blue i actually saw that he's glad they are doing that. redesigning passport and will have updated super strength carbonate material ed, thanks for being here today. >> it's always fun >> i took the jacket off like i did. >> you've got to do that. >> did you know we were going to in chairs? >> i didn't know about this. >> you look pretty good in them jeans. jeans, yes, you know -- >> happy holidays. merry christmas and happy new year >> good friday morning, welcome to "squawk on the street." mike santoli at the new york stock exchange cramer is off today. futures steady as congress

passes a short term funding bill bitcoin is cratering this morning and it's the final session before a three-day weekend. look for news dumps, europe is mixed and durable and consumer income a slight miss more data come in an an hour bitcoin down for first week since 2013 as goldman sachs throws its hat into the crypto ring. >> shutdown avoided in washington for now waiting for president trump and go live to d.c. for the latest. >> eric schmit stepping down for his role as executive chairman at alphabet. what that means for the company. >> bitcoin is the lead today extending this week's bearish run hitting a record high on sunday the crypto currency tumbled sharply in asia and wiping out a fourth of the market value in a 24-hour span 12.5 is the price people are looking at for the week you're looking at 30% drawdown as our friend josh

brown stepped in. >> doesn't get you back to thanksgiving it was about 8,000 when it really started to lift off in late november, early december. should have had so many people who get in on the ramp higher as it went vertical and tremendous amount of the activity happened there. you have a lot of people trapped up there that's why the parabolic moves tend to unwind pretty fast you have that kind of green investors in there and maybe they don't have the fortitude. that's also by the way why it's been crazy to be talking about the market cap of bitcoin. it was this weird snapshot based on the person to trade a fraction on the bitcoin, wasn't about fractionalizing anything. >> harvey pitt, along with charlie munger had comments as well this is what pitt said about bitcoin on fast money last night. the problem we're seeing here is that people are investing in things that they don't

understand and they also are making investment judgments not based on the merits of what's being offered but rather because everyone else is investing in it and price seals to be going up. >> interesting debate what kind of money, whether this is true, fast, internet money or whether now as we see reports that goldman may put together a tradingdesk by summer, whether this is real, institutional. >> obviously it's a blend. it's so heavily owned by the earlier adopters and speculators and people that believe in the technology, they are never going to sell. there's tens of billions of dollars that was never going to be part of the supply because they thinks it's a long term supply of money. for goldman, they are responding to something that's moving we're in a nine vix world, traditional financial assets aren't moving around and people aren't trading them as much.

seems like early days for something here i don't know if it will turn into much. >> and the exchanges, yeah. >> which is why we have this narrative of commodities traders or other kinds of traders with no volatility in their own world who are used to and well versed in dealing with volatility jumping in. >> those charts look familiar to a commodity trader, right? it does seem as if it's that kind of boom bust and the rush to retail and rest of it it's really hard i keep saying there's no right or wrong price for it. no right or wrong price just because it's based on adoption and enthusiasm, you know, and the benefits down the road are down the road. you just don't know how they are going to play out. >> i try to take the conversation to blockchain because bitcoin is such a mystery. blockchain seems like it could be something that will be a significant technology if you want forlack of a better term. that said, we've also been watching a number of these stocks you've been seeing them too.

they are very small cap. don't even need to pick them up. long island iced tea, which became long block chain, be careful. every one of these is straight up, straight up the moves are incredible the market caps are all around 80 million, except the one suspended. >> 23 before it changed its name. >> right, exactly. >> and it's dangerous. people should be very much aware of it. there's not much there there. >> i remember -- >> talking about this stuff as if it's not new. >> of course it's not new. there are certain things reminiscent of the dot com boom whether it's k tell or -- he mentioned it yesterday. >> it was always this intersection. >> we mentioned it a couple of weeks ago, but those moves are somewhat -- then remember that refrigeration company that b-- i keep for getting the name the refrigeration company that changed its name to something

internet related and it's long gone most of these would be long gone too. >> there's always an intersection with the penny stock promotion world, where you have some kind of listed company that you can use as a vehicle to capture the whip end of the enthusiasm. >> we'll track it later on this morning as well. congress is going home for the holidays after passing a short term spending bill the watch is on to see if the president is going to sign the tax reform bill into law we'll turn to kayla. >> reporter: the president has to sign the short term spending bill first it includes the waiver that allows the deficit to increase and then the tax bill can become law once he signs it then the shorlt term spending package was the last major move of the section for congress. it cleared the house with 231 votes and senate with 56, including democrats after rand paul challenged his republican colleagues not to continue leaving the national debt unchecked.

>> are there any senators in the chamber? >> we'll spend more on interest than national defense and more on interest than welfare and everything else. those who say we have to have more money, got to have more money for welfare, you're going to have none of that if you keep spending at this rate. >> not the only opposition to various pieces of the package. the senate didn't consider an $81 billion disaster relief package for wildfires in california and continued hurricane recovery efforts because of disagreements over its size and allocation. instead that will be considered in the new year. that adds to an already crowded legislative calendar demands are stacking up. by january 19th, congress must now reach a long term spending deal and compromise with democrats over raising caps on defense spending leader mitch mccome also promise the he'll stabilize health care markets.

and said there will be to be a bipartisan fix for entitlement spending on top of that the white house said it will unveil the program in january and impact of high level departures from the trump administration, notably the deputy chief of staff and deputy directly of the national economic council who served as gary cohn's number two, those will be felt as those try to move into the post tax reform chapter in the new year. >> in that chapter, the president did say at some point for the good of the country we'll start working with democrats in a bipartisan fashion and infrastructure will be the perfect place to start. >> there are some talks among top administration advisers about meetings taking place in early january to get their ducks in a row to put this plan together the big question is how you'll pay for it because after you increase the deficit by this very expensive tax reform bill which was a very clear republican priority, the

question among many republicans now will be how do you find the money for that you have all of the fiscal hawks and freedom caucus and people like rand paul scratching their heads where the pay for instructure come from rather we'll see what happens but leader mcconnell said in an npr interview, he does hope that 2018 sees a more bipartisan atmosphere in washington >> what a finish to this year. that's for sure. we'll talk to you later on this morning. >> google parent alphabet announcing that eric schmit is stepping down as executive chairman he'll assume the role of technical adviser in january and will remain a member of the board. a lot has been written about this today, including the fact that he came on when this company still had just a few hundred employees. imagine that >> 16 years or more at this point? >> it's kinds of an amazing thing, it's been in recent years, the more of the outside

adviser running the board of directors even the executive chairman was a title, not as much of a day to day at least from a wall street perspective, this snts necessarily a jarring shift no that they've restructured into the holding company and it seems there's a cfo that everyone loves and its operationally in order. >> larry page has been running the company for some time. remember when schmit stepped down, no more adult supervision needed he was brought in for that in the very early days as you say, carl but they may need that ambassador type person because certainly when investors do focus on the risks for alphabet's business, it is regulatory to a certain extent we talked a lot about this yesterday, europe leading the charge there, whether it's privacy or any other concerns. there are no investors here who won't list that as one of the top risks if you want to call it that given the underlying business is as strong as ever in terms of

dominance along with facebook in terms of the digital ad market. >> papa john's john snad eer is stepping down. we'll see if friday afternoon brings more changes before a holiday weekend. >> it wouldn't be surprising i guess. >> you want to bury news, 5:00 today, good time to do it. maybe 5:30. >> 4:00 to 5:00. >> closing bell. >> santelli is gone at 5:00. after that. >> the face of papa john stepping down after his controversial remarks about the nfl. looking at the premarket, the dow did avoid the first three-day losing streak in a few months, savings rate today a decade low 2.9 decade low 2.9 "squawk on the well, it's earnings season

decade low 2.9 "squawk on the once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? in a moment. 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.

