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 "squawk alley."

i'm carl quintanilla post 9, new york stock exchange. what a show. very busy hour ahead on "squawk alley. exclusive ceos with sanjay mean stitch fix ceo white house preparing for vote on tax reform following yesterday's procedural snag. el ylan mui is on capitol hill. >> right now lawmakers are debating and voting on proerm measures the real meat of that vote will not happen until roughly noon. every republican in the senate overnight did vote to support the tax bill one of the last to get on board was jeff flake of arizona. he put out a statement just recently saying he would have written a different bill, that he does believe lowering the u.s. corporate rate will help make america more globally competitive.

one provision that didn't make it into the bill was president trump's pledge to end the preferential treatment for carried interest that pledge was the victim of the -- >> we've been trying to cut carried interest, we've probably tried 25 times. >> why not >> we hit opposition in that big white building with the dome at the other end of pennsylvania avenue every time we tried. >> reporter: the bill does establish a three-year holding period for investments to qualify for that preferential rate american investment said criticisms this bill doesn't address the issue at all are egregious and misleading but this is just one provision in eiga a massive tax bill that businesses and quite frankly lawmakers are still trying to parse through. it effect affect january 1 back to you. >> any clarity when the

president might sign it and what difference that makes? >> it doesn't look like the president is actually going to sign it today because of some issues around the budget and impact of the bill on the deficit, but we have received assurances this will not trigger massive spending cuts democrats have warned about. >> we'll keep an eye on that we'll probably get back to you in the future. y lolan mui in washington. fang stocks. joining us jpmorgan's lead internet analyst doug, welcome back. >> thanks for having me. >> couple of conflicting stories regarding fang, one, they are a net loser under the tax bill there seems to be endless interest despite shallow corrections. what is your view for 2018. >> view for 2018 is positive on the internet sector overall, including fang stocks. i say three key things first, continue to think fundamentals are strong in the

group. online advertising, e-commerce, certainly the move over the top and nonlinear tv second, i think a lot of -- clearly there's been good outperformance here this year-to-date a lot of that has been driven by earnings provisions so the numbers are higher for some of these companies. multiples only expanded fairly moderately growth opportunities going forward. that supports heavy investment spend they are doing. >> doug, when you look at the underlying trends that are going to drive technology growth in 2018, what are they? we have the smartphone on the one hand and the cloud boost on the other for so long. has artificial intelligence, machine learning really kicked in as a driver of revenue yet, or is it something else? >> so there's clearly a lot of trends here in 2018, some of them that are continuing, some a little bit newer your question on the smartphone, we clearly think mobile monetization even though we're

many years into this still has a ways to go in terms of closing the gap around advertising dollars, ecommerce activity as well only about a quarter done through mobile devices that will continue to increase fast forward to machine learning, a lot of good opportunity going forward. you're seeing it now in existing products you clearly see it in things like google search results, facebook news feed very personalized recommendations that all this received i think going forward we'll see the next wave of that, which means more revenue generating products clearly we see that in some of the smart speaker devices including echos and what google is doing as well as google home. >> doug, you recently upgraded twitter as overweight and caused the stock to pop this week seems like earlier this year talked about this is a struggling company, a potential

acquisition target is it still m&a target >> the case for twitter. we think the company has seep a lot of change over the last couple years really three key things i would point to. first we think the product is getting better we've seen that with the last 12 to 18 months, algorithm time line, notifications, clearly bigger effort around video content as well. that will be a big push into 2018 the second point i would say, they have had revenue dplins over the last few quarters spoke '18 comps are easier more importantly, i think advertisers are starting to reengage here. that's happening on the back of four straight quarters of double digit dau growth i do think they are looking to move some more money to the platform the third piece, should be the first year of gaap profitability. that will come also as they are expanding ebitda margins as well

certainly like this name, it's our favorite midcap idea in 2018. >> we do have argus went to $30 on their target. that seems to be a street high finally, doug, big looming shadows over the space continue to be regulatory issues out of the eu and various countries in europe, and then just political heat here back stateside especially regarding how they treat data do those do away if they don't go away, are they material to results? do they even get resolved or cross to resolved in '18 >> i would agree i think regulatory is probably the biggest risk around this will group certainly intensified in the last months or so and i would expect this to continue. you're already seeing the company address things around this issue, add quality and add safety as well, certainly heard facebook talk on 3q about spending a lot more money towards security, for example.

