today it's unity others include collective economics purpose and kwanza was first observed to celebrate african culture 50 years ago and continues through new year's day and culminates with feast and gift giving. >> boxing day. >> that's today. we haven't talked about that. >> that has to do with returns to, doesn't it >> as i kid i thought it was boxing. >> join andrew tomorrow. i don't know who is with you but right now -- >> we're both not here. >> "squawk on the street" is next. >> you're stuck with me. ♪ >> good morning, welcome to "squawk on the street. i'm david faber, we're live from the new york stock exchange. carl and jim have the day and the week off let's give you a look at futures right now. start trading on this day after

christmas. you can see we are set up for a lower open generally speaking on the major averages, s&p showing a little more signs of life. european markets, most have been closed for the christmas holiday or boxing day as well. so not much to speak of there. let's get to our own 10-year note yield though as we take a look where we stand right now. 2.483. crude oil, wti up a few cents and just out the latest shill erin dex shows home prices up 6.2% in october. that of course year over year from last year let's get to our road map this morning. it does start with apple largest market cap out there, shrinking in the premarket on some reports about next year's iphone sales, we're going to fill you in. >> will this year's rally continue as we close out 2017. >> finally a retail rebound, how the struggling sector is faring so far this holiday season as you may know not too bad. let's start with apple shares,

they are under pressure in the premarket. reports of sales of the new iphone 10 are slowing according to taiwan's daily economic news. forecasting sales of 30 million units kpcompares to prior estimates of 45 million. there may have been perhaps some delays associated with their suppliers on certain parts of it but it is pressuring the market, looking at the couple of notes and they are very few as you might expect investors seem prepareded for shipment to be lower in q1 due to normal seasonality and fewer working days based on inbound checks done here, it appears to be increasingly concerned about chinese demand for apple in addition to chinese smartphone vendors. we'll see. >> i think the key point here is -- we know the apple iphone x game is in the late innings and super cycle we keep talking

about is in the late innings but we see a tremendously expanding user base worldwide. apple talked about record revenues for the first quarter in fiscal 2018 and remember the tax code and the advantages that you're getting from that. i've seen numbers in the last week key bank had a great report out saying the tax rate could go from 25% to maybe half of that that could dramatically move up the numbers. we've seen estimates now maybe 1160, could go into the mid $13 range. there's certainly a lot of movement behind here to help the overall bottom lines earnings numbers out and that's still going to be a factor. >> this morning is a mini example of contrarian indicator cover. apple's golden moment, making the case that 2018 apple will near a trillion dollar market cap and showing that beautiful new headquarters china is an important market for apple, especially the iphone x it sounds like a big deal. reuters is saying they analyzed

chinese social media saying interest spiked around the launch but not kept pace with the highly popular 6 in 2014 which drove big sales for china. which way this goes is a big deal. >> china is 25% shipment of iphones, almost a quarter of that. >> user base is growing and services are growing there the multiple is 15 times i think 2018 you can get a real expansion of the earnings and go down to 13 or 14. that's not expensive. >> but we talked about the multiple being fairly low and consistently been that the question is of course about the cycle. they never introduced so many phones at once to their own, they made the point we don't necessarily know exactly what to expect the number of months ago when the 8 and 8 flu and the expectation of the 10 hitting market as well, they were uncertain as how it would be taken by consumer. >> you mentioned the supplier issue and we notice some were down this morning. sky works was down too

but there's two different things if they are only going to do 30 because they can't get suppliers on board, that's a great sign. only doing 30 because demand is not there, totally different story, right >> totally >> good work on the chinese side of this and follows suppliers and she put out a report out december 22nd saying iphone x shipments will be less than 30 million judging on orders of chinese suppliers in the calendar q4 and iphone x production cuts as many as 10 -- >> sounds like demand side. >> it conceivably could be to your point it seems to have another leg to it regardless of the concerns and then we don't hear a lot from them on all of the other questions that we have in terms of automotive or the content business obviously we talk a great deal about the services part of the business, ever growing part of it with the regrowing revenue stream that so many investors like and willing to pay a higher

multiple for most analysts have 11.50 and 11.75, they have not modeled in the tax effects, you can get to 13 and above with the tax effects here that's not modeled in and maybe the market is trying to dissipate that to my point, there's another leg up here, potentially helped apple out. i believe the user base expanding the service is expanding, that's going to be the key to future growth. >> trillion dollars, only 100 billion away from it trillion dollars bob, i don't know, right? >> north of 800. >> well north of 800 never seen that before i don't know -- who knows, maybe we never will. markets reopening after the christmas break with the s&p and 500 on track for the best monthly win streak since 1983. the dow would be the best monthly win streak since 1959. let's bring in kevin, senior portfolio manager and jim paulson. jim, how are you setting things up the last week of trading week

of the year as you look ahead? >> i don't know, david i always think this week is pretty funky and there's been a lot of times in the past when you had positive alpha going into the week and they took it away from you, only to give it back in the first week of january. a lot of funky things happen i'm not sure what i expect for this week. it's going to be a lot of players gone it often times condition pretty volatile as a result of that. >> we spent the last few weeks of course talking about the possibility of the tax bill. it's reality now i would have to think a lot of what you were thinking about jim, would be impact from that, not just on corporate america but throughout as we start to think about both the intended and unintended consequences of this major very revamp of the tax code. >> i believe a lot is in the market and already in the 1.40, $1.45 earnings estimate

consensus on the street which even at that around $1.40 puts this market close to 20 times forward, one year earnings i think what is less vetted is whether this is going to promote supply side productivity generated growth next year or whether it's just going to add to already sort of inflationary pressure picking up, overheat pressures starting to emerge i think we're going to face the latter a little bit in general and then with the added tax stimulus, i think it's going to add to that. i think we'll have to reset the treasury yield up towards 3% and we're going to deal with wage inflation over 3 i think it's going to be difficult for a 20 times forward multiple marketplace >> kevin, bob pisani here. the big question -- i'm the stocks guy, the big question we're grappling with here, number one, 2018, is this peak earnings we're going to see number one and number two, is there going

to be some kind of multiple compression. we're pricing now and trading anywhere between 19 to 20 times forward earnings and some people are saying we can keep that kind of high multiple and get to 3,000 on the s&p 500 what's your take on peak earnings and multiple? >> right now the data has come together so beautifully towards the end of the year. if you look at inflation and look at stress in the capital markets, everything seems to be looking really good. we're going to go with a more bullish tone to start off the year and consequently, you could see more multiple expansion but we would point out that the returns from here -- we think are going to be lower because when you look at the multiples you're talking about, you're at 18 times earnings or something like that and margins are fairly high. so over time we would expect both of those multiples to come down and those margins to come down as wages pick up. so ultimately, not peak

earnings eventually you'll see higher earnings, but i think the level of profitability is high as it's going to be. >> jim, i want to go back to something you said about inflation because i've heard this from a lot of people, not only do you think we might get pressures there but the tax stimulus will add to that. what if we think about the tax reform as more of a increasing ago agree gat supply in the economy. could it have the opposite effect by, could it actually mean inflation is lower and not the kind of 2009 aggregate demand status but supply stimulus >> i think that's the hope i agree that's got possibility i think it's remote. i think it's below 50% that that happens. but it's not without zero probability, if we push productivity from the 1% pace we've been growing in this economy towards 2 to 2.5 on a sustained basis, then you're kind of into a late '90s

environment of growth without any bad consequences growth without the need to raise interest rates because you're promoting productivity which holds inflation in check that could be a second leg to this bull that no one is really talking about right now. i think -- i'd put the odds of that less than 25% i think we're at a 4% unemployment rate. we're going to set a 50-year low in 2018. i think wages are probably already above 3% and we're going to find that out with real -- with the reported numbers next year and i do think that's going to take a 3% plus treasury ultimately by bond vigilanties and at the minimum, we probably have a pause in this bull in 2018 with some gut check here and then maybe to your point, maybe if it's productivity generating, we have another leg yet in 2019 and beyond >> kevin, just before we let you go rotations on everybody's mind.

