it is 5:00 a.m. at the federal reserve in d.c here's your top five at 5:00 to hike or not to hike that is the trillion dollar question for the markets and your money we're counting you down to today's big fed decision facebook under fire again. an explosive new report says the social media giant gave dozens more companies extensive access to your personal data than previously believed. japan's biggest ipo ever flopping we're going to take you live to tokyo. major deal in pharma that will change the way you buy drugs including names like advil and more on the recent crude collapse why the oil story is about a lot

more than just lower gasoline prices it is wednesday, december 19th and "worldwide exchange" begins right now. ♪ let's get it started hot let's get it started in here ♪ ♪ let's get it started hot >> all right good morning, good afternoon and evening, and welcome from wherever in the world you're watching it is a very busy day. here's how the money and your global markets are setting it up ahead of today's big fed decision remember, this is the last fed meeting of the year, a rate hike is widely expected by the way we did a poll on what you expect. we'll get to that in a few minutes here meantime, ahead of the fed decision, we're seeing stock futures indicating that the markets may rise again we had a nice rally on our hands yesterday. we ended higher. it really fizzled out in the last hour and a half to two hours of trading green on the screen right now. woo he will s we'll see if that holds the bond yield continues to come

down people are leaving stocks and going into bonds around the world, we are seeing another tough night overseas in japan. the japanese market, the nikkei 225 falling yet again. hong kong was able to squeak out a few gains. the european markets are up, not a lot. germany, the ft-se and the uk and the french market, they're all higher but by a couple of tenths. outside of the fed meeting today, oil's collapse, another big story. keep this in mind. oil has now fallen 40% in just 75 days. simply massive oversupply is the reason remember, the opec cuts that we talked about, they're not going to kick in for a while and the united states, russia and the saudis all continue to pump more and more some people think the saudis are close to 12 million barrels per day right now. all ahead of the cuts. yeah, wti crude up is fractionally now but we're at 46 and change and in a couple of months, we're going to bring you a look at the companies you need to look at

the radar and have a lot of debt and credit ratingen that need oil prices to be higher. by the way, bitcoin, as the markets slide making a comeback. bitcoin up 2%. all right. that aside, the big focus on the market is on the federal reserve. just nine hours away from policymakers announcing the final rate decision of the year. most of wall street is banking on another rate hike there is no guarantee. by the way, we put out a twitter poll last night asking you what you think you will have and you are in line with wall street thinking 63% of you think that the fed will hike rates but have a dovish tone. in other words, indicate no more rate hikes will be coming on the map in 2019. at least for the first half of the year no hike and a dovish statement actually 17% of what you think joining us now is peter, chief

global market strategist at kanter fitzgerald. peter, we appreciate you coming. >> thank you >> do you agree with our viewers? >> i -- >> rate hike today but backing off the expectation for any more rate hikes in 2019 or at least the first half >> i think that's exactly what's going to have to happen. economic data has begun to roll over to some extent in certain areas. the housing issue that we have been pointing to in our work is come to the forefront. europe is obviously slowing quite a bit. the ecb obviously just ended qe. and i think the fed has the feeling that it needs to give the ecb a little bit of head room european pmis in particular have started to roll over in france >> so why raise -- you said have to and the choice of -- like, you know, i have to get more sleep but, you know, i get up at 2:45 in the morning every day do you think that's the right move >> yes i think that is the right move >> but why raise rates at all then >> i think the situation went

from fed funds being i think at 78% about three weeks ago now probably closer to 60% so the expectation for the markets was that the fed was going to raise rates almost certainly and above 80% the fed tends to raise rates. now certainly fed funds futures have given the fed some head way, not to raise rates. that said, i think chairman powell has messaged very strongly that they're going to raise rates. and by not raising rates it would send a very negative signal so optically it looks pretty bad if the fed decided no to the raise rates having signalled fairly clearly it was going to do so. >> if the majority of market participants believe we'll get a rate hike but then dovish the first half of the year, the equity markets have not responded. if they're hoping that will give a bounce, we're already predicting that. >> yeah. >> so where is the bounce? >> yeah. we certainly haven't gotten it yet. we've been wrong i've expected something of a santa claus rally. >> i appreciate the honesty, by

