[ music playing >> announcer: live from new york, where business never sleeps there is "squawk. -- "squawk box". live from the nasdaq site in towns square becky and joe are off today. our special get for the morning yet again kevin o'leary. we didn't scare you away yesterday. are you back for more mun u fun. >> i learned a lot it teaches me about the left wing >> i got texts and tweets after our conversation at the end of the show >> so did i. >> about entitlement reform and estate tax. >> yes, it went a little viral i'm glad you are learning from in. >> i'm learning from you >> you know what role are you play zplg i am trying to be the right wing voice of reason that's it. >> i want to say mr. and mrs. wonderful have gotten the outfit right today. >> you look like we're going to

the funeral. you always do the black. >> i have the same 25 suits i wear all the time. that way i don't have to think of what to wear. >> it's the jobs anyway. >> 25 shirts, 25 suits, 25 tie, every morning i say, i wonder which one i'm going to wear? >> are they all adent cal? >> they are. >> i like to travel with plaque, it doesn't wrink him or you are can't see the wrinkments >> it's a crisp look when you talk about money, you should wear a jacket andrew, hint hint >> loose, i'll put the jacket back on. >> respect the capitalist way. >> no question >> laying it on very early this morning. let's give you a look at where stockmarkets futures are at this hour we had a positive close t. major averages avoided a three-day losing streak. can you see we are green arose for futures. the s&p would open up shy one.t. dow would open 31 points to the upside t. nasdaq would open up about nine points. of course, this follows some

fairly positive trading overnight in acia. we saw better than expected retail sales in japan. we seen yen sell off later in the day. >> that caused weakness, the u.s. seems to be relatively bucking that trend wti is barely budgeing after volatility earlier in the week, same story for brent this morning, nasdaq gap up close to 3% in advance of that massive cold front sweeping across the country we feel it here. a lot of people feel it where they are >> i'm cold in here this morning. >> put that jacket on. >> we pay get that jacket. in the meantime, a couple stories we are watching this morning, apple giving its ceo tim cook and executives a pay boost, the company topped annual sales for fiscal 2017 t. company's annual proxy filing shows cook's compensation jumped 47% to drum rom, please $12.8 million t. largest bump listed

in the filing. guys, it's quite to say 12.8 is underpaid, ceos of much larger companies. >> five years ago he got that massive bump >> $300 million bump, which by the way probably turned into a million dollars. >> that's interesting. >> it's low compensation for a xa enthat probably hits a trillion dollars >> when you amortize, it's wore atmosphere billion dollars, can you say he's under compensated >> you know the income in california when you get paid the government takes almost half of it so he's really to me after tax about 6 million. which is a pretty good deal that created that much value speaking as a shareholder i think he should be alined with me and i'd rather see his comp come from equity, which he is getting. >> are you cool with the original pay jo ut >> i was very cool with that you got to remember, i look at it from the risk i take versus the return i get and the

management that works for me, so far, they've done a terrific journal i'm not one people that thinks you should cap executive pay. it's another situation, from the government, i am here to tell awe your executives are worth. no thank you >> one of the details was the first mention of tim cook's use of a private jet not to say that he doesn't use one before >> right. >> he did have the one off charter here and there, but interesting, with so many executives, kevin, who regularly used the company private jet for every manner of travel that tim cook for safety reasons according to this fileing is only now leveraging that regularly. >> you know the way to deal with the jets is don't put it on the balance sheet with the company, if you use one, own it yourself, lease it yourself. look, i'm guilty i use private aircraft but i try and be efficient about it i go commercial. if i'm taking five executives, let's take a plane that saves time and money, frankly. >> look at it. i'm with you >> also, think of it can i say tim cook is now such a

rockstar that if you were to walk through an airport, it's like a problem >> yeah. i'd be worried about that. >> he wouldn't make it to his flight on time. >> it's the situation, towp. >> actually, it's funny, for a lot of people a. lot of ceos, i don't buy that argument. i think they can walk through the airport, no one would know anything in his case, it's real. >> not to get off on a tan gent, when you go on a long distance to china or dubai, there is very few luxuries better than the emirates, i don't know anybody, even with a g 4, g 5, go 6 that can emulate that there is private isn't as good as a commercial aircraft. >> that is rarified air. though, that is the decision are you making. >> it's true, though, i am doing my but supporting those airlines. >> severally the u.s. apartment vacancy rate increased slightly, according to a new report vacancy rates increased in 50 of

79 metro areas, including new york city and walk that report also expects vacancys to rise in 2018 and also a little pressure to tell you about this morning on bitcoin today and it's coming from regulators, south korea announcing it would implement new rules to regulate the trade of the crypto currency, you are looking at bitcoin between 9 and almost 11%. >> i argue, it will help the currency the more it gets regulators the more regulators engage it the more it has an opportunity to become a currency between the trades, initially, it will put pressure on it, if every country says, look, here's how you are engage, it becomes a currency that's what i'm hoping for, because i'm an owner of this on the other hand, everybody shuts it down because of the list of transactions, it will go to zero >> but you think that countries across the world should coordinate the way they regulate it >> at some point the fcc is going to allow a bitcoin etf and

that will, that will legitimize it in a way that we have never had. it hasn't happened yet i tried to bring one, myself they basically said, off the record, we don't like it there they said that off the record that are you now saying on tv? >> i'm not saying that >> one question. the liquidity issue around bitcoin. if you wanted to sell out of your position today, all of snit a huge problem, you couldn't do it t. guys that have $90 million of bitcoin, it's virtually impossible to exit if i want to trade $500 million to usg, i request do that in a transaction in a split second. it's the largest market in the world, that's why bitcoin is not yet a currency it's a cockroach meilutyte you can put $10,000 in try to get 200 out easy, it's a problem. >> they will take this up at one of their technology meetings what do you think is the best outcome for that meet something.

>> at some point you want to embrace this i tried to settle a $200,000 transaction in europe with bitcoin t. reason it never occurred was the receiving side forced me to buy the insurance on the valuation against the u.s. dollar. i said, i'm not doing that you want the transaction because you want to avoid the regulator the fact that people are askth you, why are you transferring $200,000 you know, they want to know, where is it going? why are you doing it bitcoin doesn't have that problem. >> right we'll keep our eye on that i'm sure we will discuss bitcoin in this show. meanwhile, there are other data pieces we will be watching for t. first weekly jobless claims are out. followed by chicago pmi at 9:45 eastern. then at 11:00 the eia releases its weekly data on u.s. oil and gas inventories, so while we might not have much movement in morning in the commodities complex that could change around 11:00 today. meanwhile, homeowners across the nation have been rushing this

week to pay their 2018 property taxes early in order to take advantage of a detux scaled back under the new u.s. tax law elan moy has more on the rush to prepare. i have to imagine, there is a little more nuance than we read about? ylan mui >> reporter: we are looking at a tax code everyone is trying to make adjustments on the fly, that includes the irst. new guidance on pre paid property taxes said you can only take this deduction this year if your 2018 tax versus already been assessed so you can't pre pay what you think you will owe next year it's up to each state or locality to determine when to assess that tax. homeowners will have to check that date. now, as you transition to the new tax code, there are also a couple important dates to keep in mind as well, 2025. >> that is when all the tax cuts expire the rate cuts the bigger child tax credit

the increase exemptions for the state tax t. alternative minimum tax. all of those goes away unless congress refews them t. one is retroactive. can you deduct medical expenses from the start of this year, but it will only last through the end of 2018. one major change in the tax code won't take effect until 2019 and that's the repeal of the individual mandate after 2019, lit go away permanently. also disappear income 2019 the deduction forral.payments. not trying to imply anything, guys, just saying, delivering facts. back over to you >> ylan, no assessors are working if you wanted to get a last-minute assessment, are there? >> reporter: i don't think they will turn it around that quickly. the irs presented several sample scenarios of what it would look like if the tax had not yet been assessed in this year. it doesn't look like there is time for them to turn that

around i checked my own county, fairfax county in virginia unfortunately they assess 2018 property taxes january 1 so i'm just this short of missing out on it. >> oh, man don't you think i could make an argument the state and local municipalities should be doing this on behalf of their people >> yeah, they're going to come in so you can reduce your taxes in the last 48 hours >> no, i'm not reducing my taxes to the state or local. i'm reducing my taxes to the federal. >> exactly. >> to do that on my behalf >> i think they'll wait the 36 hours it takes to make sure you may more you will be paying your taxes next year on the faux pas, at the end of the day you have a choice to live you don't have to live in new york can you go to texas, can you go to flam. i think many people will look at it >> you are right you would think, this is like a.

>> watch it hoop >> i do, i think retirees that go to warmer states will retire a little sooner. that's all. >> real estate prices in blue states >> it will be a little of a problem. >> how big of a problem? >> not that bad t. truth is the people going into the markets, supporting it haveoaren't going to be moving i'm not worried about condo prices in new york ever changing it's an international market miami might get some support from this. >> ylan by the way thank you for that hit and getting up ernl. meantime, president trump cheering this year's record market rally while visiting firefighters in. florida. >> they say, you are a grit investor, right. you have your numbers go up t. stocks go up the stockmarket goes up, that affects everybody. not just who you think the rich, you think it affects everybody,

people own stocks, whether it's in 401ks or otherwise. we have the all time record for stopping ridiculous regulations. we are very proud of that that's one of the reasons the stockmarket is up at a record level it's a record level. we've broken 84 times this year the stock market hit a new high 84 times since we won the election november 8th of last year so that's something we can all be proud of. >> the president trump is at his florida home are we still calling it the winter white house you are a washington -- >> yes >> that's what they call mar-a-lago still >> yes >> he is there, a working vacation >> he didn't go there through the spring, people started calling it the southern white house, a little semantics. >> we will be returning to washington in the new year meantime the good times continue to roll into the new year. joining us the chief market

strategist and richard steinberg, asset management. good morning now we set up saying will the market rally roll on? so i'll ask you the question, will the rally roll on >> well, 2018, we have a pro-business economic backdrop that is going to drive marks going forward. it's going to be pervasive t. magnitude i believe is under estimated its impact to the economy. look at 2017 it's already been in play the pro-business backdrop q3, we had twoback-to-back 3% quarters. q4 looks like it's in the back 2018 will be the first 3% annual gdp year since, in a decade. and we thought that was a by-gone era. but it's here. and one thing about these tax

cuts going from 35 to 21 a 40% tax cut. it is going to put pressure on every country and region in the world to also cut tax, which is pro-business that's going to hit, accelerating corporate earnings, broadening manufacturing, consumers globally and the impact is instead of being in the 9th inning of a baseball game like this bull market is reported to be i believe we're in a double header >> a double header >> and we should position that way. >> hey, rich, do you agree with that let me throw one little terrorist attacks on top if mr. cohen is right about taxes coming down across the globe, what's that going to do for employment here or fought? >> well, the fact of the matter is, the average s&p company has a 26.2% tax rate so this is definitely going to help we think it's about $12 in earnings, which does support a

strong parmarket i think what you have to see in order to drive the markets higher is what is corporate behavior going to be like? we believe that corporate behavior will be a nice mix between stock buy backs, capex spending, and additional hiring. and if we get that mix, our twen 2850 target, 18 times $156 in earnings may be too low t. difference, though, between this year and next year is this year we've had and up market every month for the whole year that's the first time that's happened since 1987 and i think, i think that we will see a good, strong high single digit year next year, but it's not going to look like a staircase. >> so that's the corporate bull case to buy index or etfs, dourks but what is the consumption case, if most u.s. hold holds ends up with $2,000

to $4,000 in their pockets do they save it or spends it if they spend it, where does it go and how can you leverage that >> this $97 trillion, you add tax cuts and low unemployment to that rising house prices, they're going to spends. they have been spending and so on the count sum shun basis. but i see this tax cut as a double whammy first as the supply side, the corporate tax cut. but then is the demand side, the individual and the pro-growth. they're going to have more jobs and i feel this accelerating, but i call it, what i'm watching in the global xi, i call at this time big three u.s., china, europe. they're 60% of the global xi that's $48 trillion and that's my focus and i think that creates more growth and ultimately it impacts consumers in a positive way.