but we will get hopefully some more resolution here in the new year around google and their android. use of data and privacy will clearly be a big topic in '18. i don't think these are things that will really change the underlying fundamentals, though, for these businesses. >> doug, good to get your insight. appreciate it. hope you'll come back soon jpmorgan, talking tech. >> you know what i think -- before we get to the next interview, you know what i think, you should be looking at companies that make contact lenses and eyeglasses this shift to mobile, i can only imagine eyesight will be worse and boost demand i know that sounds kraeds but that's my thought. >> one company benefiting take a look at micron micron is on a tear more than 100% as chip demand gross. joining us now sanjay mehrotra

>> thank you, jon. good to be on your show. >> i want to do straight to the big issue which is demand for nan flash. i think you said you expect supply of nan flash up 50% sometimes that can make investors nervous because it causes price drops if demand isn't up you think it will be in notebooks and the like what give you that confidence? >> absolutely. i think you see note box computers, ssts are about 35% right now. over the course of next few years, expect it to be 5%. a lot of hard disk drives being replaced by flash-based solid state drives to give you that cool experience of a light

notebook, instant on capability. a huge driver replacing disk drives it's not ensemble about pcs, but also data center we're barely seeing tip of the iceberg in terms of artificial intelligence affecting our lives. as artificial intelligence goes into all work, processes a lot of data it's a lot of growth in data center operations, where we see biggest growth coming from the data centers of course flash is in mobile as well big driver of radios as well as the content on the mobile devices. so many multiple large growth drivers for flash. keep in mind that the big growth for next year for the industry we project to be approaching 50% comes with significant cost

reductions enabled technology as well as long as price decline is in line or better than the cost declines and demand drivers are as i just described to you, i feel very good about prospects of micron in the flash industry in the coming year. >> how do you factor cryptocurrencies, bitcoin, of course, all the rage right now you mentioned it on the call as something that's beginning to show up as a driver infrastructure wise and demand for your product is that noise or do you feel confident it's here to stay and you're factoring it into how you grow. >> two-thirds of my business is in this. we did say in the call as well that cryptocurrency applications are clearly driving a lot of data mining, increases demand for our graphics-based products.

contributed a relatively small amount but it's the start of a trend. cryptocurrency is one application of high performance. other applications going back to the ai trend in data center driving all the demand as well as the applications in mobile. when you look at the trends in smart phones that requires more than the memory as well. of course automatic. a trend just around the corner will move a lot of flash movie as well. many mega markets. micron is very blessed to be at the cross-roads of these multiple mega trends driving for these solutions. >> you just laid out a lot of opportunities for micron let's talk about china for a s.e.c. we've seen every time that

country and the government of that country puts money into new industries, be it steel, aluminum, solar, it pressures the broader global market. now they are putting hundreds of billions of dollars into manufacturing chips. how concerned are you about the impact china could have in the future on the memory chip market >> i think when you look at chip technology, particularly memory technology, you see decades of experience building a lot of ip, that enable you to have leading edge technology and efficient production as well so i think with respect to china, access to intellectual property, those barriers are pretty high. what's important is it's not only about having a capability, have you to be able to have products you have to have technology. you have to be able to have qualified with the customers and you have to have leading edge solutions and cost effective production at scale. so we keep an eye on the

developments in china, but this is not something i'm worried about. let me tell you, we are focused on driving our strategic priorities with respect to reducing cost of our product manufacturing by bringing new technologies into production faster and also increasing the mix of high value solutions. we did very well in that regard in the results we just announced for our first quarter but not in terms of high value solutions of strengthening our portfolio of solid state drives as well as high performance memory in graphics, data center, as well as many other applications. >> sanjay, with this tax bill, we're going to start asking every executive how they are going to prioritize whether or not the bill repatriots cap ex, labor. in micron's case, have you done any work on how this changes things >> so we will be studying the

