up 106 on the dow jones, the nasdaq indicated up almost 28 and s&p up 9.5 or so the 10-year was over 2.50, it's 2.486 at this point. you can watch cnbc and see the billing celebration, taking a victory lap down there when the house repasses this bill make sure you join us tomorrow "squawk on the street" is next ♪ >> good wednesday morning, welcome to "squawk on the street." dow needs 121 points for a new record today and futures indicate we'll get awfully close. the tax bill on the verge of becoming law the house votes again today. gary cohn spoke about it moments ago. 10-year yield is at least a nine-month high getting above

2.48 our roadmap begins with futures on the rise as the tax bill passes the senate set to pass the house again. we'll get the latest on what the highly controversial plan means for business and individuals. >> fedex shares are up on strong earnings and ceo laying out how he believes the new tax plan will benefit his country. >> bitcoin in bear market territory. we'll look what's driving the wild xring swings and one crypto is out. >> one step away from the president's desk, the senate pass the gop bill along party lines after amending it because of a procedural snag legislation goes back to the house for a revote slated to take place in a few hours. the president will hold a news conference afterward gary cohn, the chief white house economic adviser spoke to mike allen a few moments ago. this is what he said about taxes and how the stock market is spend responding. >> i think there's more momentum in the stock market. >> what do those two baskets

tell you >> that tax cuts are not priced in the stock market. >> arguing the market is not pricing in the bill. it's pricing in a strong economy. also said a few other things, he'll be there at the white house, working there within three months will he be there in three months the answer is yes. and that there's a lot more still to come, including welfare reform, the next big topic. >> i have never made a lot of money betting against gary cohn and last night is a fulcrum night, you have fedex and red hat and let's also include carnival cruise and darden, all of the companies had very strong quarters before you get to tax reform and fedex gave you this which told you after tax reform, we're instantly going to make the axe. if the economy heats up, it's going to be far more than x. we didn't expect the tax code would go through this fast and

most of these companies that are industrial, that can go right off -- they can build a distribution center right off the first year this is rather remarkable. there's still in this bill that is so great for corporations. >> you brought it up, jim, take number of times and it is something that's been overlooked a bit, which is bonus appreciation, will be increased 50 to 100% for qualified property placed in service after 2017 for little over five years end in 2022. in other words, i get too expense 100% expensing, applies to tangible property, recovery period of 20 years or less than current depreciation schedules that means they are going to spend a lot of money. >> possibly. >> it's so great for the capital equipment company, you can see why fang is lagging. you put something like that through and say, you know what, united technologies, like hvac, otis, these are parts of the economy that are going to roar

it's an exercise in -- in -- i think there's so much in the bill good for companies that -- i can't get through all the things that are good for companies. >> for all critics you say it's great for corporations and companies and later will be great for labor? fedex has 400,000 people do they need to put more people to work? they'll spend the money on equipment to make it so they are more efficient it's good for owners of capital. if you own stocks conceivably, interestingly gary cohn in the comments said he doesn't believe tax reformis priced into the market which puts him into contradiction of secretary mnuchin who said sometime back if it didn't pass the market would go down substantially, implying it was in there.

>> can't be both cohn went why it survived and what the president thought about that. >> we would have cut and carried interest we've been trying -- we probably tried 25 times. >> why not >> we hit opposition with the dome at the other end of pennsylvania avenue. >> if he said i was thinking of giving up everything i do and going to florida being a hedge fund manager, just by opening your door you make a fortune >> you could go back to your -- >> go to my roots. >> you might be able to raise a little bit. >> yeah, it is kind of -- it's a remarkable gift for hedge fund managers in florida. >> three years, you've got to own things for three years to take advantage of it and the fact is hedge funds are not the

key beneficiaries of carried interest as much as private equity and real estate interest, those who do tend to have these ownership positions longer. >> can you buy -- >> i don't know. it's helpful for them. >> that was rhetorical >> but remember, real estate is a bigger part of their business, which it's also helpful for one would argue. >> i've got to buy. >> we asked the legislative director of the white house on monday, when kayla and i were here, i asked him about this very thing, how could it possibly survive, he seemed to throw his hands up to a certain extent it is amazing. now, it's not a huge revenue razor but it is this issue, how can you continue to treat something that is not the labor of the manager as capital gain or should say is there regular income as opposed to anything happening to be anything they've invested in. >> always through the code there's always been a wake to shake some income and make it in

the capital gain more important, just in terms of where gary cohn is, i come back and look at the companies and i think that benefits tax reform are not in a move where it goes up, people going to feel better. i want to go back to the labor issue. i think more people will be hired because there's going to be -- there will be more growth stimulated by this because of really the fact money goes so much back in. >> we'll see we'll see whether or not -- >> first, pay down debt, 65% second is buybacks then m and a

and capex, they can choose more than one option. they are going to take down some of the debt they've accrued for every year since the financial crisis, corporate debt issuance. i don't think that's wrong. >> a lot of debt has been issued with collateral of that cash that they couldn't get at so they can simply bring the cash back and pay the debt down they always had access to capital anyway they made decisions previously you might tell me the tax regime is making it so the return they will get is going to be better and that's a fair argument, i suppose. >> it's not clear it's going to result in some boom. we did mention the immediate expensing and that's going to be important. i don't agree. but we'll see. >> i'm not giving you price earnings ratio, that's not what i do for a living. the aflcio price ratio is going down, multiple shrinking. >> that's been a 40-year bear market. >> secular negative story. i'm trying to figure out what

some company is going to earn and company is going to earn more and i think the economy will be better therefore i'm going to pay more for it not multiple expansion, it's like fedex is going to earn $4.40 more where i'm leading here -- >> they have a deferred tax asset helping them a lot not just from a lower rate, it's that their deferred taxes go down because of this. >> let's look at this another way. i think we're looking at it too tangentially if you own stock and many people own stocks, you've got a home run going. >> yeah. >> now, can you get more jobs? the country already has a shortage of labor in most parts of the economy if you go autonomous which is a big theme for vehicles and driving, you'll have more people and checkers if you get autonomous checkout. no one is saying you can't own stocks no one is saying, you know what,

only beneficiaries are people who own stocks but you can't own stocks that's not -- you can participate. >> absolutely. >> we know what percentage of households have stock in this country. i mean, let's not pretend the other half -- >> not enough. >> only 45% have 401(k)s i think, jim, which is not nothing. it's a lot but -- >> i guess what i'm saying is there's a percentage of the country that owns and percentage of the country that doesn't. and the ones that don't, don't benefit and ones that do, do benefit. >> nothing in here about worker retraining, i don't think. any funds for that >> these were not democrats. shocker. there were no democrats that voted for this it is not a democratic president. the country elected these people this is what they did. and we did or whoever did. >> it is the first time there has been a tax bill passed on purely partisan -- >> it is historic. >> let's give it that. >> fedex went into this last night, moving higher in the

premarkets company on track for another record holiday season and did say tax reform could add as much as 5.50 a chair share to full operating net. this is fred smith. >> we're encouraged by the tax cuts and jobs act legislation advancing in congress at this very moment. this legislation offers pro-growth, pro-business tax reform solutions that will power the economy, increase business investment, expand job opportunities and enhance incomes and improve u.s. competitiveness. >> so whether it's volume or gdp or earnings, they are convinced this is going to be directionally strong. >> this stock should be up $10 on this -- the conference call was so fabulous. memo to all ceos out there, do what they did. have the analyst send a question then answer the question don't have that conference call -- i can't hear you now and are you still on mute?