>> you like this consumer discretionary sector >> i sure do >> would you put that on your top sector next year >> top financials because as interest rates go up, i believe it looks like financials are going to double their earnings, growth from 2017, technology in this capital investment scenario, capital investment has already happened in the past two quarters i expect that to continue ultimately raise productivity. so where do you go for capex technology >> i'm surprised neither of you talked about the regulatory environment. quietly but surely this administration is peeling back regulation >> totally great >> to what extent is that a driver rich >> i think, kevin, i think there is not only the tax side, the regulatory environment is getting much better. and lastly, once we get through some of the noise of the 2018

elections, if we could start to get some talk of an infrastructure play, we could really have, you know, some nice wins back in the xi. the regulatory environment, though, huge it's been a tax on corporations for years and it's almost a boost to this tax deal. >> it's probably 2017 has been driven by the deregulation environment, but make sure you don't forget about small business, this tax cut helps small business but also the full expenseing for five years really helps small business i think that hasn't got enough attention. >> okay. thank you, guys. appreciate it. happy new year all right, coming up on "squawk box," shopping for stocks, which names should be on your 2018 list after a very successful holiday season we'll be back in just a moment

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winners is amazon. who else >> so other winners, of course, amazon's big competitor wal-mart there are players in the beauty seconder likal to and sephora that are absolutely on fire. they have been on fire a while and they continue to be and there are small value players, companies like five below doing well, expect to open 100-plus stores in 2018 and companies like starbucks that's a huge, huge store for current sales during q4. >> this year feels like a pre-holiday season marked dramatically by bankruptcies i believe there were 21 in 2017 alone. are there any companies that you think are sort of dependent on this holiday season as a make-or-break season for them? >> yeah, the two sectors that are most challenged are women's apparel. so you'd mention this 21 bankruptcies, about 13 of them

were in the fax sector so that is a is effectsector re challenged t. second group are the department stores. this is make or break for companies like series's, jp penny, macy's will pull a rabbit out of the hat and did well, this past holiday season, really 2018 and '19 will be tell-tale signs for how much they have left in their future as well. >> for the companies that did well, often times, we think, okay the holiday season the sales are pointing in the right direction. they were better than expected or the previous year then we get to earnings in january and the margins nearly always disappoint and the stocks sell off will we see de ja vu this year or do you see something else happening? >> well, that's a great point. i mean, it's -- this is usually the same story, because q4 is the time of great discounts. i think that everyoneis happy that the numbers from a top line standpoint were up but the truth, i actually think what was happening was that

consumers were delaying gratification and waiting for those sales so you saw the great discounts and the deals on plaque friday, cyber monday, even through much of december, so i think that you are absolutely right for a lot of retailers, particularly in the department stores, in those women's apparel categories where they are heavily discount dependent, we could absolutely see those margins plum when the earnings are reported >> that said, i do think that companies like the starbucks the five belows, amazon and wal-marts should nonetheless fare pretty well they've managed against those professional cadences pretty well. >> leave it there, happy new year, i appreciate you joining us >> happy new year. >> thanksb. coming up, shopping for a new home, finds out what areas of the country have become a little more attractive, thanks to tax reform. that's next. as we head to break,like take a look at the s&p winners and

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the markets seem to be shrugging off the chill this morning after major averages closed in slightly positive territory yesterday. s&p 500 would open up one point, the dow jones by five, the nasdaq by 12 t. second lowest trading volume of the year second only to black friday. so keep an eye out for volatility when have you low volume, can you see unexpected spikes or drops depending on where you are playing. >> let's talk real estate, guys. last week, president trump signed into law the sweeping tax plan for tax benefits for owning a emhochl existing home sales surged in november, a stronger economy and booming stockmarket. for more on how the economy could affect the value of your property, we want to bring in the chief economist and national associate e association of realtors good morning >> good morning. >> so tell us, where is it going to be good where is it going to be bad? >> well the states where the people are taking out large emergency, so high cost areas

like california, new jersey, new york, and you combine that with high property taxes, where now there is a limitation of $10,000 and 30% of new jersey residents, for example, exceed that amount, which means that people will be more hesitant to buy expensive homes in new jersey as well as some homeowners that desire to sell so we expect some price declines in california, new jersey and new york, connecticut. >> what kinds of price are we talking here >> we are looking at maybe in the 5% range but for most parts of the country, 95% of homeowners and home buyers are fought impacted by mortgage interest deduction limit or property tax deduction of 10,000. 95% are not impacted and, hence, the market momentum. home sales rising, shortage of inventory. so overall the nation wide, we expect prices to be fairly

neutral in 2018. >> i have a question about the cyclicality of real estate pricing across the country it used to be, you'd have a seven-year cycle, the correction was about 20%. it happened on caloricwork every seven years down 20. we have not seen that in a long, long team. 5% correction you mentioned earlier is nothing it sounds like you are bullish this asset class keeps going, even though interest rates have gone down. aren't you interested this in the psych him? >> the economy is still growing, over 2 million net new job creation per year. we expect that in 2018 because of the tax reform has some cumulative short-term impact now mortgage rate could rise because we are seeing larger bug deficit over the horizon if you

remember, a furthermore, that w pull back the home buying potential. on the positive side the household information, which has not really kicked in, is expected to slowly rise, essentially, the young adults living with parents, they will at some point start their own household, there will be a demand for housing so we feel very confident that the demands side remains solid now, i wish supply request catch up with demand, because one thing the home build verse not been doing is that they are not back to historic am normal of 1.5 million housing starts a year this year, barely skraveng 1.2, 1.3 million. >> in terms of marks where you think there lab huge upside even on homes that are, you know, under half a million dollars, $250, is there a place or a town somewhere you go, this thing will be hot given what's going on >> i would say texas, utah, a

state that is already seeing positive in migration. when we begin to see that dynamics accelerate, so him people in high tax state begins to migrate into a lower tax states and furthermore, the baby boomers are retiring, some will want to seek out warmer weather states so possibly you are looking at again texas, maybe florida, utah, arizona, these are states that is likely to benefit from positive in mieg fwrags gratione states >> let's take miami, for instance, mid-prices have stalled. we were debating a few minutes ago with this tax change, would this make the competition for people live income new jersey, new york, massachusetts, for example, would finally they say, okay, i'm going to move earlier now, i'm being chased out by high state taxes i can't

deduction. i will move to miami and that means as an investor, should i not go along all those condos on the market in south beach, for example >> so there is an active building, but still by normal job creation and house inflation there the an under production and, therefore, as a real estate investor, i think they should be looking towards, you know, where is a positive in-flow migration. i would say another thing for real estate investor is wherever amazon's second head quarter is determined, that will be a good spot real state unlike bonds and stocks don't react immediately there is slow movement so after the announcement, if a real estate investor is looking for good return, i would go into the city where the amazon second quarter is selected. >> what's your bet >> i'm pretty sure it's not going to be south beach. frankly, now we bought the this

tax code, maybe they start to say, we shouldn't put it in a highly tax state that will be uncompetitive. >> that would be remember, m.i.t. and harvard >> often >> texas could be interesting. you got the educated base there. you got a better tax code. >> life in seattle, too. >> this is where taxes matter. we've now got a state competition going on >> they suggested raleigh, north carolina. >> what are the taxes in north carolina >> good question >> taxes are very reasonable in the triangle region of the durham, raleigh, chapel hill a very educated population so i think that's what the area, one of the good locations sites. >> what's the tax rate in colorado a lot of people have been talking about denver >> so denver has benefitted from the california real estate boom. because as people are getting out of california, they have been moving into colorado.

by california, relatively speaking, compared to california, colorado is much more favorable tax wise. and but because denver prices are still rising very strongly, now you are seeing some of the secondary park, salt lake city, boise, idaho, are still benefiting from the boom that first occurred in california, then colorado, now translating into utah, idaho and filtering into nevada and arizona as well smr we will leave the conversation there we appreciate you getting up early for us, nice to see you, happy new year coming up the 2018 agenda, how will that new tax plan affect the next plus starbucks will ring in the new year with a special drink. maybe it will keep you warm as the ball drops in time's square. are you watching "squawk box" on cnbc we'll be right back. tada!

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starbucks going black tie for new year's t. coffee chain rolling out a new line of limited edition drinks to celebrate the end of 2017. for a limited time, starbucks is selling three different black and white mocha beverages, all featuring dark and white chocolate. they include hot chocolate and regular coffee topped sparkling sequence to look like a black tie. they're available right now, sold through the first week of january, anybody knows this is pretty much. >> very far from it. >> notice it's right in line. >> really? >> oh, absolutely. >> how many camrys do you think are in a drink like that >> i'm going 465 >> maybe more, i think maybe like 600. >> that is a meal. >> more than a people. >> because what do you want after the christmas holiday where you have been stuffing yourself silly besides a 600 calorie coffee drink >> that's the thing, coffee at 600 calories, you can't do that. >> you know a black coffee like we are having here, 5 calories