the way, get in line a lot of people are wrong. >> well, we've also, though, more strategically been correct in sort of calling for caution midyear this year. and we started with our concern around actually emerging markets on higher developed market rates. emerging markets are 70% of global growth right now. with emerging markets having to hike to protect the currencies, global growth is likely to slow. that is the first concern. then there is housing and europe frankly now the credit markets are concerned. the loan market is extended in our view it's as large as it's been in any late cycle rally and i think any cracks in the credit markets, we've got a problem. >> so we're going to do something on oil in a couple moments. we always tell people that it's not an oil story >> right >> it's a debt story how big is the debt threat to the overall stock market right now? >> well, specifically for energy companies, it is a problem they're still not cash flow positive and that means that they're

relying on the capital markets >> if they're not cash flow positive at $46? >> they are not. even 50 to $55 as arguable that they're not cash flow positive if they roll over, a love the guys are going to start to face real issues. >> we're going to show names that have single b credit ratings and high net debt to earnings levels in a few minutes. merry christmas, we'll see you soon. >> thank you new overnight, the new york tombs says that facebook gave dozens of big technology companies extensive access to your personal data according to the story, it is far more access than facebook itself at previously disclosed let's get to frank collins with this explosive story on facebook >> certainly bombshell allegations. facebook is denying it shared users' private messages, contact lists and other personal data with dozen business partners including companies such as microsoft, amazon, netflix,

spotify and yahoo. they're reporting that facebook was sharing that personal data with more than 150 tech, media and auto companies as recently as this year the times says the report was based on more than 270 panges of internal documents and employees and what they call the integration partners in a statement, facebook's director of privacy and public policy says facebook's partners do not get to ignore people's privacy settings and it's wrong to suggest they do however, the company didn't fully address the crux of the times story that it made personal data available without disclosing how much it was sharing and in many cases without user's permission. now that would potentially violate a 2011 consent agreement with the federal trade commission facebook says the "times" report doesn't show any evidence it broke that agreement the company says it's integration partners helped users interact with friends. facebook shares are down more than 1% in after hours traiting. brian? >> another smack on that company.

frank collins, thank you very much a major deal in the drug sector today pfizer and glaxosmithkline are going to combine their consumer health care units. they have plans to eventually spin off that newly combined business now this move will create a global giant for drugstore staples that you know, advil, tums and others. it will have $13 billion in annual sales and also free up glaxosmithkline and pfizer to concentrate more on prescription drugs which are more profitable than over-the-counter. we're going to hear much more about this deal and why they're doing it with emma walmsley, ceo. be sure to catch that interview at 7:00 a.m. eastern time. in other corporate news, japan's biggest ipo ever flopping in the public debut let's get to our reporter live in tokyo with more on softbank mobile >> good morning to you, brian. that's right concerns about the saturation and the domestic telco sector

and softbank mobile's exposure really dampened the mood for the debut of the company on the tokyo stock exchange this was japan's largest ipo with more than $23 billion raised it was right up there with the largest ipo of all time which is, of course, alibaba of 2014 retail investors were the ones getting in on this 90% of the 160 million shares alotted for these mom and pop first time investors and the indication initially was that uptick was strong. but softbank was hit by a number of negative headlines in the lead-up. earlier this month there was a software glitch that left more than 40 million subscribers here in japan without any access to mobile data and voice angering users. and there was that issue with the cfo being arrested in canada after that the japanese government said they would no longer be using their equipment. and then encourage private companies to follow. that really put softbank in a very tough position because they're the only carrier here in

gentlemanen pa th japan that use that's equipment. they said that they are considering changing up their 4g equipment to the european players and also american players. they said they are in conversations right now. they've got 10% invested in the equipment. but there are concerns about what that change-up will mean in terms of cost for softbank and what that means for the ability to stay competitive in the market we should point out that one thing that made this stock attractive in the lead-up to the ipo was that high dividend payout 85%, a 5% yield for shareholders softbank's executives say their confident they can deliver on. that but given that the performance of the stock on the first day and also the headwinds they face in the market, there are concerns that they may not be able to sustain that. brian? >> you know, what has been the local media reaction obviously, mr. son is a god like