this thing was a thing of beauty this was -- this was a gorgeous -- this is a tony award winning conference call. tony. >> a tony. it was a tony. >> i think a lot of what fred talked about is this 400,000 people -- look at this, ground segment revenue saw double digit growth at 12%. that's before tax reform that's before. and that is worthy 12% increase of a higher stock price alone. but when you go through what they are talking about and the fact they did not have any problem with a holiday shopping, they are just doing -- they are ought mated and going to buy more planes. i think there's going to be more demand they are not going to buy a huge number of planes they rationalized their fleet. in general this is a conference call that says e commerce is doing better than expected stop worrying about amazon and no one customer more than 3% of our business this is a tour de france conference call. >> tony. >> he's with me. >> better than adobe, the call

of the quarter >> yes, because adobe was consistently great and this is inconsistently fabulous. adbobe is like -- can you do -- >> i can't i'll pull something if i try to do that. you're very limber. >> i'm not on ir, i'm playing this weekend bitcoin is sliding in the bear market territory while one ceo is getting out of his own crypto currency. guidance helping to fuel micron's rally stay tuned for an exclusive with the ceo. dow coming off the second loss in nine seconds, more in a minute [ keyboard clacking ]

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after reaching its peak, bitcoin 3% and charlie lee, the founder of light coin said he sold out of his holdings because he believes it's a conflict of

interest for him to hold he is the former director of engineering at coin base, says whenever i tweet about good or bad news, i get accused of doing it for personal benefit. >> look, we're all there i mean, looking at twitter during the commercial, most people accuse me of series of things one guy accuses me of going south of canal street. i know where canal street is you're conflicted if you exist and that's the world we're in. and i don't know this guy -- i don't know this guy from adam. but there is a sense that look, apple is a good example. just break away and go back to stocks for a seconds apple was -- it was hard to find a 10 but i found a 10. people say it's hard to find a 10, wait a second they weren't ready for christmas. people who said you found a 10 they have too much supply. you can't win. there's a lot of people -- the bears won't let you win. now people -- a lot of guys accuse me of being a permabull,

i wasn't when it was bad to be a bull but can i say it's been good to be a bull. and that the bears didn't like it the whole way and they like it even less now how's that >> sure. i'll take that did you happen to notice that stock that was shut down yesterday for trading? in the bitcoin realm it had run up to an $11 billion market value that seemingly has all of the characteristics of a boiler room operation fraud. >> it didn't appear to be that good a business that they were running. >> no. >> did you hear my, the market cap? got to 11 billion, jim. >> i have -- i don't want to accuse a particular business of -- >> crypto company. >> it's a crypto company. >> well, there's -- there's irrational enthusiasm about some of this but now i know how this gentlemen who retired. i'm going to be blasted as a skeptic who doesn't understand

remember, by the way, whenever you're a skeptic of bitcoin it's because you don't understand it's not because it went up too much if i think red hat went up too much, it's not that i don't understand with bitcoin, no, it's because it's got sack religious to say maybe it's going up too fast. >> some of these examples of companies makes fruit juice, right, changes its name, changes its business strategy to future fin tech group i mean, can you believe this is actually happening >> no, it's terrible and you know, you need the sec to be as active as they were on this one they've got to -- look, there's big disclosure issues with these companies and they've got to disclose that they are not what they say they are or the government shouldn't go after them but we're kind of in a mode here, they did spot that one at 11 billion and flagged that. >> they got that after 11 billion, yeah.

>> there was andrew was on talking about laugh riot blockchain, i can't even -- i don't want to -- if i say it, give the real name and it goes down, well, for i know the government will attack me. >> it sounds like a good concert. then we get the main band coming on stage. >> when i was growing up, only thing crypto was crypto nazi, that's what they used to call it -- >> tales from the crypt. >> or the crypt. it's like wow, you can't get enough of it, the crypt. tales from the crypt must be worth a fortune by now what are the residual from tales from the crisypt. the one with ted dan za and the chains >> we think the house will vote sometime prior to noon or possibly in the noon hour. more "squawk on the street" from

post nine in a minute. ok, so with the award-winning geico mobile app, our customers have 24/7 access, digital id cards, they can even pay their bill- (beep) bill has joined the call. hey bill, we're just- phone: hi guys, bill here. do we have julia on the line too? 'k, well we'll just- phone: hey sorry. i had you muted. well yea let's just- phone: so what i was thinking- ok well we'll- phone: yeah- let's just go ahead- phone: oh alright- the award-winning geico app. download it today.

♪ we've got about seven minutes to go before we get to an opening bell on this wednesday, what we like to call hump day here on "squawk on the street." we'll talk more about the chips and micron in particular. >> this stock sells at a pe of five let's get that straight. that usually means because the earnings are going to drop off the cliff. >> they have been sicyclical. >> micron was able to put on a show even though flash, which is

part of their business, prices have gone down and peaked in october and they will make a fortune and able to make a fortune in a sequential way that people didn't think. if this takes out -- the shorts here are just amazing because you're never supposed to own this stock if the average selling price of those two chips is peaked. but they said basically look, because we're propry tri and because of demand we're going to have a great year. if this thing takes out that, it's going to go to 60 at this place it would finally get more of a multiple. >> really? >> it deserves a higher multiple because it's less commodity than what we think. the conference call was very, very good. a lot of objections were answered and david, edge computing, notebooks, intel is going up autonomous driving, artificial intelligence and what else can you use the chips for? >> gaming? >> yeah, said that already what >> cryptomining.

>> of course >> i saw the stock jump when they mentioned cryptomining. >> he said somewhat -- what? >> what? >> he didn't say it was huge for them. >> no. >> when you heard cryptomining the jaws drops becausewhen you hear crypto mining, it's crypto d cryptomining this should not be happening, this period, this cryptoperiod, shouldn't be happening. >> no. >> it is. >> yes >> and it can double and triple and before it gets to be 2% of the 1% of this and that and gold yeah, there you go if you don't believe it, it's because you're dumb. >> and there you have it okay, we've got an opening bell comi urit teth ngp ghafr is

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we've gotten through fedex and micron, general mills up seven, snacks up five what's going on. >> raised full year organic sales outlook. this is big for them, organic net sales versus down one to two. this was not a disappointment, this was better than i thought you know what, they are more efficient, they've got management that's a little more in tune. i don't know i was surprised. >> but their operating profit margin did go down 130 basis points. >> it's not perfect. it just wasn't horrible. >> it was better i guess that some had anticipated. >> that's really the case. organic -- when you look at their foundation part, it's still boring, but they have generated a lot of cash. >> still down 11. >> it's not great but everybody thought they would disappoint. the world thought they would disappoint and they didn't disappoint. >> they have an adjusted tax

rate of 29.3%, that's going to get better. >> they are a winner >> get used to saying that about companies on the tax code. more winners than losers -- >> there's the opening bell on the s&p at the bottom of the screen at the big board today, it's technology services and consultant company, celebrating their fifth listing anniversary at the nasdaq. opiant pharmaceuticals, focused on the treatment of addictions a note on yields, we mentioned the 10-year at 2.48, the biggest monthly climb in a year, up 11 basis points you saw what happened to the 30-year yesterday. >> that was great. i was watching will frost, over in london, he had a guy who such a bear other than on japan we were talking about the notion that's starting to happen that's creeping into the conversation like i said about apple, i heard people say the reason the market

was down, long rates are going higher no no, you buy the banks, mike baeo with an excellent note, long notes are going higher an taxes lower. banks a big beneficiary. that's why you raise the price target for unone. >> goldman saying the biggest beneficiary, wells, wells fargo. >> what can i say? wells fargo. wells far go. >> you're not a fan. >> i'm in that -- i don't even want to go there i'm in a good mood. >> you are in a good mood. >> i'm not going to go wells fargo and not going to go stitch fix. >> oh, yeah stitch fix not the greatest quarter. >> i'm not going there. >> i don't want to talk about the fact how expensive it is to go into plus sizes and go into men's and expenses up more than the revenue, i'm not. >> you're not going to talk about that >> no. >> someone reminiscent of other

