tv Squawk Box CNBC December 21, 2017 6:00am-9:00am EST
shortest day of the year i think my sign moved back into something with saturn. one place said it was good another place said don't make plans. i don't know what to do, it's thursday, december 21, 2017, "squawk box" begins now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. yesterday the markets ended lower despite the passage of the tax bill you can see now that it looks as if the dow would open up by 17 points the s&p up by 3 a1/2 and the nasdaq down 4 1/2. let's look at what happened overnight in asia. the nikkei was down by a tenth
of a percentage point. the hang seng was up by 0.4% shanghai composite was up 0.4% in europe in some early trading that we're seeing, we are looking at a mixed picture slight declines in germany and in france. the ftse is up by a quarter percentage point gains in italy and in spain as well finally crude oil prices, which were up by 50 cents yesterday, they have given back some of those gains. we are talk about crude oil below $58 a barrel >> a couple stories we're watching, bombardier said it is confident u.s. international trade commission will reach the right conclusion in its dispute with boeing. the commerce department announced yesterday it will impose duties of 300% on the company's c-series jets after boeing had been complaining they had been unfairly subsidized by the canadian government. the penalty will only take effect if the itc rules in
boeing's favor bombardier said it is common practice for a plane manufacturer to offer discounts to launch customers. bombardier's ceo will join us at 7:30 a.m. eastern. and chinese ride hailing service didi is catching up to uber in the fund-raising race. it it received a billion dollars of new funding from investors including softbank uber's latest fund-raising round brought its valuation up to $70 billion. we know that softbank's new offer or tender offer values it at 48 billion. strange bedfellows across the board. uber has a stake in didi softbank now has a stake in both it's all very complicated. >> frenemies >> google, google ventures has some stakes. they're doing their own things they have stakes also in lyft.
a trio of economic reports weekly jobless claims, the monthly philadelphia fed index and the final estimate on third quarter gross domestic product, that's all out at 8:30 a.m. eastern time as for the earnings side of things, you have carmax, pay checks before the opening bell, nike reports after the close corporate america reacting to the tax overhaul, promising more pay for workers or more investment for training. at&t saying it will pay $1,000 bonuses to more than 200,000 employees. it took me an hour to figure out how much money that was. i am still not sure. either 20 million, 200 million i don't know 2 billion? i don't know invest an additional 1 billion in the united states cnbc parent company comcast says it will give $1,000 bonuses to more than 100,000 employees and invest 50 billion over the next five years
that's about 10 billion a year >> 200 million, right? >> yeah, i think i was kidding. >> boeing will invest 300 million in work force training and facilities enhancements for employees. and wells fargo and fifth third bank are raising minimum wages to $15 an hour fifth third is handing out bonuses to more than 13,000 employees. i'm naive. i thought this was great to get the negative take, i'll turn to my co-anchor, andrew these are just crumbs, right >> no it's not crumbs. it's a great thing first of all, in dollar terms, percentage terms it's great. how can you say it's not great >> i'm looking for you to say that i'm naive -- >> i will get you to how it's not great in a second. >> i was happy i want you to pop my bubble. >> i'm not popping your bubble >> let me ask you this the left right now, are they in
position of hoping this fails miserably, that the stock market crashes and that the economy goes into recession? >> no. >> is that the best outcome for them now >> i hope not. then you're rooting against america. that's not what is going on here i would tell you, in my humble estimation, this is fantastic. all good news. >> can you hear it in his voice? >> comma, but, you look at the at&t thing that was effectively agreed to a week and a half ago. >> that was for 20,000 union employees. not 200,000. >> part of it was for that what is going on right now -- what is going on -- what is going on in america right now with at&t? the justice department >> yes so when the mafia is running the country, you have to show love, respect and kiss the ring what do you think is going on >> why did comcast do it >> if you want to understand how this is happening --
>> these are all bribes to the trump administration >> no. no. >> the mafia who is the mafia the trump administration >> i think so. >> in comcast's case -- >> so they're getting shaken down >> in our parent company's case -- what about boeing -- >> they're watching other people do it and say i should do it if they're doing it. i made calls yesterday across the board to understand how -- hold on. >> is equifax -- >> i saw these press releases coming out within two, three hours of each other. i thought this is weird. this is not like a market force situation. you believe in market forces there's something else going on. i call around to very, very senior people at all of these companies to try to understand what is going on here. and i will just tell you it's not like everyone just decided we're giving out christmas presents >> i have to say -- i understand the reaction on twitter and the reaction to cynicism that comes
out. but randall stephenson has been talking about tax reform long before this. long before donald trump became president and what that would mean -- >> also making all of these investments that they've been talking about the whole time meaning some of these numbers that you're hearing about were already baked in some of these companies had already been thinking about what are the ramifications going to be either way? what investments do we have to make based on what some people -- who was here yesterday who called it the obama recovery i'm only saying -- >> i got so much mail. that was the most ludicrous thing. i didn't even address that >> i'm saying it's great for the country, great for the employees of at&t and comcast. >> you think this has anything to do with obama >> no. i'm saying to the extent -- >> your record is eight years -- the first time you didn't get above 2% that's the record. that's cast in stone >> whatever you think is