tech which has been the market leader all year, a little tougher this month and banks, some other groups like energy are coming to the floor, some of this may be on tax issues, what's your thought on rotation as we go into 2018 the rubber band is fairly stretched between let's say growth and value growth represented by tech has had a phenomenal run a lot of it has been supported by improving earnings and investment trends. but ultimately there has to be a squaring up. so the growth -- the growth trade is probably looking a little bit tired right now i think it's time to look at maybe some of the value sectors like energy and financials >> guys, thank you both. appreciate it this morning kevin and jim. >> thanks. >> i've got to talk about bitcoin. futures may be pointing down but the crypto is looking okay bitcoin's wild ride continues, prices are rebounding, bitcoin is trading over 15,000 right now after it had the biggest weekly

decline since 2013 then this past friday dipped just above the $11,000 mark from a high of over 20 k on some exchanges. bob, how do you follow this? is there some cosmic tell in what's happening with crypto >> the thing to do is keep a perspective on the size of this. this is attracting tremendous outside interest because it's a new technology i don't know if we can put up the market cap for bit coin. it's important to understand not just bit coin but the total value of the whole crypto currently is $400 billion. the u.s. stock market by comparison is close to $30 trillion and bond market is $38 trillion and the gold market is $7 trillion i throw the money supply too, broader indication of the money supply, including cash and deposits at $13 trillion my point in bringing all of this up, we're dealing with a very, very small business. and we're dealing with something that is literally one one hundredth of the size of the

bond market. >> this is the argument for why bitcoin should be able to increase in value. in comparison to that, it seems small but this market -- the size of bitcoin is huge. look what it did in 2017 alone it's crazy. >> the important thing, this is why the central banks are not acting aggressively on it because it's still relatively small. people say what can bitcoin do in 2018? it could double for sure my point is you're not going to see this turn into a $10 trillion, 15, $20 trillion industry without the government stepping in some way and getting more aggressive in the regulation that's my point. >> i'm surprised they haven't already. >> when we return, we'll look at what the numbers are saying about the holiday shopping season as bargain hunters head to the malls this day after christmas and rbc analyst mark mahaney and what he seize ahead for amazon and apple is hurting the dow say little bit this morning.

that's implied to open lower, nasdaq 29 lower and s&p fractionally lower for the bond market well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.

i'm excited for the dog show with christmas in the books,

consumers are making shopping runs for bargains and returns. i think my family is going to the mall kate rogers is at a mall north of new york city with the holiday season numbers and early crowds there hi, kate. >> reporter: hey, kelly, retailers have something to cheer about this holiday season. new data out from mastercard shows that retail sales from november 1st through christmas eve grew at a pace of 5%, that's the fastest clip since 2011. e commerce even faster grew at the rate of 18%. overall the national retail federation says this season was set to be a strong one with total sales around $682 billion. ecommerce said to account for 100 billion of that total spend. we are at the pal sades mall and it did just open it's not too crowded just yet but shopper track says today, december 26th is set to be the fourth busiest day in terms of foot traffic this entire season because people are taking advantage of deals at bloomingdale's, 75% off,

target, 70% off of thousands of items and best buy's discounting computers by $150 depending on the brand and amazon online, anywhere from 10 to 70% off. tons of electronic items we caught up with shoppers really eager to take advantage of those sales >> macy's has like a 40 to 60% off. i got a great deal on calvin klein coat i lucked out today. >> good prices, it's like 50 to 75% off after christmasand sav it for next year >> now, christmas of course fell on a monday this year. so shoppers actually got an extra saturday this past saturday to get in and get some last minute shopping done. that's called super saturday that was set to be the second busiest day of the shopping season according to shopper track, we don't know how it fared just yet, we'll find out later in the week even though the holiday season is over, the return season is just beginning and the nrf says on average people usually return about 4% of the gifts they receive

back over to you >> kate, what time did that mall open it's only 9:00 right now >> this mall opened at 8:00 a.m. the foot traffic has been slowly trickling in we've been here since before the doors opened nobody was in but you would be surprised. we spoke to one woman, she flew in overnight and came right to the mall to take advantage of the sales, the shoppers are committed to these deals. >> david is bummed he can't be there right now. he's there early first thing when it opens -- >> you know me, me and a mall, we're like this. >> all right >> the trends this year, i had a hard time discerning trends. it seemed like home auto mason was big and beauty was big my family, a lot got elf cosmetic kits that were out. it was hard to see big trends. millennials walk around with stupid ear flaps on all over town. >> what do you mean?

>> ear flaps with the '70s, look like you're a hunter in the woods. >> that was all over the place, couldn't figure out that. >> i wore that when i covered the conrail annual meeting, it was minus 3 in philadelphia. never heard the end of it. art cashin will offer his take on the markets let's give you another look at futures as we set up for the open nine minutes from now i'm a small business, but i have... big dreams... and big plans. so how do i make the efforts of 8 employees... feel like 50? how can i share new plans virtually? how can i download an e-file? virtual tours? zip-file? really big files? in seconds, not minutes... just like that. like everything... the answer is simple. i'll do what i've always done... dream more, dream faster, and above all... now, i'll dream gig. now more businesses, in more places, can afford to dream gig. comcast, building america's largest gig-speed network.

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>> welcome back, just about six minutes to go before the opening bell let's bring in arthur cashin, director of floor operations with ubs. >> very merry christmas to you and everyone out there. >> what do you think about the markets as we set up for the last week of the year here >> it could be a little puzzling this is when we would be due for the so-called santa claus rally which starts basically christmas eve or the last trading day before christmas and runs through the beginning of the next year now, there's a little bit of a problem here and i discussed this with bob pisani in my year end interview that the tax bill threw a lot of things off. people didn't necessarily do the kind of tax selling they are used to and didn't know what things -- what rules would apply. so they kind of postponed some of that. that may be what is going to distort the santa claus rally a little bit and the other thing that as much as everybody was rooting on the

tax bill and it was going to be great for the p/e ratios and whatever, just as it was passing, we saw the largest takedown in bond funds and in stock etfs that we've seen all year i don't no if that was year end planning or not but little disturbing going into the period when you think of a massive rally and bond funds and stock funds both see the biggest takedown that i have seen all year. >> i guess the question we were talking about jim and kevin about this for 2018 is are we heading into a year where we're going to hit peak earnings we've had a tremendous run for the last few years after an earnings recession in 2015 historic high numbers now. most of the numbers i see we're thinking 15% upside for earnings in 2018. but some aren't quite sure where we go from there and the multiple is high, close to 20 times forward numbers. can we keep that multiple up there? can you argue we have a global economy continuing to grow we're still arguing that we're

not at peak earnings can you keep a 20 multiple on the market >> it won't be a 20 multiple if the earnings go up, if they stay where they are to see where things move off from there this year is set up to be an absolutely wonderful year. the corporations will have theoretically greater earnings without needing to do higher revenues and higher sales. so i'm wondering maybe we should be looking over our left shoulder if something geopolitical that may be a surprise. >> it's been a while since that was top of mind. >> another gray swan out there. >> yes. >> art, thank you very much. we'll let you get to it. the opening bell just minutes away quk t see wl be right back