ipos blue apron. >> that may be unfair. >> that is unfair. like broadcom and worldcome. >> that was unfair >> you'll keep bringing it up. >> stitch fix -- i don't want to talk about it. it's fine. the fact they make themselves into a data center company that they talk about algorithms -- >> the stock and ipo, aren't you -- come, on, man, really. >> first quarter out you've got to kill me on this down 14%. >> you're doing fine, you're doing great. i didn't like the idea it's all algo it's an algorithm, 87 designers and algorithm and plus sizes is expensive and men's boxers there you go all right? >> okay. >> i was in a good mood. >> i just had to mention stitch fix. >> white house is saying this morning that the president will hold an event with u.s. lawmakers at 3:00 p.m. after passage of the tax bill but the wire also saying he will

actually sign the bill at the later date. >> really? >> when he does -- >> there are questions when he signs it, if you wait until january 1st, perhaps, makes it easier and what about the irs, what are they going to have to do there to get ready for this. >> they need sales force.com in there. >> with the budget having been cut substantially, one would thing it has to go the other way but there are no provisions for increasing the staff for the budget at the irs. >> they have to. >> how do you get ready for this how do you determine you're not a pass through when you say you are? >> they need many more agents, absolutely i want to personally invite the president of the united states to ring the bell because of what's going on with the stock market. >> and then do an interview with us. >> then sit down there and take some questions because we -- talk about the market and the president should ring the bell he's afill yalted himself with the market he should come here, ring the bell and sit down and we'll have a good conversation.

it will be like it doesn't have to be -- >> he likes you. he likes you >> you were on his show. >> the president likes me. you could do worse you could do worse than the president liking you last guy didn't like me at all >> no? >> i don't think so. i don't think so >> are you sure he thought about you? >> he probably didn't. don't flatter yourself, jim. >> don't flatter yourself. >> i'm going to be -- do the rest of the show under the desk. >> really? >> yes. >> why, still have other names to get tlo through blackberry, three cents, revenues ahead, do see 2018 at the high end we're not going to talk to john chen today >> intellectual property doing well nasdaq, i still many struggling with red hat had a great quarter. it was an absolutely great quarter. the 13 contracts of millions of

dollars versus five, and what happens? it goes down because everybody expected red hat to be great, okay caterpillar, i emerson, it was huge 16%. no one expected that emerson is a buy. >> it's interesting because emerson's failed attempts to buy rockwell and to pay what was a big price had many people believing that emerson must be in a particularly tough position given they were willing to go to that number. and still, unsuccessful at emerson but no -- >> stock goes to 70 easy we know they are doing much better than we thought and it was not out of weakness it was out of strength watch caterpillar. nothing has been said about cat cater pillar in the last five minutes, it might stall at 151. >> caterpillar is like what used to happen to fang, remember it cats got fangs. >> boeing is more likely -- >> it's unbelievable

one day we'll be able to fly to florida to do the show, half hour flight, get the tax break from being in florida and come back. >> no, new york will get you if you're here for a moment if you land at laguardia, it's a day of work. >> we'll go to teterboro. >> okay. >> maybe that's why trump won't come here. >> track the comings and goings on various -- >> i have a lot of friends that do that. >> don't live your life for taxes. be in the moment, okay >> i'm mindful i went to lululemon this weekend. i went to the mindfulness room. >> i'm not going to turn myself into a pass-through somewhat, i'm going to be okay. >> david, i'm okay, you're okay. i'll get you that book and really help you. >> no accounting for taste -- >> president is tweeting now, says the tax cuts are so large and so meaningful and fake news is working overtime and only demean this is truly a case where the

results will speak for themselves starting very soon. jobs, jobs, jobs that's sort of a common theme with what the speaker said yesterday. >> he doesn't watch us. >> and cohn said today, you'll see it market may not appreciate it right now or public, doesn't poll well. but give it time and the results will prove why it was the right thing to do. >> i mean, i think you could have easily designed it so that some people did much better but that corporations -- if you believe the corporations are going to hire people, put people to work, then it's a good bill -- what's the matter with that >> there had always been an expectation we would have corporate tax reform that we needed it. but linking it so much to individual and all of the other things that gone along with it, i do still wonder, could we have just done that, was there a way to have just done that >> i think there are taxes had to be more competitive, that we were going to lose a lot of business. >> we believe that to be the case and people in corporate will tell you that over and over again. >> that was very right to do

because everybody else, it's a race to the bottom, but we were getting killed repatriation makes a huge amount of sense linking it to the individuals was tough. i didn't see that particular freight train coming. >> corporations are not people i would point out even though they have the rights because they continue to be able to deduct the state and local income taxes. only people can't. >> look, the market is going to -- i think the market could sell off simply because it's been up so much but that when numbers come out, they will be better than expected and that moves stocks higher. remember, i'm speaking as someone who follows -- my personal politics are not an issue here nor is my tax return who cares about my dam tax return i'm talking about stocks. >> like to see the president's tax return still. >> i do well i got lucky, done well in my life. >> the final numbers on cash coming back which we've talked so often about, 15.5% on cash. 8% on permanently reinvested

earnings going back to 1986, the last time we had tax reform. it's higher than people initiated initially. there was expectations it would be really low but that will be a wind fall for a short amount of time and they have to account for it soon and start paying the tax, even if you don't bring the cash back. >> i know this expense thing is so boring and difficult for people to get their heads around but you're going to order more equipment and that is good for the manufacturing base in this country. you're going to order more equipment because you're going to look at it -- your accountant will come in and cfo and say, you know that thing we've been holding back, we should buy it the distribution center we haven't built, we should build it these are positives. >> what had to to do with raising the state deduction for the estate tax, i'm not sure. >> people get around that. that's a generation skip trust issue, they get around that. >> it's now $22.5 million i

believe. 22.4 million for a couple. >> it's exasperating, i read the fedex call three times, i wanted to see how many times we can figure out whether the stock has fully reflected the tax bill and it's just not possible to think that it has. it's just not possible there's going to be too many things bought. >> with higher interest rates, i don't hear you complaining about the squeeze from higher interest rates, the corporate or the credit card balances last 13 weeks. >> look, they are a function of job growth and wage growth you need to see more wage growth and i think that that -- i'm not advocating -- not doing a complete libertarian, the iriis famine because they were not thrifty enough i'm not giving you that. i'm saying there's enough in this bill to make it so there

will be companies that spend and i'll use it. i think it's going to not flood down and not trickle down. it will be something in between. >> how's that? >> that's going to be something we watch closely. >> we'll talk a great deal about it over the next year, next couple of years and we'll see. >> tlsz a faucet that got turned on but it's not full and it's not a leak. >> there are some who would say that rates moving up appreciatably, which is a real possibility, would have a detear yor -- impact on things you're talking about. who knows. >> punk lending has to do with the fact the banks don't make enough money because the long rates aren't high enough i want to get interest rates a little bit higher, there you go. you say potato -- >> and i say potato. >> and we'll have a conversation about spending cuts and paul ryan said welfare to work three times this morning on "good morning america". >> really? >> that is entitlement reform. >> that's next >> people thought should have been part of an overall

bipartisan approach could be next you've got the mid-terms coming up next year, not that far away. unclear whether they get that done but it does seem to be on the radar. >> we potentially need but -- >> we haven't discussed whether riot block chain benefits or not. >> that's in the d block let's get to bob pisani. >> happy wednesday, everybody. we started strong advancing in declining stocks but sold into the opening rally and the dow is now negative originally all of the sectors for the month were strong, semis which had been lagging were nice, still up banks which has been surging, also modest on the upside. retail a big winner this month transports also doing well utilities have turned positive the interest rate moving up to 10-year moving up has been a real problem for the interest rate sectors now that the tax bill is going to pass, let's not worry about