investor he is the warren buffett of japan if you will. so what are we hearing what is the reaction >> you know, the concern is really the big overhang here because people here in japan remember when in the earlier days was a real cheerleader. he was the first mobile carrier to use the equipment that helped to drive down prices for softbank which made it attractive for users so that's been a concern in terms of how that adds to cost it is interesting to see the lead-up to this ipo they are going foifrt time investors. a lot of them elderly to say you have the 5% yield on the stock

and that is a big payout what we saw in the initial trading was an immediate drop. you get the sense that a lot of those first time investors got a bit jittery given the negative headlines in the lead-up and that was a big part of the big decline we saw today >> akiko, live for us. thank you. all right. we're just getting started here on "worldwide exchange." up next, why the oil story is really a debt story. we're going to name some stocks that you need to watch as oil prices slide later, your year end playbook. the best places for your money as 2018, thankfully, comes to a close.

welcome back hope you're having a great start to your day or end to your day maybe you're in asia have a cocktail for us here's how they're setting up their day. stock futures are higher it's interesting we had a nice rally on our hands yesterday. kind of petered out. we did end higher on the dow by 80 points. but the rally really fizzled like a stale can of dr pepper. anyway, dow futures rare up oil may be quickly becoming one of the big market stories outside of the federal reserve oil up a little bit right now. b but it's at $46.58 as oil does fall, you're going to hear a lot about how lower oil prices mean lower gasoline prices and how that's a good

thing. well, it is for consumers. but you have to remember there is another side to the oil slide. the debt side. crashing oil prices can be a bad thing for many debt heavy companies. oil companies and their investors all oil and gas companies, by the way, the stocks are down over the last two months we dug out names we did a screen on companies that have high net debt to earnings and a single b, a junk credit rating. so high debtratios, low credit ratings, some names that you want to watch as oil slides. we're not picking on the companies. these are just names that meet those criteria callon, extraction oil and gas, laredo, matador and oasis petroleum. coming up on "squawk box," you'll see my mug again. we're going to talk more about the debt heavy side of the story. talk more about some stocks that you need to watch.

joining us now is kate richards, founder and ceo of warwick energy a private equity firm with more than 5,000 investmentes in oil and gas, wells, somebody you've seen on this network before. and we planned to you have on weeks ago before oil has done what it's done recently. >> it's been dramatic. >> it has been dramatic. 40% drop in oil in 75 days >> there were a few reasons. we had had u.s. refinery enter a maintenance turn around. they were consuming 18% of the global market to 16% secondly, the entire market, i will say from a macro stand point and a producer standpoint and from political standpoint was caught off guard by the iranian waivers. i did not expect that in advance of iranian waivers, saudi and russia production was ramped to offset the production coming off from iran >> and by the way, this is an important story, kate.

if you're not familiar with what kate is talking about, we put on these sanctions on iran. and people thought 2.5 million barrels a day is going to come off the market people can go to the u.s. treasury department and request a waiver and say i'll give you this but let me keep buying iranian oil. so far eight major countries have asked for and received waivers. in other words, that iranian oil is still out there >> the iranian oil is out there while russia and saudi production ramped. >> thinking iranian oil won't be out there. >> exactly, to offset it and the other story that hasn't really been talked about too much is that the u.s. government released 20 to 30 million barrels of strategic petroleum reserves in the last two weeks of october and november lower oil prices for consumers you have a glut in the market which is temporary and it will work through it will take five or six months. and that release is now tapered going forward. and it also eventually sanctions

will come on the u.s. government has given chinese, korean, japanese buyers a chance to figure out where to source the oil apart from iran so we have a little glut >> a little glut if you go to canada, you can get oil for free >> it's not -- >> they can't get it out of there. if you got a truck, they'll almost give it to you for free so you can just say get it out go away. >> yeah. the big thing is actually if you look at u.s. inventories, they're healthy and global inventories have drawn this year ive think the important thing is if you look at the total volume of extreme traded futures, more crude, you will see that there actually is a situation where we have gone from over the last five years, we've gone from, you know, all time low of $28 a barrel to $77 in october we have fallen from 77 to $44. during that time frame, if you look at the u.s. oil and gas