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since we saw significant reform in the tax system. cuts to corporations being a key part of that overall plan. and many corporations actually busy this week this year to get the higher tax rate against in terms of losses. there's the opening bell real time exchange back at hq, should be a mixed bag. here at the big board the new era q strike bowl plays boston college this wednesday at the nasdaq, discovery communications celebrates animal planet's new year's premiere of the akc national championship dog show that is presented by royal -- i'm going to go with canine. >> i'm a dog lover now too. >> the puppy thing has been okay. >> it's been a year. it was a hard year but gotten a

lot better. >> we're coming off five straight weeks of gains for the dow and s&p. best monthly win streak since 1959 just talking to art cashin, we're starting off soft this week to close out. >> it's been an extraordinary year, extraordinary month. i just want to point out what the big issues for 2018 are. we talked with art ba it will we be at peak earnings in 2018 we're looking at expansion of about 15%, depends upon what effect the tax cuts are going to have but that's a big issue unlikely we'll ever hit that in 2018 the bait is about 2019 and the other is the multiple progression, 19 to 20 times forward earnings and there's some issues about whether we can sustain that the bulls will argue when the global economy is expanding and your earnings are still at peaks, you can have a fairly high multiple. the bears don't feel that way. for 2017, the end of an extraordinary year first off on the gains, out sized gains, 20% for thes&p 500. bear in mind the historic

average for the s&p 500 is about 8% this is an extraordinarily out size gain for the year the all time highs, every single day we kept -- it was a bit of a joke, 62 daily all time highs this year. the historic average is 29 and that's on years when you hit at least one historic high, usually you'll hit successions but nothing like -- another extraordinary year in the amount of new highs that we hit in terms of the volatility we were doing, all time lows in the volatility and we tend to mention things by how much the s&p will move and 1% on pt day is a sign of volatility. only eight days in the whole year when this moved and the average volatility since 1945 has been 50 days extraordinarily high gains, extraordinarily amount of new highs and extraordinary low volatility, the final thing i'm l i'll point out here, david and kelly, dispersion between the high and low sectors now normally, you will see a

dispersion between the group that does the best, this year it was technology, up 38% and the ones that did the worst, energy and telecom, normally it's around 20% some years maybe a little more look at this, you're talking at 44% between the high and the low. that is astonishing. you'll very rarely see that kind of thing happening a lot of people are trying to read the fig leaves, you get reversion -- there is the long history of statistics, this is an extraordinary outs year most people are not expecting kinds of gains for the s&p or the lower volatility that we've been seeing or even this kind of dramatic sector dispersion but then again. >> if we come into this year i told you we were going to be up 20% -- >> you would have said no. >> one thing i expect markets will be volatile no, actually, that was the one thing that didn't happen. >> we set all time lows. >> look at the top decliners in the s&p 500 right now, micron down 3.45 and sky works down 3%

and apple down 2.4 broadcom down 2.3% what do they all share this report out of what was it the taiwan daily. >> they are all of course supply chain sellers into -- there was weakness overnight in asia and all sellers into the iphone and concerns there pressuring apple shares to the tune of 2.5% loss are that the x and 8 and 8 plus is not nearly what had been aepd wall street journal writing last week as of last week, the x, the 8 and 8 plus had combined for 69% of u.s. iphone sales for the month that ended december 3rd. compare that to the 6th which was a blowout for them and 6 plus 91%. so as we sort of start this trading week, that seems to be the center of concerns there, particularly in china, which accounts for as much as 25% of apple's revenues for the upcoming chinese new year holiday, not as robust as

initially thought and that is pressuring the shares of apple and as you pointed out, all of those that provide apple -- >> some of the providers. >> look at the top gainers in the s&p. we have a retail theme once again shaping up towards the end of the year here macy's leading the way with a nearly 2% gain kohl's is up and foot locker, all of the top five if you just checked would be in the retail sector maybe they like these numbers coming out we've also seen after all price for extinction on the amazon trade a couple of months ago, a nice ramp to year end. >> if we look at the big names for the month, you'll see these extraordinary gains and bear in mind, retail tends to sell off in the month of december that is a historic trend but we have never had a year where some of these big retailers are down 30%, 40% and 50% while this is either extraordinary to see, it is preceded by an extraordinary first 11 months of the year where people basically decided that amazon was going to take

over the world we know that's not going to happen i think some of these companies are doing much better in their online sales too we're starting to see pickup in that particular area these companies are certainly not given up for dead right now. >> also a couple of energy names, chesapeake having a nice session and range resources. >> the most beaten up large group. telecom only has four stocks and energy is 8% of the s&p 500. that's a big debate. if we get towards $60, the earnings are going to definitely improve. and they have tried on two or three separate occasions in 2017 to buy in and they've all been wrong on that. so a lot of skepticism and money out of the market. it's a very underowned sector and that's a very interesting area to have thought at play in 2018. >> interesting to look at the home builders, you emphasized about technology and what a year it's had the home building sector is up how much this year more than tech and the data the last couple of days has been incredible

here again just ap again reporting 6.2% increases in home prices on the year >> still we're dealing with 30 year mortgage rates in the mid 4% level i found my old mortgage, 1985, 11.2%. i paid 11.2 -- >> just going through old mortgages. >> end of the year files. >> i have to confess, i found a block buster collection notice from 2008. >> 2008. >> that's nerdier than mine. at least i had mortgage -- >> i have a horrifying collection statement for $30 from the upper east side block buster i'm sorry, i don't know what happened with that sorry, yes, nice looking home sector into the year and this is despite the tax bill that everyone said could be a real potential blow not seeing it there. look at the home building sentiment index. >> the key story of the home

builder, publicly traded builders have the tremendous advantage of having money and available land and once you lockup land, long term, that's a tremendous advantage over small builders that they have we're publicly traded builders i don't know, maybe smaller 20% of the overall building but they control a lot of the important properties and that gives them a tremendous advantage and particularly now when you still get economic expansion, you get better household formations, finally getting some of that you get a little more improvement in the attitude towards the economy. they are in a very good position it's not inkprensible why the stocks moved this year. >> a bit of a replay of that rotation that we've been more accustomed to in the last weeks of the year, namely technology not getting much of a bid. some other names also, facebook down less than a percent some of the old industrial names and others benefitting let me take a quick look the banks are mixed this

morning. >> ge up 1.2%. >> i love seeing this rotation because to me it's a sign of a great market and not the sign of a market -- a healthy market if you believe in the global economic expansion, i don't know why you wouldn't believe in the growth stock story still. >> because you can get the growth elsewhere, you don't have to pay it forward in one sector? >> but technology still represents the single biggest area of revenue growth far and away i'm not convinced that everybody should rotate out of technology. >> as we point out so many times and if jim were here he would say, the multiples on a facebook and alphabet and the other two which have growth rates that are extraordinarily high, are low. given they are growth rates, many would argue. >> one thing i was going to raise for 2018 is the regulatory risk you can be in a name like facebook and google, looking at the european decision against uber and thinking about the issues with media classification