the procedural issues and looks like it's going to pass. where do we go from here there's three camps that are out there. first the sell on the news that argues we should do -- we are do for a pause. the other is the rally is going to continue, global fundamentals are supporting that and the rotation camp argues you should be moving into value stocks and into banks and energy, value camp over the growth camp which is primarily technology this already happened this month. if you look at what the banks for example, versus semiconductor stocks for the month, banks outperformed and banks on the white line and semiconductor on the orange line this is for the month. you can see this game has already played out and the question is could that continue into 2018? again, there's different camps on this. it's very certain right now that parts of the market have risen on taxes and with very good reason take a look here, this is the central reason why the market has gone up. without tax cuts, most analysts are predicting earnings would go

up 8 to 11%. with the tax cuts it adds about 5% more on to earnings you get 13 to 18% growth that's significant and that's why the market has been moving in the last month. this is the single most important thing you can look at right now. did you listen to fred smith at fedex? it's important to look at the numbers here new guidance is 12.70 to 13.30 they throw in another caveat, if this goes through, we'll add 4.40 to 5.50, partly on deferred tax liabilities and add a dollar more of that 4.40 to 5.50 is due to the tax rate. fedex is having a great day, up 3% this is a historic high for fedex. it's one of the big performers up 37 or 38% for the year. so the problem here right now is you could make an argument stocks should pause. i'm sympathetic because stocks

are overbought and really expensive, without the tax cuts, we're looking at the multiple of 19 times forward earnings? the average stick with about 16 times forward earnings as an average for the last serven or eight years. if you throw in the tax cuts, you get 17.5 here's the problem, at 17.5 forward earnings, at the current levels say $150 next year, you're where the market is now, 26.85. to say i think stocks should be 10% higher next year, you have to increase the multiple rather notably or think earnings have to go up dramatically. look at the s&p, citigroup has 2800 the debate is what's the right multiple to throw on this assuming the earnings numbers are fairly well known here finally want to note, bill question technology, xlk, 25% of the s&p is tech. here's what citi had to say on whether or not the tech rally would continue overall the excitement around cloud

automation and cyber security and mobility, been a major part of the 40% rally in tech sector this year. hence it seems unlikely that another big boost is coming into 2018 that's a very good summary and that's why i would be a little cautious on expecting a 30% move in technology for 2018 right now the dow is down fractionally, 1 point. carl, back to you. >> thank you very much let's get to the bond pits as well rick santelli at chicago hey, rick. >> oh, my goodness, if you look at the last six or serve years in treasuries, you'll find many of those years find extreme pricing towards the end of the year this doesn't seem to be an exception. whether you want to call it a cycle or just a nuance of late, no matter how you slice it, sovereign rates, especially the long end are running up as 2017 runs out now, let's look at a one week of fives, they've covered a lot of ground they are now at the highest yield cloegss since spring of

2011 march of '17 is the last time tens were here january, february, part of march we spend some time, maybe two-thirds of those closes above where we had settled at 2.45 at the end of last year since then, one day in october, until yesterday and now today, these are important moves. now, if you look at the two-day of 30s, they'll also run up quite a bit although they are still only comping in november it's the only maturity on the curve without a lower yield higher price than they settled in 2016. let's look overseas, there's no way our rates are moving up if their rates didn't move up let's look at the two-day of shots. this is a short maturity, covered five basis points low to high in two days doesn't sound like a lot until you look at how important it is based on history these are now the highest shots rates since august and it's those negative rates, remember, we're talking for minus mid-70s to minus 66, 67.

but it's significant two day of bunds covered a dozen basis points one reason why we don't like to use percentages, to go from basically 30 to 42 is a really large percentage but it really doesn't mean much in that context. but it does mean something in the context of us dragging these rates up most likely because we're going to be dragging tax rates throughout much of the world down so they can be competitive. finally last time the bund was here was around november 13th. and the dollar index through all of this, snoring, carl, jim, david, back to you. >> thank you very much rick santelli, micron and red hat among the top gainers. stay tuned for interviews with the ceos of boechbth companies morning. dow is down a couple of points and s&p holding on to a slight marginal gain. back in a minute

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after declaring it was not a digital services provider but rather a taxi company. that means they could start to have to pay licensing fees and benefits to employees in some countries. uber released a statement saying this will not change things in most eu companies where we already operate under transportation law however, millions of europeans are still prevented from using apps like ours so we'll continue our dialogue whether it's this, guys, whether it's facebook germany, google eu, european regulators are a thorn in the side of tech. >> that was the theme of the show this morning, and you know, look, don't think that these things won't add up in the end they will add p. and they will have their freedom of motion, and yes, it's true. like google in china, but i keep coming back to the fact that there's always room for growth when we get one bad growth number, people go right back to faang. they're addicted to faang. it's not going to end. you can say they're dead but they come right back as soon as you get a number that is not

growth >> because they grow a lot, and they don't sell at incredibly high multiples >> you're not going to endlessly buy caterpillar. i think that, just the way it is >> the end doesn't, but otherwise. >> yeah. >> in some cases there's no expectation of a profit. >> no. >> at li not in the near term. >> no. we didn't mention ge yet i just did it. not a winner in the bill not a winner >> we're going to get "stop trading" with m jiin a moment. dow up 19. don't go away. [ 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.

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time for jim and "stop trading. >> great article in the journal today about which company -- what industries will do the best one that was mentioned was the health maintenance organizations, health insurers i think centene got hit last week after it had a great analyst meeting because of some problem in the state of washington that's been solved. i think centene can go up a lot more this acquisition was brilliant michael is great, and the stock is very undervalued and would be a big winner on tax code >> so tonight? >> a lot of people talking about the oil being big winners over the change in the tax code i will have one that i think is poised to go much higher but that's all i'm going to say about it because you have to watch. you have to put your red hat on,

oops, down six why? because everybody knew it was going to be great, and it was great. tell jim i said high and he should not lament this his stick was up big going into the quarter. >> got it. whitehurst >> right >> white head used to run goldman. >> when we come back, the gop tax overhaul nearing the finish line we'll talk to new jersey governor-elect phil rpmuhy about that and more when "squawk on the street" continues.

at t-mobile when you holiday twogether, great things come in two's. like t-mobile and netflix. right now when you get an unlimited family plan, netflix is included. wow t-mobile covers your netflix subscription, so you can catch the hottest new movies and shows all year long on us. amazing and it's your last chance to buy any of these hot new samsung galaxy phones and get a 2nd one free. that's one samsung for you and one to gift. just in time to finish off your list. t-mobile...holiday twogether. well, it'sonce again.eason >>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.

welcome back to "squawk on the street." i'm diana olick with breaking news from the national association of realtors, existing home sales in november jumped 5.6% to a seasonally adjusted annualized rate of 5.81 million units from an upwardly revised october reading. that is the strongest pace since december of 2006 well above expectations, which were essentially flat for november so a fall surge. remember, existing home sales represent homes closed in november that's people out shopping in september and october. the median existing home price also jumped 5.8% to $248,000

inventory, though, continues to be a problem the supply of homes for sale 1.67 million homes that is down 9.7% from november of last year and that's the second lowest pace on record since the realtors began tracking this in 1999 days on market very fast just 40 days one note, first-time home buyers really dropped back. just 29% of buyers in november they should be up around 40% so most of the sales occurring on the higher end of the market. first-time buyers dropping back. the low end of the market, very slow, because there's very short supply, but a very big jump. 5.6% in november the realtors noting also on the tax plan, they were pleased to get the $10,000 property tax deduction kept in there. they say 95% of homeowners pay less than $10,000 in property taxes. not the case, of course, in new jersey also pleased to get the mortgage interest deduction cap at $750,000 back to you guys