happening in today's economy -- i was saying whatever is happening in today's economy had something to do with before. you can disagree with that completely if you would like >> the uptick in growth we're seeing now compared to the tepid growth from that administration. >> independent of my view that this is fabulous for everybody getting the money, some of the motivations for some of this, at least the press releases are more cynical >> i like to see the good in people >> comcast saw this and said within a matter of hours, we'll spend 1$100 million for bonuses >> if i -- if you called me, i wouldn't talk to you knowing who you are. you don't talk to republicans. you don't talk to anyone who has a different view than you. -- >> i understand the reason for cynicism >> i think that's 1100% wrong >> companies are damned if they do or don't. >> i'm saying it's great >> remember liesman's all-american thing, all these
things are going great you find the 81% of the ceos who say they hate the tax bill you and sonnenfeld >> i sat in a room, because it was a situation that is supposedly off the record, so many of those people in that room are guests of this program, friends of yours >> okay. what's wrong with the all-american survey? are they lying for that? >> i'm telling you -- >> i don't know. >> you're asking the question -- >> i know some of them like howard schultz will like this tax plan? >> howard schultz did not attend >> he wants to be president of venezuela probably let me read you one other thing here >> oh, no. i'm looking at what you're looking at horoscope? >> i need to know what to do here my horoscope says it is a great day for me as a capricorn i should make plans. and on drudge it says this is the worst day of the year. make sure you don't make any plans long-term. >> right >> all this stuff you told me i
need to do for this tax thing, set up a crown trust, second to die, a reverse -- some way of setting up the llc, but put it in my wife's name. >> keep your head down today >> i don't want to make those plans now. prepay -- >> it's the shortest day of the year, also my brother's birthday happy birthday, rob. >> this is not a good day for me to start the tax planning. >> you're taking the advice very well >> we have to move on. oh, no >> yes >> we finished this, didn't we you have more? >> i wanted to add one thing we got an e-mail, which i will just say from somebody who knows, that apparently when it comes to this at&t situation, the 200,000 employees who got the $1,000 will get an additional $1,000. >> so it's the 20,000 that the contract union that they got but then it was another 180,000.
i didn't realize it was those 20,000 who will also get an additional thousand. >> cnbc and -- this is from dotcom, even cnbc had an article saying this is just the beginning of companies doing these things >> i hope this is very good. >> i don't believe you >> the idea that people are coming out with a press release the day of the thing -- think about that >> we have been talking about that for months. if they passed this, this would be extra -- it's not like this happened and companies said let's do this. companies have been thinking about these things is this an attempt at saying, yes, this is a payback potentially. but workers said if they had more money, they would spend it. >> the republican tax reform bill is a done deal. focus now to a spending bill to avoid a partial government shutdown tomorrow night. kayla tausche joins us now
>> the conversation in washington has changed with the house expecting to vote today on a bill with two core pieces being considered separately. sti first a stop gap funding bill that would last until january 19th second, an $81 billion package for hurricane and wildfire reli relief, to which the senate is expected to make changes the house rules committee will meet at 8:00 this morning to consider the disaster relief portion. it says it will reconvene on the short-term spending deal at a later time several other items are expected to be included in this package but it's unclear how short-term reauthorization for the surveillance programs known as fisa, children's health insurance, a short-term patch to that and a budget waiver to bypass mandatory spending cuts that were triggered by the tax bill the house would need to issue a pay-go waiver, that's the only way the president can sign the bill the last item wasn't mentioned
at a meeting last night of house republicans. it's maybe expected to be left on the cutting room floor. deep divisions remain among republicans with defense hawks wanting longer funding, conservatives wanting spending offsets and they'll try to reach a deal somehow mark meadows is chair of the freedom caucus and he spoke leaving the meeting last night >> i don't see a shutdown scenario i see that there's still work to get to 218 votes, with republicans only this will be a whole lot easier if you had democrats willing to come across. >> the house conducted a whip last night to gauge support for the deal speaker ryan needs unified support to garner the 218 votes in the house the senate needs at least eight democrats to support the measure. that's why they abandoned an idea of a comprehensive full package that would get you longer than january. they're just trying to figure out something streamlined that would garner enough support to
get everybody on board >> all right we will continue along this conversation i don't know if you want to run to a tv set or live your ifb in. mike alan is here. internet feedback -- what is that ifb what does it stand for an acronym for that little thing in our ear mike alan is executive editor and co-founder of axios. i will tell you highway i want to sta how i want to start this we have midterms coming up it's a victory for the administration it's an unpopular bill reminds me of obamacare, how under water that legislation was for years and years and years. do you expect this to stay unpopular as we see some of these things happening with companies and minimum wages and that how much has to go -- how many
companies do we need to see doing this, how many employees need to get bonuses before this becomes more popular, do you think? >> i'm happy to be here on the horoscope edition of "squawk box. what is your sign? >> i was born june 21st. >> you don't know? are you in the middle? >> everything is always awesome, that's my horoscope. the job you need added is yours. people will feel it when this hits them. it will take a long time to spread out there needs to be a real rally that turns into real actions by more companies we're hearing forecasts from the top that this could be -- there could be a boom as a result of these tax cuts jamie dimon, ceo of jpmorgan told me that we could have years more of this global synchronized
growth that we've been enjoying, a rare phenomenon. yesterday in an axios event, the white house economic adviser, gary cohn said we're not near the top of what could be this rally. he said as a result of these tax cuts he expects more ceos do this because of fundamentals and new incentives >> so i've also seen that -- i see one day republicans are out raising for 2018 the next day democrats are out raising. then they have this spread in the generic preference then the people polled were 15% more democrats i'm not sure what to believe at this point i know it's really divided i'm not sure what i would be saying as a democrat what do they have to hope for. they have to hope for this not to work, don't they? if this works, how can they hope this really generates 3%, 4%