and wondering whether it's overseas or even in the u.s. whether there's going to be more pressure put on the business model. >> i think that's what i hear as well, kelley, from people who own the stocks as perhaps the biggest risk next year is regulatory europe is leading in terms of privacy and number of other areas. but you do have to wonder what pressure they'll be under here in this country. and it's one reason why they may not raise their -- will they ever do the big deal, for example? raising your head up for an m and a transaction is not the best thing to do when you already believe you're a target. >> this was the right year to have that discussion amazon, facebook, google, the discussion now about the social impact of what they are doing, above and beyond the amazing technology this was the right year to bring that up. there are legitimate questions and we had scott galloway on >> he'll be on later. >> the european regulators are in front of u.s. regulators in asking these questions but it's time they did. >> they are not their home

companies, google, apple, amazon, facebook, netflix. these are american companies that unfortunately -- name -- what is the big company that's come out of europe in that sort of -- you know, if you go back to when we had nokia, they used to have huge technology champions and you're not seeing that as much this time around. there is a little bit of that which is to say you've come in and invaded our land you're destroying our societies and they are probably quicker to make the argument. >> folks would argue there's a reason the innovation occurred here because the way our system is structured. less regulatory before things get big and they notice it i'm for keeping more open markets here in the united states i'm for more innovation. let's have united states companies be the innovators in the world. nobody else will be, we should be. >> the question becomes market power and are they preventing innovation from others given their size and the scope and power that they have let's get to rick santelli and

check in with him at cme the bonds, and dollar, all of the dollars coming back and going to send the green back higher perhaps >> well, if they are, it's the best kept secret on wall street because the dollar just continues to be on the soft side, david and when you consider there's many markets close it's hard to get an adequate gps but one thing that is not closed and is continuing to come further back in history is the shortened of the treasury market if you look at a chart going all the way back to the fall, september of 2008, that's the last time two-year note yields were topping the 190 mark. but as i've said many times, we'll have to get up to 3% before we stop using 2008. in june of that year, when we actually traded 2% so these comps are going to kind of hit a brick wall on the two-year five-year is the best closing yield now, it's basically trading right at or slightly above 2.25

that's where the action is at. as you get to the end of the curve, not much going on virtually unchanged but this chart goes back to the last time we're hovering at these levels, which was march, high yield of the year was 2.63. we settle at 2.445 which looks like it's going to be an intersection with the current level 2.47, 2.48, probably before market will close 2017. remember the year in flattening of the year curve. there it is year to date the ten minus two pred and the reason it's interesting, it has a lot of implications whether it's for banks, they have floating debt and prices offshore but it's still significant. at one point it was 130 base points, less than half of that now in the mid-50s and if you look at the month to date, you can see we've had steepening since the fed meeting and finally, the dollar index, that's what you're asking about, david. it's down today as you see a month to date. year to date, down in the 7%

camp after settling at 102.20. can it go higher next year certainly. interest rates designed by the fed, should they push them higher i completely think so. i think a lot of traders might have thought that as well. they've been getting out for months it seems as though the hot trade is the euro but they are boxing and doing a variety of things outside of trading in europe although of course the foreign exchange market is trading in a quiet unchanged manner on the u euro currency. >> we have more on yes, bitcoin's wild ride, one firm is out with a bearish note on the cryptocurrency, when "squawk on the street." returns. whoooo.

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♪ >> bitcoin is rebounding from its worst week since 2013. here's a closer look at the wild

ride. >> it's been a rough holiday season for bitcoin investors after suffering the biggest sell-off and plunging below 11,000, bitcoin rebounded over the weekend seeing a gain of $1,000 overnight now hovering around $15,000. traders say that the recent volatility is due to a couple of factors, one is the ongoing trading issues at coinbase, the largest exchange and second is more warnings for regulators not just in the u.s., but globally, israel announced on monday that it would bar companies trading cryptocurrencies from operating on the tel aviv stock exchange also making the rounds is those comments from one of the loudest bitcoin supporters who said he sold a significant amount of bitcoin and told cnbc he's putting his plans to launch a crypto hedge fund on hold. an interesting note from morgan stanley, disputing dit bitcoin's classification as a currently

and why the value of bitcoin is zero highlighting that you still can't use it and guys, i can tell you you've been trying to use bitcoin in new york at local merchants and found that the rise in bitcoin that we've seen over the last two months has not coincided with more businesses accepting it that full story coming up later this week. but for now back to you. >> i don't want to steal from it, but my impression that's it almost becomes the more popular bitcoin has become, the slower the transactions on the network are and the more expensive it is for anybody to accept it is that the issue or no? >> no, i think that's exactly right. if you want to use bitcoin as a means of payment, many people are looking to bitcoin cash which actually has a lower transaction fee and therefore not looking to bitcoin as much as a way to buy and sell goods, that's more seen as again that digital gold concept >> here's the big issue. it's block chain that matters, block chain is going to change the world.

cryptocurrencies just running off of blockchain. there is no effective way to invest in blockchain people want to do it, how do we do it? we want to go into -- she's trying to set up an ecosystem around that. the only way to get into blockchain is chain is through crypto currencies. >> that's not smart, like if you want to invest in the rail track, but you don't think railroads are a good investment, you shouldn't invest in railroads. >> there is nothing there to invest in. it's that lack of sellers and intense demand to get into the blockchain ecosystem driving bitcoin all over the place >> did you get questions over christmas? >> i did >> the number one topic of conversation >> and i had my answer, i have nothing for you, pass the punch. it continues to be a happy holiday season for disney. star wars, the last jedi, was the box office winner over the four-day weekend, generating more than $100 million in north america where the film has

collected about $400 million that's just 11 days into its release. took the whole family yesterday. >> you contributed >> six of us went. yeah i have seen them all now >> you went because it was a good thing to do, not because you really wanted to see >> christmas afternoon >> did the kids like it? >> went on forever >> did the kids like it? >> they enjoyed it, but they're fairly -- they have a fairly high bar these days as well. they're not little so they liked it everybody enjoyed it, i think. >> did you >> yeah, it was long went on for a long time. >> a brujing review. >> we don't have many shared experience anymore in the country. i think of so few. but going to a see a star wars film is a shared experience of citizens of the united states. >> the reviews have been okay. you know, people who i know who love star wars and went to see it say it was okay these numbers say it must be something more than the quality. >> sort of an obligation

even if it's a bad game, you're going to watch the super bowl. >> are you, though >> i will. >> i'm going next week >> to where? >> star wars >> i thought you meant to the super bowl >> he is from philly he has a shot. >> i have never heard you talk about the eagles actually. >> yeah, very complicated feelings about the eagles. >> interesting >> that will be our next block up next, president trump signing tax reform into law now. there we go. before christmas there are some stocking stuffers tttihy of your aenon details when we come right back.