companies, the xop is at an all time low >> it really is. one thing we to highlight, we're not trying to scare anybody with the names. but the oil industry is built on a lot of things, sweat, hard work, ingenuity and also debt. >> yeah. >> and there is 240 billion in in global energy related debt that is coming to maturity the next five years. now it's global. not all in the u.s but we're seeing the debt story now kick back in again >> yeah. energy has been a huge driver of the growth and the high yield debt market. but these cash flow -- if you're a ceo or a cfo of an oil and gas company, if you're board of an oil and gas company right now looking at forecasting $40 to $50 oil next year, can yyou cant increase we saw them come out last night and cut rate count by 20%. >> they're the more well run of the oil and gas companies. fiscally conservative. they were not on our list of naughty. >> that's a fantastic.

so next year we see multiple compression from eba cash flow standpoint and we also see -- we see on going leverage. the most important story is that oil and gas industry which is known for spending cash flow got the message from activists teaming up and saying do not spend cash flow on drilling. return it to shareholders. >> is that negative for economic growth this has been a jobs driver in america the last number of years. who is the only industry adding jobs after the financial crisis which is why we dug in so deeply on to it f you're cutting cap ex, that means you're cutting investment which means maybe you're cutting growth. >> i think the most important thing earlier in the intro you said this is good -- will will oil prices be good for consumers. they are to a certain point. the problem is over a 36 or 48-month time frame, low oil prices means companies don't reinvest in growing production a lack of growth in u.s. production means that we'll be in a situation where oil prices

will skyrocket and 36 to 48 months so having low oil prices creates the follvolatility and that's what we're in stable oil prices are better for companies. and they're better for consumers. >> hard to run a business when oil is moving 40% in 75 days kate richard of warwick energy, ceo, have a merry christmas and good new year. we'll see new 2019. >> thank you up next, driverless delivery one major grocery chain is taking it to the streets without a delivery person. we'll explain how and maybe why. but first, the countdown is on we're a few hours away from the fed's latest decision on rates likely the market story today. will it be dovish, hawkish or the fed pigeons just walk around a lot? ♪ ♪ (buzzing) gather new insights, leave your data protected on-site, and put it all to work with ai. the ibm cloud.

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the senate passed a sweeping criminal justice reform bill that could put a dent in the u.s. prison population we're talking reduction of 53,000 unmates over a span of ten years. that's according to an estimate by the congressional budget office the first step aims at lowering the number of people behind bars by making thousands of inmates eligible for immediate sentence reductions and early release programs the bill would also help boost prisoner rehabilitation efrlts this applies to federal prisons and not state prisons.

former national security adviser michael flynn who admitted to lying to the fbi appeared in court tuesday for sentencing he got an earful from a judge who asked why flynn wasn't facing treason charges after a recess, the judge admitted to misspeaking about general flynn's conduct as a foreign agent which ended before he joined the white house in 2017 the sentencing was delayed until march. a dramatic rescue caught on body cam. two deputies in texas running towards a car that flipped after it crashed bystanders watched, the deputy struggled to pull an unresponsive man from the front seat while the flames raged all around them. they eventually pulled him out and put out the fire with water from a nearby puddle the man was airlifted in critical condition none of the deputies were hurt just a remarkable video there of just the job for them, brian >> thank you very much

all right. up next, back to business. ready, set, hike the big environment names on wall street sounding off on what they think the fed should and will do today.