growth when that would be not a positive for 2018 for them >> two things. one, republicans are starting in a hole on this when you talk about this tax cut being -- this tax reform being unpopular at this moment, it's not just unpopular i look back, it's less popular than t.a.r.p. was, the bank bailout. and if you look back to the clinton and bush 41 years, this tax cut is less popular than sub tax increases. that's part of the reason why companies are trying to curry favor with the white house by making these announcements gary cohn yesterday in my conversation with him was candid about the importance of the psychological effect he said you sit in a boardroom, he was number two at goldman sachs, you sit in the boardroom and psychology is important. psychology drives, job increases, which drives growth
a lot of this is psychology. then on that generic poll, of course don't pay attention to that what matters is ten states for senate races, and some couple dozen or a couple house races. everything else is noise the generic overall will mislead you at this moment and for some time to come >> hard to handicap it then. what will you be thinking about? i know you're not just going to have a relaxing holiday, are you? you will be thinking -- >> i am. i will be in oregon. then i will be at the sugar bowl, the oldest of the oregon nephews works for the roll tide football team. we'll have the whole family in new orleans on christmas eve and new year's eve >> when trump gets back in january, he is in a pretty high gear in terms of trying to -- he
wants to be a success as president badly. what do you think he starts attacking next or going after next >> this has been an incredible adrenaline shot. as we've seen on "squawk box" all year, they've been dragging all year he finishes the year with quite a record yesterday we did a piece about triumph. and trump not only because of this big win which is really a triple it takes in tax cuts, tax reforms, but also drilling in alaska and the repeal of the obamacare mandate. that's three in one. you add to that regulations, judges he has quite a list that really has given this white house, which has dragged a lot, a spring in its step january 3rd, they already got their calendar invites, there's going to be a meeting in the west wing about infrastructure, including some transformative technologies they're talking
about, like building the infrastructure for autonomous vehicles can we build tunnels for high speed rail that's january they'll talk about welfare reform and gary cohn ticked off other issues, including the banking reform both the house and senate have versions of that housing reform, too. they'll try to step on it. but there's not the money to do a lot of these things they want to do. >> not going to get better with the two sides of the i'll. i like watching schumer lately, he keeps saying, you know, if you guys do this, you will lose so badly in 2018 it's like, are you sure you want to talk him out of this, chuck you keep warning them, if they do this, they'll lose. just say this is great do it you should even vote for it then what should chuck be doing now
>> never finish off a man who is digging his own hole that is the view of democrats. they think this psychology will stay and that puts them in good position republicans are having trouble recruiting the candidates they wanted and in the most important states, important districts. that's a leading indicator of trouble in '18 despite this big bump coming out of the end of the year >> we'll talk to you again maybe come down to squawk square next time. >> i'm in. when we come back, is your portfolio ready for the new year what are you waiting for we'll talk strategy after the break. we have a huge lineup today, starting with senator bob corker, then steny hoyer at 8:00 a.m. kevin brady at 8:30. that's followed by paul ryan at 8:40 a.m "squawk box" will be right back.
markets is chris retzler and simien hyman gentlemen, welcome to both of you. let's talk about the tax bill and what happened. we are saw some gains yesterday at this time by the end of the day there was a decline in the market. what happened? >> we had a run up that was sort of paid for. if you think something on the order of 5%, 6%, 7% of this run up was anticipation of this tax bill, now we had it. just go back to where evaluations were, now we're off 2017 earnings. put it together, we're trading at 18, 19 times 2017 earnings. that's not too bad but inflation is picking up. so we'll have to see a bit of that growth dividend come out of this tax policy to support evaluations. >> chris, i thought that maybe walking in two days ago that a
lot of this had been baked in from the tax policy. we've seen a big run up, then you hear fedex yesterday raising expectations the real earnings per share numbers they're looking for. you have to start thinking what other companies will do that it made me think maybe there's more room to run what's your take >> certainly some of the easy money has been made. but right now you will move into an environment where stock picking will be more important you need to find the winners and losers due diligence with companies and ask questions about how are you prepared to capture tax saving dollars from your customers? we think technology will be a great place for that we also think value stocks will do better. they're probably taxpayers so they'll drop more earnings to the bottom line which gives them that valuation boost it's not going to be that everyone is a winner in the market you have to be out there looking for that that's where we think stock picking will be a good place
>> you think there will be big losers >> i think the higher growth names that have had a great run this year, larger cap. it was easy, lazy investing, buy the passive funds. we think those are more at risk going into january people are probably more reserved in selling those because they would be in the tax season of this year versus next year >> that's an interesting point >> so we're focused now, if you want to narrow it down, it's small cap value names out there with good stories that will be benefiting from the change >> how about you, simeon do you look deeper and say you have to pick stocks? >> i agree, we're just back to where we were now that the tax bill passed. on the value side, financials have the opportunity from the steepening of the yield curve. a lot of the rest of the value has a headwind from rising rates. >> you're talking about higher rates meaning the ten-year