>> i know. >> a good deal >> and only costs 18 cents to make why would you pay 250 to 4 dollar for it? executive edge joining us from washington to break down the tax and infrastructure plans set for 2018, liam donovadonova, there have been expectation infrastructure plans for january or as soon as january, still a lot of outstanding questions of where the money comes from do you know where it comes from? >> i don't think we are quite sure yet they talk about using $2 00 billion -- $2 00 billion we have been hearing the contours of the plan over the last year. it's not entirely clear where that comes from, particularly an environment where you know you have the biggest part of getting tax reform done was having the house freedom caucus in line and some of the more unruly parts of the house conference

and getting those guys to go along with a major spend increase is not an easy sell i think they're coming off a win with tax reform, have the wind at their backs, it will be interesting to see what they roll out if january. >> what about a different what toy approach this? tell me the probability of this happening is everybody is concerned about deficits, what about letting the private sector participate in the buildout of infrastructure give me perpetuity to build a highway on the east coast. i'm there i'm there forever. >> that means a toll road, a pay as you play, that means the modem of the european versus worked on and the british and some countries in south america, the really works you let the rest of the world invest in america, pay for it. you pay them back over a very long period of time at a very attractive rate. because doing these infrastructure plays now, 6% is probably the hurdle. there is no deficit on the government what do you think in do you like it >> it's an important piece of the puzzle

i think that is considered by the white house and others i don't think everybody can be told so having those public private partnerships, having private activity bonds, having all of these, all of the above strategies important to getting that trillion dollars spend that the administration has been talking about. >> liam, i know that residents of the dmv area around d.c. are familiar with the hot lanes coming in from virginia. there has been this controversy over the fact that the price for a one-way drive, in some cases can be as high as $40 bucks. they point to that and say is that what's going to happen if we get the private sector involved in this because they have to make a profit on their investment how expensive would that proposition ends up being for the consumer >> coming from arlington this morning, i had my driver ask me the same thing i think it's something they are hone income on, it's a new process, it's something to consider, i will say somebody that drives in the hov lanes,

i'm not complaining with that high toll. i do think that's something that's important to consider i don't think can you toll everything and certainly not to that level i do think it's an important component of whatever plan they come out with. >> kevin put one plan on the table t. plan floated last year when the budget came out was this $200 billion federal outlay matched by $800 billion in private sector involvement but, obviously, conservatives want the government to put up less democrats want the government to put up more. reason amy, where do you think this shakes out? is there a i'd million ground. >>ly think that's the challenge. you have both sides with similar language and meaning different things with tax reform can you use the reconciliation process to sort of work around the need to have 60 votes in the senate so i think that will be the challenge is finding that area of overlap that can get sufficient support and i think that's hard enough to do without the challenge of having a president who is polarizing and

who doesn't necessarily, you know, isn't going to have an easy time gaining support of democrats who want a political victory. >> liam, it's great to see you maybe can you take the metro next time. >> that's right, thanks. >> appreciate it coming up, when we return, 2017 turned out to be a big year for the ipo market snaps, stitch fix. roku, blue a upon to make a few that made a splash what's on the calendar for 2018? can we see an ipo from youtubeer, lyft, spotify we go to break, after that a quick break of what's happening in european markets right now. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business,

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♪ ♪ welcome back to "squawk box. it was a busy year for the ipo market with the most public listings since 2007 globally, including snapchat, parent company snap, blue apron, stitch fix and roku are we in for more ipos in 2018?

so we just talked about -- just mentioned a couple big names that came out in this last year, however, i don't think the vail did so well so i don't think what that says about -- by the way, in a rising tide environment. what does that say about next year >> most ipos did really well the overall performance of that sector was fantastic. >> but the splashy ones didn't, oddly enough we always have a few that get a lot of attention and some had bump yes roads and i like to say that's our b to c tech companies but all in all the market has done well. >> so you look out next year -- no, here's the question. you look at what happened with snap or blue apron or any of the big b to c guys and we talk about whether an uber or spotify or lift were to come to market, if you're a bpganker are you saying "i don't want to do this right now" >> these companies are unique

and have to be eval baitevaluat. we need to look at each one of them a lot of them have been -- now they're getting seven, eight, some of these ten years old. so some of the companies that are coming this year are more mature. >> what are the average returns if i bought it on day one? >> 20%. >> mr. wonderful tells me during the commercial break i won't touch one of these ipos on ipo day, is that right >> i don't buy ipos. let me ask you a question, there was a time decades ago when a company before it would go public would have to have subsequent quarters on increasing return on assets, something that prepared it to go into the public markets and today we're happy to take companies public that have never made money why would anybody want to own that ever. and i don't want to pick on these ones that lost 78.2% in the first three months what would be the reason you

would ever want to open a company that has never made money? what would be the reason >> well, you know, those are long-term investments. >> that's the answer >> you have a portfolio, right you have -- any of these companies that are going public you have to evaluate them individually some are not going to be top line bottom line everything driven instantly. >> i have a different reason it's occurring. >> you do? >> an average private equity firm is a seven year investment. there comes a point that even though you have a holding, it's been in the park for five years. your motivation to get liquid is high at any price so you're bringing these things into the market because you've owned it for seven years, your investors want liquidity and it doesn't make money it's a dog, it was a dog, it will be a dog tomorrow and the people that buy it learn how dogs bark right away if it doesn't make money, it shouldn't be public. that should be the rule. >> well, i think there are some of these companies that won't

make money today we've got history that's shown that this story is they make money long term. there's some of our companies that are at the top of our "fortune" 100 list that didn't start out as high profit companies to begin with, maybe were money losers to begin with but everybody bet on them and they've don great so you with need to evaluate company by company but not every company will see a long-term success path and some will get bought out in the process. >> had you bought amazon and ipo i doubt you'd be feeling that decision. >> the only time i bought amazon is when it paid double digits on it so i got paid interest to wait and it was taken back by the company. >> the other question i wanted to talk to you is about ratchets one of the features of so many of these unicorns is they have a particular private valuation but the valuation has these ratchets in the deal such that if you invest later in the game, often times, you're guaranteed a certain ipo price and if it doesn't hit that number you get more shares to make up for it.

how does that change the dynamic one way or another in terms of ipos and valuations? >> the group we're talking about that had these clauses, they're so small in relationship to the pool of companies going public so you can't look at these unicorns that have these unique characteristics to them. in general, most companies are going public are sort of like our traditional public companies we have today. most of them are pevc-backed companies. most of them are top line and bottom line, they're doing well, most of them are having very strong growth rates and they continue to perform post ipo we looked at the stats on companies that have gone public, most within two to three years have doubled top line, doubled the number of employees. these are growth-creating engines. >> a bunch of the biggest market cap deals that are expected in the next few years are from outside the u.s. what do you think the makeup is going to be next year of u.s. ipos versus ipos coming to the

u.s. from outside? >> that to me actually this whole phenomenon of the international listings on u.s. exchanges has been wonderful this year. we've had approximately a quarter of all the deals in the capital raised on u.s. exchanges was from companies outside the u.s. i'm expecting that trend to continue the u.s. is definitely one of the favorite markets. >> does aramco happen in the united states? >> tbd, i don't know it's competition out there but we'd love to see them on the u.s. exchange. >> thank you president trump would, too, by the way. coming up on "squawk," the tax scramble, homeowners rushing to pre-pay property taxes and the irs speaking up about it we'll be right back.

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good morning, everybody. two trading days left in 2017. president trump touting the market gains we'll tell you what he said. and to prepay or not prepay? everyone is trying to figure it out now. the irs has spoken about this and we've got everything you need to know straight ahead. plus, why the royal kingdom might get a bit more high tech apple and amazon reportedly in talks to invest in saudi arabia. details coming up. it's thursday, december 28, 2017 second hour of "squawk box" begins right now ♪ we'll never be royals, that kind of luck just ain't for us ♪ >> announcer: live from the beating heart of business, new york city, this is "squawk box." >> good thursday morning, welcome back to "squawk box" on cnbc, live from the nasdaq market site in times square. i'm kaley tauscheyla tausche. our special guest, "shark

tank's" very own kevin o'leary sox in the u.s. have been extending wednesday's gains so far this morning, albeit on very low volume yet again today s&p 500 would open up more than one point, dow opens up about 36 points the nasdaq opens up 30 points. this is on the back of mixed to lower trading across europe, though asia was mostly higher despite a late afternoon selloff in the nikkei. take a look at where we are, the ftse 100 is the only major average in europe that is positive, up by about 0.1% germany, france, italy and spain all marginally lower finally let's look at the ten year fairly stable throughout the week we have been at 247, roughly yesterday, now we're at 243 so yields dipping just slightly and we will see where we go to end out 2017. >> we have other news for you this morning

i don't know if you saw the real news is how many calories that frappuccino had. >> how many? >> regular frappuccino 240 that one might be steeper. they didn't put the number on it. >> if you're talking about under 2000 to try to keep your weight under control, i'm counting calories on an app now, i can't touch that it's too much of an investment. >> is that with or without whipped cream, the 240 >> i don't know. >> and the chocolate bits. >> during the 6:00 hour, starbucks has a new frappuccino coming out for the new year archl, a black tie holiday drink. we're trying to get the calorie count on that. in the meantime, the year's final economic numbers are coming out at 8:30 eastern time. we'll get the weekly jobless -- numbers initial jobless claims expect to fall from the prior week just after the wall street open this morning we will get the latest chicago purchasing managers' index. shares of nintendo fell in japan.

nintendo has delay it had introduction of higher capacity data dprards the switcards frome console. the new cards are set for introduction for some time in 2019 the sorkin boys got a nintendo switch for the holidays so this news is paramount in our house. >> can you peel them away or have they been playing since they got it? >> they've been very responsible, shockingly. >> did they delay the cards to 2019 for a whole year? >> i don't know. i don't know. >> i'm just wondering will the sorkin family be litigating? >> because we want the higher memory cards i don't know, we're in a whole minecraft situation in our house so we have minecraft going on that thing and we have minecraft going on the ipad. >> these platforms shift revenue, the demand stays constant and so when you bring the new cycle it all comes in the quarter you want. >> also apple ceo tim cook getting a big raise for the fiscal year that end in september.

cook's total compensation jumped 47% to $12.8 million that was driven by his cash bonus which was paid to sales and profit targets set by the board. we had a conversation about how he might be underpaid given how big the company is and how much value has been created though we were looking before he had gotten a lump sum before that also this is fascinating apple and amazon reportedly holding separate with saudi arabian officials to sell in that country a licensing agreement for apple stores expected in 2018 and amazon in discussions -- they're being led around the conversation around having a cloud computing division take place in saudi of course, amazon web services these plans would be inn line with current prince mohammad bin salman's push to give the kingdom a high tech look

you might remember mbs was out in the valley 18 months ago, spent time with us >> does this mean the policy of let's call it the aggressive nature of his moves on corruption, whatever you want to call it, you were there recently. >> it could be working. >> it looks to me it is working. that you feel better about putting a long-term capital expenditure into a country because you have an administration that is clapping down on graft. >> this is the big question. when i left that saudi -- this was in november, end of october, whatever it was -- there was such good will among western investors -- >> erm the conversation you were at. >> i would have thought there would be $50 billion invested in saudi in 12 months >> and a week later everybody is the jail at the ritz. >> so there's the math piece, there's still this aramco ipo piece, then there's been the stories about mbs buying other things so if you have an apple or an amazon, that's a real seal of approval. >> this is the best story i've

ever heard about saudi. >> but do you think you can draw a hard line between the anti-graft propositions to this investment or do you think it's more about the modernization of human rights, the allowance of women to drive, the commitment to -- >> that's coming, kayla. >> becoming a more forward-thinking economy that would be welcoming to employees of companies like apple and amazon. >> where money flows to the path of lease resistance is always an indicator of where it thinks it will get its best returns. to me this is a much better indicator about saudi's long-term potential than anything else that happened. i think his policies worked. maybe what he did created a stability in terms of the future of that country. >> okay. also a story that has everybody talking this morning the irs says homeowners may be able to deduct their 2018 property taxes if -- and only if -- they were assessed and pre-paid before the end of the year