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the tax bill signed into law by president trump not only looks to transform the code for large swaths of the american economy, it also dolls out special gifts to even the most niche businesses >> i have combed through the tax bill i have checked it twice. now i know who has been naughty and who has win nice we're going to start with the beer industry. tucked inside this legislation is a provision that lowers federal excise taxes on brewers for two years. for small brewers, the tax is cut in half.

for others, the tax is reduced by about 10% this is something the industry has been lobbying for for a decade it was ohio senator rob portman who delivered the gift for christmas. it's also broad way. leave theatrical productions will get to take advantage of full and immediate expensive for the show this was passed under president obama. it's been championed by new york senator chuck schumer, but it expired at the start of the year, and the new law puts it back in. they also made a stop at citrus farms. they get a carveout for damaging the rostof replacing damages plants growers in florida are still asepthey haven't gotten the full disaster relief package. this could help tie them over in the meantime one elf who worked on that was vern buchanan who also happens to be a member of the tax writing committee in the house those are a few of the presents

that the industry has found in the bill, and i'm sure lobbyists are still unwrapping them all. back over to you >> thank you >> broadway, beer, and oranges where's the avocado industry why didn't they get in on that >> where are they grown? >> california. >> almonds, too. >> why aren't they in on this? >> bob, thanks >> pleasure to be here >> that's it this hour we have a rough start to the week for apple we'll get to that. reaction and reports about slowing demand for the iphone x as we keep you going here on 'rawonhetrt. wee back after this. ♪ working as an emt in a small town usually means hospitals aren't very close by. 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. there's nothing worse than when we're responding to the hospital,

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this is truecar. good morning welcome to "squawk on the street." i'm david faber along with kelly eva evans. carl and sara have the day off let's look quickly at how we fare on the markets a half hour into trading the dow barely eking out a gain, despite what is sasignificant weakness of shares of apple.

a key dow component, particularly giving the price weighted nature of that index, but it's manage to be slightly in the green s&p and nasdaq both lower. our road map starts with the dow. up 500 points for the month. four trading days left in the year will stocks continue what has been a five-week winning streak? >> bitcoin is bouncing back after plunging last week we'll find out why m.i.t. thinks there's much more to it than just the price >> plus, president trump not just a big legislative win with tax bill, but will charities suffering. >> the dow is on pace for the first nine-month win streak since 1959 we're joined by brian, bmo's chief investment strategist. what's your price target next year >> 2950 on the s&p 500 we do not project the dow as it's only 30 stocks and the majority of portfolio managers around the world bunchmark

themselves versus the s&p 500. that would be another positive for equities, if we take a look at what has happened in 2018 versus 2017, we're still seeing double digit earnings growth valuations that we believe will compress earnings that will continue to go up. and more importantly, gdp that's going up with interest rates that remain at or near record lows pretty good environment to own stocks >> all right, john rutledge is with us as well. he's a chief investment officer. are you a sanguine >> good morning. well, i'm happy from christmas, that's for one thing but i agree. this is the 1st time all of the oecd countries in the world have had positive growth in my life, so the growth picture is really good the picture that's not so good is that markets have been going up so long that people are buying bitcoins with their life savings and european negative interest rates have got people buying into the u.s. market. so i think we have some bubble

here problem, the fundamentals are pretty darn good though. >> it's interesting how you put that, that markets have been going up so long that people are buying bitcoin you would think the opposite is true, the stock market isn't going anywhere or there's no performance so people are forced into this thing. you could do just fine holding a broad index fund, right? >> absolutely. i was on an airplane a couple days ago fellow in the row behind me ran a warehouse and was talking on the phone and said he put his life savings, $4,000, into bitcoin. was wondering about the price. that's what's going on out there right now. in the stock market, some, but reamy in the exotic stuff. i think that's very dangerous. but also, the capital flows have been coming in to the dollar and when the fed buys bonds, emergic markets do well because the capital also flows there and we have gotten central banks moving in reverse. the momentum problem and the

capital flow problem are on my mind and which is the reason i'm now about two thirds cash thinking there might be a good correction opportunity. >> brian, let's say your kids are saying to you, come on i think we should buy some bitcoin. what do you tell them or anybody about why you should invest in stocks instead of buying something like that? >> i would say no, no, no, to bitcoin. no, no, no, to cannabis stocks no, no, no, to any stock or company that people are asking you off the street or sitting on an airplane talking about. this is the yeah but bull market we have gone on. stocks going up, but markets have tripled since 2009. yeah, but stocks are going up, but we don't like president trump. well, how did that trade work out for you so far yeah, but we like stocks but valuations are at above 20 come on, valuation is not necessarily predictive of future

events united states stock market with respect to fundamentals is in the best condition since the 1950 people have been negative for 20 years. this bull market is 20 years in the making we haven't had a capx cycle in 20 years we're going to get one this market is just now getting going. doesn't mean we're not going to have a correction, but the more people talk about having a correction, the more people that talk about having the majority of their assets in cash, the more likelihood that the market goes up. we need everybody to be euphoric with respect to the stock market, and we're nowhere near euphoric highs in the stock market we have euphoric highs in stuff like bitcoin and some of the silly stuff that isn't a real investment, aren't real companies. we're nowhere near that in terms of the stock market. >> also in march 2002, 2001, and you know, i think it's just a time where we've got a lot of

risk of events happening, political events around the world. and i would just be away from it, but regarding the kids, i agree. the only rule i know about investments that i know for sure is don't ever buy anything you don't understand that rule rarely lets you down so i think buying the broad market is fine for a piece i have six kids. i have all of them to some degree in the stock market but i see 4% real estate yields in new york. and i see capital flows not moving the other way i see interest rates that are too low for what's happening now in the pricing reason we've got rising earnings power now is because companies are able to raise their prices we have had more than a 5% increase in revenues this last year and more next year so i think there's interest rate risk as well >> yeah, but that's where i wanted to go let me fing up with brian here

interest rate risk, is that a risk at all? there are those who believe we could get oefr heating and inflation could heat up as a result of so many of the positive things you cited and we could end up with a few more hikes than we perhaps think going intothex year, and that could be a break on the market what do you think? >> i would say that's very consensus, and consensus has been wrong for eight years common sense says companies will take longer than you think to enact and put to work these tax cuts cap exis going to be delayed until maybe the second half of 2018, maybe the first half of 2019 this whole notion that we're going to overheat and the people who have bitrying to drive the market lower for a while mr. powell is a disciple of ms. yellen, nothing is going to change the earnings are going to be pretty decent, but not overheating until at the earliest, second half of 2019 and maybe 2020, we start to get

very strong gdp and oversized earnings growth that nobody is talking about. we need to surprise on the upside growth until we start to really see the semblance of inflation, and we need to see that growth surprise, again, and worry about what no one is talking about instead of what everybody is talking about, which everybody is fearing of an overheating market next year, it's not going to be next year >> these scoldings are brutal. >> he's a happy angry man. kind of combining both positive >> i'm feeling fired up or disciplined or something brian, john, thank you both very much this morning. merry christmas. >> when we come back, president trump notching a big legislative win last week, signing that sweeping tax cut we're going to discuss what is next on the white house agenda plus, let's give you a look at shares of amazon. the e-commerce giant said it had its biggest holiday season more than 4 million people gave prime a try, and one week alone.

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the gop and the president taking a celebratory lap, but the mpact of the new tax bill still being debated. the president reportedly commenting to friends at mar-a-lago, quote, you all just got a lot richer, after sign the long anticipated overall of the

tax code on friday joining us now, cnbc contributor jared bernstein and former chief economist to vice president joe biden. and also james, american enterprise institute fellow and cnbc contributor guys, what nice is i don't have to ask you what your chances are that this thing is going to pass it's done now. >> 100%. >> there you go. finally right. i think so many did not expect, including i think all of us, that it would pass certainly so quickly. here we are, end of the year, trying to figure out the amifications jim, let me start with you what is your sense here in terms of what this is going to mean as we look for both the intended and unintended consequences? >> well, the intended consequences is to boost economic growth and jobs and i wonder with what's going on in the economy, if it won't overwhelm any of that impact it's going to be tough to tease out how much is because of a continuation of trends that have

already been in place with what's going on in the tax cut what i think is going to be super interesting and maybe one of the first things republicans are going to do in the new year is try to make those individual tax cuts which are temporary, try to make those permanent, and make democrats take a tough vote are they going to vote against making those individual tax cuts permanent even though it's going to raise the deficit by another trillion dollars past this decade >> yeah, and jared, i know how you feel about this tax bill because you comment on it so often. many say democrats caring about deficits now, doesn't seem to be a real complaint on that subject, deficits, by the way, you know, the tax rate for many corporations could be well below 21% because so many of the deductions did not go away to jim's point, you may actually have an extension of the individual cuts beyond i think the sunset in 2025 deficit concerns on your part still there?