moving up above 2.4% or the potential increases from the fed? >> out on the curve. >> what do you talk about? 3% out at the ten-year >> 3 handle does not seem far off. >> we thought that before. >> we did, but we have the extra impetus of the tax bill. this is stimulus that is perhaps late in the i ccycle. we should have had this eight years ago, it's a little late. >> people are trying to figure out what to do with their own taxes and how the new tax bill will impact them that may change or hold off some sales until next year. what do you think people should be doing beyond that >> i think you do hold off some of the sales of your big gainers, try to get that one extra year pushed out. otherwise, you know, it's normal course of business you need to look at valuations,
if it's the time to sell, sell being a long-term investor, you have to understand the cycles and see that sometimes it's just a minor pullback moving to much higher levels. one area that we spend time in is semicap equipment it had a great year, a bit of a pullback but what you're hearing from the customers like micron, they're going to spend that would be a decent place looking into 2018 that we still like >> all right great to see both of you thank you for coming in. happy holidays a couple of stocks that we are watching today shares of pg&e are falling after the company announced it is suspending its dividend the company cites uncertainty surrounding liability in the deadly california wildfires and as a result stock is down
almost 10% see what the dividend used to be >> there were all kinds of questions about liability. >> yielding about 4.2% bed bath & beyond shares volatile after last night's quarterly report profits down 52 % from a year ago, same-store sales declined, but those results were better than expected. don't buy me anything, andrew. if you're bringing me something, i'll get you a heavy duvet you still don't have one of those, do you? >> i don't >> feel safe >> do you have one >> oh, my god. >> when did you get it had it a long time >> they're called a heavy duvet. >> no, no. >> a weighted duvet. >> it's big, thick, impressive. >> the one i want is on
kickstarter. >> does it have gold thread? how much >> i'll find out it wasn't terrible i'll find out. the tie for the holiday season >> i see that. coming up, the republican tax bill is a done deal. but up next we'll talk to a tax policy adviser to president george w. bush about the impact of the tax overhaul. and later, paul ryan will join us to talk about the taxes and looming government shutdown. just when the good news was there, another cloud on the horizon. we'll talk to him at 8:40 eastern time as we head to break, a look at yesterday's s&p 500 winners and losers
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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good thursday morning. let's look at the u.s. equity futures. this morning we've seen things with modest advances dow futures up about 30 points s&p futures up by 4.5. the nasdaq up by 1.5 this comes on a day where we saw strong gains in the morning and by the end of the session,
modest declines for the markets overall. yesterday republican lawmakers successfully passed the most sweeping overhaul of the u.s. tax system in three decades. joining us is jeff cupper, he served as executive director of george w. bush's panel on tax reform and works in the white house as an assistant to the president on economic policy good morning to you. >> good morning. >> i have about a million questions for you. weigh in on this, it was a debate we were having at the beginning of the show. great news posted by a number of big companies after this announcement at&t, comcast, boeing and others all saying they're giving out christmas bonuses effectively and other things i had said great, but i had a cynical view for why that was happening, why the press releases were going out. how do you think about that? >> i think part of the bet on this tax bill is what is going to happen on the ground over the
next year. and what we saw in the last day or so is the beginning of that so, the proof is in the pudding. the theory of tax reform has always been that cutting corporate rates, giving more money back to the individuals and people who pay the tacks will result in economic growth, and higher wages so what we're starting to see is companies beginning to respond to the various incentives in the tax bill >> how quickly -- obviously getting those announcements out is pretty quick, but how quickly do you think people will feel it we'll start talking about the midterm elections very quickly >> i think part of the reason that the bill has not had as much popularity as one may expect over time is because people are just hearing press stories or just reading the coverage of it, trying to decipher the various estimates coming out of washington and different projections.
when people get into next year and see withholding begin to adjust in february, when they get to april and they begin to think through the various taxes that they'll have to pay, estimated taxes, then you'll see a bit of a change in how people react to the tax bill. >> just yesterday i was watching, and sometimes i don't watch -- well, i might watch fox. at 3:00, i had shepherd smith on i know if you take out the corporate tax cut and look at where the majority of the tax cuts go, it's mostly to the middle class, as a percentage of what they pay, they don't pay as much as the higher end so the people that have a much higher tax bill are going to get some benefit from it this guy just basically said we all know this is a tax cut that is just for the rich other people say that -- talking to paul ryan, are you living in
fantasy land, trying to promote this as a positive for the middle class coverage has been breathlessly hyperbolically negative. i don't see how anyone could like this plan >> i think one of the things that people always miss is understanding the way that the tax code is structured right now and who pays what. so the top 1%, which gets about 20% of the income in the country pays about 40% of federal income tax. the top 10% pays over 70%. >> 70% >> right of federal income tax. the bottom 40% don't pay any tax. >> if you include the corporate tax cut, if you call corporations rich people, and then you look at what the middle class gets out of this 1.5 trillion, if you leave the corporate side of things in, it looks miniscule, but the whole reason for doing it was to make
corporations more globally competitive. if you're going to label the corporate tax cut a tax cut for the rich, it's never going to look good. it will never get out from under water. >> that's my point before, when you look at who pays taxes, you're always going to have a higher dollar amount going to people at the top. that's the way it goes when you look at relative to what people are paying now, then the middle class is actually going to get a good sized tax cut on its own when you also layer in what will happen in economic growth which has been the whole theory of tax reform over the last few decades, which is lowering the corporate rate, making us more competitive, that's going to help the middle class as well. >> andrew, at 3:00, i go to bonanza. i do i can't watch a couple other cable channels at 3:00, it's like i'm watching "bewitched" reruns nowhere to go.