the irs cautions pre-payment which so many people are talking about trying to do of anticipated property taxes won't be deductible. the guidance comes a week after president trump signed a sweeping tax bill, a reform bill into law so unless there has been an assessment and most jurisdictions are not doing the assessment ahead of 2018, you can't do this. >> so it's probably going to only affect 10% of the market. there's so many different interpretations that you have to wait for enough big fat bill that has to go through the meat grinder of the irs to interpret it for the big five or big four accounting firms to say this do this, do that i've got all kinds of things hanging up in different companies. >> so this is the individual world. but in the corporate world, what's the one question in your mind that you don't feel like you know the answer to >> this expensinexpensing, this% expensing, which is so tantalizing, i want to see it in the tax code not the bill. i really want to see it. because if i'm going to pull the trigger and move forward, millions of dollarsov s of

expenditures, if we were going to do 100,000 here, 100,000 there, let's do it now i don't want to hear it on the news, i want to read in the the code so it behooves the irs to get that out there show it to me in the code so i have a defense when i'm in tax court. that's why it will take a while for this to get implemented. >> let's get back to the markets. we have two guests standing by just two trading days left in 2017 landon dowdy joins us with what we might expect from the markets in the new year. good morning. >> good morning, kayla markets have continued to ride the santa claus rally as we close out those final two trading days of the year the dow is higher by 25% year to date the nasdaq rising 29% year to date and the s&p up nearly 20% will that trend continue into 2018 well, if history is is any indication, we could expect a winter chill to start the new trading year according to kensho, here's january market performance the

last 20 years. the nasdaq, the lone bright spot up about half a percent on average, the dow down 1.3% and the, is and p about 0.8% and january is typically the third worst month of the year. within the sectors tech with the highest return of three quarters of a percent on average. western digital the big winner hosting more than 6% returns on average. so you may want to think twice about financials, the sector usually slides more than 2%, one of the biggest lagers with an average decline of nearly 8% there. kayla, back to you. >> thanks so much, landon dowdy at headquarters. president trump, meanwhile, touting stocks gains since the election here's what he said while visiting a west palm beach fire station. >> we have the all time record for stopping ridiculous regulations and we're very proud of that record that's one of the reasons the stock market the up at a record level. it's a record level. we broke it 84 times this year, the stock market hit a new high,

84 times since we won the election in november 8 of last year so that's something we can all be proud of. >> joining us now to talk about where the market goes from here, david liebovitz, global market strategist at j.p. morgan asset strategist and sam stovall from cfra david, do you think history will repeat itself? we saw landon say tech is the outperformer, set us up. >> i think that after a year where the market has gone hutmuh higher, it wouldn't be surprised to see people take gains, maybe rotate back into technology which fell down a little bit towards the end of the year. but when we look at economic growth, it looks solid earnings growth looks robust so we think the path of least resistance for stocks continue to be higher. >> sam, do you agree >> i like to say history is a great guide but never gospel

but i start with history and what it tells me is we will get more for less. i think we should expect more volatility but less in terms of price appreciation for the full year several things that led me to that conclusion was the outsized number of new highs. 62 new highs in 2017 for the s&p 500, well above the average of about 29 we also had only eight times in which the s&p was up or down by 1% or more in a single day as compared with a more normal 50 times. that i can to the dispersion between the best performing sector, worst performing sector, we had outsized gains for the cyclical groups, usually they take a pause in the subsequent year so i would tend to say look for something in the mid-single digits and you'll be happy. >> generally the view among main street has been that this is a good time to get into stocks we've seen that in surveys, polls, even steve liesman's all america survey showed largely

americans feel like it's a good time to get into stocks. but we always worry about when the retail sentiment turn what is that means for the market because generally it has indicated a top. should we be worried this time >> well, i've looked at consumer confidence going back to the mid-'70s, whether it's the conference board or the university of michigan and essentially even when we'd gone above one standard deviation from the mien or a level of excessive confidence, we've still had good returns going forward. so while you might say that looking at newsletter writers being overly confident is a good contrarian signal, when dealing with the consumer themselves it doesn't usually or accurately point to a top in the market. >> david, your thoughts? >> i would agree i think the question people should be asking themselves is why is confidence so high? you've seen a tax bill finally get passed, you've seen corporate profit which is remain relatively solid, you look at the economy and things seem to be on more stable footing than

they've been in in quite some sometime to your point there's reason to be optimistic, it's when the optimism becomes unbridled that it falls on its face. >> how much comes from the fact that there's no competition from fixed income what would you want to get on five-year paper to have you buy credit instead of equity >> we found the more statistically significant relationship is between the ten-year treasury and the performance of the equity market and the pain point seems to be somewhere between 3.25% and 3.5% on the ten-year. the way i think about that is right now fixed income paying you nothing after inflation. equities you're still getting something. you get the ten-year up to 3.25% or 3.5%, now you're looking at a real return of 1% with a volatility of three to four as opposed to an earnings yield of two to three with a volatility of 15 plus as soon as you see that real return come back into the fixed income market, that will lead investors to switch back to bonds and away from stocks. >> people thought that would happen in 2017, we'll see if it

happens in 2018, david, sam, happy new year to both of you. >> thanks, happy new year. before we head to break, check out the price of bitcoin, dimming this morning south korea says it would implement new rules in an effort to regulate trading of the cryptocurrency the regulations would prohibit anonymous trading accounts and give authorities the ability to shut down exchanges. south korea is a major hub for bitcoin. it has also been a major target of its neighbor to the north when it sought to hack bitcoin but you can see the effect it's having on bitcoin futures across the board, down as much as 9%. >> i love mr. wonderful's contrarian take on this as good news. >> i think it is let everybody regulate it and overnight it becomes a global currency that was the home of the creators anyway. but at the end of the day, until it has stability, until you know you can keep in bitcoin for a month without losing 30%, it won't be anything except a vegas-type speculation which it is right now 9% a day up and down is nuts

so we need more of this kind of activity to give it credibility. coming up next, we'll continue that conversation, plus 2018 will be a big year for at&t as it takes its battle for time warner to court. stock down more than 8% this year we'll talk to an analyst about what it means right after the stk. ay tuned, you're watching "squawk box" right here on cnbc. 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. show of hands. let's get started. who wants customizable options chains? ones that make it fast and easy to analyze and take action?

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welcome back to "squawk box. check out the price of gold. prices hitting a one-month high on dollar weakness on the year up about 14%, up just about a quarter of one percent this morning let's talk at&t and what is ahead for the telecom giant in 2018 joining us right now is jennifer pritz, the managing director at wells fargo securities good morning, we have a lot going on with at&t we have this big court case that's going to come down with the time warner transaction. also some capital investments they've now promised to make, some bonuses they're going to be giving out and we heard yesterday there's job lesses, by the way, did you see how those job losses were characterized

yesterday? a lot of people said people are losing jobs at the same time they're giving bonuses but at the end of the day there's a small number of job losses for legacy technology, you know what i'm talking about? you're looking at me like i'm crazy. >> but they're a thousand jobs i know that's small in the grand scheme of the company. >> it's a thousand jobs in terms of -- you're saying it's small or big. >> small in terms of the company but -- >> if you're one of them -- >> top if you're one of the thousand people. >> the stock is in the penalty box until we get this trial over jennifer, this will be a settlement, a deal, what will happen >> i think we're going go to court. they've been public about the fact there have been discussions. they couldn't reach an agreement so i think we head to court mid-march, march 19 is the date, i believe, and we'll fight it out. i mean, i still believe that case law is very much on at&t's side you know the stats, there's been no vertical merger broken up, i think, since the nixon administration so i do believe

that the law is the law and that hasn't changed since the deal was announced in october of 2016. >> and just so i understand, you're saying -- is there any piece of this company, meaning of time warner or at&t that you as a shareholder or analyst who cover this is would be prepared for them to divest in order to make everybody happy >> you know, i think so much of this deal is also about advertising which is why i think the turner piece is critical if the press is to be believed, cnn seems to be a hot button here and i think that's very important to their advertising hopes. i mean, look at the hires they've made there look at brian lassar's new role. he's essentially reporting to randa randall stephenson, which is a big role if you remove one key part of that, there goes the whole advertising theme which i think is bigger than people realize or appreciate. >> now, i own this stock, this

is a full weighting for me, a 5% weighting, i'm a big believer in randall stephenson and his executive team, i like what they've done what am i missing? this is a vertical integration it scares me that the government would bring a complaint. what do they have that i don't know about this is what the whole world is wondering. why would they bring this? what do they know that i don't know and what do you think and what is the probability coming out of this thing with cnn -- because i buy into your advertising issue -- but what am i missing? >> you know, something clearly changed because -- and it seemed to change right around early november i don't know what changed. there's all sorts of conspiracy theories there, i'm not going to bring in politics but something changed. but at the base of this you are not removing a competitor so, again, the law is still the law as it was prior to the presidential election. so i'm not sure really what changed. and i think that's -- that fact

is why they feel the confidence to go to court. >> jennifer, straight up, though, do you think this is political? >> how could that be >> i'm asking the question do you think this is about cnn >> i think something changed and i don't know what it is but it clearly changed in early november and -- >> macon, who runs the antitrust department at the doj, you think he's disingenuous when he says this is a philosophical argument he n his mind he will say, look, we should not be in the policing businessing, meaning we shouldn't agree to these consent decrease, we shouldn't agree to these deals that need somebody to police them after the fact, we should set it u -- structurally from moment one. >> i would also say that macon had been on record to be in support of this deal and we have clearly with nbc and comcast a very good precursor of this and

at&t i believe has already agreed to the concessions that comcast agreed when they bought nbc. so, you know, i think at&t in my view has been more than conscientious in trying to get this deal done i still think case law is on their side so i think that's why we feel the confidence or they feel the confidence to go to court. >> jennifer, real quick, you saw the company announce that they were going to handout bonuses at the end of the year. >> yes. >> after this tax news i said i think earlier this week, randall's a boy scout. he said he was going to do this and he did it. but at the same time, if you're a shareholder, do you say did he have to do this? >> i think what at&t sees in terms of tax reform will more than offset these bonuses. and i think people have to remember that at&t is the largest tax -- excuse me, capital spender of any u.s. company. and i think they're betting on

america. i don't think that's a bad thing. >> jennifer, appreciate it, happy new year. >> thank you, you, too. coming up, a not-so-magical trip to disneyland a power outage leaving many theme parkers stranded some getting stuck on the "it's a small world" ride. that sounds like a nightmare hopefully without isonth sg playing, though, that story coming up. we'll be right back. well, thomas, you've got prediabetes. but with more exercise and a change in diet, it can be reversed. but i've tried exercising, and it just makes me hungry for bacon. i love bacon, too.