doves, hawks, or chickening out. what the fed is likely to do today and what means for you and your money facebook under fire. at black eye for the company and explosive new report says facebook gave out more access to your personal data than previously believed. and a game changing deal in big

pharma that could change the way you buy drugs. the full details as we roll on right now. welcome back thank you for being with us. 5:31 on the east coast i'm brian sullivan let's kick off the second half of the show with the news you need to know about 60 seconds. it's your executive recap. frank is back with that. >> this is what is leading right now. facebook reportedly shared more of the users' data than it previously admitted. "the new york times" says facebook gave microsoft, netflix, amazon extensive access to your personal information that includes the contact information of users' friends and even the ability to read private messages the report adds more than 150 companies have had access to that data as recently as this year facebook denies it let other companies misuse that data

pfizer and glaxosmithkline are consumer the health care units they will create a global giant for drugstore staples such as advil, tums and toothpaste the combined unit will have $13 billion in annual sales. and softbank began trading in tokyo. shares of the telecom unit plunged more than 14% on its debut. this is japan's biggest ever ipo and is one of the largest the world has ever seen. brian, back to you here's how your money and investments look stock futures indicating another pop at the open. sound familiar we had one yesterday we had a nice rally on our hands for much of the morning and then it kind of fizzled out late afternoon we did end up higher by 80 points dow futures up indicated 109 right now. the key thing for the market an money on cnbc is the federal reserve meeting. it is the last one of 2019 the majority of wall street

believes that the federal reserve will raise rates but not everybody thinks the fed should >> the fed should not raise rates. we're now below 2 which we used to be the fed's target and dropping that is a sign they shouldn't be hiking >> i think they'll probably hike again, there is just so much momentum and central bankers by definition are so conservative and for them to change that quickly would require this unbelievable change. >> the only argument i hear from the fed to raise rates now is somehow they have to exert their independence from the white house. this is a bad argument. >> in terms of fed doing it too fast, there is risk of doing too little too slow. it's easy for lower rates. but the fact is a strong economy normalizing rates is a good thing. >> they shouldn't raise them this week. i don't think they should.

the bond market is basically saying, fed, you got no way should be raising interest rates. >> all right joining us now is lindsey. you heard from some of the bright minds there what do you think is going to happen today >> well, i do think the fed is going to move forward with that fourth round increase. of course, we can debate whether they should. and we would argue that they shouldn't have riz sen rates in september. >> but they're going to. >> they're going to move forward. i think the more importantish s -- important issue is what is the language that accompany that's rate increase do they open the door to a slower pace of rate increases next year? remember, in november we did see a number of fed members talk about losing -- being less comfortable, i should say with, that gradual commitment to additional rate increases. >> we know what it sounds like when doves cry all right. we learned that. what does it sound like when the fed goes dovish? what would to you be a dovish statement that we're close to

neutral? they're not going to say we're done raising rates. >> no they're not. they're going to use fed speak i think they're going to take out the word gradual gradual to the market translated into a commitment of 25 basis points every three months. so by removing that, maybe putting in more data dependent language, they open the door for a slower pace of rate increases. again, it doesn't mean that there is a commitment to an outright pause but does it say we're willing to watch the data and we're not necessarily going to move forward with an additional 25 basis points three times >> watch for the elimination of the word gradual watch for more talk about data dependence okay the market is expecting a rate hike and a dovish state. we have to assume that expectation is built into where the stock market is right now. >> yes >> what happens if we get a rate hike in a hawkish statement? what happens if we get no rate hike what if jay powell starts crying or screams or runs out of the room or quits?

what happens if we get -- >> that's a little aggressive. i think if we see a hawkish statement or perceive as moore hawkish than anticipated, with he could see additional downward pressure what this is going to say is the fed is ignoring the data which suggests that we are seeing very clear weakness underneath the surface. and a very clear trend of disinflation if we continue to see hawkish language, it sends the signal that the committee is still seeing the economy on relatively solid footing. they're willing to move forward with additional rate hikes and mostlily as feds before them move beyond that neutral point of potentially tightening us into recession >> i put out a poll to our viewers, rate hike, dovish, hawkish, i would have answered my own poll. i don't think the fed will raise rates today. i know i'm in the minority but what happens if they don't raise rates but have sort of a neutral tone what if they don't do anything >> i think at this point -- >> first off, would they lose credibility? >> exactly what i was going to say. i think the fed does lose credibility with the market if they back away from essentially