details of this. of course we'll be assessing how it changes things for us what we said on the call yesterday for our fiscal year '18, the tax guidance provided before, it does not change that. we like the simplicity that this bill provides. we also like the aspects that it gives us easier access to global cash in terms of deploying it wherever we need these are all positives. again, in terms of driving value for our business, it's not just about tax rate it really is about driving, the market needs, continuing to drive our product execution engine and micron is making excellent progress in these areas. >> all right sanjay mehrotra, ceo of micron, thanks for joining us. >> thank you and talking about beat and raise, shares of fedex hitting an all-time high leading

transport sector higher. the company on the top and bottom lines, on track for record holiday shipping season on the call last night ceo and chairman fred smith said the new tax plan can significantly boost full year earnings and also he and cfo alan graph laying out all the ways they are planning on reinvesting all the potential savings for taxes. it will be interesting they said they expect to power the u.s. economy and expect tail wind. >> smooth sailing with package delivery for holidays? >> so they say they are very happy with how they are going so far. they forecast 480 million between thanksgiving and year end. >> some of these volume numbers are impressive. >> yes. >> when we come back, roll out the red tape, more headaches for uber's ceo stitch fix first earnings report as a publicly traded company

katrina lake will join us in a cnbc exclusive later on, the tax reform package fails to address what he calls tech tsunami when "squawk" comes back ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that,

you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

alley. we have breaking news out of uber deirdre in france with that news

what's going on? >> hey, uber finally filling its chief executive officer position announcing it has hired barney harford, ex-orbit ceo. they have been looking for number two sense earlier this year starting under former ceo and now new ceo dara khosrowshahi has filled the position he begins january 2nd. in a blog post khosrowshahi writes, harford served as an adviser with uber since october. he'll be able to hit the ground running in january they also worked together at expedia in the past. this is a big position to fill keep in mind there are still plenty of high level executive positions dara will need to feel including cfo. he does have an extensive network. another uber story we're following, a ruling from european court of justice classifying uber as a taxi company and not digital platform that is an important distinction and could have major ramifications for how uber is regulated and how it's able to

operate in europe and the way it treats its drivers that decision can't be appealed but uber said it won't change things in most eu countries where we operate under transportation law still, uber has been trying to overturn such rules and licensing requirement arguing it's not a transportation company. ecj says in its judgment uber must be regarded as forming an integral part of the overall service whose main component is service, not classified as online platform. the decision applied eu wide efforts to ease regulatory load, uber cost, pop service that uses drivers without professional licenses this has already been banned or suspended in a number of eu countries but it does still operate in much of eastern europe this ruling tells those countries in eastern europe uber should be treated as a taxi service and eliminates any hope of uber expanding or reviving uber pop

beyond europe this ruling could set important precedent in uber and other markets where authorities are trying to figure how to regulate the company and sharing and other companies that classify themselves as digital platforms and not providers or otherwise. back to you guys. >> thanks very much, deirdre busy day four as well. when we come back, exclusive with ceo of stitch fix katrina lake is with us following her company's report first watching price of bitcoin. again, down 20% over the past three days "squawk alley" is back in a minute

i think we should do that meeting tomorrow. well wait. what did you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies see it- and see it through-with digital.

they cahow many of 'em?e, sir! we don't know. dozens. all right! let's teach these freaks some manners! good luck out there, captain! thanks! but i don't need luck, i have skills... i don't have my keys. (on intercom) all hands. we are looking for the captain's keys again. they are on a silver carabiner. oh, this is bad. as long as people misplace their keys, you can count on geico saving folks money.

fifteen minutes could save you fifteen percent or more on car insurance. stitch fix delivering its first ever earnings report as a public company the stock now down just over 10%. joining us now katrina lake, founder and ceo of stitch fix. katrina, good morning and welcome. just 33 days. >> good morning. >> we were sitting down and you guys were going public at the

nasdaq public at 15, now you're dropping 10% but to 22 investors don't know what to do with this. i want to dive right in on margins because that's what investors seem to be concerned about as you move into men's and plus sizes and amp up your marketing spending your margins are coming in. what is your cost of acquiring customers doing over the course of 2018, and are you confident you're going to be able to continue doing that at a reasonable rate? >> yes the fundamentals of our business are really strong. we shared that we grew revenue 25% year over year this quarter. we shared that we added more active dlints than we've had since q3 of 2016 and had 30% year over year client growth all of that is through efficient marketing and through finding fibt ways to acquire new customers. so we're really happy that we have a diverse set of ways in which we're acquiring customers and really happy to demonstrate that growth that we're seeing