>> yes i do think it's the case that asking even republicans to put another trillion on the deficit in the near term is a very heavy lift for them. i mean, there are still some folks who at least pretend to be hawkish, and interestingly, you're seeing a number of republicans have rediscovered the deficit problem, one of the things they say they're going after next is welfare reform on democrats and republicans on the deficit, i grant you there's a lot of hypocrisy on the issue, but it is the case under obama, the deficit went to 10% of gdp during the recession, it won't down to 2.5% a lot had to do with economic dwroeth, but he also did increase taxes a bit i think democrats are on solid ground when they complain about the deficits i don't think the public is massively engaged in the issue i think it's something we think about more here. >> i don't think the public

cares more about it. even though the tax cut is polling terribly, listen, ingoldman sachs is right and the unemployment rate is 3.3% by the end of 2019, a lot of people say they're going to credit the tax cut for boosting growth, boosting jobs, whether or not it deserves it. the coincidence will be compelling for people. that may be a surprise how popular the tax cut is over the next few years >> let me ask, jim, are you going to try to figure out how to be a passthrough like so many people i know these days who live in new york, new jersey, or high-tax states? >> i'm going to turn myself into a passthrough bitcoin investment business the papers are in the works right now. >> i asked the question, jared, because there would seem to be room for a lot of people trying to figure out ways to game the system i don't know if they'll be able to do or not, but that would go to the revenue rates that may or

may not be there >> this is a testable hypothesis i think revenues from these tax cuts are going to come in significantly lower than they think because of the very dynamic you just suggested it's not just the incentive to incorporate as a passthrough, though that's there, and i'm looking forward to jimmy bitcoin llc. it's the incentive to incorporate as a c-corp, as a corporation. there you're talking about, you know, it used to be you wanted it to be an s-corporation, now you want to be a c-corporate because you want to be the 21% rate the other side of the argument is because jimmy is right that the economy is going to be strong in 2018, that's going to be a revenue booster but to the extent that we can figure out what's going on with the tax cut and revenues, i think the trillion dollar deficit is going to be larger.

>> i agree with what you're saying, the perception of how well the economy is doing may be great by the time we're, you know, thick into the midterms. do you believe or does it matter that the president's personal popularity is still so low how much of a headwind is that against his policies >> well, we're going to find out, but we do have at least one other data point, which is the 2000 election, which we just came off an amazing boom markets going crazy. economy growing 4%, 5% and yet al gore was unable to win. because i think a bit of the hangover from the clinton impeachment and people wanting a fresh start. it will be interesting to see if that's the better analogy or the more economic centered explanation, the economy doing better, people credit the republicans and they do better than expected in the midterms. >> they're saying, i forget who i read, probably karl rove or something, saying the president himself should stay off the trail, kind of like he figured

out after health care, to be hands off. maybe if he's hands off in the campaigns next year and lets the republicans run without worrying about the attachment >> stay off the trail or twitter? >> i think trump's problem, it's actually mnuchin's problem, too, simply put, especially trump, he just lies too much and so people don't trust him. and when he says the economy is doing great because of me, it just goes in that lie bucket >> jimmy's point is if you feel like you're doing better, how much will that help the gop given that, you know - >> gop, maybe, but if trump's approval rating should be 15 percentage points higher than it is based on the economy. the reason it isn't is because people don't trust him >> guys, we'll leave it there for now. and i know we'll be revisiting this oh, so many times always a pleasure. thank you both dow has turned around into positive territory up 15 right now. when we come back, bitcoin is

also recovering from a selloff below 12,000 last week i think you made this happen you don't want to read about bitcoin. >> i'm trying to read about it and understand it. i just can't claim i have a deep understanding i would like to have in order to comment on it >> sure. bitcoin was down 30% neck week we'll find out why m.i.t. thinks there's much more to the crippo currency story than the price. gt 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.

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more wild swings for bitcoin as morgan stanley came out with an evaluation that said the true value could be zero. we're talking to the co-kauther of the truth machine, which is on sale february 27th. good timing, my friend >> purely accidental, but we did seem to luck out for once in my life, i timed it. >> we set this up as m.i.t. thinks this about bitcoin. you represent m.i.t. >> that's a bit of a stretch a very large institution with a lot of people, so yeah, i represent myself in this case.

>> okay. well, you are deep into how this -- we were talking about this, how bitcoin and blockchain work is there a way you can invest in block chain without having to get involved with bit coin or another cryptocurrency >> that's a rabbit hole because it depends on what you mean by blockchain a lot of us think you can't have blockchain without something like cryptocurrency. so the answer would therefore be maybe, if you believe it's possible to create one without it you could possibly invest in these companies that are providing these services that are without cryptocurrencies chain.com is a start-up company doing well there are companies that are working with them, nasdaq, for example, maybe nasdaq is a little bit of an exposure to it, not too much, but certainly, if there's ways to get access to some of the tokens of the companies that are providing those services - >> that's the funny thing. if i sort of am excited about

the idea that i don't have to pay title insurance one day on a mortga mortgage, that i could transfer the documents more securely, why do i have to get involved with coins of any kind? >> well, ultimately, because it's inincentive system around which you traet a permissionless architecture without that, it becomes something that is partially centrally controls and is at risk of censorship, so it depends on what your position is if you believe in a decentralized position, we need the cryptocurrency architecture to build and grow. if you think it's okay to compromise, and nats not a bad position to take, then you can accept that there is a distributed ledger that could be run by a consortium of validators and they're incentivized by the fact they all agree this is a good idea to participate in there's a fill sophcome difference in those two. >> to those who say the more

important story is this underlying technology we're briefly touching on and what it means in terms of changing the economic model, is that going to happen is that a real opportunity in terms of these applications such as blockchain? >> i do. and i think it's interesting to think about the comparison to the dotcom bubble. a lot of people say it's like the dotcom bubble, and i tend to agree with them, but when we think of what it did, it laid the infrastructure for the internet that came back afterwards back then, it was physical, fiber optic cable, 3g mobile, and then we got a boom what's happening in this space is the development of social infrastructure we're developing networks of decentralized applications there are people that are working on inventive new ways to sort of manage value and create economic systems that will emerge out of this at what point, i don't know.