john schnader is sftepping down he'll be replaced with steve

richie a notable backlash after he criticized nfl leerdship saying the controversy hurt the company's business it was a little jarring to see a company so closely associated with the sport be so critical of the rules. >> there was one more distraction you have to imagine if the company was kind of in a mode where it was growing nicely, the stock was doing well, everything else was fine. maybe it doesn't create the sense that you have to make a change very long time executives have been there and the company now succeeding and the stock is down 40% in the last year a lot of the street commentary on this, fine, this is a decent transition but the company still has to invest heavily. they are playing catchup to dominos is the idea. plus, the price war is in delivering pizza are brultal and not going away. >> i'm looking at the one year comparison against dpz, which is up 18% papa john is down 30 plus.

how is the pizza any good never had it. >> you're not going to comment. >> we're going to talk about in this case knike a little later. >> i'm not sure what the stocks trade on is the quality of the pizza. we'll talk nike earnings in a little bit we have this looming shadow of controversy surrounding -- there's the chart by chart over the corporate results nike is a little bit more complicated regarding price competition in north america margins sgna which we'll get to later today. >> when it comes to nike, it's one of those -- it's back up to where it traded two years ago and now it's what's next that's a different kind of question. >> when we come back this morning, nike shares are soaring. we'll look at the challenges and what may be ahead for the stock. another look at the futures and more squawk on the street from more s[ keyboard clacking ]rom

[ click ] [ keyboard clacking ] [ clacking continues ] 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.

their leadership is instinctive. we're bullish on the future. they're experts in things you haven't heard of - researchers of technologies that one day, you will. some call them the best of the best. some call them veterans. we call them our team. ♪ traders -- they're always looking for advantages. the smart ones look to fidelity to find them. we give you research and data-visualization tools to help identify potential opportunities. so, you can do it this way... or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just $4.95 per online u.s. equity trade.

fidelity. open an account today. ♪ the famous work by george ballentine for the opening bell. in the meantime, nike has lowered the premarket as investors focusing on a drop in gross margins, mark parker expressed confidence in the company's direction on last

night's conference call. >> the anl lthletic marketplace continues to shift, we're confident in the business we control. so through our consumer direct offense, which identifying which opportunities have the most upside we're overindexing in those areas to compensate for growth. >> senior retail analyst at bar clay's, it's good to have you back welcome. >> margins down, 120 basis points in north america. is north america been reset or not. >> the story was never about this quarter the story was about the spring, the upcoming spring and in this case knike talked about that more innovation in the pipeline they'll scale into than in history. the management is very bullish on the quarterly call. while the earnings themselves beat a little bit, gross margin was a little weak.

still outperform expectations, decline of 170 basis points. so they are on the path to recovery so we should see real acceleration when we get into the spring >> you had this three month sprint in the stock and mid-60s again, and back where it was two years ago in terms of stock price. did that build in for next year? i wonder about the reaction today and whether people are reassessing how fast they can have a payoff? >> i think that people understand longer term nike -- this is the time to buy nike those expectations maybe got elevated in the sense of people piling into the stock before the quarter. this quarter again was never supposed to be the inflection point. while the results themselves were an improvement, they probably weren't enough of an improvement to justify the meaning outperformance of the stock over the last month relative to the s&p 500 and other retail stocks. that being said, i think that

for longer term shareholders, the ones that have more of a two-year or three-year view, investors who buy on the weakness will likely be well rewarded. >> some argue about sgna marketing spend going into the new year is the fight with adidas getting more intense or less intense. >> it's irnteresting that you sa that, nike called out more new models that ever before. they kept talking about shoe after shoe after shoe that's coming down the pipeline over the next six months. adidas, we only hear about one or two shoes down the pipeline i think the competition as you said, the intensity of how nike is looking at this, is intensifying because nike has something finally to say so they are starting to put marketing dollars behind it and starting to spend on that i think we're going to see really good results as we get to the next couple of quarters. >> what's the picture on china

overall? >> china was strong. very bullish there but china is strong for many reasons, one is a basketball focused country and nike is dominant in market share. the chinese government is incentivizing people to work out and train. that's a huge push by the government that nike fits because of the products they sell. >> any disruption to the supply chain meaning what happened we saw with sporting goods earlier this year, sports authority, is all of that wash out >> i think so. we have a little residual effect a little more residual effect in the january/february but as we get to the march/april, i don't think you're going to see offplis selling, if you're looking to get nike shoes on a discount you probably should be buying them right now i don't think you'll see that in the next couple of quarters.

>> are we seeing any takeaway s from that amazon deal? >> it's interesting you say that they are going to start accelerating the partnership with amazon. clearly nike sees some value there and from an initial -- they've only been with amazon six months now and clearly that i have seen enough to increase the partnership with the distribution channel. >> the way you set up the approach to adidas, new models, innovation, performance orientation. it's not going to be fashion are they justified in thinking that that's a turn in the market >> i think that a couple of things here. nike does have a lot of fashion products adidas has been fun with its significant shoes from back in the day, stan smith, superstar, models like that, the samba, nike has the same thing. there's a lot of iconic shoes in nike saes catalog that they can reiterate. the air force one is a very good

example that continues to perform extremely well for them. don't forget about brand jordan. a brand that has so much opportunity and for the all-star game coming up next year, they are going to launch the very first russell westbrook shoe very first model of that at the allstar game that's going to be a brand jordan event you'll see that coming back in a meaningful way. >> i'm happy you'll see what price action looks like after the bell thanks. >> good to see you >> when we come back, the opening bell just a few minutes away don't go away.

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

as we head into retirement. it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife. you're waufing cnbc, squawk on street live from the financial capital of the world the opening bell in 90 seconds no half day for stocks today because christmas eve is sunday night. so we'll have a full day, a lot going on congress passions the short term funding bill we'll see if they sign the bill later this morning

bitcoin is in focus, separatists have a surprise win in catalonia but like much of the year, mike, markets -- small dent in the euro but not much more than that. >> at least markets are shaken -- spain is 1%, beyond that it's not something -- i think the market feels it has callouss against much of thing, whether justified or not or just kind of that's the character of this particular year it's hard to say we throw a lot of times the santa claus rally term today is the technically the beginning of this period it's not so much that it's always up, because it's been down a couple of times in the last few years, if it doesn't end up being positive, the almanac said that's a somewhat beari isish o men? >> it's a tendency. >> we'll watch that. yields in focus as well. goldman is out with a call saying 3% on the benchmark on

the end of 18. tweeting about the three-year, knocking on 2% which he argues is a big pivot from june of '09. >> we started to talk about how the dividend year is higher than the 10-year now it's lower than -- that's -- >> there's the opening bell at the big board. as we said earlier, dancers from the new york city ballel production of the nutcracker buyers and sellers of preowned motorcycles and rvs. there's some corporate news today. david, qualcomm among them given their response to broadcom i love to come back to the bond market for a minute because i think it is at least to the extent it was to people to talk to they brought it up more than they might have. inflation seems to be a concern, when they are talking to the large oems and prices going up

and worries about inflation. the tax bill also then adding to growth but also to that, it's interesting set up for next year. >> it seems like the ingreed yenlt yents are all there. i guess core pce pretty much on tark target, not showing the trend change yet the long end of the treasury curve stays anchors for now. a lot of folks keep looking whether the 10-year will be up year over year it's nip and tuck right now. 2.44 is the level, which we beat two years in a row a very modest increase a multidecade chart looks like it changed. >> there's 20-year charts of the 10-year. we're bumping up on the high end of that long term -- that's why people are interested in these

levels. >> 35-year bull market turn on a dime usually. >> as far as wages go, people are starting to eye sectors where that pain would be felt first, construction wages on a six-month annualized basis up 3.4. knowing what we know about construction and if we build a border wall soon or we increase home inventory, that will change. >> restaurants and retail, everyone mentions it and you're seeing in the conference calls, they are saying little bit of the margin squeeze the upside would be if consumers are spending right now the savings you mentioned again, if i can make it up on the top line, it's not if not, it's going to be tough for the sector. >> corporations still feverishly going over the tax bill as you might expect in fine detail trying to understand the full ramifications and there are so many certainly as there always will

be, as a piece of legislation this size and given how quickly it was passed, the unintended consequences of which we don't know but i will tell you that i talked to a couple of people wondering about the expensing of entertainment which apparently is being impacted. was by the way back in '86, when reagan did away with the premartini lunch but now it may be going -- is it possible to zero when they cut back on t and e, what does that mean for your favorite sports team or luxury box owners or things of that nature that's one small example of the ways that investors are trying to start to understand what the ramifications will be. >> another small related one is companies that provide food for employees which is all of tech essentially. and it's a less generous treatment right there. you do wonder if it's going to have this little hiccups in there in terms of what it does.