>> diana, thank you very much for that >> good wednesday morning, everyone welcome back to "squawk on the street." i'm carl quintanilla with david faber and melissa lee here at post 9 of the new york stock exchange price action has some personality here in the first half hour. we dipped in and out of the red in the dow tax bill is front and center the house votes again. potus at 3:00. stocks rallying as investors await the latest on taxes out of washington phil murphy is going to join us as he prepares to take office in one of the states most impacted by the bill. >> it isn't only crunch time in washington retail mania in full swing look at the calendar christmas just five days away. we'll have a look at the winners and losers coming up >> plus, optimism on wall street may seem alive and well today, but according to a new survey, hopes for next year don't appear to be as strong, especially among america's wealthiest >> senate passes that landmark tax reform bill earlier this morning. the bill then goes to the house

for a revote >> that final vote in the house is expected to happen in just two hours or so. and the reason they're taking it up again is because the bill hit a technical snag over in the senate, but right now, all indications are that this bill is going to sail through the house. majority leader kevin mccarthy was on cnbc earlier today and even joked maybe the vote is going to be better the second time around. >> we'll vote on this bill again. we love this bill so much, we want to vote on it twice >> the tax bill here delayed but not derailed on its way to the president's desk republicans framing this as a campaign promise made and kept remember, this is not just about taxes. this bill also repeals the individual mandate and opens up portions of the arctic wildlife reserve for drilling this is a major legislative victory for republicans on multiple fronts. president trump is going to bring gop lawmakers to the white house for a victory party this afternoon, but guys, the celebration can't last too long because republicans still need to reach a deal with democrats

to keep the governmentfrom shutting down on friday. so still a lot of work to do here on capitol hill back over to you >> not much time ylan, thank you. earlier this morning, white house economic adviser gary cohn sat down with axios' mike allen. here's what he had to say about the tax bill and its impact on stocks >> i think there's a lot more momentum in the stock market >> and what are those two bask lts telling you? >> those two baskets tell me that tax cuts are not priced into the stock market. >> for more, we're joined now by gabriella santos, global market strategist at jp morgan, and steven gallagher guys, good to have you with us we're hearing from individual companies. we hear from strategists overall, all due respect to you strategists out there, in terms of the impact on s&p 500 targets for 2018, but what we're hearing from individual companies is actual estimates and boost to epfs based tax. we heard from fedex last night, from delta

are we simply underestimating the actual impact here >> i think really we're all trying to wrap our heads around the 1,000-page tax bill at this point. there are several things we have to weigh there are lower corporate taxes. there is capital expensing, which are positives, but then we also have to weigh that with our expectation of higher rates and higher wages next year ultimately, we think it is a positive, but we do have to kind of curb our enthusiasm here a little bit because there is some pressure on costs coming from other parts of the economy >> it seems like analysts have been loathe to raise estimates until a tax plan is signed into law, and maybe that's a little bit of what we're seeing now should we expect a wave, do you think, steven, of revisits to earnings estimates through the next couple of months here upward revisions >> i think we can modestly your fedex i can't comment on them in particular, but it was on

deferred tax liabilities on the tax cuts we have seen. i have no question after tax, profitability is better. what are you going to do with the after-tax windfall it's going to go bag to shareholders shareholder returns are going to get higher is that increasing your profitability overall, though? and that's left to be tested a lot of hope. i think the market has mostly priced in this tax bill. i think it's been built -- the pricing in on the hopes of what it can do, in 2018 is all about the implementation how does it live up to those hopes? and i think it's going to be more challenging >> what are the sector impacts as far as you can see. there's talk that tech is going to see the smallest positive impact from tax. banks as well as other sectors like health care will see the biggest impact to the upside >> an easy way to think about it is just looking at effective tax rates that companies already pay and thinking about which sectors pay higher effective tax rates, things like financials, even

retail to an extent, and which sector already play pretty low effective tax rates, things like technology that's at the surface. i think ultimately, what we have to see next year is some of these other provisions and how they could impact the bottom line >> how does this place in terms of the rotation we have seen, technology, seeing money come out of technology, into banks. these happen to be the sectors that benefit the least on the tech side and benefit probably the moe on the bank side >> so actually, our review for the top sectors we like for 2018 is both financials and technology because i think really taxes is just one ingredient we have to look at. there are other things at play as well. and there's some pretty solid arguments for both sectors financials in terms of rates, in terms of credit growth, in terms of regulation. for technology, in terms of foreign profits and a weaker dollar there are arguments for both, but sector rotation for the next couple weeks is possible >> i definitely have to agree with her overall

technology and financials are the winners in this. it's not just about the effective tax rate it's what companies are going to do they're going to fully expense their capital purchases, and they're going to be buying a lot of technology. i think it's raising labor productivity, and it's through i.t., so i think they're a big beneficiary of this. on the financial side, it's tax reform, but it's also just ongoing republican efforts on the regulation side. i think that's still something we're pricing in in 2018 >> how do you view rising rates we have seen in the past few days we're seeing levels now in the ten-year yield we haven't seen since march. are we underestimating that steepening >> 100%. that's why we mentioned we were talking about the earnings impact, that it's not just about looking at the taxes but also what happens with rates, both short and long term rates. we do think that perhaps we're a little bit underestimating first of all the fed's willingness to continue raising rates second of all, the willingness of central banks to reduce their

balance sheets and impact on the long end and lastly, really how good the economy is already doing here in the u.s., and you're adding a little fuel to the fire with the tax plan so we do see higher rates, yields continuing to move up as the year moves on. >> we have had a couple days in a row where someone has pointed out either the way the savings rate has fallen, on the consumer side, or the way credit card balances have gone up over a 13-week rolling period and to what degree higher rates siphon off some of the gains from any tax relief. >> from the consumer side, i don't think higher rates are necessarily the problem. i mean, it's just the debt load by itself. i think, you know, outside the mortgage arena, we're seeing maximum leverage on the consumer sector debt servicing, because of very low interest rates has been favorable. i think you would have teex pkt interest rates to rise really dramatically for the debt servicing cost to the consumer to be a problem. keep a watch, though auto loans and some credit cards. we're seeing delink wnlsy on

auto loans and greater write-downs on the credit card debt it's not free, coast is clear for the consumer it's something that we'll be keeping an eye on. >> thank you we appreciate it when we come back this morning, new jersey governor-elect phil murphy is going to join us on a first on cnbc interview we'll get the former goldman sachs executive's take on the tax bill and a lot more. >> plus, five days to christmas, the pressure on for retailers. we'll take you to a big shipping facility for a look at the doup6.s aiomadnesinctn. w 4

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new jersey's governor elect phil murphy is preparing to step into his new role in a couple weeks. his high-tax state is in the spotlight thanks to the new tax plan the governor-elect joined us from our headquarters in new jersey governor-elect, great to have you. good morning >> good morning, great to be here >> obviously, it will be a historic day, certainly, when the president signs this the first question, obviously, sort of leads to s.a.l.t do we have a number on what the average new jersey taxpayer, how they'll be impacted by the change in that deduction >> it's many thousands of dollarser carl this is an awful bill for america. it's an awful day for america. and it certainly is an awful bill for new jersey. we're going to have to fight back this goes right at the heart of the middle class and those who dream to get into the middle class. breaks those dreams. it's just an awful, awful bill