>> why isn't centralized beneficial over decentralized? >> in some ways, it is but if you look at what's happened to the internet, it is a manifestation of the problem of centralization. we have this behemoth, these amazons, these googles, these facebooks, and they're a function of the fact we weren't able to figure out how to transfer value in a decentralized way, so we ended up with monopoly powers. sometimes it's good because it's more efficient, but there's plenty of cases where monopolies add more cost, more friction, more difficulty. i believe that this technology opens up access for so many more people, and they'll be able to participate in a global digital economy. >> i want to ask one final question centralization is more efficient, but all this mining uses a ton of energy how do they solve that >> it's easier to think about what might happen to the

incentives to build renewable energy because of that problem we'll use a lot of energy during this, but does it matter if it's solar? >> if it's cheap enough, yeah. >> incentive to make solar more efficient and cheaper, precisely because you're going to make money if you do so >> a good goal, but in the meantime >> in the meantime - >> bitcoin didn't work out, but the solar industry finally reached the tipping point. >> i'll take it. >> michael, thank you very much. good to see you. >> as we head to break, we're edging closer to the end of 2017 that means it's time to talk about some of the big themes that could shape 2018. julia has your media playbook for next year. >> in 2018, we can expect an acceleration of change in the media industry as the giants adapt to more competition. first, with disney's fox deal creating a behemoth that will grab an even bigger piece of the box office, all the other media players are likely to scramble

for scale. targeting the smaller media companies, we could even see netflix via studio to lock in a library with subscriber appeal as the industry awaits a court decision on at&t's decision with the doj to buy time warner second, amid growing concerns about cord cutting, there will be a surge of new skinny bundle subscribers. youtube, hulu, and at&t's directtv now will make greater gains as their sports-free bundle appeals to people who don't want espn. new live video offerings from amazon and even apple and facebook could put a deeper dent in pay tv numbers. lastly, with sexual harassment and misconduct revelations prompting an overhaul of hollywood's top ranks, all signs point to the entertainment industry taking the lead in redefining work place conduct. after years of criticism for being too white and too male,

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i'm contessa brewer. here's your news update at this hour u.s. home prices rising 6.2% in october over a year ago. the s&p case schiller index finds the strongest gains occurred ipseattle, las vegas, and san diego. a new report fines airlines costs rose more than 8% in the first nine months of this year revenues only rose 3.8% during the period the numbers suggest airline profit margins could come under pressure garmin is introducing a new fitness tracker. its color display always remains on, so much for trying to ignore it, and the device has a battery life of more than a year and finally, just a warning for you. this is a cuteness alert the budapest zoo announces the arrival of a new baby gorilla. the animal keepers can't tell

its gender, they don't know how much it weighs because mama is not letting the baby out of his arms why would you? you're going to hand over your baby to a bunch of strangers that's our news update for this hour back to you, kelly >> we'll see you later thank you. contessa brewer. >> new numbers on holiday shopping let's get over to kate rogers who rejoins us from new york with those details hi, kate >> hey, kelly. well, christmas may be over, but shoppers aren't slowing down they're set to spend some $69 billion this week between christmas and new year's alone now, that's on top of an already strong holiday season. there's new data out from mastercard this morning showing that overall retail sales from november 1st through christmas eve rose by about 5%, the fastest rate since 2011. and overall, the nrf says consumers are set to spend some $682 billion this year, $100 billion of that coming from e-commerce today, the day after christmas, is actually set to be the fourth

busiest shopping holiday in terms of foot traffic this year. this mall in west niacopened around 8:00 a.m. we're starting to see more shoppers come in many shoppers were eager to take advantage of the sales very deep discounts the day after christmas. >> i'm looking to make some returns. maybe do a little holiday shopping so got some gift cards over the holiday break. >> i have a gift card for victoria's secret, so probably there. >> we had to return something at gamestop, get a new -- what is that called? screen protector >> christmas, of course, fell on a monday, so shoppers did have an extra saturday this past weekend to get their last-minute shopping in. that's called super saturday it was set to be the second busiest shopping holiday this season after black friday. in terms of foot traffic, and you know, we're going to keep you updated throughout the day returns are also big the day after christmas, and on average, about 10 million people are estimated to return items this year back over to you

>> that can really slow down the stores if they don't have -- you know, one or two or three people doing returned and like good luck trying to check out with anything else. >> yeah. absolutely i mean, the lines get longer and longer like we said, tons of sales, too, so people are looking for good deals >> you have to navigate around the returners. thank you very much. kate rogers. >> sticking with retail, it appears this year's holiday season was a strong one. figures from mastercard show 4.9% gain from last year covering november 1 through christmas eve. that's the biggest year on year increase since 2011. we're joined by jan kniffen. okay, this is in the numbers, isn't it we knew it was going to be strong there's efz of that from black friday look at the ramp a lot of retail stocks have been on. granted, they're up today, but it's pricedige now, isn't it >> it's priced in. we have seen really good numbers, but we did see 5.7% increase for november alone. so it's been slowing year over

year week by week, up through christmas. that doesn't mean it's not fabulous i think it's really probably the best in a decade but the sales came online. if we were really up 19% online, which is about what we think, then about 3.6% points of all that growth came online, which only leaves less than a percentage point for brick and mortar it still came early and it came online, and it will still be a great season, and inventories were thin and profit margins will be great, but it hasn't changed the trajectory of what's happening. >> the secular decline of brick and mortar which you have been talking about for years continues despite what has been and continues to be a strong season >> you're right. i started telling the story in 2014, so maybe it's getting old, but what we're seeing is the continued growth i was saying 50% of all non-bar, non-restaurant sales would be online by 20 en30. we're on thak for that we're going to have less stores, less malls

but that doesn't change the fact that this has been one heck of a good selling season. the best in many years it's going to be great for a lot of retailers the other thing we're going to see is with this new tax law change, the strong get strocker and weak get weaker. despite the fact it's been a great year for sales, what's happened more store closure announcements than we have ever seen before. more retail bank than we have seen outside of a recession, and that's in a great year so that trend is still continuing a lot of pressure, retailing is just as competitive as it's ever been, none of that changed but with thin inventories and a strong consumer, we're having a really good year >> we're having a really good year to your point, retailers will be amongst the biggest beneficiaries of the tax cuts giving they are typically domestic taxpayers with a higher rate than most other companies >> most are going from 35% to 21%, a 14 percentant point drop. the only reason you don't see retail listed on all this lists

of things that bf is there's a whole bunch of retailers who don't make money and don't get benefit. those people will be really hurt as retailers start passing this tax benefit back to the consumer and walmart will start it first, right, because they're in a huge fight with amazon. and they'll start giving more free shipping and better pricing because they'll be able do more of that now, and it will put more and more pressure on weak retailers to go out of business. >> walmart leading the dow now, up less than 1%. ulta beauty is leading the nasdaq s&p is up by kohl's, macy's, foot locker. a strong performance, but now that kohl's is up 25%, 30%, does that mean suddenly the game has changed or not >> well, i'm thrilled you named all those because every one of those was in my note to you from last night so yes, i'm thrilled they're doing well and i think that the winners will continue to do well but that doesn't mean retail across the board is going to we're not going tosee the

strength in early 2018 that we have seen here in 2017, probably we're going to see a little bit of giveback, but with the tax law change and with the average consumer having a little more money in their pockets and retailers being a big beneficiary, it's going to be a pretty good 2018 for retail, too, but it won't be less competitive. we'll still see more store closures than this year, more bankruptcies than this year despite the good news. >> i have been interesting, we can't own stocks here, we like to point that out, but i focus on macy's, when the yield was approaching 7.5% not too long ago. do you see in 2018 the opportunities for that company a stock up 22.5% over the last three months, benefitting today as well. a better quarter than many thought going into it. >> macy's is last man standing in their space if you look at department stores, it's not going to be belt, not going to be baas kauv's, it's going to be macy's. they own that space, and they have $16 billion worth of real

estate they haven't monetized. they're going to win in that space. what does winning mean we don't know, but we will see that monetized and there will be real value there longer term, they still have to win as a retailer. in the shorter term, given the givedened and it fact they can buy back stock forever and they have $16 billion worth of real estate, i'm a fan. >> you are >> i am. >> he'll make a note of that in his portfolio. >> my nonexistence >> thank you very much thank you for coming down. >> as we head to break, take a look at shares of apple this morning. the stock is under pressure this on reports that sales of the iphone x not quite what had been anticipated. we don't know what these buyers, as you might expect, are under pressure as well when we come back, it is the time of giving, and as we embark on the sweeping changes to our tax coat, could charities feel some pain? we'll have both sides of that debate when "squawk on the street" returns. e.