through the investments we're making in marketing. >> what do you see as your main differentiator from the likes of amazon moving into this category of personalization they have this new echo that looks at what you're wearing and suggests what might go with it you use human beings as well as data to match. so investors are going to want to know why is that going to be better longer term >> yeah. the way we combine data science in humans is very, very unique to deliver our kind of personalization. ic is a significant competitive advantage. to give you an advantage i style fixes myself i was styling a fix for a client who was a teenager there was like a logo jacket that was kind of like a big urban jacket that the algorithm had a perspective on it thought it had a 40 or 50% chance of working. i as a human based on interpreting her instagram i was able to apply this layer of

judgment that gave me more confidence i thought that was the thing she was going to really love. it turns out she did really love that that's kind of an example of how the nuance of what humans can do in interpreting how clients are feeling about what they are getting or their social media channels or their feedback on all of that adding that human interpretation and combining it with data science i think really delivers better results and also just allows us to have a more nuanced way to deliver personalsation. >> katrina, i want to dig into your numbers a little more $0.04 jufted per share one penny beat, stocks down 10 1/2%, though one of the things i'm hearing from the street, measurement of preferred stock warrant liability that perhaps the quality of earnings weren't as good as anticipated. are investors wrong to be concerned about the quality of the earnings >> yeah. i mean, we're really not worried about the day to day fluctuations in the stock price. we're really focused on long-term and doing the right thing for today but really also to generate a lot of value for

shareholders over four or five, ten years horizon. in terms of there was a little bit of favorability we saw from the it stock there was favorability we saw in gross margin we saw we were selling through this quarter, i guess q1 we were sealing through more of the seasonal summer product longer than we would have expected that we attribute to a warmer fall. so both of those kind of contributed to the favorability that we saw on the profitability side. >> you made the point, katrina, that seasonality in your business does not follow that of traditional retailers. when is the sweet-spot from a seasonal standpoint? >> yeah. stitch fix is a 365 day a year business we're not a q4 business, we're not a holiday business there's a lot of benefits that come from that this is a business where we're helping people to outfit their every single day and not just special occasions and not just

over the holidays. and so for all of those reasons, we see the holiday quarter as being a little bit of business as usual we don't plan to do -- we don't plan to accelerate anything over the holidays in a lot of ways we actually set out on the marketing side, for example, right now is a really expensive time to be trying to attract the attention of customers. so from a marketing perspective we see a lot of advantage, actually, to laying off a little bit in this quarter. that allows us to be strong during the rest of the year. >> katrina, it seems like the big hurdle for a lot of people is getting them to sign up and go through that process of telling you what style they like, what they don't like, the sizes, et cetera i went through it. my wife went through it. full disclosure after you did my podcast i wanted to try it out we both ended up keeping everything in the box, which is good for you but when we mention it people are like i'm not sure we want to go through answering all those questions.

so do you need or are you thinking about getting a brick and mortar presence to get out where people are used to shopping and take some of those measurements and perhaps add that into your marketing or is that off the table for you, too expensive? >> yeah. we don't have any news to share on that front. but you make a good point. this is a completely different way to shop. it's not stores. it's not e-commerce. there's a lot of education that goes into helping people understand the value of stitch fix. so you know, a store isn't totally off the table, not in our plans now, could be interesting use cases. we don't have neg to share on that now i think part of the benefit of personalization is that we really can be agnostic to the ways in which -- the places we're interacting with people. there are lots of different ways we can deliver this business of personalization and we're excited to demonstrate some flexibility on that front. >> well, there certainly is a lot to play with when it comes

to retail, when it comes to fashion. you guys in a a lot of ways, katrina, investors are going to have to catch up to that way of thinking we'll see if that happens. katrina lake, stitch fix, thank you. >> thank you. >> dominic chu dom. >> european stocks pulling back for a second consecutive session as u.s. house of representatives gets ready to vote again on gop tax bill back on monday optimism about that tax bill sparked best one-day performance for europe's broader markets in five months eu's chief brexit negotiator now sediuk's transition period after leaving the block should end no later than new year's eve 2020 the brexit schedule is going to take effect march of 2019. uk prime minister theresa may had asked for a two-year transition period after that kind of kicks in meantime imf is lowering 2017 growth forecast for economy by a