a promised rate increase at this point, fed members have been talking up an end of the year rate increase we saw as early as november or as recent as november. fed members talking about an additional rate increase soon. >> okay. you expect a rate hike, dovish language. >> exactly >> probably already priced into the markets? >> exactly >> okay. we're watching no gradual lindsey, thank you >> thank you >> we appreciate it. all right, big day now to the top three stock stories right now. fedex reporting quarterly profits before forecast. revenue in line. the company slashing the outlook for next year. citing weakness in europe. everyone is blaming the italians these days fedex down 6% right now. fedex also starting voluntary buyouts for some workers micron's earnings narrow will he topping forecast revenue came up shy. and that stock is down in the premarket nearly 8%. stop fuss you heaus if you heare

before aflac is buying a 7% stake in the company. the japanese post office is effectively pection system sounds weird it kind of is. but japan post is a big deal all right. former star wall street banker is stepping down as ceo of block chain start-up masters is leaving for personal reasons. blockchain industry has come under stress bitcoin and other cryptos lost 80% of the values this year. masters jumped to digital asset from j.p. morgan where she was a pioneer behind the credit default swap all right. let's find out what you're talking about on this very fine wednesday. is it wednesday? >> definitely wednesday. >> time for this morning's top trending stories frank collins back with those. >> good morning. we're going to start with a boring story that's a pun >> i get it. >> it wasn't good. all right, elon musk unveiling the plan to fix your morning commute. he is showing off the boring company's first underground tunnel and in an event in los

angeles overnight. the tunnel runs beneath the streets of l.a it's designed to alleviate the traffic congestion phil lebeau was there and got to take a ride in that tunnel > the tunnel is like 1.14 miles its a demo for a bigger grand plan but interesting. >> yeah. once they put something in there, otherwise headline is man builds tunnel which is not -- listen, i love elon musk and what he's done but being a los angeles kid originally, they need help but right now it's just a tunnel >> this might sell you when you go down -- >> you have ever been in the tunnel >> there are tunnels >> there's a few tunnels >> it's not new. there are tunnels there. >> but this one, when you go down it, jackson five dancing machine plays. >> it's not like the holland tunnel. >> moving on kroger is parting with a start-up to make driverless grocery delivery the reality the driverless vehicles are smaller and lighter than traditional cars

they don't have space for human drivers. the deliveries will begin in arizona. and trending on a sad note the entertainment world is coming together to remember the life of penny marshal. they portrayed laverne in the classic sitcom "laverne & shirley. she died in her hollywood hom home on monday night tom hanks tweeted, man did we laugh a lot. wish we still could. love you geena davis sweeted, i'm terribly sad to hear the news of penny passing. i'll be forever grateful for to her for letting me be part of "a league of her own. she had a heart of gold, tough as nails she could play round ball with the best of them penny marshal died of diabetes related complications. she was 75 years old >> and a genius. >> absolutely. >> we always thought of her for laverne and shirley not realizing until later had, she's an actress not realizing she was a director, producer, screenwriter >> fantastic

>> remember she was brilliant in laverne and shirley. she was the first female director to direct ai movie that grossed over $100 million. that is in the '80s. you make that 2018 money that, is a huge box office. >> it was "big." the whole thing on the floor with the music fantastic. >> really well directed movie. coming up, we're going to talk taxes democrats may be pushing back on the gop tax law in a way that you and your property taxes in new jersey, new york, massachusetts, you're going to want to hear this story. also, 2018 is thankfully almost out the door. what needs to be on your radar as we wrap up the year i still can't believe how incredible the screen is on the new iphone xs. and our unlimited plan really takes things to the next level with your choice of the best in tv, movies, or music. it's the perfect holiday upgrade. i know what i'm asking santa for this year. you still write letters to santa? no. please. i send him emails. can i get his email address? oh... i don't feel comfortable sharing it.