>> even expensing of bonus payments by comcast or at&t whether they are done this year or next year, given you're having a far higher tax rate and the write off is more valuable as well. >> the president comments, our tax cut has taken on unexpected new source of love, big companies and corporations and showering workers with bonuses, some are trying to do the math of in the case of for instance wells fargo. how much they stand to gain in earnings power they are giving essentially 1.50 an hour raise to a small subset of their workers. >> $80 billion in net change. >> it goes in somebody's pocket. it's money into the private sector wouldn't otherwise be there. but it's not really a move in the needle in ago agree gat just yet right now. >> i thought steve leisman's reporting based on research that was done at wharton was very

interesting. because of course many of the deductions remain in place for corporations and so the 21% rate may be even lower. those are getting to be pretty small numbers. >> a lot lower by some of those items. >> expensing of equipment purchases and all of that which has kind of accelerated and cram activity into next year, it could have a dramatic impact taxwise. >> the question remains whether the market will pay up for those earnings is this going to be seen as this one time wind fall next year doesn't help your growth '19 doesn't help at all for year over year earnings growth. i think it's going to be -- >> you have one gap up. >> is it the market already. i think it was ray saying this morning most of it is already in the 10% or whatever the -- the basic savings is going to be. >> the larger point was it does live to solve his biggest care

which is massive income poe larty which is generational in spirit, hard to fix that with a $1,000 bonus, structurally it's not changed. >> it's exas an baiting it. >> bitcoin futures down, cme telling us here at cnbc, we'll keep our eye on what bit dsz co coin is doing today. munger, total insanity, avoid it like the plague in his words some things are not going to work for you you need to find out what those are and bitcoin is one of them what a headline that would be if he had a different opinion >> exactly yes. >> never sells something said this looks promising, that would be kind of interesting, yeah i do want to point to one quick mover, one of the best stocks in the s&p this morning cintas, ive-year chart, 30% an

you'llized, work uniforms. >> they make uniforms. >> they are rolling up the industry i think of it almost like the waste management of this era, business services and rolling up the industry and it's an interesting an example of the sort of stock that's been compounding at the great rate without people noticing, 30% a year down this morning after a higher print but it's up 30% an annualized. >> we dntd gdidn't get to it, pn california got crushed as a result of concerns about liability over the fires taking a look today to see if it's recovered at all. that was an ugly move down that we saw yesterday of course in that key utility there it is, just sort of hanging in there now pcg. >> that's become a standard suspicion with the fires as to what degree the spark or explosion may have started some of these things. luckily in the case of the

thomas fire, it's 60% contained. you're talking billions in potential. >> you don't see utility move down 35% plus in -- >> the stock market is telling you, rates are going higher. >> rates are going higher. it didn't help there yesterday. >> in terms of sectors that are ahead for the year, it's going to be a photo finish between home builders and casinos in terms of s&p sectors, 73% gains and semiequipment is close behind at 61%. we'll see which one can come out on top the worst oil and gas equipment reinsurance not a surprise given the season we had and auto retailing. still one of the worst areas of retail so let's get to morgan brennan on the floor and see what's moving >> carl, the dow and s&p set to close the week higher and cap off the ninth straight month of gains, right now opening the

session lower fractionally lower right now. now if you -- take a look, we had a mixed session in asia and weakness in europe as the spanish equities after the catalonia election put separatist in power. folks head out for the holiday weekend, including d.c. lawmakers with the short term spending bill last night the focus now with the president signing that bill into law, does this become a sell the news event as some traders suggested coming into the tax reform bill or do we get a so-called santa rally and mike just talked about that briefly with the stock tradersal man ak it's an iindicator in the new y. if santa claus -- bears may come nike, one of the biggest movers, that is falling despite a beat revenue declined, biggest drag on the dow today

shares of foot locker and under armour sliding as well still on pace for gains of more than 20% for this week in this day and age, can't talk about shipping without fedex and ups, opening up fractionally today. you can see that right there indicators suggesting they may handle a last minute package surge as well. dow transports have been the outperformer, up more than 2%, poised to benefit from tax reform, clocking a series of records high over the past several days we have no earnings today but at 10:00 a.m., you have consumer sentiment and new home sales and u.s. stocks are poised to end the week higher though they are fractionally lower right now david? >> okay, thank you, morgan carl mentioned this earlier involving the continued battle between broadcom and qualcomm. they also unanimously reject those directors. remember broadcom is nominated an entire slate of directors to

replace qualcomm's current board and no surprise, as you might expect, qualcomm says the directors assembled by the partner and like to bring in silver lake partners through a convertible to broadcom's bid. saying they are simply not of the caliber that qualcomm currently has on its board of directors. one of the key quotes bringing up as they will, a number of their concerns, broad come and silver lake asking qualcomm to turn over control of the company now to the hand picked broadcom, silver lake nominees based on proposal they say dra maltically undervalues, 60 of that in cash and 10 in broadcom stock it's not actionable they say due to significant regulatory uncertainty, and they point out the lack of committed financing. on the regular tri front when you talk to broadcom, they say a different thing in terms of

their belief that there are not significant overlaps in the key wireless business. and not overlaps in other parts of any other parts where they do even hit of course they have 19 product lines at broad come, qualcomm would be the 20th. the company spends too much on r&d. broadcom does spend as much as 50% of revenues on r&d not as though they are not spending that. as this moves along into mid to late january, we can expect to hear more things broadcom specific to its proposal will it actually ever get there in terms of regulatory offering insurance, i don't know. but i do expect that we will see a tender offer, potentially a raised price, largely in the stock portion but a higher price being offered. and committing financing as well this is going to be short over time the annual meeting takes place in march when you count back from that

the clock will begin ticking to do certain things including that tender offer, higher bid potentially. regulatory review starting so many of the things that qualcomm is questioning on that front the key questions for some shareholders involved are what's going to happen there. we had anticipated that nxp, qualcomm's purchase as soon as the end of the year, it looks like it's going to move into early next year. that does not really change the time line here in terms of what's the price going to be we know it's 110 we know the stock is six bucks more above that and many of the large shareholders including elliott which came out with this presentation saying at least 135. will not accept 110. qualcomm is starting that process reaching out to some holders i am told. querying them on what it would take

what is the number is it 125? where will they come with that number that remains unclear and should be a lot clearer in the early part of january and we'll be watching closely as well there's movement into the new year. >> and qualcomm shares picking up a little bit. seems like people are trying to gain that out exactly -- >> the expectation is certainly higher bid and the key -- a lot of it will come down to regulatory so many other things m and a seem to and will what conceivable assurances can they offer or what arguments can they make to ameal yor ate the real concerns on the part of share hoerholder shareholders, they'll keep coming back, you want to hand the keys to a new board which is then going to see and management will leave and see what happens and we could end up with an independent company because the deal was not approved by