>> you say many thousands. can you be any more specific than that? >> you've got at least a quarter, i think, of homeowners in new jersey who pay more than $10,000 a year in property taxes. you have four counties of the 21 where the average property tax bill is over $10,000 it's a huge devastating impact and not just new jersey, as you know it's other states like us. new york and california, to name two. >> yeah, and you have obviously got high, as you point out, state income taxes i think at the highest rate, at 8.97%, over $500,000 we're looking at some of it there. what are your expectations for the economy of your state, then, and it would seem that you're not in a position to raise taxes any further if in fact you should see flight of some high earners to lower tax states. >> listen, wecome pained on a theme of a stronger and fairer economy that works for everyone. right now, new jersey's not

strong it's not fair, and when it works, it does not work for enough of us we will still pursue that mission, and we will succeed this makes it harder without question we have to get back to investing in the middle class, the middle class, as i mentioned, those who dream to get into the middle class have paid a huge price over the past eight years in our state. never mind this tax bill it makes our job harder, but not impossib impossible we believe that wecan reboot a couple of the economies that we used to dominate the innovation economy you can argue that we were silicon valley before there was a silicon valley we have all those pieces still before us. we need leadership that understands how you put it together the infrastructure economy our location is one that 49 other states would die to swap in for we have let that economy rust. we can -- we believe strongly we can reinigerate and reboot those economies.

this makes it harder but we will succeed. >> i'm wondering how you're going to succeed -- i mean, what are your expectations when it comes to people leaving the state? high earners, for example, which typically contribute a higher percentage of the income tax overall. that's the case for new york city, for example. what are your expectations do you think people are going to leave, and if nat is the case, isn't that going to have an economic toll, not to mention less money in people's wallets and their willingness to spend overall. >> a couple things number one, there's a myth that new jersey, that everybody is leaving. that's not true. new jersey has been growing. in particular, in some of the dynamic growing immigrant communities. pick the south asian community as an example. new jersey is in fact growing. secondly, it depends you guys have been analyzing this, i know, all morning and for the past number of weeks it depends on who you are and where you sit. the extent to which you are getting a really sweet deal on your income tax, weighing that up against what might happen to

your property tax reality. you know, new jersey was never the low-cost state to live in. we were always on our best day the good value for money state there are examples of around our country right now where that -- where those states have that imbalance, and they're humming massachusetts, california, to pick two that's the objective for us. that you pay a premium to live in a state like ours, but boy, you get a lot back for that. and our job is to make folks feel like, you know what, that premium was worth it we got great infrastructure, great public schools, communities that millennials want to live in, those economies i talked about got rebooted. the most diverse state in the nation, those are incredible assets that we have to invest in >> are you basically saying that you don't anticipate any impact to new jersey's population yes, new jersey may have been in a period of growth, but with the new tax plan, moodies has estimated in high tax states, property buys will go down 10%

you're saying they'll see an increase of a few thousand dollars. this will have no impact on people's decision to go to new jersey on that continued growth trajectory and corporations decisions to either move or relocate to new jersey >> i'm not saying that no one would leave a high-cost state. i'm not saying that at all what i'm saying is that new jersey has the opportunity to package an economicee eco syst that we used to do well and other states are doing now, where you say listen, your tax rate matters obviously, that matters to individuals. it matters to companies, but by the way, top three public schools in the nation, top three educated workforce in the nation the most diverse population in the united states. we sit beside where you are right now, the largest market in the world. we're the densest state in the nation that gives us environment challenges, but a huge leg up on the technology and innovation economies. our job is to get that into balance. we used to have it in balance,

and that's going to be our mission to do so again and all the while, we have to shrink in equities our state over the past eight years has become an us versus them state very few have done well. most folks have been on the outside looking in we have to make sure we get as inclusive as we can, and we will >> does the bill essentially handicap your administration's ability to raise property taxes or state income tax? would you even try at this point? >> i think you have to have everything on the table. and we have said that both as it relates to looking at everything from property taxes all the way to the legality and constitutionality of this bill new jersey has been -- has taken a back seat over the past number of years in challenging what's coming at us out of washington so, you know, we will -- you should expect that new jersey will lock arms and look at all available means, both legal and otherwise, to challenge this and/or compensate it

>> to challenge this bill in court, through a state a.g.? >> if need be, absolutely. >> on what grounds, governor-elect >> you saw the 500 pages of amendments a couple of fridays ago. a lot of them handwritten. i'm not a constitutional lawyer. but my going-in bias is going to be flaws there will be holes. if there are, we will exploit them, i hope with other like-minded states >> governor-elect, it is interesting to note steve mnuchin, treasury secretary, a new yorker and californian, gary co cohn, a new yorker from this area, our president, of course, from my home town of queens and a new yorker all his life. not to mention, did you have any republicans in your state who voted in favor of this as well i'm just saying, a lot of people who conceivably would have thought otherwise were in favor of this particular deduction going away >> the president has made some outlandish claim he would pay a big price for this he's going to be a big winner. there's a reason someone like

himself and big corporations are going to jump in on this we have seen this movie before the big companies will say, listen, the money we save will go into jobs and increased wages. we know that's not going to happen because it's never happened before. the gap between senior executives and the factory floors will widen and shareholders will do just great, which is why i assume the market continues to be up, because they're going to get profits to go up and shares will be bought back we had one republican congressman, congressman mcarthur, vote for the bill. i don't understand that. he and i have spoken i don't agree with him i think it's an awful position to have taken. the other four republican members of the house voted on the right side of this obviously, all democrats in the house in our two outstanding senators voted on the right side of this. again, i don't know how you can -- i think it's not a democratic or republican calculation. it's either you're with your constituents who elected you or you're with donald trump it's that simple he saw it with the president,

everyone else saw it with their constituents >> finally, i wonder if you would be more optimistic about an infrastructure bill if that becomes a riding theme in 2018 >> listen, we would be desperate for that we want the gateway tunnel built. it would be the first tunnel under the hudson river in over 100 years. it's the one area of common ground that we have talked about as it relates to our aspirations and what the president and his administration have talked about. but so far, at least, out of washington, there's been a lot of words, but we need money. we need a major investment by the federal government it's a great opportunity not just for new jersey, for the entire regional economy, and that's something we're all over. >> governor-elect, thanks for your time. good to talk to you. governor-elect phil murphy of new jersey coming up, retailers are working hard, of course, to get products out in time for christmas. courtney reagan is going to join us next from a massive fulfillment center with an upten e da othlast-minute gifts.

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on time. our courtney reagan is live at a shipping facility in kentucky to show us how it's all going down. courtney >> hi, melissa retailers to ship and consumers to shop. the pressure is on i feel it, the clock is ticking. we're about six days until christmas. if you're ordering online and you haven't done so yet, chances are your package might be coming from a radio fulfillment sister like this one. it's a provider that works with hundreds of brands and retailer like adidas, niemaeiman marcus, many more. there are 21 radial fulfillment centers in the country, and that puts it second largest behind amazon in terms of fulfillment center footprint in the u.s. but interestingly, it also does offer amazon sellers the opportunity to be prime certified, just leveraging radial fulfillment center network. the final hours for loirn shoppers to get gifts ordered in time for christmas makes this one of the busiest weeks of the

year here at radial. they expect to ship 2.7 times the volume that is shipped on cyber monday, and we know what a record day that was for almost every retailer across the board. the facility here covers 1.3 million square feet. it packs orders for brands like arrow postal, world market, and others if you're one of those shoppers who needs to order in time for christmas, watch the shipping deadlines very closely for most cases, standard shipping options are behind you. radial tells me, in fact, that many retailers and brands have been paying behind the scenes for expedited shipping since about the 13th, but that's over. now it's on you if you want those gifts ordered in time for christmas. back to you at the new york stock exchange >> right around the corner thank you. so which companies are expected to win and lose this holiday season let's bring in victor anthony and ed, manager director retail analyst at key bank capital markets. guys, ed, i don't know if fedex