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dow futures are up 109 points right now we ended higher yesterday. but that rally fizzling out at the end of the day had some people worried about this morning's open futures are indicating up. and, of course, the federal reserve meeting a rate hike is expected in the 2:00 eastern time hour today and there is a press conference ahead of that, bonds continue to get bought you heard them talking about it the other day. people are selling stocks, buying bonds the yield on the ten year at 2.81%. democrats are planning to turn up the heat on republicans as they expand their power on capitol hill in the new year we're going to hit the story on

two cnbc fronts. number one, diana olig is here on the impact on houtsing. but let's begin with a related story on the tax side. we were chatting going back and forth on e-mail and joking about asking for a friend. a lot of the viewers live in high tax areas of d.c., new jersey, new york this cap on the deductions in state and local taxes taking its toll is there any sign the democrats are going to try to roll back or eliminate that cap which has a lot of housing markets around here struggling? >> yeah, brian it is true democrats do have a lot of complaints about the gop tax law. as you said, the one that literally hits home and sounds like your home in particular is that cap on state and local tax deductions now the law put a $10,000 limit on the deductions. as you said that, isti being fe in blue states those also happen to be states where democrats picked up a lot of seats during the midterm.

6 in california, 3 in new york and 3 in new jersey. complaints about the cap did play into the victories. this is something that democrats will want to address in the new year congressman of new jersey will be leading that charge he sits on the tax writing committee in the house and he told cnbc this law targets middle class citizens in my state, stealing the state and local tax deductions to pay off corporate executives we must make the tax code work for all americans and stop targeting blue states. however, not all democrats agree with him the big criticism here is that getting rid of the caps is really expensive and mainly benefits wealthy households. the tax policy center estimate that's out of the top households, nearly half of them would see their taxes go down. the average cut would be about $5500. the cost to the government, about $621 billion over a decade it's going to be really hard for

democrats to justify that cost after they slammed republicans blowing up the deficit with the tax law to begin with. >> i understand that they need to find another source of revenue there are a lot of people that are not going to whine and explain for people but i think what a lot of americans and congress need to realize, if you go in new jersey or new york, can you live in scotts plains, you're not rich maybe you're an accountant or teach eastern your taxes are $20,000 a year for three bedroom, two bath ranch house. this is not just a wealthy person's issue >> that's true so what republicans though are arguing and this is why they put the cap in is that issue is the size of the tax. it's not necessarily what is paying it. and this is a way to force some of the states like california, new york, new jersey to maybe bring down the taxes to cut taxes in order to give households more money to spend on other things.

this is a back doorway for them to reign in government spending. that will starve the beast strategy that is one of the ways that this cap could actually end up limiting the size of government and force the states to bring down the taxes >> okay. great story here one that a lot of the viewers really care about. like you said, it literally hits home thank you very much. so let's now transition and talk more about exactly what this means for the housing market diana, you had a report the other day about new home sales they were terrible in the northeast. and my mind started thinking, i wonder if this plays into that >> well, in part it does look, brian, it does affect california, new york, really high end housing markets its did he ever it inially having an outside impact on those states if you look at some of the numbers, north new jersey and california, the impact is clear. home sales in the bay area and southern california fell to seven year lows in october while prigss are still higher than a year ago, the gains are really shrinking back.

in new york, manhattan, of course, specifically, sales of co-ops were down 11% and median price down 4.5% on the luxury end, top 10% of the market, median price down over 10% sales down 11% that is the concern. this will get worse when people do their taxes and realize what the change in the tax law really means to their bottom line in their wallets. i'm talking to folks in new york, they're saying they don't want to sell their apartments. they don't want to buy anything different. they're afraid of how much worse it might get next year again this is in very specific markets. you talk about it being a tax not necessarily on the rich. it is a hardship on people in those certain states i want to emphasize this is not the reason for the overall national weakness that we're seeing in the housing market >> look, i understand there is

not a lot of sympathy for people in high income states whining about taxes. but asking for a friend, what people don't realize or congress needs to think about, you have done a lot of great work on this, when you buy or sell a home, it's not just the tax side of the story it's the moving people getting paid the sofa salesman who makes a sale because you bought -- there is something like 50 or $60,000 put into the economy every time a home is transacted on when you make the sale. even outside of the real estate commission >> right it's that tax that a lot of folks are worried about again in new york, new jersey, california but it doesn't hit the vast majority of people in america. i was talking to a home builder who was talking about the down turn in new home sales of half of americans can only afford a $225,000 mortgage. the average new home price, $440,000 it is about home prices bottom line and the big jump we saw in mortgage rates last year