regulators they don't think that's a risk worth taking, including other reasons. >> let's get to the bond pits. rick santelli what a day for data >> yeah, no, there's a litany of data guess what, i'll have more coming out shortly kind of a mixed bag today. i did like the spending number too bad income was commence sur atly higher and that's all going to change. look at one week of tens, let's look at all one-week charts and two-year note yields up five basis points 10-year yields up 13 bund yields up an even dozen and dollar index down half a percent. you can clearly see it's hugging up we're not bowing much to the 2.50 or higher by only a handful of basis points, one week ever bunds, same pattern here's something fascinating look at one week of the euro versus the dollar, it looks like other two charts, which means

it's a detriment of the next chart. not looking so good. continues to hover down about a half cent, down about 7% on the year, i'm rounding of course what's fascinating the next three charts look like the dollar index the rates are the mere index there's a lot of things going on with muny which may be related in part to the tax changes, but you see it's under pressure. hyglqd very similar. granted the spreads aren't behaving badly look at the things in the paper today that we have discussed and we'll discuss with peter church later on today dell computer, it's going to be the time of equity, not debt is that a good thing, bad thing. it's a different thing for dell. moving forward, maybe it won't have the same consequences,

we're going to continue to monitor everything going on. should this market in its thin environment start to trade much about 2.51, 2.52, the thinness could drive it quickly back to you. >> we'll see you in a few minutes for more numbers rick santelli, unhappy holidays for companies whose stocks missed out. we'll look at the names we're talking about. talking about. dow down the great emperor penguin migration. talking about. dow down trekking a hundred miles inland in just a moment this time next year, we're gonna be sitting on an egg. i think we're getting close! make a u-turn... u-turn? recalculating... man, we are never gonna breed. just give it a second. you will arrive in 92 days. nah, nuh-uh. nope, nope, nope. you know who i'm gonna follow? my instincts. as long as gps can still get you lost,

you can count on geico saving folks money. i'm breeding, man. fifteen minutes could save you fifteen percent or more on car insurance. i thyou never got the brakes looked at?l... oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back?

get ready, because we're helping leading companies see it- and see it through-with digital. i just finished months of chemo. but i don't want to talk about months. i want to talk about years. treatments have gotten better, so... i'm hoping for good years ahead. that's thanks to research funded by the american cancer society. the same folks giving me free rides to treatment, insurance advice,and a place to stay during chemo. i need that stuff like you don't know. and now that you do, please give at cancer.org looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country.

discover how we can help find your unlock. about this holiday season thanks to this year's record setting rally but a number of stocks have missed out on the run-up. we're looking at the land of misfit stocks. >> if you look at the sectors who have set record highs or multi-year highs in the course of this year, we have a handful

and we're going to focus on three in particular. first of all in the industrial sector, there are a lot of names out there that have underperformed, the overall sector, but these in particular have been some of the worst. alaska airlines, a beleaguered airline group. down 16% acutety brands off 25%, and general electric, which has lost nearly half of its value over the course of this year to date period another one to look at here is the consumer staples side of things miller coors on the brewer side down 17% a misfit stock campbells on the consumer staples side down 19%, and kroger down 20%, all despite the fact kroger made a new high this year and the discretionary side of the retail front signet jewelries off 41% mattel, the toy maker, 43% dothe downside, and under armour shares among the worst performers as we look at the sectors that have hit record high levels and the stocks that have

underperformed, the question is whether there's a boubs off the low levels or whether the trends to the down side stay in place >> good stuck. interesting, especially since consumer discretionary hasn't been a losing sector overall >> it hasn't largely thanks to amazon and such that's not exactly traditional retail we'll see a lot of shakeup in the sector stuff when s&p does change also, dom mentioned consumer staples has made a new high. that's largely thanks to walmart. you kind of have to look below the surface, but yeah, retail, energy, and some of those selected consumer brands have been pretty rough. >> i think you've had almost a quarter of all s&p stocks at some point recently were negative year to date. it's been a real bifurcated market >> you have mentioned that before when we come back, we're staying on top of bitcoin as the week-long slide accelerates at 30-plus percent in the past few days meanwhile, dow down 30 points.

we're back in just a moment.

bitcoin is a story this morning, limit down in the front month contract at the cme this

morning. charlie, great chart watcher, has a table of major corrections going back to 2010 and you're talking drawdowns of 85%, 72%, 94%. so it's mild by history, but with a lot more players involved >> and with a lot more actual money at stake because you had all these late adopters paying those high price chart work has actually been effective on bitcoin you can't really do a good near term fundamental story, but that would get you down below $10,000, at $10,000, if you want to see when it might get washed out before the vertical move started. >> this is global in nature. a lot of action taking place off the shores of our country, in china, for example, where it may be more difficult to understand the motivations between buying or selling >> not just a u.s. story >> i can't claim to understand the motivations either >> we come back, the retail rush is under way, but will big holiday windows brighten what

could be a bleak retail season we'll discuss with jim stewart when "squawk on the street" continues. [ 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. ♪ music plays throughout) let out your inner child at the lexus december to remember sales event. lease the 2017 is turbo for $299 a month for 36 months. experience amazing at your lexus dealer.

yes or no?gin. do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with michelle cariceo cabrera and david faber at post nine of the talk exchange. market down about 12 point on the dow. busy morning consumer spending and income, durables, and we're going to rick santelli for more numbers rick >> absolutely. now, we have our final read. final read, on university of michigan sentiment, and our mid-month read was 96.8, which is a bit higher than our final read at 95.9 it is a bit of a disappointment. lower sequentially, a point and a half, maybe two points loeter than some expected, but it comes back to the lowest since september because the numbers have been running so high. that 96.8 is gone now. if you look at the last solid month, that was 98.5, the november final

that gives you an idea of what's going on quickly, one-year inflation, 2.7. one tenth hotter that the med-month look the five to ten-year inflation at 2.4, also one tenth lighter let's go to november new home sales. i'm glad i could give you the last number before the holidays is a good one because this is good one 733,000 seasonally adjusted annualized units that's not too bad it's up, i'm just guessing, but i would say 17%, 18% that's pretty solid. now, the personal who's always solid for going and digging deeper and telling me exactly the issue with the number, of course, is diana olick let's head east to talk to diana. >> well, you're right, rick. 17.5%. what a jump in november to 733,000 units annualized that is a huge jump. well beyond expectations because we did see a jump in october this is november reading remember, november existing home sales represent closings, but

newly built home sales are counted as signed contracts, which means people actually out shopping in november could this be a bump from folks maybe wanting to get in before they saw that tax bill, which would cut some of their deductions possibly but we also saw prices increase. $318,700, the median price of a newly built home ennovember. that's up from $315,000 a year ago and down to a 4.6 month supply a big jump in existing home sales, now a big jump in new home sales seems to be that toward the end of the year, people are finally jumping in, getting whatever inventory is available but it's a nice sign moving into 2018, again, concerns over the tax cut bill taking away some of those deductions for homeowners, but we'll see how that plays out in 2018. rounding out 2017 very nicely. back to you guys >> biggest number since '07 on new homes. thank you so much, diana olick. >> road map begins with crisis averted for now. lawmakers strike a last-minute

deal to avoid a government shutdown how the markets are reacting >> plus, the final retail push as christmas is just two days away we'll look at the winners and losers this holiday season >> and bitcoin's big drop. the bears amerging from hibernation as cryptocurrency drops below $12,000. we'll break down why straight ahead. first, political news to get to lawmakers striking a last-minute deal to avert a government shutdown the house and senate passing a temporary spending measure which will keep the government funded until january 19th congress now done for the year they return to work in january >> big market story today is not equities but bitcoin no matter what exchange you're looking at, the cryptocurrency sinking deeper into bear market territory. down 24% in the last 24 hours alo alone. triggering some trading halts at the cme and cboe joining us, jpmorgan strategist,

and jeffrey kleintop i don't know if you want to discuss bitcoin or not, but it has become part of the institutional discussion, has it not? >> it has, but i think the price action you're seeing today is a testament to the fact the market is still very young. there's still a lot of volatility involved. if you look at the bitcoin market, it's four tenths of a percent. it's still small still some room before it becomes widely adopted >> what is the standing answer to clients who have interest in it what do you say? >> bitcoin to me represents an investment as opposed to a currency economics tell us currencies can be exchanged easily for goods and services if you try to spend bitcoin in manhattan in the course of a week, you moibl have trouble do that to your point, becoming part of the institutional way. >> jeffrey, are you getting inquiries or not >> everywhere i go from the midwest to the southwest, everywhere across the u.s., people are asking.