>> you need a life >> there's nowhere to go at 3:00 nowhere. i have nowhere i can't hide anywhere. >> jeffrey, thank you. what do you do at 3:00 p.m. in the afternoon? you're probably at working i assume >> i'm not watching anything at that time. >> you don't get up at 3:45 a.m. either, do you i've been up at 12 hours at that point. >> 6:41, he's in front of the camera >> he is he looks good. he's going back to bed after this he's dressed from here up, right? >> like you. >> like me coming up a lineup of political newsmakers will be here to talk taxes and the potential government shutdown. first senator bob corker will join us at 7:40 a.m. eastern then we will talk to house minority whip steny hoyer at 8:00 that will be something to see. at 8:30, kevin brady, at 8:40,
retailers getting ready for last-minute holiday orders, and the shipping scenario is complicated because christmas falls on a monday this year. i've been trying to figure out, do we only get one day off when it's on a weekend, i feel like we get more time off, courtney i felt like we were not getting as much time off this year what if i have eggnog on christmas, i have to get up the next morning, don't i? >> i think we have to be responsible. we have to follow the work and the stock market schedule. >> where are you you're at an amazon -- >> can you tell? >> yes >> we're at an amazon prime facility in new york city. i don't want to tell you exactly where we are we can't give away those details. in midtown there are options for procrastinators. you are pushing your luck if you want to order online and get delivery in time for christmas,
even expedited because of christmas falling on a monday. here at amazon prime, employees are starting to pull those orders, packing them up for delivery in one or two hours that's done often via bike or subway here in new york city amazon's prime now option is available in more than 30 u.s. cities for about 25,000 or so commonly ordered items 5% of amazon prime households use prime now about once a month. grocery, personal care items, house oldhold essentials are th most commonly ordered things orders fror or prime this seasoe up about 2%. they saw a peak in 2016, or on december 23rd, it spiked 3% for last-minute orders we could still see that. amazon prime now is not your only option. other retailers are offering same-day delivery from their
stores in certain markets, they're using stores and startups to do that. best buy has same-day delivery in stores for 40 cities for 5.99 macy's will cost you between $8 and $19 depending on your item title, and inventory can be low. oftentimes seasonal items don't restocked for an amazon prime now center if you want christmas lights or an ugly krchristmas sweater, you may be out of luck >> the lights just went out for you. >> they're back on >> courtney, thank you we will be watching all of this. listen to what courtney says you are taking a risk if you're doing this the last man. when we come back, if you
are worried about the cap on state and local tax deductions in the new tax bill, you're not alone. governors of high-tax stakes are scrambling to find looploopholes as we head to break, a quick check of what's happening in european markets things are higher across the board. modest advances in france and germany. the ftse is up a third of a percent. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.
welcome back, everybody. the new tax bill capped the state and local tax deduction at $10,000, now governors of high-tax states are scrambling to try to minimize the impact on their residents and state revenue. robert frank joins us with more on this. this is a bipartisan issue, depending on where you live. >> it is an interesting situation where the democratic governors are defending their wealthiest taxpayers here. because rather than cutting taxes, the governors and legislators of high-tax states are focused on a different response to the new tax bill -- avoiding it. the governors of california, new york and new jersey have deployed armies of tax experts and lawyers to preserve part or all of the salt deduction to minimize the impact on their most affluent earners.
states could replace the income tax system with a payrollcompane equivalent of income tax then companies deduct the payroll taxes and get the refund from the state and pass that to employees at the end of the tax season this is a long shot. companies have to agree, it's complicated. you have issues with the progressive tax rates. it could run afoul of longer term employment contracts. the second idea is on the property tax side. new jersey and california are both looking at the possibility of turning their public school systems or even parts of their entire government into 501(c)(3) charitable organizations. >> what? >> taxpayers could then deduct the taxes that go to the school. so in new jersey i was talking to the governor. he said you could deduct 55% of your property taxes that go to the school system as a charitable gift. now, 18 states already do something kind of similar where they offer tax credits to
scholarship-granting organizations, i.e. private and religious schools. >> so my thought would be immediately that the fed would step in and try and block. if an entire state is trying to do this, it's not like you have to have the irs figuring out who's doing this it would be much easier to block it but if you do something like blocking that and 18 states already do this for religious schools, you're suddenly going to have republicans in congress on your side because my guess is, it's the republicans who have wanted to push these things like ted cruz pushed in this latest tax documentations soyo could use 529b funds for the k-12. >> absolutely. >> so you'll have an area of interest. >> or hypocrisy. but those states have been republican proposals it's a way to get private school vouchers becoming more popular california is looking at saying look, you can give to the general fund of the state and write that off as charity. >> wait a second -- >> will it get closed up within 12 months? >> i can't imagine that will be
successful when you have entire states trying to do this. >> it depends on how widely they want to do it. if you get a full dollar-for-dollar state tax credit for giving either to a school or general fund and you get the charitable deduction on the federal side, that's actually a plus for your taxes and so, you know, i don't see how the state government could avoid that but it's interesting that -- there's no discussion about r . reducing your budget. >> trying to cut costs. >> they've become the biggest tax avoiders. >> and did you hear your first comment, which was absolutely true, but did you really consider what you were saying? that these governors, democrat governors in blue states, are in this bizarre situation where they like wealthy taxpayers. >> yeah. >> so it is the politics of envy that drives this party. >> until it's not. >> until it's not. but can you imagine saying that, that the governor hates the
people that are paying the biggest taxes? >> once they got the $10,000 deduction, it became harder to justify it as a middle-class tax cut. >> do you think it makes sense to not like your wealthy inhabitants in the state. >> the state systems have gotten so progressive and reliant on -- in manhattan, 1,000 taxpayers in manhattan pay nearly 20% of the income taxes so we know it's 1% pays 40% of state, but when you get down to it, it's that tiny group -- >> and those thousand people are the people who most mobile can and relocate to other jurisdictions. >> they're worried, as they should be. >> politics of envy. >> robert, thank you. >> stuck with that coming up when we return, a cnbc exclusive interview with the ceo of bombardier, the company in the middle of a big trait dispute with boeing. then the other big interview of the morning, house easpker paul ryan will spend time with us to talk about the tax plan, the looming government shutdown.