is necessarily in your universe, probably not, but i wonder if the color from the call last night altered your shoe of your retail universe. >> i would say this. we had a really good holiday shipping season. we haven't heard about delays generally from our retailers you know, we have had nice cold weather, but not weather that stops packages from moving i think that's favorable, really, across our broad retail universe >> how about you, victor, at least from an amazon stand point? >> i think the fedex numbers were supportive of the data i have seen. daily active users have suggested the numbers are strong for amazon revenues are set to accelerate, not just for amazon. i think qvc is another one, a tv shopping network more so becoming more on an e-commerce mobile focus company today. emerging with hsn, i think that closes next week, as well as ebay as well >> you said on the show that you're the most optimistic about

amazon going into the holidays than you have ever been in your history of covering the company. >> it is part of my thieesis i have ordered through those devices as well, and other people are starting to do that >> you have know exactly what you're ordering if you're ordering over alexa. >> that will be refined overtime as most people get accustomed to doing it this holiday season, amazon, apart from everything else they're doing, so i definitely think amazon comes out as a winner this holiday season qvc and hsn and ebay as well are some of the winners i have seen. >> as far as apparel goes, i mean, ever since black friday, it's alonged strong. a lot of the stocks reflected that at the time, we were discussing cyclical trends like weather and inventory versus the overall

structural trends in retail. what's the chance we go back to -- we take two steps forward and one step back in q1 in. >> there's always a chance of that, but it looks like we're going to exit the fourth quarter with really tight inventory. we have had nice cold weather, so all of those items that would have spilled over into the first quarter, the jackets, the sweaters, will be pretty clear you have retailers who have been increasingly talking about how do we get people ready for spring, for summer i think you're going to see a quick transition from the short end of holiday sales to what will be new, fresh merchandise as people start to think about warmer weather >> it seems like everybody, though, ed, is upping the ante when it comes to competing against the likes of amazon and walmart in terms of shipping and shipping quickly ultimately, are we going to see that challenge margins when the numbers come out >> e-commerce can challenge margins. your point is fair, two-day shipping particularly can be very expensive, but retailervise been vesting to get distribution

centers closing to consumers i think retailers have tried to figure out how can they mitigate the margin risk as more people move to e-com. >> one last question on amazon one of your rivals on the cell side suggested that prime membership might be plateauing, at least in the u.s. does any of your work back that up >> it doesn't. it's a big number today. i'm estimating over 55 million prime members in the u.s but i think there's, you know, you look at the number of households in the u.s., over 100 million, so the one way i think is long and wide as far as prime membership is concerned. i'm not really seeing that from the data i'm looking at. >> that's something to watch guys, thank you so much. we'll talk to you later. now, let's send it over to suherrera for a news update at this hour. >> good morning. here's what's happening at this hour the european union's top court ruling that uber should be regulated like a taxi company.

a decision that could change the way the ride sharing service functions across the entire continent. the decision stems from a complaint by a barcelona taxi drivers association. >> palestinian president mahmoud abbas holding talks with the saudi king in riyadh it comes amid reports the kingdom is pressuring abbas to relinquish palestinian claims over east jerusalem in exchange for u.s. continued pressure against iran >> palestinian protesters continuing to clash with israeli troops in the west bank city of bethlehem. there have been daily protests and clashes every day since president trump recognized jerusalem as israel's capital just two weeks ago and cardinal bernard law has died he resigned in disgrace as the archbishop of boston in 2002 amid the investigation into child abuse in the city' archdiocese. law died at a hospital in rome after an undisclosed illness he was 86 years old. you're up to date. that's the news update this

hour over to jackie deangelis for the eia inventory report >> good morning to you you can see crude prices are off session highs but still supported after the department of energy reported a draw down in crude oil inventories of 6.5 million barrels. we had an increase in gasoline inventories of 1.2 that crude number is supportive here, and people still watching the north sea outage, the 40s pipeline that's also giving us a little cause for support here actually, we just turned negative 57.53 is where we stand at this hour on crude oil prices i will add, production in the u.s. went up slightly but a new record, 9.789 million barrels a day. back to you at "squawk on the street." >> all right, thanks, jackie >> when we come back, the tax reform countdown continues much more on what's expected out of washington, and fedex delivering a much better than expected profit. the company also addressing tax reform here's what their ceo had to say on the earnings call >> we're encouraged by the tax

cuts and jobs act legislation advancing in congress at this very moment. this legislation offers pro-growth, pro-business tax reform solutions that will power the economy, increase business investment, expand job opportunities and enhance incomes and improve u.s. competitiveness.

the president heading for a legislative win with the senate passing the tax bill and the house getting ready for a final vote after hitting a technical snag yesterday for more on the impact of tax reform, we're joined by maya macguineas, the president of the committee for a responsible budget, and sarah, former white house political director ladies, thank you so much for joining us maya, i'll start off with you because you're saying what is supposed to be $1.5 trillion bill is going to cost much, much more more to the tune of $2.2, because of political gimmicks. what is the most egregious ones? >> well, the whole point of the

limit of $1.5 trillion that the bill had to fit into was so it could get past reconciliation. but from the very beginning, many members of congress have been saying a lot of the things that we did to fit this bill into that limit, a lot of tax cuts that are going to be expiring, and other things that are supposed to kick in later to help pay for it aren't the real intents of our policy, and our plan is to make the tax cuts more permanent or not tax some of the pay-fors. if what they say is true and all of these will be made permanent, the whole bill will cost over $2 trillion over the next ten years. bumping up an already unaffordable cost beyond what it had been sold for. >> what was your initial take, assuming the bill was going to be $1.5, and what's the take now that you're saying it's going to be $2.2? >> either way, what we shouldn't be doing is having a tax plan to make our debt worse. tax reform is a tremendous opportunity, both because we need to do things to grow the

economy and make us more competitive, but also because we can help improve our fiscal position, mainly by getting rid of a lot of the inefishabout tax breaks we did an end run around tax reform we didn't do nearly as much of the base broadening as we could have and should have the result is it's going toadd more debt and be less pro-growth than it would have been if it was paid for and we got rid of a lot of the tax breaks. i thought $1.5 trillion was an outrageous thing to add to the debt when our debt is at near record levels and something that will cost over $2 trillion will do even more damage. i find it disappointing when we should do the hard work shoring up our financial situation that we're taking the easy way out and mortgaging the future to promote this tax bill. >> sarah, let me get to the political ramifications here, in your perspective the republicans certainly seem to think this was going to be something they had to do to deliver on promises made during the campaign

how do you think it's going to resonate amongst the electorate in the next year, particular with the midterms 11 months or so away? >> i think this is a huge win for republicans. i know there's been a lot of discussion about polling that has showned it unpopular, but when you test the provisions and when they go into impact and when the average family sees that their tax bill is, you know, anywhere between $1,500 and $2,500 less next year, that's going to be -- it's going to be received very well, and republicans will certainly pick up more seats than otherwise having not done this i don't agree with maya entirely on this. i agree in principle that we should be cutting the government more however, you know, the numbers that both the joint tax committee put out, the number she talked about, gives the economy no credit for growing, for higher tax revenues. and certainly, when you lower our corporate rate as much as

you have, you give a tax cut to almost every individual, less a few people in high tax states, you're going to see economic growth and higher revenues so we're going to see some benefit from that growth >> maya, a lot of cynics this morning are saying the next conversation is about spending cuts, welfare reform, that deficits are going to matter, so to speak, once again do you expect that to be a larger part of the conversation next time? >> well, i do think it will be a larger part of the consalgz, and i think it should be part of the conversation my concern is by having this huge tax cut that is really unaffordable, it makes the argument that we need to be addressing the spending side of the ledger and fixing our entitlement programs, which is true, much less credible i think if we had gone into this and said let's figure out how we're going to address the debt and do revenue neutral tax reform, we would be in much better shape, but this, we're going to cut taxes and now make

the case that the deficit is a problem is undermining an argument that is true but really complicated by the kind of ignoring of fiscal responsibility in this first piece of legislation >> sara, does this win -- go ahead. >> i was just going to say, i think that the spending situation could actually get worse before it gets better because if you move on to infrastructure growth, which is going to be really -- is critical for the country the country needs it, you could actually see a scenario where the government spends more before it tackles the tough work of entitlement reform, which is absolutely necessary to get our fiscal house in order. >> we're going to leave it there. thank you both sara and maya. >> thank you sticking with taxes, realtors are concerned about the future of sales under the tax bill our diana olick has been watching that along with existing homes this morning. hey, diana >> that big jump in sales, but realtors this morning said only that they were relieved the bill ended up with the following, a