one of the things they're most worried about is it a bubble, and also, what happens to the economy if that bubble would burst? and certainly, those fears are evident today, to some degree. the difference between the bitcoin call it a bubble or crash and the housing crash is one, there's not leverage in the buyers the same way banks were leveleraged in the subprocedure market and housing was people's biggest asset, and three, it's not become embedded in the economic system the way housing made up a big part of the economy. very different, a bitcoin crash, in terms of the fallout on the traditional markets than what we saw with housing >> what do you think is going to happen in 2018 do you stay in the, mat or not. >> there's still room for this to run the better economic momentum will be carried into 2018. you pour fiscal stimulus on top of that and we're looking at a growth rate around 3%. from a market standpoint, we're

looking for continued profit growth on our own estimates, the fact the tax bill is now done and going to be implemented on the corporate side in 2018 helps >> there's a growing consensus from the bullish houses on the street, 3,000 for the s&p 500. are you there? >> assigning price targets is a fool's errand, but we see furlth upside, and more upside before tax reform was signed. we're cautiously optimistic but we're watching the warning signs, namely interest rates >> jeffrey, what do you think for the s&p 500 in 2018? are you there at 3,000 >> i think he said it very, very well picking price targets is kind of a joke >> all right you're passing the buck. >> no, look, i do think we'll see a good year. here's the thing, we all know what happens when the yield curve inverts. it's been an infallible symbol

to the bear market but in the year before the yield curve inverts, stocks tend to go up double digits that's 50 years worth of history. so that's a good sign for 2018 plus, international stocks tend to outperform u.s. stocks during that year by quite a significant margin, so stay invested and go global in 2018 >> jeff, you concerned at all about a rise in inflation bringing yields higher than we might have anticipated or the fed becoming more aggressive you kind of seem like you just said there's going to be a recession and when, back half of '19? based on the inverted yield curve. >> possibly. we could see something like that if we do see a rise in inflation, i think the fed will be cautious. markets pricing in two rate hikes. the fed thinks it will do three. i think we'll probably see something along those lines. inflation is trending higher but not getting out of control a much sharper rise in the pace of inflation causing the fed to be more reactive could invert the yield curve more early, and we'll keep an eye on for that,

but still, it looks like a 2019 inversion and a recession a year and a half or so away. >> what would you be watching to perhaps be the thing to change your bullish view? >> i'm going to watch any repricing in interest rate expectations i tend to be more in your camp i think there is inflationary pressure i think favorable base effects are going to boost inflation, and coupled with further tightening in the labor market is going to lead the fed to act more in the forecasts they have laid out any sharp repricing in rate expectations gets us the 10% correction that everybody has been looking for, and as inflation moves higher into 2019, we'll start to take some chips off the table. >> do you like a target on the ten-year >> i think we can get up to 3% by the end of next year. we're sitting at 250 with a week to go, so another 50 basis points higher seems reasonable >> does that provide competition to stocks? >> at 3%, you're stating to get there, between 3.25% and 3.5% is

the range at which equities come under pressure the reason is two-fold one, statistically, that's what the equation tells us. more importantly, people say fair value for the ten-year should be equivalent to nominal gdp. nominal gdp has averaged 3.25% on average in the course of this expansion. real returns for investors are north of 1%, and that gets you to rethink your asset allocation >> the impact on households? we have been watching credit card balances. we know what a quarter point does to someone with a $5,000 rolling credit any worries about that look at the savings rate today, 2.9. >> yeah, pretty low. i think the key is wages you're not going to get inflation if you don't get wages to rise along with that. we are starting to see this, there is this relationship between the unemployment rate and wage growth. and most parts of the world, including europe, i think we will see more wage growth. hopefully that will offset some

of the higher cost for credit in households in 2018 >> really quickly, president just tweeting a few moments ago, will be signing the biggest ever tax cut and reform bill in 30 minutes in the oval office we'll be signing a much needed $4 billion missile defense bill. some of the guidance we have been getting is that this will be perhaps a private signing we don't know, but there will be larger event celebrating the bill in early january. >> wouldn't be surprised to hear that the press would not like it to be a private event. we the press, that's us, it's the biggest tax bill in 30 years. he's been crowing about it why not sign it so we can all see it and show it on television. it's what we do. >> david, jeff, happy holidays thanks again >> same to you >> thank you in corporate news, alphabet's executive chairman is stepping down. our josh lipton joins us from san francisco with more on that story. josh >> david, it's the end of an era at alphabet. eric schmidt announcing he's stepping down from his role as executive chairman at the

company in january he will now be transitioning to what is being described here as a technical adviser but he'll continue to serve on the board i'm told, guys, this transition has been in the works for about a year schmidt did take to twitter this morning saying after ten years as ceo and seven as executive chairman, i can't wait to dive in to the latest in science, technology, and philanthropy, i look forward to working with larry andsergei on our future here at alphabet schmidt joined google in 2001 as ceo when that was a scrappy search engine. took the company public in '04 and helped scale the business into the true tech giant it is today. alphabet's reach now extends well beyond the bread and butter search business into smart phones and video and cloud computing. schmidt's life outside the office has been colorful and controversial. he reportedly had romantic relationships with several women while still maintaining his

longtime marriage to wife wendy. now attention does during to who is going to be who is alphabet's next executive chairman. one potential candidate is john hennessey. >> josh, thank you very much that's big news in tech today. when we come back, the retail rush is on. two days of shopping left until christmas. we'll tell you which retailers are ready and which ones are not. >> look at shares of nike, one of the worst performers on the dow despite an earnings beat we'll talk about what's spooking investors. dow is down 20 ♪ a wealth of opportunities. that's the clarity you get from fidelity wealth management. straightforward advice, tailored recommendations, tax-efficient investing strategies, and a dedicated advisor to help you grow and protect your wealth. fidelity wealth management.