home prices overheated z that hurt california and new york that tax law yes, absolutely. it is softening the markets especially in new york, california, i think, was a lot more about overheated home prices people buy the monthly payment they don't buy the house. >> bingo >> yes, there are outside costs. it is that monthly paymented, added taxes to that, but that monthly payment that makes people make the decision whether to buy or whether to rent. >> and we don't have time for it today. i bet we got a story in the new year will locations starting to feel the pinch people are going to start selling who have to at deeply discounted prices the they're going to bring down everybody's values which means what else tax revenue is going to come down and some of the cities are going to be like, whoa, we can't make our budget we have to start laying off teachers or whatever that might be about thought is for another day. >> the beat goes on. >> the housing beat does go on th thankfully. trading the big swings in the market the back half a super volatile year for your money. we have the big themes that you need to be watching as we wrap

up the year. plus, should you keep calm and invest on? maybe history says you should. it's your rbi and it's a reason to feel good on a wednesday. stick around [leaf blower]

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because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. all right. good morning we love that shot. we're going to keep showing this to you every day it is starting to finally feel a little bit like christmas. a volatile 2018. a lot of bad news out there and people getting angry it at the internet and tv. but there's a beautiful tree with a lot of colored lights on it makes you feel nice, doesn't it? stock futures looking pretty nice as well maybe kind of calm we're seeing dow futures up 104 right now. again, not to throw water on it, we had this rally yesterday. it fizzled out we'll see if the market can buy and follow-through today

we just talked about real estate mortgage rates may be coming down in the next couple weeks. we say that because bonds are getting bought and the benchmark ten year yield is coming down. its no the a perfect relationship between bond yields and mortgages. but they are related and we're seeing looks like the ten-year yield going out again for another year with the yield below 10%. let's take a look at the asian markets overnight. it was a mixed trade japan can't get out of its own way. it's not a good year for the nikkei hong kong, squeaked out some gains the european markets are looking a little better. italy has been the trouble spot. putting that aside today the i tall yab stock market up 1.5% let's get you up to speed on what you might have missed this morning's top headlines there is a another big story out in one you will not like on

facebook facebook sharing more of the users' data, private data, maybe even messages that it previously admitted "the new york times" out with a big piece saying that facebook gave microsoft, netflix and spotify extensive information to your information including the contact information of user's friends and ability to read private messages facebook denies that it let other tech companies misuse that data they'll have $13 billion in sales. all right. time for the wednesday rbi crazy market times, we found another random and interesting fact that should bring your blood pressure down. according to data trek, the s&p 500 only posted a negative yearly return nine times we're on pace to do that this year keep in mind, the average return is up 18% which means even with

down years like this year, the average total return for the s&p going back to 1970 is 12%. in other words, history says, stay calm and invest on.

quhanch . what is the fed going to do? we'll tell what you to expect straight ahead and a major pharma deal breaking overnight. glaxosmithkline is forming a in you venture with pfizer. they're splitting into two businesses, the consumer versus the pharmaceutical and putting them together and eventually spin it off. glaxo ceo will join us first on cnbc. japan's biggest ever ipo was a flop the stock fell 14% it's wednesday, december 19th. and we'll get close, aren't we

2018 "squawk box" begins right now. ♪ and it's all right and it's coming home ♪ ♪ we have to get right back to where we started from ♪ ♪ love is good >> live from new york where business never sleeps, this is "squawk box. >> good morning, everybody welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick. let's take a look at the u.s. equity futures at this hour. yesterday we saw strong moves in the morning. but that all fizzled through the afternoon. you had all three major averages briefly falling into the red before you did get a late day push for stocks that left us with some modest advances. dow was up by 82 points yesterday. the nasdaq was up by 30 points and then the s&p was up by less than a quarter point to close near the low for the year. you're going t