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tax triumph. wall street cheering sweeping tax reform the latest market reaction is straight ahead and bombardier's big boisterous battle with boeing. the ceo of the canadian rival joins us for a squawk exclusive. plus, senator bob corker will tell us why he voted for the tax plan after being against it initially and what changed his mind a lot of stuff in the -- that you might have read in the media, he'd like to set that straight we have that interview straight ahead as the second hour of "squawk box" begins right now.
>> announcer: live from the beating heart of business, new york city, this is "squawk box." good morning, everybody. welcome back to "squawk box. i'm becky quick along with joe kerr anyone a kernan and andrew ross sorkin. dow futures up but 33 points, nasdaq up by two it comes after a day when we saw these gains at the beginning, the big gains give way over the course of the day and the markets end lower. let's get you caught up on our headlines at this hour an economic reading is expected it will show the same 3.3% growth rate the government estimated last month also out, the labor department's weekly look at initial jobless claims japan apple said it does take measures to reduce power demand in its
old iphones to prevent the phones from shutting down. the issue stems from the fact that the lithium ion batteries in the phones degrade as they get older and have trouble supplying power for certain apps e-trade will allow customers to trade bitcoin futures it's the latest online brokerage to do so td ameritrade and allied have ma made similar announcements corporate america reacting to the biggest overhaul of the u.s. tax code in 30 years, promising more pay for workers and invest in training as well at&t saying it will pay bonuses of $1,000 to more than 200,000 employees and invest in additional a billion dollars in the united states. it seems the parent company comcast says it will give $1,000 bonus to 100,000 employees and invest $50 billion in its infrastructure boeing says it will invest $300 million in work force training and facilities enhancements for
its employees. both wells fargo and fifth third are raiding their minimum wages to $15 an hour fifth third is also handing over bonuses to more than 13,000 employees and despite my phone cynicism, it's hard to argue with any of this because it's all good for the country. >> let's just leave it at that. >> shall we just leave it at that >> mike allen did say there could be some coordinated effort with the administration trying to get this out because they wanted to get better pr. >> that i did look into. >> the coordinated effort? >> the coordinated effort. my initial cynicism was that the white house had literally tried to -- >> like a shakedown. >> no, not a shakedown, but in the same way that remember br d broadcom, they said we're going do this, we'd love you to put out a press release. that i'm not so sure about i think this turned into not a shaming situation but i think certain people took the lead on this and certain people have
different motives to take the lead for different pieces of this and others decided that they wanted too do it, too. >> not a bad thing. >> and if you're a recipient of it, even better and if you're part of the economy, even better so we'll do it like that. >> it's funny when corporations do exhibit almost human nature do you remember -- i don't want to get back to 9/11. but do you remember companies started pledging after 9/11, ge came right out of -- i mean within hours pledging or after hurricanes and -- >> i put this in a completely different category >> why this is good, too, though. this is helping employees. >> but i think there was a true sense of -- >> i'm not saying that -- i know that but i'm just saying that the shaming aspect of it is that, wow, everybody else is doing it, we better do that. you want to take that cynical view point, it happens, companies will eventually -- one person is doing it, maybe they feel like they should do it, too. it gives them the idea to do it,
maybe. >> right but i would also say not to continue this, in each case there's something going on -- >> you think at&t it's the justice department probe >> your wells fargo waiting to find out whether you're going to get a penalty. fifth third there's banking regulations that are going to affect them. >> i can't believe -- how do you connect -- >> boeing -- >> comcast is involved with boeing what's comcast's reason? >> comcast's issue is different and i probably know too much about that so we'll leave that there. >> you know stuff you're not telling us >> no, i'm just saying -- let's get to some people. >> digging, digging, digging. >> i'm not digging you're putting me in a place i don't want to be. >> that's what i mean. for more on the tax bill, kayla joins with us more. >> good morning, andrew. republicans don't have much time to savor the passage of tax reform because they have to move
to keep the government open or risk a shutdown friday at midnight right before christmas. already items that would have been contentious like the health care provisions that senator susan collins wanted in exchange for her vote on the tax bill, those have been withdrawn in order to get votes from house conservatives. today the house is expected to vote on a streamlined bill that has two core pieces. number one, a stopgap funding for all government spending until january 19 the second piece is an $81 billion package for hurricane and wildfire relief to which the senate is expected to make changes, and that could push it into next year unclear whether that's going to be one vote or two, but those are the two definite things that will be considered the house rules committee is going to meet in roughly an hour to weigh the disaster portion of this, and it says it will reconvene on the rest. but there are two other items expected to be part of this week's package in some way, a short-term patch for the fisa surveillance program and children's health insurance. the third item, a budget waiver