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♪ city of wonder, city of lights ♪ ♪ good morning, welcome back to "squawk box" on cnbc, we're live at the nasdaq market site in times square. i'm andrew ross sorkin, kayla tausche is hanging out with us along with mr. wonderful a combination of medical equipment makers expected to be completed. it will happen tomorrow. chinese regulators have given their approval for becton dickinson's takeover of c.r. bard the chinese approval was the last one needed far to go through. secretary has imposed restrictions on cryptocurrency to reign in speculation.

this will impact blockchain related stock this is morning including riot blockchain and longfin. you're watching those stocks down along with the price of bitcoin which pretty much is down close to 10%, 9% i believe just this morning as well. 2017 was a banner year for global ipos according to figures compiled by the "financial times. almost 1700 companies around the world went public, the most since 2007 and a jump of 44% over a year ago. also, those of you hanging out at disneyland, a power outage leaving visitors stranded on rides patrons taking to twitter posting photos of their experiences. one user tweeting these photos showing huge crowds in the outage adding "all of toontown and parts of fantasyland are affected." another disney customer tweeted this photo while stuck on "it's a small world" ride. it is a small world when you're stuck on it. disneyland said about a dozen attractions were affected as a result of a "issue with a

transformer. the power has been restored. i don't think there was any issues with anybody on a big roller coaster that's the thing that would get me very nervous if you were really high on a roller coaster and it stopped >> or upside down. >> right >> those are all engineered to assume the power will go out at some point they slow down, they go to the bottom -- there's a lot of great technology i'm a big advocate of those things. >> and you're a big disneyland guy, right >> i used to be when my children were of that age i've been to every property multiple times. >> if you were stuck on "it's a small world" with "it as a small world playing --" >> i've been on it's a small world. i've been on that ride ♪ it's a world of hope -- >> i don't think the music would keep running if there was no power. >> you can only hope. 2017 was a big year in the sports business. billions of dollars being made off the field. here's the playbook for 2018

>> reporter: first, sports gambling legalized after a two decade battle the supreme court rules new jersey can offer legalized sports gambling at casinos and horse tracks this opens the door to the nation, creating a multibillion dollar industry. bribery probe expands, the fbi's investigation into college basketball goes further next year, taking down big-time schools, big-time coaches. the ncaa tries yet again to institute sweeping reforms to make the problems go away. big baller blows up. america's most controversial father, lavar ball, takes his brand public in 2018 ticker, triple b let's talk more about the sports business in the year ahead. joining us on set is elena bergeron, editor-in-chief at sb nation good morning. >> good morning. you heard eric talking about gambling, you have the olympics, the me too movement.

where do you start >> i guess you start up front with the nfl it seemed like a surprise to jerry jones and a couple of the owners who had an adversarial relationship with him, but otherwise it was widely expected that they would extend him and they've done so with the five year deal. >> were you surprised at the price tag? would there have been anyone else to take that job? >> no, although you guys mentioned tim cook's salary and it looks like roger goodell is going to be making more than tim cook, so i'm not surprised at all by it. a lot of people have pointed to the ratings for the nfl being down as potentially a reason for maybe not wanting to renew that contract but in terms of all the important numbers to the nfl as a whole and to the ownership groups, the numbers are up revenue is up about 2% for the nfl and it's mostly because of their tricasting rights. they've been experimental with broadcasting games on amazon and

twitter. a $2 billion streaming deal with verizon. so you see there are a lot more places to watch a lot more football which is also -- ended up with some additional ad inventory for people. >> so when we hear these headlines about traditional ratings going down is -- should we take away from that that there's a problem from w twith l or should we say it's being distributed in other ways and there's more people watching >> i think it's the latter our colleagues at recode have done great work around this. curt wagner for recode wrote a big piece about it, about the future of football and broadcasting rights. without that experiment you can't get cord cutters they have to reach out to millennials and people watching on different devices that's where the future of the league is going to be. >> the issue of the year had to

be did the market value of this franchise get tainted by this issue around taking the knee it's still there it's been approached in different ways about advertising, about how many people it offended i have some investments with vets that are very taken aback by this, they're not okay with it, they're big football fans, they're unhappy, they're still unhappy. somehow this going to resolve itself is there any way to know if this hurt the market cap of the franchise? >> not particularly because you see attendance being down in certain stadiums but not overall and from team to team they've handled it differently and you've seen some players take a knee throughout the whole season, you've seen players take a knee and their teammates put their hand on their shoulder and some teams take a knee before the anthem and not during the anthem. >> shouldn't goodell put policy on this? >> i think you tread a fine line because you infringe on player rights and players are the marketable part of this game. >> these are private contractors. they have the same rights any

employee would have. most companies have edicts of policy why wouldn't this apply here >> i don't think you want to see the nfl go the way of hiding behind the shield and protecting the brand over its players because, again, the players are the most marketable part of the game you see the celebrations come back for the nfl and it's been amazing to see people in the end zone dancing, odell beckham being out for the year was a huge deal because he's the number one in jersey sales fans want to see players be themselves and i think you've seen in the nba that's been widespread there's a freedom of speech there and people are allowed to express their political beliefs and the nba has grown in popularity because of it. >> let's talk about the carolina panthers 36 hours between the "sports illustrated" exposé and the announcement that the team was going to be sold is that a one off? >> yeah, i think it's a one off. jerry richardson is -- has been an owner who has had say so in the league is and he bought the rights to the team in 1993 for

$203 million he's looking to sell the franchise for $2 billion after the season is done it's a one off in the sense that jerry richardson is going to sell without an estate and without a trust and not to anybody in his family mostly because he doesn't want to face nba disciplinary -- sorry, nfl disciplinary practices he'd rather sell the team outright than deal with those sanctions. it looks like they will be able to find buyers. >> do you think running a news organization, i'm sure you guys get all sorts of allegations, unfounded and otherwise, coming inbound. do you think there will be other franchises hit with similar allegations? >> sure. i think you see with the "me too" hashtag and the movement around certain things that have happened in hollywood, harassment is an issue top of mind for everybody in every business right now and i don't think that the sports world is immune from that it would be hard to speculate to say how widespread that would be but i don't think it's a problem

that exists in a silo. >> give us a look ahead to the olympics we heard ticket sales were underwhelming. whether that was because of russian doping or restriction on chinese tourism, geopolitical concerns, them being in south korea, where are we now? >> i think there's political tensions on the peninsula itself so people are worried about that but it hasn't scared off the sponsorship groups there the biggest concern business wise was coming into that, seeing if the samsungs of the world would be able to underwrite the games themselves and even though samsung has faced their own political drama, you've seen other korean groups step up and take over that sponsorship so we're thinking the olympics will continue to be big around some women's sports there. >> do you think when it's over -- i'm going to be going to it to cover it but do you think when it's over the headlines are going to be more people watch, less people watch? >> i think it will be more people watch they're expecting revenue overall around the olympics to go up double digits.

>> elena appreciate it elena bergeron from sb nation, which is part of vaccinatiox na. have millennials missed the train? i missed the train, i know about that. >> we're going to find out where they're putting their money to work it may n jotust be in bitcoin. we'll back in just a moment. my experience with usaa has been excellent.

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futures have been in the green all morning extending ginns from wednesday's close if we were to up right now, the s&p would be up by one point, the dow would be up by two we're awaiting weekly jobless claims those will be at 8:30 eastern. more and more millennials are taking action when it comes to their financial future, but where are they putting their investment dollars to work joining us to talk about it is the co-founder and ceo of wealth simp simple good morning to you. >> good morning, thanks for having me. >> we have a sense that millennials don't invest or when they do invest they're not interested in individual names, maybe they just throw it in etf or they give it to you or somebody else. is that really what's happening

here or is there something else at play? >> i think that's quite a smart thing to do. i think millennials get a bad rap when it comes to investing but when we see is they think about investments differently than the last generation i think historically when it came to investing people would value relationships above all else millennials see something different. they see people that want ease of use, signing up to an app or computer, they want transparency around fees and the service that they're getting and they want a broader mandate. we have tens of thousands of millennial clients around the world today and one of the most popular investment options they choose is socially responsible investing so looking for something that not only generates a return but something that aligns with their values long term. >> question for you, when the stock market is increasing, all of this looks good, i get it, everybody's -- the boats are being lifted across the board, everybody's happy. and if you're effectively dealing with an app rather than

human being, it works. when the market tanks, if it ever does, do you need somebody holding their hand because the biggest mistake investors make habitually is they sell at the wrong time. >> that's a great question and we get it all the time and i think it's a responsibility of a firm like us that deals with clients mostly through digital channels to help educate them. a lot of our clients are first-time investors one of the things we spend a lot of time on is investor education, trying to coach them that success when it comes to investing isn't about beating the market, not about picking winners or bitcoin being up a thousand percent, it's about disciplined boring behaviors over the long term and also understanding that markets go up and down and there will be a crash at some point in the future so we have this great series we send out quite regularly called "keep calm and carry on" where we try to remind investors through ups and downs no matter what happens in the marketplace, stick to your plan and keep cribbing over the long term. >> good advice and i applaud you

because you're part of the whole effort to do digital financial literalsy, that's what's going on here. i'm an investor in a similar application called bean stock s and those of us that invest in these apps, the big question seems to remain can we get the customer acquisition cost below the lifetime value what do you think we'll get as an industry? very few have been able to prove out that they're able to find a way to solve for that problem. >> absolutely. the key in this is especially when you have models like ours that charge a half percent or less it's all about scale. people spend an enormous amount of money on marketing. what we find is the unit economics are quite attractive but you have to have a view of

the long-term relationship you're building with a client and you have to have a great understanding of the lifetime value of that client and that comes down to what is the initial contribution they're making what are the ongoing contributions that they're making and how long are they going to stay with you over the lifetime as a client one of the things we focus on heavily at wealth simple is trust. we have measures for how much we get trust from our clients, how much we're building trust and we really focus on how to apt mize that because we think if we can get that right and truly build a trusted relationship with a client we'll have that client for life and not only will we be able to build a great long-term relationship with them when it comes to their investment portfolio which we expect will grow substantially from our young professional audience today as they mature and build wealth and inherit the wealth of their children and grandparents but also build a broader relationship. >> you said social impact investing or socially responsible investing. most of the folks you find making those investments, are

they doing it based on a philosophy or based on returns and are they capturing both? is there a way to figure it out? >> well, i think the most fascinating part about socially responsible investing is the new academic research coming out that shows socially responsible investors outperform their peers. not because necessarily the portfolio has performed better but because they're more disciplined as investors when you care more about just the simple returns you're getting, you're more likely to stick your plan and market ups and downs and ourp clie clientsk 50% of new clients are opting into socially responsible portfolios. >> happy new year, nice to see you from toronto you want to send a canadian shoutout >> another great canadian company competing gobelly. >> absolutely. >> all week we've been opening up the cnbc play book for 2018 up next, predictions forhe t health care sector on the other side of this break (daniel jacob) 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 to about 10 pounds of carbon dioxide every week. (malo hutson) 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. then that data runs across our network, and we use it to optimize the timing of lights, so that travel times are shorter. who knew asphalt could help save the environment? ♪

