -- ylan

mui continues to tweet out some details about the tax bill regarding the estate tax and top rate of 37, and we look to see more confirmation of that later on today nice to have you here. i don't know how you do this and all the stuff you do off the desk, amazing. >> thank you >> have a good weekend. >> let get to the judge and "the half." and welcome to "the halftime report." i'm scott wapner our top trade this hour. taking stock with the tax vote closing in new questions today about where your money will work best in the months ahead, even as the s&p hits yet another record high with us for the hour today, josh brown, jon najarian, kate moore, blackrock's chief equity strategist and erin brown is here, the head of asset allegation at ubs. market is higher as details of the tax plan rex pected this afternoon. details already trickling out. still a number on questions on whether the republicans have the votes and even