tick to 1.6%, like the impact of brexit and weaker pound since last year's referendum on departing european union we're going to finish with parliamentary election in catalonia. you may recall the prime minister called for new elections ousting catalan president and government after they declared independence following the referendum he deemed to be illegal pro separatist and union parties too close to call. still catalonia election a big focus for some investors out there. carl, back to you. >> appreciate that let's get to hq for sue herera's update sue. >> good morning, everyone. here is what's happening this here as dom mentioned the house is preparing for final vote on the tax bill in just about 30 minutes. house speaker paul ryan was on the "today" show this morning where he said corporate tax cuts are vital in helping the american worker. >> the vast majority of businesses are going to do just

what we say, reinvest in workers, actories, pay people more money, higher wages the data is really clear by the way. workers benefit through this by higher wages not if but where it goes. >> the state department confirming death of multiple u.s. citizens in a bus accident in eastern mexico. twelve foreign tourists killed after the bus flipped over mexican officials say eight americans were among the fatalities. a new study from emory university say unmarried patients with heart problems were 50% more likely to die from a heart attack than their married peers. experts suggest the benefits of companionship is important for people with heart disease. that makes sense news update this hour. back downtown. morgan, i'm going to send it back to you. >> next time my husband says i'm giving it him -- i'll cite that study. thank you, sue

still to come, shares of red hat under pressure following earnings beat. shares down % right now. we'll speak with ceo jim co eluvest in a cnbcxcsi ming up when "squawk alley" returns. ♪

feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

house getting ready for final vote on tax reform after 30 years critics analyzing fine print

writing for "new york times," argues what the tax bill fails to address tech tsunami. you say the bill looks like the wrong fix for the wrong problem. what do you mean by that >> the kind of long-term problem facing the economy, a lot of the problems are stemming from technology technology is changing how we work it's changing the structure of work it's changing a whole bunch of industries, retail it's going to change how truckdrivers work, much of the delivery infrastructure. there's this long-term question of whether automation and artificial intelligence will leave any work for us at all there are lots of kind of ideas for how to address these problems, how to address displacement, retraining ideas people are talking about things like universal basic income. some of them are far off ideas and some of them are really expensive. you could have tried some of these things as experiments or

other things in this huge expensive tax bill you know, none of them are kind of addressed in this problem in some ways, you know, by making -- sort of distributing a lot of the gains here to wealthy tech companies, it kind of exacerbates some of these problems >> yeah. i want to play devil's advocate on the last point you just made. that is the fact this is not a cure for that problem of sort of the growing divide between the big cap tech giants and all the smaller start ups. it narrows the dui, lower tax rate, big cap tech companies with money overseas getting hit with 10.5% tax rate on offshore profits. what more could be done. wouldn't this at least have positive impact for those smaller startups >> there's some theory that in

the long run -- after they get this initial repatriation windfall in the long run because of the big tech companies are getting taxed at 10.5% rate for overseas profits, that that hurts them because they have set up a very savvy scheme of international profit, putting profits elsewhere, so they could now pay money on that. so that's somewhat good but it's still going to be far lower than the rate that most of their rivals have to pay here. it's going to give them a lot of cash to buy a bunch of startups over here. so i mean, you could say it seems like at best it's a wash you could say it helps them a little it doesn't fundamentally change the structure of the tech industry i think there are ways where it actually increases the power of the big five you know, they were kind of heavily lobbying for those i think if they were kind of looking at the long-term image of the tech industry, they might

have been better off at pushing some of these ideas that would have stemmed inequality or some of the more negative consequences of their technology and how it's changing the economy. >> how much is education infrastructure, we want lower class and middle class to get ahead, we have to prepare them for a very different future these companies repatriating cash are creating. so maybe there should be conditions on them bringing back that cash and retraining people or bringing back that cash and doing something wit that's going to mitigate the impact of alexa starting to do more than what we tell her around the house. >>ening education is a big part of it. there's lots of plans for retraining and unemployment insurance that would pay for this of some retraining. there are sort of experiments on things like basic income or expanding the other ways of kind