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antitrust scrutiny will be front and center regulators blocked to the big insurance mergers saying they hurt consumers will they block cvs '69 billion deal to buy etna which aims to buy a model centered around consumer clinics, not doctors. nonprofit hospitals are gearing up for big deals, too. if approved, watch for more meg mergers as others play defense two, amazon will impact the health care supply chain whether or not the online giant gets into the pharmacy business the amazon threat and mounting regulatory scrutiny over pricing will keep pressure on pharmacy benefit firms and drug wholesalers to hold down costs and prove their value. three, obamacare won't go away doug jones' win in alabama makes the math even tougher for republicans to get enough votes in the senate for full repeal. but the trump administration can still make big changes at the edges, especially through state waivers on plan benefits the leadup to 2019 exchange enrollment will likely be rocky

again with another year of uncertainty about insurer participation. and one of the biggest regulatory hurdles for health care firms in the services business may very well be the tax bill on the one hand, they have a very high effective rate up in the 30% range, but a lot of them have debt. for example, the hospitals do and the for-profits won't necessarily be able to deduct as much of that any more. the nonprofits can still raise debt and they can do that as municipals so they have a little bit of an advantage on that but there are a lot of moving parts that we're going to be listening for as they report in january and february what sort of odds do you give the cvs/aetna merger? the stock market seems to be skeptical. >> the stock market does seem to be skeptical and it's such a different kind of deal that regulators have to think about and normally it would be something that would probably go to the ftc because of cvs being

the acquirer but given the fact that we have those vacancies on the felt stct could go to the doj which doesn't seem to like these big massive sprawling deals. however, you have so much consolidation, you also have ascension and providence st. joseph talking about getting together that would create a hospital powerhouse, nonprofit, catholic, nearly 200 hospitals across the country. so if you suddenly is that much consolidation and we are thinking about new models to keep people healthier, you know, it's an interesting deal the stock market seems to indicate there's going to be pushback. >> that deal came after the rumor that amazon was going to get into pharma distribution do you think it's because of a desire to bulk up, to defend themselves against that kind of attack >> i this i that's part of it although cvs on its own has launched delivery and they do home delivery. in fact, here in manhattan they

are doing delivery same day so within a couple of hours you can ord you are your prescription and they'll deliver it to your door if you're in manhattan. this is really more about diversifying your portfolio. united health has been building up its services in terms of the provider services. they have 30,000 affiliated doctors through a number of practices they have acquired i think this is to compete with that and to do in the a sense on a less expensive scale because everyone is looking for sort of better cheaper more affordable wellness care and so the idea that you're able to have most people near a cvs, within three miles anywhere, they can go there, they can get some of their preventative services so they don't have to go to the doctor, could be cheaper, and if they're on the aetna plan they could also the get the kind of monitoring for things like diabetes that's one of the big things that everybody has tried to tackle, trying to prevent people with type two diabetes from getting worse and perhaps maybe

getting off of medication and getting healthier. so for chronic disease management, that's what they're looking to do to be able to have both the insurance and the provider in one shop and in this case also the pharmacy >> you're going to show up at cvs to see not your doctor but -- >> you could do a nurse practitioner i go to my doctor's office and half the time it takes so long to see my doctor, i see a nurse practitioner. >> i used to have the cvs app and it was crap, it's so much better now. >> they all do that. walgreens will give you points if you've been walking they connect with your apple health kit they give you extra points so suddenly you can get something. >> who ever is running the show on digital at cvs could keep their job. >> happy new year. thank you. when we come back, if you live in a high-tax state, listen up should you pre-pay your taxes?

that's what i thought you're supposed to do, property taxes before the tax bill takes effect it's not so easy as it happens we'll talk about what's going on later, we're opening the cnbc playbook for the house of the mouse. we'll talk to an analyst about disney 2018. lots going on there. "squawk" returns in a moment

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a rush to pay taxes. something you don't always see but some homeowners are trying to get in front of the big tax changes for 2018 the weekly claims report is straight ahead, plus hiring trends for the new year. and the force is strong with disney but that was 2017. how much magic does bob iger have left in 2018. the third hour of "squawk box" begins right now >> announcer: live from the most powerful city in the world, new york, this is "squawk box. good morning, welcome back to "squawk box" right here on cnbc, we're live at the nasdaq market site in times square. i'm andrew ross sorkin along with kayla tausche

becky and joe are off. sitting in with us, mr. wonderful, kevin o'leary the futures, take a quick look and see what's going on on this thursday morning dow looks like it would open up 32 points higher nasdaq up 13.5 points higher s&p 500 just a half point higher we'll show you treasuries and then we should really show you what ice going on with bitcoin that's down 9% the ten year note right now 2.434. kayla? in the headline this is morning, 2017's final economic numbers are out this morning and in about 30 minutes we'll get the labor department's weekly look at initial jobless claims they're expected to decline just slightly after the market opens, the chicago purchasing managers index for december will be out, that hits at around 9:45 eastern. and apple and amazon are said to be in separate talks to invest in saudi arabia. that's according to reuters. both companies already sell their products in the country but do so through third parties.

saudi arabia has been easing regulations in a move to make foreign investment easier. a lawyer who once advised so-called pharma bro martin shkreli has been convicted in a skra fraud krcase he was found guilty of helping martin shkreli steal from retrofin ironically, a jury cleared shkreli of the same charge earlier this year but it did find him guilty of securities fraud. now for a look at the geopolitical hot spots, let's bring in nicholas burns, former u.s. undersecretary of state for political affairs during the george w. bush administration and a former u.s. ambassador to nato he's now a harvard professor and cnbc contributor ambassador, good morning to you. >> good morning. >> we heard the president say multiple times throughout this year that the north korean threat would be solved because it would have to be. where are we in that fight >> it think it remains the most difficult challenge for the united states, for the trump administration

i think the trump administration has done well. three u.n. security council sanctions resolutions, china doing more but not quite enough, a good relationship with japan and a lot of pressure on north korea. some people think that 2018 will be a year of decision where the administration might choose military force to deal with the north korean nuclear problem i think that's a possibility but the greater probability is that we'll see a continuation of the sanctions effort, more pressure on president trump for xi jinping for china to do more to restrict trade with north korea and i think the administration is still looking for an opening towards negotiations because the risks of a war are so great of developing an even greater war in the korean peninsula i i have this the administration will be very sensitive about that and probably more of the same in 2018 from what we've seen in the past year. >> china overnight denied in a report r.o. that reuters published. china denying it's doing any sanctions or oil sales with

north korea that would go against those u.n. sanctions do you think china at this point is being fully compliant with those economic sanctions. >> i think that bears watching because the chinese has a record of announcing they're taking actions in conformity with the u.n. but not doing it. and so that's what the administration has to do and i think for the president particularly with xi jinping, keep the chinese focused on what they have said they're going to do, have them do it, but also ask the chinese to do more because it's not in the interest of china to see this terrible problem on the north korean peninsula heat up. i would say this, secretary tillerson road an op-ed in the "new york times" this morning talking about the administration's accomplishments. he hinted that the administration might be more aggressive against china in general on intellectual property rights and other trade disputes. the administration held off in 2017, didn't want to pressure china on trade because they needed china's help on north korea. that may change in the next few

months and so that bears watching as well >> some think that may change in the next few weeks because you have deadlines looming on potential tariffs on steel, on solar panels, on washing machines and the national security strategy seemed to be pointing a finger jointly at china and at russia. how do you think that plays out economically >> i think it's going to be one of the most important early determinants in january/february of where the administration is going. we are seeing a lot more talk from the administration about the need to get tough with china on trade the chinese as you well know have been ripping off the intellectual property of a lot of american companies not conforming to wto standards. the chinese may back away from directly helping the united states on north korea. so keeping those two in balance, stopping or at least slowing the north koreans down on the nuclear front but also being tougher on trade that's going to be difficult for

this administration. >> i wanted to ask you about the olympics andrew is going to cover it for cnbc i like -- without any disrespect, i just love the name "rocket man" so i'm going to call him rocket man. i thought this was brilliant marketing. but he likes to showcase and the olympics are a global opportunity to the that. what are the chances andrew isn't coming back from the olympics >> ooh, ooh! >> i think the chances are very high that andrew is going to go there and enjoy the olympics and come back. >> thank you, ambassador i just thought i should offer that as an end-of-the-year prediction. >> my family appreciates your answer. >> ambassador -- go ahead. >> i was just going to say, i think it might look like a tempting target for the north korean leadership, for kim jong-un, i doubt it, however this is an event that in a way is going to unite a lot of koreans and the north koreans are going to take, i think, the people of north korea some pride in this as well.

i doubt that the north korean regime is going to use this to make a demonstration, some kind of military demonstration. >> ambassador, the state department maintains there's still an avenue for diplomacy. now the kremlin wants to broker talks. if you're tillerson, what do you do >> i think the administration -- both secretary tillerson, secretary mattis have been pointing towards negotiations. secretary tillerson has to be careful. he leaned forward in december about the need for negotiations, the white house walked them back but i think the administration walks them back if we launch a preventative war against north korea, there's no assurance that we'll be able to take out north korea's existing nuclear force it could lead to a much broader conflict, there are 30 million civilians living south of a demilitarized zone i think they'll look for a diplomatic opening once these sanctions have taken hold and secretary tillerson said this morning he thinks they've dried up 90% of north korea's hard currency that may be -- i don't know about that number.

i don't know how you confirm that number but i think they have made progress and that's why i don't see the use of military force. >> ambassador, separate issues, separate region. talk middle east for a second. i don't know if you saw the news this morning, apparently apple and amazon in talks to get licenses to do business directly in saudi does this suggest the anti-corruption effort that mbs is undertaking is working? >> i think that mbs is economically reform drive is sincere. he wants to open up the kingdom to foreign investment. he wants to open up to internal economic investment by saudis. the problem is balancing that with this corruption campaign. as you know, a lot of princes arrested, members of the royal family it doesn't appear all of them should be brought up on corruption charges, it looks to be political score settling and consolidating the rule of the salman branch of the royal

family they have to juggle that, andrew, with this big war in yemen which is not going well, the saudis have blockaded ports, the united nations says this is the worst humanitarian crisis in the rule so he's had to juggle both this internal economic reform effort with what's going wrong in saudi foreign policy in the peninsula. >> with every major strategist saying it's geopolitics that could schlowthrow a wrench into stock market policy, we appreciate your insights ambassador nicholas burns. >> happy new year. homeowners across the nation have been rushing to pay their 2018 property taxes early to take advantage of a deduction. that is being scaled back under the newtax reform law. we're in a suburb of new york city where some tax payer ares trying to get ahead of the new rules. >> reporter: that's right.

westchester county has been known as one of the highest property tax counties. the irs announced the only taxes that will be deductible for property taxes are the ones that were assessed this year and that you paid them this year, but not every county municipality is ready to tell you what you owe for next year. we talked to one westchester county executive on why they're not ready to give those numbers. >> i think what we're trying to promise is that the county will act responsibly and in doing so will do the best job to provide the most accurate tax warrant as possible so when people do get the tax warrants from the county they can rest assured that this is a good calculation, an accurate calculation. >> so the thing is not every county on the same schedule as westchester so other people are paying, taking their chances, even here in westchester, even if you don't know the numbers people are coming in with an estimated payment hoping they can get away with that so we'll have to see what

happens with the irs next year and that's why everyone says talk to your tax preparer, you might fall under amt and it depends on your personal situation whether this makes sense to you if you see property taxes through an escrow, you need to get the bank to pay the taxes to the county and they may not be open to do that. so people are lining up here trying to pay these taxes before the end of the year. back to you guys. >> eric, thank you this goes back to why i think state workers -- i hate to say it but they should be able to -- this is when it matters to their people. >> we hear anecdotally that those having to do this through the bank as eric was just mentioning are facing super long weights and -- >> the system isn't ready for this it's a once in a lifetime event. it will come and go, never happen again and it was never ready for this and the interpretation of the code is going to take over a year in my view to come into irs where you

can read it, that's all i care about. coming up when we return, the bayh hiring trends for the new year later, a power outage at disneyworld -- i should say disneyland -- isn't going to stop the entertainment powerhouse we'll find out how much imagine tick mouse house will have in 2018 you're watching "squawk box" on cnbc