for spending cuts triggered by the tax bill was not even mentioned at a thursday night meeting of house republicans, but that's the waiver that's required for president trump to sign the tax bill. despite then kroeencroaching deadline, deep divisions were on display. defense hawks want longer funding for defense, conservatives want spending offsets and speaker ryan needs unified republican support he needs 218 votes in the house and the senate needs at least eight democrats to support the measure which is why they're trying to put this streamlined bill together. but they certainly don't want a government shutdown in the immediate aftermath of perhaps their signature legislative achievement this year. >> kayla, thank you for that do you have any thoughts about the business communities coming out? >> i think it's impossible to find a company that is not lobbying this administration for something and mike allen, who
you had on earlier, he reported before this bill even came out that the administration was going to lean heavily on the corporate community as a constituency that it was going to ask to sell this bill and to help them gin up its popularity. perhaps it's something that they said look, this is not popular and lawmakers and the administration have said wait until it gets enacted, wait until people see their bigger paychecks and poll numbers will turn around. and when people see they'll get a bonus before the end of the year, that will drive the popularity of this measure up quite a bit. that being said, the data set of these specific companies, there are several pending actions and it's hard not to scratch your head and say, "i wonder if there's a correlation between these. but that's always impossible to put your finger exactly on >> kayla, thank you for that great to see you and happy holidays >> same to you. in the meantime, let's get a quick check on the markets joining us, the managing partner and head of research at
fundstrat global advisers. also a new bull to the bitcoin mania, jay jacobs, head of research at global x funds you want to talk taxes or bitcoin? >> i think taxes >> you want to talk taxes first. what's going to happen now how much -- we always say how much is baked into the cake? how much more there to go? >> i mean, in some ways if you looked at how confidence has improved this year, it started with businesses being more confident through the isms and consumers confidence in small business, i think delivering bonuses to employees and if it increases their wage expectations, it's a pretty big deal it's sort of an environment that you want that equity markets have been thinking about for years, so i think it's net positive. >> how much more there to go what does 2018 look like >> i think a lot of it has to do with how inflation develops and -- because i think developing inflation expectations is a good thing and
i'm hoping it would steepen the yield curve, because the yield curve is flattening and that is a deterrent to capital spending so if it steepens and inflation picks up, i think it's a huge story for value stocks and it would be good for the s&p. >> where are you at? >> well, i don't think this is baked into the markets yet. >> at all? yesterday someone else said not baked into the markets at all. >> i think people are looking at the nominal returns in the s&p and saying this was an incredible year and had to do with tax reform. the reality is the u.s. is 26 out of 35 countries in stock market returns we're the bottom third so this has been an incredible global story not related to tax reform. if you look at eps growth, people are expecting $10 in eps growth, that's good growth. >> so what is the issue in terms of your market expectations next year do you have a number >> i won't have an exact target but i think we can see another good marquetket.
if you look at 7% on tax reform, you look at a pe of 18 that seems lofty but if you have that kind of growth next year, it's not that expensive of a market. >> so hold on. >> you can see a repeat, you're saying, of at least mid-teens growth for the market next year? >> yes if eps turns out the way we expect it to and that's, of course, if none of these risks we're worried about start to emerge. and the story of 2017 if you look back is we had so many risks we were worried about -- german elections, french elections, brexit, rising geopolitical tension, what's going to happen with the trump administration it literally sounds like another line in the billy joel song "we didn't start the fire. and the reality is none of those things turned out. they passed and came and went and the stock market went on marching forward >> so you look at 2018, what is the thing that worries you >> i think the most important something what -- how inflation develops and if it's a surprise. because i think if it develops quickly and it's improbable it develops quickly it will change
the play book for central banks globally but you know history says it's very difficult for inflation to make big jumps so i think developing inflation is positive hopefully it steepens the curve and i think central banks are staying on the same glide path and that's positive. >> you want to talk bitcoin for a second >> sure. i mean, everyone's talking bitcoin. >> everyone is talking bitcoin so i need to figure out what to do about it because the price came down a little bit. >> yup. >> are you still -- would you be buying at these prices >> yeah. i mean, i -- you know, i think the message for any viewer is bitcoin shouldn't be something that they're allocating a disproportionate amount of their money to. >> is this like a lottery ticket at this point? or has the lottery ticket already been bought and sold >> i think the advantages -- bitcoin is uncorrelated to stocks and bonds and gold. so for someone who wants to put money into it, it is good diversification. >> do you have any bitcoin >> i'm going to slightly pivot away from bitcoin.