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let's get over to the cme group in chicago rick santelli joins us with the santelli exchange. rick >> good morning. and thank you, david like to welcome my first guest after the holiday, andy brenner. thanks for taking the time today. >> rick, thanks for having me. always a pleasure, buddy >> so as you pointed out in your most recent writing, there's reamy only two days, wednesday and thursday, where we have full capacity shortened sessions on friday for many markets. of course, marketsts were closed yesterday. is there going to be action in any of the markets specifically on the treasury side as we close out 2017 that you see in your technical or fundamental crystal ball >> you pointed out midway, you have been talking about it for six months, we tend to close near the previous year's close you know, last year, we closed at 244.5 we're at 247 now the difference is this year, you know, the two years at 190 was

119 at the beginning of the year we had a flattening, and you have been saying it for a long time you should take a victory lap. >> thank you for that, andy. you know what. it's funny you mentioned the long end, and you're right 307, 308 281 isn't going to get up there in a couple days, but what about the treasuries perspective many want to see 50 and 100-year paper. secretary mnuchin hinted he was okay with it, but it seems as though the strategy for treasury is more short dated issuance for 2018 your thoughts? >> a huge mistake on treasury's point of view. by the way things are going and the way the fed is projected to raise rates two to four times next year, it really makes sense to issue in the long end as you pointed out to me off camera, argentina did a multi-billion dollar, 100-year austria did it everything has gone well i think that the advice the treasury has been given is wrong. there is tremendous demand for 50 and 100-year paper.

the problem is it won't be a tradeable instrument bike the 30-year is, but then again, it will be good long-term management for the treasury. so secretary mnuchin should revisit this and revisit it now before rates go up >> finally, we have a little less than a minute left, andy. i always enjoy the holidays because i get to talk to a lot of relatives and friends along the demographic spectrum and hear their thoughts. this holiday, the thought was, the fed raises rates, yet my bank cds don't seem to be going up do you have any advice for senior citizens especially that are looking to get a little more horsepower out of their savings? >> rick, you know, now you're anging me on a retail level. i tell you what i do, i look at the fidelity website and i see where current morgan stanley or goldman sachs two year cds are, at about 2.15, where my local bank is 1% it is out there, or go in and

buy two-years. how can you go wrong buying two-years at 1.90, or get 2.10 or something like that, it makes good sense, get a good yield, no risk >> awesome you know, andy, i'm sure my mom is watching, taking notes right now. thank you very much, andy. hope you have a happy and healthy new year kelly, back to you >> good stuff. thank you both >> as we head to break, a special night coming up on cnbc. it's the premiere of the profit in puerto rico an american crisis some americans are living in unfathomable conditions while they wait for help marcus lemonis saw some of the worst firsthand. >> el salto is perched on the side of a gorge. it's home to trinidad revara and her extended family. we trekked up to her house >> you have to cross a zigzag. >> or what's left of it.

>> there used to be a wall here? >> yeah. >> and a roof? >> yeah. the roof is right there. that's the roof. >> this was your family room >> yeah. yeah her furniture, everything. >> now i'm at this moment in time where i don't even know what to think. no roof, no electricity, no water. no walls american flag is flying. like, this is the united states. this is what it's supposed to look like? >> be sure to watch "the profit mecauerto rico, an arin crisis" tonight at 10:00 p.m. eastern and pacific. "squawk on the street" will be right back the great emperor penguin migration. trekking a hundred miles inland to their breeding grounds. except for these two fellows.

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and we digest the tax overhaul, still starting to evaluate the potential ripple effects. some fear chair ritab2k45ir dhan could suffer we have two experts on that joining us with opposing views

good or bad for charitable giving >> unfortunately, this is terrible for charitable giving all of the charities are rightly extremely worried about their viability after that tax bill. >> why >> well, the problem is that the charitable deduction has played an important role in encouraging charitable giving. and the effect of this tax bill is to reduce the number of americans that can take advantage of the deduction to about 6% of american taxpayers this is unprecedented in the history of the tax code. the charitable deduction was enacted with the tax code 100 years ago and throughout the whole history of the tax code, we've provided significant tax benefits to many americans that support their charitable giving. and essentially this is all going away now >> we asked the head of make a wish about this this morning and he doesn't seem too concerned

and i wonder if that is because there are other ways that the tax code still advantages charities not only on the annual income tax return front, right >> there are a lot of ways but the estimates the charities are using are worst case estimates. also not based on what is actually in the bill as understand, there are a lot of provisions that help charitable giving in the bill as well no one quite knows how this will all play out, so we're hearing a lot of alarmist talk even if the worst case scenario worked out, and there is a big doubt, it will set back charitable giving by the give lebts of can i have len equivalent of a year every year it has been growing by 4% per year when the standard deduction was first introduced into the american tax code as a world war 2 era measure, charities and their experts predicted a

decline in charitable giving except in recessions, charitable giving has been going up constantly since then. >> your concern is that fewer people will give, but is that fair to people who just want to support charity regardless >> well, people do want to support charities, but the tax benefits have played a significant role in charitable giving and we know this because of the amount of giving that takes place in december and specifically in the last week of december and the problem is that it goes much further than who actually gets tax benefits because the way the law currently is, a lot of americans don't get tax benefits, but they believe that they do. there is a highway awareness si the tax benefits so you hear all of this from the charities with the promise of charitable tax

benefits but takes becomes more widely known that the vast majority of americans about 94% get no tax benefits for their giving, then this alignment of charitable giving occurring at the end of december will go away and i think it will impose a significant problem on charities. an even greater problem is because of the way that the charitable giving will occur and in particular the growth of donor advised funds. everywhere you look you can see that donor advised funds are touted as the answer to the current shift in tax regime and we already have enormous growth of colors into donor adviser funds. the problem is is that money that goes into donor advise funds are subject tono further obligation to ever get to charities and the organizations that are running these funds have a financial stake in the

money staying in them. and that has to play a role in how they market to their donors. >> leslie, do you share those concerns >> no, i don't donor advised funds at least as far as the records we have tell us actually spend a lot more than many givers it's not unheard of to find 10, 15% of donor advised funds being spent in the year in which they are donated. in addition, about 15% of charitable giving in the united states comes from foundations which are subject to a payout rule, they have to give a certain amount each year based on the size of their as ssets and given the run up in stock market and other asset values this year, i think that you can confidently expect maybe a 15% to 20% increase in foundation giving which will translate into

billions of dollars. >> this is actually an additional problem because private foundations are subject to a 5% payout rule, but they can now meet it by giving to donor advise funds where there is no further payout rule. and as this becomes more widely known to private foundations which it is being marketed to them, we will see that while they might be effectively giving their money to charity, the charities are not receiving the money. >> only a very small percentage of foundation gifts go to donor advise funds and again keep in mind that these funds spend money too. sometimes at a faster rate than the foundation payout rate >> i'm afraid unfortunately we're out of time. but i can promise you this is a topic that we will be revisiting >> i look forward to it. >> we appreciate you both joining us >> seema mody has a quick sector

report >> and health care is in focus after some activity in fa pharmaceuticals. sucampo will buy mallinckrodt. both trading hire on the news. and stay right here, we'll be right back

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