♪ i want to get away, i want to fly away ♪ ♪ yeah, yeah welcome back to "squawk box. u.s. equity futures have been in the green all morning, although it is a week of very low trading, yesterday the second-lowest trading volume of the year, second only to black friday we're seeing air come out of the futures. the s&p would now open up by less than one point, the dow by 27 points, the nasdaq by about 12 points. we are awaiting the last economic data of the year, that is weekly jobless claims in about 15 minutes time. we'll see if that has any impact on the futures andrew. let's talk hiring. this whole tax bill is about hiring we're going to hire, hire, hire in 2018. i want to bring in the manpower group north american president good morning to you. >> good morning. >> are you excited are you of the view that this

tax reform bill is about to be a game changer >> yes, we're very excited at manpower group we have conducted an employment outlook survey for the last 50 consecutive years and for q-1, 2018, we're seeing the strongest hiring intention we've mean? a decade really driven by construction and manufacturing >> are there places where you might see a downturn i hate to ask that. >> what we're finding if you look across the united states, the midwest is the strongest hiring intention we've seen since 2001 and the other regions are stable and 135u8 secretary gener generalmentes of the economy, whether it's travel and leisure, we're seeing growth across the board. >> where are you on the debate regarding -- let's say we're going to get to 3 pvr.5% gdp grh generally you would see unemployment go before -- employment going below 4% but

now there's a debate about artificial intelligence being so productive that in many sectors, let's take self-driving cars and trucks -- that this will be the first time ever we get a significant move in gdp without a follow-through in employment are you seeing evidence of that? >> what's interesting about that is we are seeing six million open jobs in america today and so even with the introduction of artificial intelligence, we believe it will create new opportunity it's fascinating, with six million open jobs and strong hiring intention, we're still finding difficulty in finding skilled workers. so 46% of american employers are saying they cannot find skilled workers they need so the challenge we have with artificial intelligence as well as strong hiring intention is to reskill the american work force. >> what about wages? where are you on wages right now? >> wages, we've not seen wages move as much as we had expected. with the supply-and-demand mismatch that we had, we'd expect wage to increase. we've not seen that movement. >> how much are we talking

about? >> wages have increased about 2.5% in the last 12 months >> but what do you think will happen in 2018 as a result of all this you see big companies announce bonuses and things like that on the back of this tax reform plan. >> we're hoping with the tax reform that the corporate tax reduction will stimulate more job growth we're hoping that stimulates wage improvement it is a conundrum we haven't seen wages improve more than they have already. >> so maybe we should blame the fact that there's no wage inflation on ai, because this is highly irregular to get below 4% unemployment, have 3% plus gdp growth and no wage inflation somebody or something has changed. >> it is interesting the other thing is we're in the middle of a skills revolution and what that means is growing divide between the haves and the have notes of skills where skills is truly the new currency it's time to invest in american workers to reskill and upskill at manpower group we're

partnering with rockwell automation, we created this academy for advanced manufacturing where we're reskilling veterans because if you want wage increase, we have to have a skilled work force to do the jobs in the future. >> big philosophical debate. i want to have it with you and kayla and mr. wonderful. who should be paying for the skills upgrade of the american people, for veterans and all of these other people is that something you think the government should be doing something companies should be doing? >> andrew, i can sense -- i feel the aura of government in you when you say that. >> i'm just asking. >> and what i'm saying is let the market do this don't even get the government involved in this the market will do a marvelous job of figuring out where to deploy capital to upgrade people, at what age, at what industry the minute you bring the government into it, you will increase inefficiency by 33.3% like that. they will waste more money. >> 33.3% i'm glad you added --

>> one third of every dollar government spends is wasted wherever they spend it i've become convinced of that just watching what they do over multiple regimes, generations. >> community colleges are trying to fill this gap, we should note companies are partnering with community colleges already to try and equip workers with the programs to transition them from old-line jobs to new-line jobs it's going slower than it was expected, becky, and i'm sure you have a front row seat to how that's going. >> that's right. we would say it's public/private partnership that will transform america. there are new jobs coming, you mentioned ai, jobs that don't even exist 65% of the jobs that my children will face in the future don't exist today. so it's going to take a public/private partnership companies have to reinvest or reskill their workers. we have declining population, a tightening labor market and the skills life cycle is more rapid than ever. it's going to take all of us working together to skill our american population. >> becky, you agree, the dark

forces of government are not necessary in any of that the dark forces of government aren't necessary. i would say it's going to take all of us working together we're facing an entirely new world and none of us know the extent automation and ai will have on the work force so we have to work together -- universities, companies, and government. >> the reason why i'm fascinated by your answer is because there's part of me that would have thought you would have said i don't want to pay. i'm a business, i don't want to pay. if i can offset that cost, if i can lay that cost off on somebody else. >> market good, government bad that simple. >> that simple. >> always go with that you can never go wrong the dark forces are evil when you bring in government into changing efficiency. it's a horrible idea to have the government investing in sectors. >> i think the primary responsibility is with the company and we're seeing companies start to increase their focus on reskilling their own employee base, as we are as well. >> becky thank you, happy new

year, good to see you. we're going to talk about dark forces, light forces, but we're also going to talk about riding the crypto coaster bitcoin prices took another dip. we are tracking prices next and we'll explain what just happened "squawk box" returns in a moment moment ♪ roller coasr le teofov♪ our t 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. (barry murrey) 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 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

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futures in the u.s. equity markets are mildly positive. the dow opened pup eed up 34 hopes of the santa claus rally kept alive for some late-day buy orders yesterday toward the close. we'll see what happens in just about an hour when the markets open today with just two days of trading left in 2017 we're seeing pressure on boyitcn prices today look at where we are across the board. some of these exchanges, futures are arranging anywhere from down 5% to down 4% to down as much as 6.5% that's better than the lows we saw earlier today and this news coming on the back of south korea announcing it would implement new rules in an effort to regulate trade of the cryptocurrency it seems any headline related to bitcoin can send it soaring or sinking and that's the effect we are seeing today. in the "in case you missed it" category, perhaps the biggest news of yesterday as it

happens, cnbc's technical operations team kicked off the trading day ringing the opening bell right here at the nasdaq and our director was there you have to look a little closely, unfortunately, he's really there in the back [ laughter ] a big thanks to the crew that made "squawk" happen each and everyday but we've made an effort you can see him so well can you see him, guys? there he is. he's the one with the beard. there he is. there he is. thank you. >> paul is the one who is responsible for all the cutaway shots of people laughing or doing something. >> any time we're not supposed to be on camera he has us on camera. >> a good day for the unsung heroes behind everything we do on the air great they got to have that moment. coming up on "squawk," breaking news on jobs. the weekly claims data is straight ahead plus some predictions for the 2018 economy we'll have those on the other side of this break

we're second away from weekly jobless claims.

let's look at futures before we get there to show you what's going on we have green arrows it will open 32 points higher. nasdaq up about 12 and the s&p 500 up about a point the ten-year note is looking like it's at 2.434 and rick santelli standing by in chicago. rick, the numbers, sir >> andrew, we have several let's start out with continuing and initial claims initial claims unchanged that doesn't happen very often 245 last week, no changes. 245 right now on continuing claims, very subtle revision to 1.936 million and it moves up just a smidge more to $1.943 million. let's get to our november read on advanced trade balance which is a deficit, a bigger deficit than one would have anticipated. they're looking for $67 billion to $68 billion we ended up with minus 69.7

billion and that follows 68.1. that's the biggest trade deficit of the year. biggest of the year. to find a bigger number than that we have to go to looks like march of 2015. march of 2015. now let's get november read on retail inventories up 0.1%, that follows minus 0.1% and on wholesale inventories up seven tenths over double the expectations and that follows a one-tenth revision from minus a half percent to down four-tenths. on that wholesale inventory bill, that may have gdp implications we still have chicago purchasing manager survey to come out we are basically a basis point, base point and a half below the yield. high year price. so if you're looking for an unchanged year, you're still in the hunt and it seems like something -- we usually get important moves from the last couple of three weeks in terms of interest rates. this year is no exception as we

move solidly in the mid to low 240s and then finally on that darr index can't get a break, down a quarter of a sent at the moment kayla, back to you. >> thanks so much rick santelli. joining us on set for more reaction to the jobless claims and what could be a solution to the untapped potential of the u.s. economy is beth ann bovino, chief economist at s&p good morning. >> good to be here. >> the expectation was a slight decline, we saw futures very short-lived, a couple point gains. what do you make of this >> i see it as holiday distortions. we expected it to go down a bit but we thought the holiday -- the imfact the holidays would till distort the numbers we expect the numbers will come down later on once the new year arrived and we expect it to be around 230 to 235, a nice reading, not as low as we saw when it hit near a 50-year low

but nice readings. >> do you think this would hit a bottom again in january or is that in the rear view? >> you can't rule anything out these days but i don't expect that seeing that 47-year low back in february was a surprise and it seems like that's not necessarily going to be in the picture for 2018. >> we saw a survey from the business round table show most ceos when they were surveyed expect sales to increase next year because of the tax bill they expect cap exto increase because of the tax bill but they don't expect to increase higherin highering. that's a bit of a concern. we've seen good jobs numbers over the last several years. we saw jobs in 2016/2015 p but this year it slow ed down.

with the unemployment rate at 4%, it explains why businesses aren't hiring as much but that is a concern hoping that tax reform is hoping to galvanize job gains. >> every time we get these data set i look at volatility in the ten year to try to divine when we're going to have wage inflation. nothing happens here do you have an opinion on what's happening why can we get near 4% and have no wage inflation? what's going on and a 3% handle on gdp growth. >> what we think is going on, that 4.1% is misleading that unemployment rate because the urntsds lying trend is still suggesting there's some slack. you have a labor participation rate near a 40-year low and that's not going to change even if there's a tax reform. that's good old demographics off lot of baby boomers leaving the market and that means slow

growth one of the reasons why we lowered our potential growth rate to under two. >> so you don't think we're going to have wage inflation in 2018 >> the wage inflation we're looking at, we think it will pick up, around 2.5% year over year according to some stats we think it will pick up but we're not expecting to see what you would normally see in this recovery closer to 4% that's a concern, i remember there was talk about a skills gap. that's one of the factors at play as well. >> next week we'll get the december jobs report it will be the first partial month where the expectation of tax reform is baked into any company's expectation. the holidays are slow for every company. i'm curious whether you think we'll see any green shoots from tax reform. >> i don't think we'll see it. remember, the december data comes out. so you won't see the impact. a lot of these decisions have

been made could we see some activity from businesses starting to anticipate tax reform you might tart start to see business investment spending and we have seen a bit of green shoots there and that might extend into the new year but we won't see that in jobs. >> in the days of old it would be wage inflation first, fed makes a move, starts accelerating, sometimes they go 50 basis points instead of 25. all of a sudden the long bond corrects as a result and the market corrects. it's not happening anymore and everybody is trying to divine why. what is it about the economy what is it happening that this cycle is so different? >> we did have the worst recession since the great depression >> and we've had one of the best recoveries since. >> one of the -- let's put it into perspective one of the best recoveries when you saw -- a year after a recession ends historically, going back to the 1940s or '50s

we'd see growth rate of 5% we never saw that. if you look at the annual growth rate we've seen during this recovery it's about 2.25%. what you saw historically was something over 4% so i would disagree that it has not been that strong. >> i'm trying to find a way to blame the government but i can't. >> i think one big factor is demographics >> aging population? >> aging population. that labor participation rate near a 40 year low, that won't change regardless of tax reform. one of the arguments we put in place and one option would be how about we bring more people back to the work force we targeted women if they choose to make it easier for them to come back. we see that as a pro-growth boom for the economy. >> you published a report on that topic and found full employment or close to full employment for female workers would add 5% to 10% to nominal gdp. how do you figure? >> that's over the next few decades. it won't happen next year. >> but the demographic change

would take a long time. >> what we saw is that women -- female participation rates had been picking up at a fast pace historically but stagnated into the 1990s and other countries caught up. if we saw women participation rate increase as a pace of what we see in other advanced countries according to the oecd, we could have seen the economy today about $1.6 trillion bigger than it is right now and because of the productivity gained for more people, not just women in the work force that productivity boom when we know productivity is low could give the economy that kind of competitive boost to get growth over 5% to 10% going out several decades. >> speaker ryan said there will be a huge demand for workers and new workers with this tax reform bill we'll see whether more women jump at that chance.