of paying for some of these dislocations, displacements that are occurring because of these technologies yeah, i think education is the big one. there's very little in this that kind of helps that there are obviously some provisions that obviously make that worse, things having to do with universities and stuff. i think they would have been better off kind of pushing some of those more progressive ideas. >> it's also worth noting gary cohn did talk about retraining with axios farhad, thank you for joining us happy holidays. >> you, too. >> as we take a break, this is capitol hill the house set for that final vote on tax changes. we will bring you those results live but first rick santelli, what are you watching today >> i'm watching long end of somp rate market pretty much all across the globe what's going on? 'lta authaafr a couple of breaks ♪

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, and we need to be able to identify where in the cold chain that occurred. we took our world class network and we developed devices to track environmental conditions. this device allows people to understand what's happening not only with the location of that asset,

but also if it's too hot, if it's too cold, if it's been dropped... it's completely unique. we ship fish, beef, poultry, vaccines, insulin. this is about monitoring and protecting everything we ship. i catch all this amazing, beautiful fish and then once it's out of my hands, i have no control over what happens to it. if you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. it's really all about the network. you are looking at trillions of transactions a year. not too many companies in the world can even scale to that type of volume. who knew a tiny sensor could help keep the food chain safe? food has to be fresh. it's that simple.

. scott walker at the top of the hour onon halftime report most pressing questions for investors as tax plan crosses the finish line where will your money work best in the year ahead. wells fargo banking executive rising on every stock but one. where he thinks they now go and who got left out in the cold hedge fend legend steve cohen

could be making major comeback >> look forward toyota, scott. thanks shares of red hat under pressure despite top and poem line beat software provider up almost 90% this year. for more on that let's bring in red hat ceo jim whitehurst good to have you back. good morning. >> good morning. great to be here. >> i guess it's a compliment that i guess because of the magnitude of the beat on billings not what it has been in prior quarters has you under some pressure. does it say anything about demand or execution dism. >> your j-- we have raised outlook for the next quarter we feel good about the business. we performed so well in the last few quarters, there was heightened expectation beyond estimates. we felt great about the quarter and we feel really good about next quarter and next year. >> some analysts point to an

uptick in what they call large deal activity. what color sort of surrounds the size of the deals that are being drawn? >> we've seen significant increase in million dollar plus deals. we have 94 million dollar plus deals in the quarter we had 17 over 5 million that number at 30% growth year over year. it shows more and more customers are trusting red hat to be their partner as they look to don't cloud computing. >> jim, i wonder about that. you guys are a big name in hybrid cloud as people perhaps more cautiously move toward the cloud. i wonder how that plays out depending what kind of year it is for 2018. if people move more quickly or less quickly, does that affect your revenue, your growth rates? do people pull back and are more cautious, what's that going to do to your growth. >> well, look. looking forward to next year and talking to a lot of cios, we feel very confident there's going to be accelerated spending

going into cloud adoption, so we certainly think that's going to be good for our business we have two pieces of the business our other piece of the business is having much lower prices than microsoft or oracle. in more difficult or tighter times we focus on value. in faster growing times we talk about innovation in the new segment. that's allowed us to have over 0 quarters of continuous revenue growth so we feel like we're pretty durable in either economic scenario. >> you have said your position the internet of things transformation what that means from i.t. perspective, where do you see biggest opportunities there, retail sector as viewpointed from amazon, 4g to 5g, manufacturing and industrial internet of thingsthat's takin root there >> well, look, i think all of those are significant opportunities. i would say in the near term over the next several years telco in particular in the rollout of 5g offers really a

massive opportunity for red hat as much of the technology associated with the infrastructure of that is red hat related technology that's also ultimately a core platform that's going to be required for a whole bunch of other industries to be able to roll out iot getting that broad infrastructure in place will be the platform on which so many platforms will build we feel good about the other areas but i think in the near term, next year or two, telco in particular represents a really good opportunity. >> will you be one of the companies that upgrade and revamp all the government run i.t. systems we heard about that a couple months ago is that something that's going to happen and will you be involved >> right now the u.s. government is our only customer that represents more than 10% of our revenues we've always had a very significant position on military, so the defense and intelligence side because of the security and performance