it's the final countdown christmas just two days away malls bracing for last-minute shoppers courtney reagan is there live from the queens mall >> a lot of people here already, but just wait because tomorrow is really the big day. especially with christmas falling on a monday. stores becoming even bigger part of the equation. shopper track expects tomorrow, which is dubbed super saturday, will be the second busiest day of the season for stores behind black friday they expect 126 million americans to hit the stores. that is half of the country. and believe it or not, that's actually down from last year because so much shopping was done early in the season with the early black friday sales both online and in stores. and you can see the strength in the spending with some fresh

data we got from first data. this is based on actual point of sale transactions. look at the categories overall, 6.6% growth from november 1st to december 18th, with electronics higher by 12% building materials up by 8%. specialty retail up almost 8%. that's something we should pay attention to home, home furnishing has been strong paper jeffrey is also updating its holiday growth forecast. they said they asked the same questions and shoppers spending intentions has actually only gotten stronger. the weather has been favorable, and they point to a lot of opportunity in this last weekend for stores but if you still have to check off your list and you don't really feel like braving the crowds, there are hybrid options. we talked a lot about the order online, pick up in stores. target says about half of the online orders are picked up in stores in the final days to christmas. i was at macy's, and i counted

nine people in line for the order online four cashiers were open and serving customers already. there's action, if that's something you're interested in you want to come to the mall because you have to, but you don't really want to go through the digging yourself, you can have a retailer do it for you in advance. back to you. >> thanks for that how-to for all those procrastinators. >> shares of nike are down investors focusing on a drop in the company's gross margins. even with today's decline, the stock is up more than 23% year to date. for more on nike, let's bring in scott, senior equity analyst at buckingham group gross margins are down because they're spending a lot of money, right? >> it's getting better gross margins were down almost 200 basis points last quarter and almost all of the decline this quarter can be attributed to fx. you're going to see that inflict positively, ultimately, the

stronger euro, the stronger pound will begin to benefit the dnl. >> why is the stock doing what it's doing today >> number one, it's run up really well into holiday they hosted an analyst day in october, and laid out their case for innovation, laid out their case for why they are still the dominant player. and the stock has gone from 51 to the mid-60s they put out squishy q3 guidance investors aren't on board with the north american inflection. >> for people not familiar with the nike story, let's talk about the north american inflection. north american has been a dud, international has been stud. the cfo says don't worry, 2018 is the inflection, and 2019, north america returns to growth. do you buy that? is he right? or is it too late? were they looking for more, analysts >> honestly, i think we're now at the point where is adidas

going to become, you know, a dominant player in athletic footwear that question is now becoming a little bit muted i think when you talk to the retailers, they think that there's more product innovation coming from nike over the next 12 months than adidas. that hasn't happened for the last two years when nike says we're going to grow in north america in the fourth quarter, we tend to believe it >> do you see a breakout in the $15 range it's been in for two years? are we back to the years prior to 2015? >> yeah, so what we have seen is sales have slowed from a high single digit, low double digit top line trend to low to mid single digits. and the multiples come down along with that. so i think if you actually see this inflection in north america in the fourth quarter, this is a stock that's traded at 30 times earnings before. if it's growing double digits on a $30 billion base, that's a very impressive growth algorithm

for anybody. we think in the next six to nine months, we'll talk about this being an $85 to $100 stock >> we had a discussion earlier about the pipeline and the product introductions they have made are we in harvest time, so to speak, all these shoes coming to market >> so it's nice to have something to talk about. six to nine months ago, we didn't have this to talk about october, the investor day, that was a big inflection management, they're not the most investor friendly team and they went out of their way in october to really show to investors that the next 12 months from a product standpoint is going to be something special. >> what about the tax bill how much of a cut to tax rate, 13%, but will it go even lower as steve liesman reported yesterday, it could be 9% as a result of this bill. >> so where they're going to get hit, they're going to get hit on the tax. they pay below a 10% tax rate outside the u.s., and there is a provision where international low tax income is going to be

taxed at 10.5% >> one time, and then they can do whatever the heck they want with it. >> and you bring back the cash overseas, you buy back stock, and they said last night it's going to be an earnings positive event. >> the tax reform bill >> yeah. >> okay. did they say by how much >> they did not quantify it. look, we have done a lot of analysis at buckingham we put out a report across retail the guys you hear the most about are the domestic retailers with high tax rates when you have guys parking billions overseas and they can bring it back, you know, it's going to be a boon for everyone. >> one last question on the amazon partnership getting bigger, happy so far i mean, all the concerns about how your brand is portrayed on that website gone? >> happy so far. look, we view amazon as a hedge against the future of brick and mortar retail, right nike sells a lot of shoes to kohl's to jcpenneys and famous foot wear and these stores where they in two or three years

decide they have to close half their doors, they have this partnership in place with amazon and they're one of the few where they dictate terms >> thank you when we come back this morning, a lot still to come as we watch the markets in a narrow range. a lot more on retail two days until christmas, and this weekend, saturday, is the second biggest day after black friday will it be enough to lure shoppers to stores we'll talk about that with jim stewa stewart. take a look at bitcoin, too. the contract did go limit down back in a minute square block. this is a diamond tracked on a blockchain -ock. protected against fraud, theft and trafficking. this is a financial transaction secure from hacks and threats others can't see. this is a patient's medical history made secure - while still available to their doctor at their fingertips. this is an asteroid live-streamed

to millions of viewers from 220 miles above earth. this is ai trained by experts in 20 industries. your industry. hello. this is not the cloud you know. this is the ibm cloud. designed for your data. ai ready. secure to the core. ♪ ♪ the ibm cloud is the cloud for business. yours. ♪ ♪

♪ for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts, over the course of the week, to about 10 pounds of carbon dioxide. growth is good, but when it starts impacting our quality of air and quality of life, that's a problem. so forward-thinking cities like sacramento are investing in streets that are smarter and greener. the solution was right under our feet. asphalt. or to be more precise, intelligent asphalt. by embedding sensors into the pavement, as well as installing cameras on traffic lights, we will be able to analyze the flow of traffic. that data runs across our network and we use it to optimize the timing of lights, so that traffic flows easier and travel times are shorter. who knew asphalt could help save the environment?

despite the online boost for retail this holiday season, many traditional retailers continue to face pressure is this seismic shift in the shopping experience signaling the decline of the department store? for more, we're joined by jim stewart, "new york times" pulitzer prize winning columnist. good to see you, jim on a topic we don't talk with you a lot about. >> i wanted to do a holiday themed piece this week i was looking at the holiday traditions and the store windows. it kind of reminded me how much of what we consider a traditional christmas grew out

of the department stores the santa claus visits, the windows, the singing, the special attractions. that was all, you know, none of it had any overt commercial purpose. they weren't -- one thing i loved about the windows is they were pure fantasy. no products in there they were just meant to, you know, excite the imagination of children certainly worked on me when i was a kid. and i loved them so i went around this week, and now i see, you know, lord and taylor selling their flagship store, sure, that got me worried. i always loved the lord and taylor windows their parent company hbs also owned saks they have a big window display they assure me they're going to keep going already, you can see the trend starting they're co-branded with the hallmark channel, and saks is a big disney promotion when i checked into that, it's like a slippery slope.

>> like native advertising >> the destination may be the nordstrom rack, which just opened at herald square. as i say there, under the glaring flourensant lights, it could be january there wasn't a single bulb to be seen >> a corollary for the retail sector >> the nordstrom rack has been propping the company up, nordstrom a traditional high-end retailer everybody i talked to said this season is looking pretty good. we have strong consumer spending they may get a bump. the stock is really down this year in an otherwise strong market but the trends are all there and, you know, for people who love this holiday tradition, there's going to be a lot of pressure to cut those costs. but one thing i do wonder, part of the decline was, of course, the decline of the urban core in america as shopping destinations i see a lot of the old downtowns are being revitalized. not by the presence of big department stores maybe but once

there's a vibrant core there, i'm sort of hoping some new traditions will spring up. >> like what >> well, you know, special events that bring people together i mean, that's what the department stores did. that helped make those cores vibrant. and at the apartment complexes there now, the office complexes they're trying to develop, if they're going to succeed, they need to make these places attractive for people to want to be there, to want to live, come, eat, drink so maybe we'll see new traditions spring up >> a separate topic than what happened to the suburban mall. they had a story about mall tenants, and all these shops that at least i used to go to when i was young are now a line item on amazon's dropdown menu >> but the malls were already, you know, in severe decline when it came to any of the amenities that the old department stores offered. the malls would throw up a few token christmas decorations, but they didn't really -- they don't