it's a provocative report. we appreciate you coming on. when we return, disney had the power of the force in 2017 we have a score card on big time at the box office and launching a megadeal for fox as well does bob iger have any more magic up his sleeve for investors? we'll talk about it when we return attention homeowners age sixty-two and older. one reverse mortgage has a great way for you to live a better retirement... it's called a reverse mortgage. call rfree information kityour with no obligation.

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through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade disney closing out its year

with a smash hit "star wars" film in a bid for 21st century fox's assets, key assets joining us right now for a look at the mouse house in 2018 is tim nolan, the senior analyst at mccory capital we're thrilled to have him here. what else could happen next year first of all, let's do the 21st century fox deal you think it's going to happen you think it's going to go through? >> yes perhaps in 2018, perhaps not until 2019 12 to 18 months is the expected time frame given what we've seen with other deals, it may not happen until early '19. >> is there any chance the deal gets jumped by somebody else >> jumped as in somebody else jumping in over disney. >> yes. >> unlikely. i think the scale of these two players to begin with is such that it leaves everybody else in the industry so i don't think there's another possible bidder. i don't know that anyone else will be interested in doing such

a deal clearly the murdochs chose to sell to disney they will be shareholders in disney for a long period of time i would assume and i don't think there's any other interested party that would be strategically or financially capable or willing. >> during these transitions it can often be complicated because everybody is sort of frozen in time what do you expect to happen at disney. >> well not much in regards to fox. as a regulatory reveal you'll have a deal. in terms of a movement over their ott efforts, do you think they slow down because people will wait to figure out how to integrate hulu do we do it with hulu? where doesbamtech fit into thi whole thing? that's what i'm talking about. >> we could talk for an hour here, there's so much involved in this deal that's so exciting. on the one hand, you have all

this extra content from fox that will come on to an ott service that disney will launch and then you still have disney regardless of fox before the fox deal was announced disney was planning to launch this what i call an alternative espn over-the-top service so it will have espn sports content coming on early part of 2018 eventually adding more fox content from the regional sports networks they bring on and then disney has this disney brand atott service coming in late '19 which i assume this is the big ration l rationale. that doesn't push disney in 2018 that will launch this espn service as a test case perhaps for an eventually full blown ott espn one day you have major sportsrights coming up for renewal in 2021, a little ways off but not too far out to be planning that and when the ott disney service coming out, you have this extra fox content to put on that as well

consumers are moving in this direction, paying for content, particularly for advertising-free content. >> let me ask you the question from the institutional investors point of view. disney has been in the mid-90s to 110 then the story about cord-cutting and espn and cash flows involved drag it down then you have this new dialogue, just a few weeks old, about how fast revenue can come from this over-the-top disney content service. i'm a shareholder in this thing and i've been watching it go up and down here's the question i have for you as an analyst. is it possible -- and this would be the bold case -- that if tomorrow you could flip on the switch that all of the content that families buy everyday from disney, whether they go to a "star wars" theater, whether they watch "frozen" again and again and again, if that was available and not on netflix,

would we get a big surprise at how many people in america would buy that service if you have children under ten years old, how can you not own that service is there any chance you wouldn't own that service at any price? which is why iger is not going to be president, because that opportunity seems unique could you argue and would you argue that this is the buying opportunity of a lifetime on the disney stock just for that factor >> like i said, off year or too for these things to play out. >> the market anticipates that. >> maybe this is the time to be entering because as you say there is a lot of value that they're going to be able to create, look at the ott services and these virtual bundles, smaller bundles that have come along in the last couple years that people are willing to pay for. you have cbs all access. disney can do the same all the first run pay tv window releases going on to the disney service not to netflix

i agree, there's a lot of value that they will create with people that will want to pay for this service so whether today is the day to enter into disney, you've got probably a couple years for this to pan out but i think it's an interesting value proposition. >> who else do you like? who's the biggest loser as a function of this transaction. >> we don't like a whole lot in media right now. >> including netflix? >> we're neutral on netflix. >> what does neutral mean? neutral means -- what does that mean >> if you already hold it keep it, don't buy it. >> to me it means sell >> neutral can mean you don't have a strong enough buy or sell case it can mean you're resting on a stock until you're waiting for the next piece of news that gets you to move one direction or the other. clearly they have changed the way people watch tv. clearly they've created a valuable service and look what we're talking about, these subscription services coming along basically playing the game netflix invented >> would you short netflix and

go long disney. >> i'm not a hedge fund guy and i don't -- >> because it would tell me about what you're thinking neutral calls -- >> sure. we're neutral with a positive bias on disney we like the fox deal, the content they create and their ability to go down the road and create these subscription services that i think will contribute to better growth for disney over time once you get through this period. do you have to short netflix for that i don't think. i don't think disney pulling content from netflix hurts netflix. they have enough content that they'll do fine. they created this market that people are jumping into. those that have a deep content brace and a band i think will do well. >> thank you appreciate it. great to see you when "squawk" comes back, the post-holiday naughty and nice list the retail winners and losers you might want on your 2018 investment list. that's up next ♪ you're the best, around,

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time to check on the winners and losers of the retail world now that the shopping rush is mostly over. kate rogers tells us who turned out to be naughty and who turned out to be nice we'll see which list is longer kate, good morning >> hey, kayla, good to see we'll take a look at the retail etf, the xrt is up about 3% for the year it actually hit a new 52-week high the day after christmas so who are the retail winners and losers this year take a look at this. year-to-date, these five stocks are the best performers, conn's ink, seller of mattresses and furniture, up 183% way fair, up 131%. pet meds, up over 100% and alleys and five below are up 80% and 70%. here are the bottom five in the index. they are riteaid gnc and traditional department stores and sears, both down around 60% rounding out the bottom five is

je necessa genesco, the owner of lids and journeys the retail season, the naughty and nice list shifts around. so these are the best five performers year-to-date. footlocker is up 60% express up nearly 60%, as well abercrombie & fitch, finish line and eveninngls market was up footlocker has turned around, it was in the bottom 15 for the year, and to the downside, this retail season, gnc, sears, signet jewelers along with carmax analysts say in terms of execution, amazon and walmart are the real winners this season they're up nearly 60 and 45% for the year, guys back over to you >> thank you for that. coming up, when we return, a netflix tradition designed to trick kids to go to sleep on new year's eve i love it. and the trivia game that interrupted christmas dinner find out how many people put the eggnog down to play hq

os'll tell you all about both of the things when squawk returns in a moment. you like him. he's one of those guys who always smells good. his 5 o'clock shadow is always at 5 o'clock. you like him. your mom says he's done really well for himself. he has stocks and bonds. your dad wants to go fishing with him. your dad doesn't even like fishing. you like your brother-in-law. but you'd like him better if you made more money than he does. don't get mad at your brother-in-law. get e*trade. jack and jill went up the hill to fetch a pail of water. all because of a burst water pipe in their house that ruined the hardwood floors in their kitchen. luckily the geico insurance agency had helped them with homeowners insurance and the inside of their house was repaired and floors replaced. jack and jill no longer have to fetch water. they now fetch sugar-free vanilla lattes with almond milk. call geico and see how affordable homeowners insurance can be.

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parents like the sorkins fool their kids on new year's eve they're launching a set of on-demand countdowns so parents can let their kids ring in 2018 without having to stay up until midnight ifp if the children can tell what a clock likes, you might have a problem. >> there's a huge ethical issue here you are lying to your children >> it depends what age -- >> so it's okay to lie to them at a certain age >> you don't necessarily have to lie to them. it's a cord-cutting countdown if you don't have cable >> we were visiting some friends in l.a. and we left the party we were at to come back to their house and realize they don't have a television. so we had to do the netflix countdown. we did the madagascar countdown, we're entirely too old to be doing that >> do you do it at the right

time >> we tried to get as close as possible p possible >> you've got to get your kids dealing with the real world as soon as possible >> this is a santa claus issue, too. you know >> if you say henry max it's 8:00 p.m.. >> you don't get into that >> i'm all about the truth you've got to tell the truth that way you don't have to remember what you said one year, they're going to say, dad, all of these years, you've been lying to me i don't think we can have the same relationship. >> you know, we might have some young viewers, so i'm not going to get into the whole santa claus thing this morning but my hopes and dreams were -- >> some doogie hauser investing types watching between christmas and new year's >> the hq phenomenon hit a peak on christmas day 730,000 people stopped what they were doing to log on and play

the 9:00 p.m. eastern time game. that's more than twice as many people who usually open the app, which is only four months old. if you're not familiar with hq trivia, think facebook live meets jeopardy it's broadcast live twice a day with a $1,000 jackpot split between winners. and you've recently tried this >> i didn't know about this. the squawk producing team, i didn't know it 3:00 p.m. every afternoon. they apparently play we're all having lunch one day and they say, it's time for hq, break out their phones and it's the biggest thing going. >> all these viral games, will they be here 12 months from now. is there any way you can manufacture something like this without having a unique element of chance? 12 months from now, this thing will be dead it's so hard to make one of these things last. it's huge with my kids >> millions of people of people will be doing it >> do you remember that game where you virtually saw that game where you saw the little

guy running around where wherever you were. >> powerball, joe kernan would tell you not to buy a lottery ticket this guy is buying bitcoin >> lotteries are just another form of tax. that's all they are. >> thank you to kayla, thank you to kevin we'll be back tomorrow "squawk on the street" begins right now. good morning and welcome to "squawk on the street. i'm david faber along with mike santoli and wilfred frost. both jim and carl off today. let's give you a look at futures as we get ready for trading a half hour from now here on this thursday only two days to go before, of course, we begin a new year of trading. you can see, we are looking for a higher open this morning european markets, what were