characteristics of our products. we more recently have seen a significant growth on the civilian side of government. so as government looks to renew both in terms of the lower cost profile that open source provides, as well as the security posture that we can bring to government customers, we expect to continue to see government being a key driver for our growth. >> we've been talking about the tax bill all day, jim, as can you imagine. is the expensing of equipment going to be a big deal for red hat? >> no. for us not really. i mean, you know, we -- it will help a little bit on the margin, but given the nature of our business that's not a big impact we're still trying to understand the full impact of taxes you know, unlike a lot of tech companies we haven't parked ip offshore so we pay u.s. taxes in a similar ratio to the profitability you would expect in the u.s so we're still trying to ball and we'll certainly get a benefit there so overall we think there's a modest benefit

but as the goal posts keep moving until this gets finalized we don't have a good time beat on the exact impact for us >> if you find out who does, let us know because everyone is working on it. jim whitehurst of red hat, thanks for your time good to see you. >> thank you great to be here. >> and now we have a news alert on chipotle. shares sinking over the last 20 minutes or so. dom chu is back at hq with that. >> the reason why is we have headlines coming out of business insider with regard to reports, again, just reports right now of possible food borne illness situations with a chipotle restaurant in los angeles, specifically the pico boulevard one. we have reached out to chipotle for a comment on this and they do say in the story from the business insider that they have at least been commenting on the fact that they are aware of what's going on and they are looking into what's happening, but for right now that's the reason why the shares are moving to the downside. we should point out shares are down 2% off their lows and down 16% year-to-date, a stock we

will be watching we'll have that and more coming up here on the break after squallly keep it right here see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

let's get over to the cme for rick santelli and the santelli exchange rick >> thank you there's a lot of things going on these days that merit talking about, especially as they accelerate going into year end, and what i'm specifically talking about is how the long end of the sovereign rate market globally has changed you know it used to be that the q to the

relative value trade was mostly buyers because central banks were promotingthe type of policies, of course, that brought rates down through much of their own activity to try to create the wealth effect in the equity markets well, things are changing. relative value trade has many more characters in it, tax reform our federal reserve bring out the mop. grant, there's still a lot of puddles around and the balance sheets are big and they have raised rates and indeed they have started the taper europe is further behind, although in 2018 they will troy to reduce the balance sheet, but the long and the shore of it is that we've all been looking for the critical mass to flip meaning many look at the long end of our market ant say how could treasuries be lower on the year with the stock market doing what it is investors obviously must not be buying into the motion that there's better growth in the u.s. and better growth globally.

it must be that they think we'll continue to stagnate after a couple of quarters even though that still could be the case, i don't think based on my observations that it is now, this doesn't mean that everything is going to flip and that sellers are going to reach a point where activity, other countries competing to lower their taxes to compete with us, other central banks being forced to reverse course because of our central bank, and that spiral in my opinion will grow and it is a growth spiral, but in the end we have made a change bund yields popped over 40 on the long end they are now under 68 basis points in the shots which is a two year instrument, and, of course, the bank of japan i'm sure is paying close attention, but in the final analysis it's going to be fits and starts but you certainly want to look at the possibility of closing the year out on traits at maybe a five or six-month high yield which will mean 260 to 263, the high established in march of

this year. carl, back to you. >> all right, rick, talk to you in a by the. meantime, we'll keep our eye on the floor of the house ahead of that final vote on tax reform which we expect sometime in the next hour. cally is back after this ♪

feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow.

live shot of the house floral they passed the tax bill 227-203 the first time we expect a similar vote this time the president son the tape saying congress needs to fund the border wall and may visit some border wall prototypes very soon let's get to the judge and "the half." >> and welcome to "the halftime report i'm scott wapner, the will markets, your money and the most sweeping tax plan in three decades. with us for the how, jim lebenthal, and rich sappersteen is back, the c.o.o. of baron's top financial advisers that tax planis expected to reach the finish line and the house could be voting momentarily. you just saw a live picture there of kevin brady on the floor. we'll keep our eye on that involvement of course, it's a procedural