really have any windows to speak of the outsides of the malls were like fortresses. nobody walked around out there and looked into the windows. >> on this day where we're maybe going to see president trump sign the tax bill, one of the sectors that stands to benefit is the retail sector, when you look at some of their -- they're some of the highest taxpayers in the country. talking to the nike analyst we had on earlier, he said they're only paying 13%. foot locker, they're paying 35%. and they're going to really benefit. >> i think that's a good point and also, to the extent that the tax reform puts some disposable income into consumer pockets, where are they going to go there's going to be a definite boost, you would think, in consumer spending. and that should benefit the retail sector significantly, and you know, it has not done well, if you're looking for a contrarian investment, certainly, that's one of the spots you might sniff around >> if you were still doing your stock selection stuff, would you be on alert for signs of

euphoria in the first half of next year? >> in the market in general? >> yeah. >> well, i have to look back and see where we are i mean, this -- i definitely feel rebalancing the stock component of their portfolios have gone from 60 to 70, 75 to 80, and they haven't really looked. i don't think now is the time to be moving out of your asset allocation sticking right to my 70/30 allocation >> so paring back if it's grown. >> and it has grown. i can't imagine that people are going to look at their allocations right now. they haven't seen a fairly significant gain in the last six months >> jim, happy holidays merry christmas. see you soon jim stewart of "the new york times. >> let's send it over to sue herera with a cnbc news update >> good morning, everyone. here's what's happening at this hour following regional elections, spain's prime minister says he

is willing to talk with catalan leaders as long as they don't violate spain's constitution a block of separatist parties retain their majority in the catalan parliament their popular party came in last, winning just three seats >> another day of rage palestinians continuing their protests of the u.s. decision to recognize jerusalem as israel's capital. they set fires in the street and threw rocks at israeli police who fired back with rubber bullets and smoke bombs. the u.s. ambassador to the vatican meeting with pope francis. she was joined by other u.s. officials including her husband, former house speaker newt gingrich the meeting took place in the apostolic palace in the vatican. >> and legendary hall of fame broadcaster dick enberg has died of a heart attack. this career spanned some 60 years working for nbc sports, cbs, and espn,s and a the primary voice of the san diego

padres he was 82 years old, and a really lovely man. that's our news update this hour michelle, back to you. >> yeah, he'll be missed thanks, sue. >> when we come back, the bitcoin bears are out. the cryptocurrency getting crushed. we'll tell you why >> holiday season is upon us take a look at the retail winners and losers coming up xt quawk on the street" will be right back don't go away. being rammed by a shopping cart. sitting in gum. and walking into a glass door. but for everyone else, there's directv. for #1 rated customer satisfaction over cable, switch to directv and for a limited time get a $100 reward card. call 1-800-directv.

the bears on bitcoin are out. the cryptocurrency plunging below the 12-k mark. seema mody joining us with more. >> incredible. michael morrow of genesis trading says what we're seeing right now is panic selling driven in part by retail investors and first-time buyer whose bought bitcoin around 10,000 and are now experiencing their first major pull pm back also warning, capacity and liquidity constraints. ongoing issues at coinbase,

which had to temporarily disable buy and sell trades overnight, has since then fixed the issue separately, strong warning from financial industry regulators still making the rounds this morning on companies touting their association with cryptocurrencies, long island tea, net element, and riot blockchain down substantially following big moves earlier this week thehope that the entrance of larger players like the cme and cbo will inject a stability into the market, but so far, volatility has not subsided. bitcoin now down over 40% from last sunday when the bitcoin futures contract went live for long-term investors, here's a silver lining. we have seen five separate 30% drops in bitcoin the average one-week gain following each decline is 20%. michelle >> we'll watch to see if that happens this time. thanks so while digital currency is plunging, retail is rising christmas just two days away

the s&p retail index outpacing the broader market in the last two months s&p 500 up 400%, while the retail higher by 1200% we're joined by the ceo of the telsy advisory group >> hi, dana. >> thank you for having me >> thanks for coming on. we have a couple data points that suggest 2018, the holiday season, will be better than the last couple years. are your channel checks pointing to the same? >> yes, i have been around the country. i even was in london earlier in the week what i'm seeing is traffic is better this year than last year. the lull between thanksgiving weekend and christmas is still a lull, but it's not as deep and also, the level of promotions is very similar to what you had last year so whether it's seasonal weather, whether it's the fact that this innovative product, check out bottoms, they're working and they drive the sale of tops, it's a better holiday season and the consumer has the ability to send.

>> i love it when bottoms are working. >> i agree >> because that means pants and skirts are selling >> yes typically, for every pair of bottoms that is sold or pants or leggings, two or three tops are sold if you get pants right, it's a higher average transaction, a better gross margin, and you sell a lot of tops >> you men understand that, right? intuitively, like, you wear pants far more often repeatedly than you do a top. >> got it. >> you get that? >> got it. >> excellent saturday, the biggest shopping day of the year? >> biggest shopping day of the year, most traffic, sense of urgency given that christmas is on a monday. today and tomorrow are key times for the holiday season and typically, 40% of holiday sales occurs between december 15th and the 25th. today and tomorrow are outliers in terms of their importance and significan significance >> in terms of the consumer's ability to spend on all this, we

have been eyeing credit card balances and the leverage of the household relative to retail sales. today, the savings rate comes in at a ten-year low. do you sense the consumer is getting overextended or not? >> no, i think there's still opportunity for the consumer look at wage increases that you have, the benefit from lower taxes that potentially is coming i think the consumer has the ability to spend there certainly is more job security today than there has been in the past few years i'm not seeing the consumer being overextended and look at the growth patterns you have seen out of the discounters. walmart is benefitting from higher traffic the low-income consumer has the opportunity to have more jobs. >> have you crunched the numbers for all the retailers and who's going to have a much more improved tax position because of the tax bill, which we think is going to get signed today? retail is famous for having one of the highest effective tax rates in the united states >> exactly retailers overall, one of the biggest sectors out there.

we did a whole sensitivity analysis of over 120 retailers and those companies that are domestic, basically, where they have higher tax rates, have the ability to have lower tax rates, and frankly, more income whether it's the gaps of the world, there certainly could be big improvement there, and some of the department stores too >> but beyond a sense of direction, can you give me a sense of magnitude are they going to go from 30 to 20, 19 to 7? anything like that >> overall, the way we're looking at it, it could be a 38% tax rate going down to around a 21% to 23% tax rate. what they do with those dollars is reinvesting in the stores which certainly would be a benefit. investing in technology and share repurchases and dividends. they'll be in a much better position >> who should you be buying right now and who should you be avoiding when it comes to the stocks in the sector >> when i think about the stocks in the sector, i would buy

phillips pbh also, vf corp. i would look at lululemon, burlington i think estee lauder, and i think the opportunities in some of the department stores if there's an improvement in some of these names that have been weak, is macy's is going to be the name where because of a better christmas season, hiring more seasonal sales help, we could see it pick up there >> i'm looking at macy's right now because their yield had gotten still close to 6% >> yeah. >> they preserve that at this point? >> well, i think take a look they just hired 7,000 more seasonal sales help. it's just a little bit that has to help -- that helps the stock price. i think in the near term, if we're having a better holiday season, it helps them too. it also helps kohl's it's also been a beneficiary of getting more active wear brands in their stores. >> thanks, dana. good to have you happy holidays >> happy holidays. >> as we go to break, take a look at papa john's. the company's founderstepping

down as ceo effective january 1. the moves come about two months after he made some controversial comments, saying that protests by nfl players during the national anthem were hurting sales. getting a check on stocks at this hour. close to session lows but that's not saying much given the muted range. down down 28 points. we'll be light back. we thought we had the right equipment, we quickly realized we needed more. we were able to send a wire transfer to a local vendor and get more solar cookers delivered, right here in death valley. manage business expenses from virtually anywhere. the chase mobile app available with business checking. chase for business. make more of what's yours. wow! record time.s. at cognizant, we're helping today's leading life sciences companies

go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. 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.

a handful of dow stocks are trading at what some may call extreme levels we'll explain why and if that makes them worth your money at tradingnation.cnbc.com more "squawk on the street" coming up.