$750,000 cap on the mortgage interest deduction, up from the original proposed cut at $500,000 it is currently at interest paid on $1 million of mortgage debt but for buyers over the next five years, just about 800,000 buyers would have loan amounts over $750,000. that's according to estimates from black night had the cap been cut to interest paid on $500,000 close to 3 million buyers would have had loans higher than that. they were pleased with the $10,000 deduction for property taxes. 95% of homeowners currently pay less than that certainly states will be hard hit, new jersey for one. 30% of homeowners there pay more than that. 20% in new york pay more than $10,000, and 9% in illinois. according to realtors. that said, raising the standard deduction will cause fewer homeowners to itemize, therefore taking away the tax incentives for home ownership, and the realtors chief economist said that could have a chilling effect on future sales,

especially with home prices continuing to surge. carl >> diana olick in washington, thanks so much for that. busy day for you when we come back, stocks continue their record run, although dow slightly in the red. the results of a brand-new cnbc survey are out, and it seems the richest americans may be less optimisticbo t authe markets we'll talk about that when "squawk on the street" comes back a tiny sword? bread...breadstick? a matchstick! a lamppost! coin slot! no? uhhh... 10 seconds. a stick! a walking stick! eiffel tower, mount kilimanjaro! (ding) time! sorry, it's a tandem bicycle. what? what?! as long as sloths are slow, you can count on geico saving folks money. fifteen minutes could save you fifteen percent or more on car insurance.

it is the dow dog that one technician says will howl next year the name is at tradingnation.cnbc.com more "squawk on the street" coming up.

let's hop over to the cme group, check in with rick santelli and get the santelli exchange >> good morning, and thank you, carl i'd like to welcome my guest, christina pageant from movies investment services. thank you for joining us this morning. >> thanks. >> well, listen. the tax bill is going to have unintended consequences, as all

legislation does some are going to be good, some are going to be bad. and some will outweigh whether they're good or bad, due to the benefits of significant drops in the rate from 35%. i want to focus on corporate securities, both investment grade and high yield what do you see with regard to this reform package on taxes that may affect both of those securities sectors >> well, what we did was take a review, five years back, of both investment grade and high yield companies. and if you look at investment grade companies and even the high end of high yield, all those companies will do better when you're looking at three specific measures. the important measures from the reform the tax rate going from 35% to 21%. the accelerated capital expenditures and then the limitations on interest deductibility, which is a negative for the space, but really won't be an impediment in opportunity for the investment grade but could really be

punitive to the lower end of spec grade >> i'm glad you brought up that point, christina, because justin wrote a column today about this very topic on the "wall street journal's" side. and his point was above and beyond the complexity of having a trigger date of 2021, prior to that, it focuses on the deductibility of interest based on ebitda, which is earnings before interest, taxes, and amortization can you dig down into that for us >> sure, and i'll talk about the overall deductibility issue. so 30% of interest is permitted to be deductible so for high yield companies, we would say about 50% of them aren't harmed by this. under the ebitda calculation, far more punitive, about 85% would higher taxable income just on that metric as a consequence.

when you net the benefits of the lower tax rate, it's a much smaller number but then when you get to the low end, 30% are still harmed under ebitda, 35% under ebit companies that are already distressed really are harmed in either case. so we're concerned about that. >> real quickly, christina, let me interrupt you we're almost out of time and i love this topic. let me oversimplify. it sounds to me like as credit quality deteriorates, most likely, those companies will have more debt, and that's going to be the issue. high debt isn't going to be treated as well after the 2021 so things like private equity that like to use debt, for example, will they be effected >> i think they're even effected today. their cost to capital just went up the cost of capital at the low end of the spectrum for everag buyouts just got worse not only that, but in a deteriorating environment, your interest expense ends up comprising a greater amount of

your earnings and you get punished further in a negative, in a downturn, so that causes concern, too in addition to the rising rates, which is an inherent part of that problem you know, the one thing -- >> excellent >> go head >> we're out of time there and i'm going to have to ask you back, because of out of time. i'll have to ask you back because this is rather navigated. thank you for navigating those waters for us. i really appreciate it david faber, back to you. >> thank you, rick santelli. let's send it over to jon fortt and get a look at what's coming up on "squawk alley." >> david, one hour, three stocks, three big earnings moves. we've got the ceos of stitch fix, red hat and different areas, three diffentre moves we'll dig into all that coming up on "squawk alley. i think that she's a very nice girl...

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welcome back to "squawk on the street." markets mixed as they are set to push the tax cut over the finish line despite the recent uptrend the group of stocks up 4% over past three months you've got names like philip morris, altria, campbell among those pushing lower. philip morris down 2% in the wake of reuters report revealing

scientists discovered issues in the tobacco company's e-cigarettes experiments things to watch. i'll send it back to you guys at the new york stock exchange. >> thank you, dom. cnbc millionaire survey is out turns out richest americans are less than optimistic about stock market going into next year. robert frank joins us now with the results. robert. >> reporter: well, america's millionaires, they own about 85% of the nation's stocks their outlook can really shape markets. right now they are gaining more skeptical about the stock market in the most down beat forecast in three years millionaires surveyed said flat to down according to cnbc millionaire survey 41% said it's going to be up between 5 and 10%. a quarter said up double digits. still positive but below the levels of the past three years their favorite sector for putting new money into the market is tech and then financials next year it all falls along party lines

republican millionaires say the economy will be stronger next year democratic millionaires say it's going to be the same or worse. republican millionaires say the market is going to be up 5% or more next year dems say it's more likely to be flat to down so politics shaping a lot of their economic one thing, both agree on biggest risk to financial markets and wealth is government dysfunction. this is at its highest level that we've seen since we started the survey 44% of millionaires say government dysfunction is the biggest risk it ranked first among both republicans and democrats. trump is unpopular but congress even worse millionaires give trump a score of 32 out of 100 congress got 18. now, in the last election millionaires were dead even in who they voted for but a quarter of the millionaires who voted for trump said they would vote for someone else in 2020, depending, of course, on who that is. guys, back to you. >> interesting numbers, although the dysfunction story is not new, right >> no, absolutely not.

>> you put that number on the past 20 years. >> it actually -- carl, it's not new but it grew dramatically over the past two surveys. so it was at 25%, 31%, now it's in the mid-40s so as they are concerned, it's really become top of mind. >> last year, robert, did millionaires get the markets right? >> they scored in that 5 to 10% range. i think a lot of prognosticators they underestimated how strong this would be. either not surprising given where we've been that they would cause, say, look not quite as good next year what's surprising to me how it shapes even your view of how the stock market will do when you're a millionaire. >> that's what tribalism is doing. >> absolutely. >> thank you, robert frank when we come back, big hour ahead. we'll speak to the ceos of micron, stitch fix and red hat "squawk alley" is up next.

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good morning, it's 11:00 a.m. on capitol hill where the house is set for a final vote on tax reform in just about 60 minutes. it's 11:00 a.m. on wall street and "squawk alley" is live ♪ ♪ good wednesday morning welcome to