let's head to chicago, the cme group, and check in with rick santelli. >> thanks, carl. listen, when you say we have the perfect guest for the perfect day, today is that day and that guest. peter, thanks for taking the time >> thanks, rick. >> you know, it's all about

things like yield curves and debt and high yield. let's start out with yield curves one of your recent writings, you talked about with u.s. and uk, it's been all about flat curve nervousness. but not a problem in germany, italy, and japan and i really liked when i read that because all i could think of is in order to get germany, italy, and japan into a flattening curve mode, you would need negative rates on the long run which is frightening to think about. comments, peter? >> we're finally going to see european yields tick up. less buying by the ecb, actual real growth. they might be a better growth engine than the u.s. right now i'm looking for european long end rates to push up people have been waiting for that for two years and that would be great to see. >> absolutely. i couldn't agree more. now, let's get to the heart of the matter tax reform, which is now going to get signed probably today, has had some unintended consequences already i can't think of a better example than what i was reading

in the "wall street journal" today about dell computer being able to write off some of their interest remember, they had a boat load of debt to do some acquisitions and to kind of go off on their own again. now all of a sudden they can only write off 21% is this a big issue? >> it's a reasonable issue we're calling it the up in quality trade. what you're going to see is better quality credits out perform. repatriation is going to help a lot of investment grade companies. the tax changes that disallow some of the interest deductibility will probably hit high yield companies, some of them dell, for example, they have an 8.1% coupon bond that's currently trading at 125 cents on the dollar. maybe they buy that back and issue coupon price, but it's more problematic for the high yield companies than investment grade companies. >> i couldn't agree more now let's think about this moving forward the idea that it's not equitable anymore or a different

equilibrium, when you created this debt, you were looking at a certainly interest rate write-off, and that's changed. but moving forward, it's in balance. it's going to be different moving forward, is it not, peter? >> it's going to change the capital structure for some companies at the margin. one problem facing the high yield market is a lot of these companies need that debt it's not a luxury item on their balance sheet. it's going to take some time i think that's why we're going to see a little pressure in the high-yield market, ongoing weakness, and one thing i have noticed that is in the leverage loan space they're having out flows, and that benefits from rising rates. it's clearly a credit issue. i think you'll see ongoing pressure in the high yield space as people digest the tax implications >> let's get off the hydraulic pump and move higher i like to look at things in a macro perspective. with the last minute, my question is, as we take a step back, will this change in tax policy mark the end of an era of

debt, particularly high-yield debt, that has been the sugar for all those hungry sugar-tooth investors out there? is that all going to end is equity going to reign moving forward as the best way to raise capital? >> i don't think so. i think you'll still see debt. companies will look at the cost structure. remember, the ten-year treasury is still only at 2.4%. it's not costing you that much to issue debt. i think the thing to keep a focus on is the two-year treasury this year, at 1.9% investors last year were looking at the two-year treasury at 1.2% they can take risk off the table in the equity space versus dividends and in the high-yield bond market and get two-year treasuries yielding something. it's much better than 1.2% we stared at last year at this time >> always a pleasure to spee with you happy holiday, merry christmas, and healthy, happy new year. >> thank you so much, rick when we come back, the

surprise victory in catalonia after a divided vote got the details on what it means. taking a look at stocks and what they're doing today. lower across the board, but not by much, especially considering the year we've had industrials lower by 23. s&p down by 2. nasdaq lower by 6. "squawk on the street" will be right back don't go away. ♪ (music plays throughout) ♪ ♪ ♪ ♪ ♪

stocks lower by 1% due to the very inconclusive outcome of what happened in catalonia yesterday. if we could just stop for a moment and think about how bizarre the world is right now, we're not talking about a latin american banana republic in the '80s, we're talking about spain, where the situation is an exiled leader, who could be tried for treason in his home country could be the most natural person to be negotiating with the leader of spain, talking about carles puigdemont, who might be the person who sits down with the leader of spain, rajoy so here's what happened. there was an election. madrid was hoping this would be a conclusive election. the unionists, people who wanted

to stay as part of spain in catalonia would outright win that did not happen. that party did get the most votes, but they did not get a majority, they got only a plurality. a bloc of smaller but separatist parties did retain a slim majority, so now we have a very inconclusive outcome and they have to figure out what they are going to do. they are back to square one. are they going to negotiate with these people, give them more concessions, as they have historically done through the decades, what their critics call extortion, but we're kind of back to square one and that's why you see the move in the spanish stock market it's added to some weakness in the euro today, as well. we're not talking about a euro crisis, though, at this point. >> we're not >> no. >> negotiations to try to come to some sort of end here >> exactly, exactly. if he ever gets out of exile >> you had to love rajoy's language this morning after the vote, says this will usher in a new era based on dialogue. that will happen when your separatists take in majority

>> right, right. i mean, a slim majority, but who knows? >> few seats >> they are trying to argue, madrid, that all negotiations will only happen within the context of the current constitution, which means you have to first concede you're going to stay part of spain. see how that goes. meanwhile, hurricane maria was three months ago, but puerto rico is still reeling from the damage as part of a new documentary, cnbc caught up with the governor, take a look. >> just want to give you a perspective when we say the hurricane comes over this way, the width of the hurricane was 35 miles puerto rico's 30 miles so once it's touching over here, it's touching over here, as well 100% of the island got hit by sustained category 4 hurricane winds. the mountainous region of puerto rico has vulnerable housing. >> a nice way of saying housing built a long time ago.

it wasn't built with concrete and any code >> that's right, that's right. >> sticks and stones >> sticks and stones >> to find out more about puerto rico's struggle to rebuild, tune in to "the profit in puerto rico: an american crisis" tonight, 10:00 p.m. eastern and pacific. there are some estimates that full electricity won't be restored until the summer. i think we're getting into june before you're looking at 100% coverage >> that's thoroughly believable because their grid was 40 years old on average and running on petroleum still, an island who borrowed piles and piles and piles of money and yet never managed to upgrade the infrastructure >> you've covered the fiscal issues significantly of course, it was the last congress that approved the bill to allow for the bankruptcy, but what about all the people leaving now, and what is that going to mean? i'm sure there are people leaving every single day >> absolutely. >> no plans to return.

>> no, absolutely, so the ability to generate gdp gets smaller and smaller every day. what happened in the last 40 years in puerto rico is absolutely critical. people will die and are still dying as a result of this hurricane, because of the bad fiscal mismanagement i mean, it matters you don't invest in your grid and so the hurricane hits, it's hot. the mosquitos are rampant. you're elderly, you end up dying because of it. it's disgusting. >> what's gdp over a decade, probably down 15%, something like that? >> something like that >> the exodus into cities like orlando changing parts >> dramatically, but your buddy there pointed out $75 billion in the tradeable debt they only have 3 million people living there >> yeah, yeah. >> anyway, interesting to see the story. quite a story. when we come back, holidays are here with just two days before christmas get a breakdown of bricks versus

clicks who will win in the fight for your money when "squawk alley" starts in just a moment.

♪ when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. we call that, the golden hour.

evaluating patients remotely, is where i think we have a potential to make a difference. we would save a lot of lives if we could bring the doctor to the patient. verizon is racing to build the first and most powerful 5g network, with ultra low-latency that will enable things like precision robotic surgery from thousands of miles away. as we get faster wireless connections, it'll be possible to be able to operate on a patient in a way that was just not possible before. when i move my hand, the robot on the other side will mimic the movement, with almost no delay. who knew a scalpel could work thousands of miles away? ♪

good morning it is 8:00 a.m. at alphabet headquarters in mountainview, california it's 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ good friday morning, welcome to "squawk alley. i'm carl quintanilla with mike santoli, morgan brennan is with us at post