i think at lo lot of people are looking at bitcoin as a disruptive technology. you look at targets but i think the reality is there's more disruptive technologies out there besides bitcoin. we're looking at robotics, electric vehicles, i think a lot of people do want some sort of lottery ticket aspect in their exposures right now, but it's a bigger story than just bitcoin the pace of technology and the applications across the economy are huge. >> i assume you agree with that. but on the bitcoin itself or what about any other currencies? >> i think what we all have to -- >> if if you can cayou can call currencies. >> we have to accept the recognition that blockchain and bitcoin and digital businesses will be a real asset class and it's no different than the way the silent generation adopted gold and the boomers helped drive the stock markets in the '90s. so i think it's a really big
deal but, yeah, it's not -- there's not just bitcoin there's many other really good blockchain technologies, ethereum is one. we're only writing about bitcoin, but you know we've spent time with the other tokens. >> what's the intrinsic value of bitcoin? >> i think that's tough to -- >> isn't that a problem when you don't even -- most people don't have a way to attempt to answer it >> well, it's because you know in the same question we have to answer what's the intrinsic value of a dollar and of gold or even stock because at the end of the day, we don't truly redeem stock. so i think as a concept what we have to realize is a lot of the value is because of its general acceptance dollars are accepted you can't take your dollar and redeem it with the central bank. so i think it's a value that bitcoin makes sense because gold for many years was a store value, but that's because there wasn't inflation i mean, in the last few years it's become an asset class, it's a $9 trillion asset class.
>> if i told you right now that i could promise you that regulators would never regulate bitcoin out of existence what would it be worth? that's the thing that keeps it from -- >> i think if the u.s. tries to regulate this, it's going to take place outside the u.s. >> we have to go happy holidays, guys >> 2,000 of the points in the dow are between november 8 and january 1 and that was about 11% and it's 35 total. so if you go back with all these other global markets you're talking about from november 8, where does the united states sit? because going from january 1 to where we are is not accurate we need to go to november 8. i'd like that see that figure, if it's just attributable to global blah blah blah. anyway, thank you. >> thanks, guys. when we come back, amazon has been a key to small business success, but there are pros and cons to letting the big guys do all the work we find out how small businesses actually feel about the fulfillment service and the web
welcome back to "squawk box. we know amazon is a web giant, but what you may not know is what a driving force small businesses have become for the company. kate rogers joins with us that story this morning kate >> good morning, andrew. amazon says more than half of the items it sells online come from small businesses. a big driver of this is fulfillment by amazon. it lets small businesses offer prime two-day shipping by pre-shipping their products to fulfillment centers and letting them handle packaging, shipping and customer service even though amazon takes a big cut, steve grubs, owner of victorystore.com, says it could be up to 30% on his giant greeting cards and signs the payoff is exposure since many people limit searches to prime results and winning new customers. >> people trust it they know that amazon's going to take care of them and so they use fba or prime all the time now. >> but it also costs small businesses a degree of control jack brechter, owner of jr
william, a luxury good seller, says he has little contact with his customers and he faces lower rankings with amazon if he opts to fulfill on his own. >> if you're listing "fulfilled by merchant" on amazon, the chances of you becoming a hot seller is slim to none. >> it's important to remember they also include resellers in this small business owner category so while we talked to two brand phoneowners, there ar other types of businesses included in this mix. >> that's an interesting point i would think it would be a huge advantage to do this and a huge disadvantage not to. just to somebody always looking for what can i get here in two days you can filter your results based on stuff that can get there prime and can't. >> and if you're using fba, they'll rank you higher. but these sellers say one thing they miss out on is the data and analytics. if a customer returns something, they don't understand why so they can't interact with somebody if they were fulfilling on their own but amazon is handling a lot of. this it's in some ways cheaper and you have to fulfill so you have to weigh the good and the
bad. >> thank you. when we come back, the trade dispute between boeing and bombardier escalating after the commerce department hit the canadian jet maker with a 300% tariff on some passenger jets. we will hear from bombardier's ceo in a "squawk box" exclusive. t> senator bob corker will join ushis morning to talk about the passing of the tax bill. "squawk box" will be right back.
developing story out of australia. more than a dozen people are being treated for injuries after a car plowed into a crowd of pedestrians in melbourne now, the driver of the vehicle is in police custody authorities believe it was a deliberate act but they now say there's no evidence to indicate that there was any connection with any terrorist group big water cooler story this morning. the report from propublica and the "new york times" says a company is using facebook to exclude older worker from job ads. employees including amazon,
verizon, goldman sachs, target and facebook itself placed recruitment ads limited to particular age groups. >> what? >> now facebook defended the practice saying the age-based targeting is acceptable industry practice and they compare it showing job ads to different age groups to running job ads during t showyounger people propublica made it so people over 40 years old could not see it. >> but everybody can see this ad if it's in the newspaper. >> i saw the story -- i have a very mixed view of the issue, not the story, because clearly if you wanted to advertise on mtv, ostensibly, you'd be trying to reach millennials and people of a certain age group or if you were advertising in a certain magazine you'd know what the demo is in that magazine, if you
said -- by the way, if you wanted to advertise in -- >> but somebody else could happen upon it and see in the that situation you aren't saying if you're over 40 you're not allowed to see this. >> yeah, but you are trying to target a particular group of people like that's how -- >> see, this is where we go down this crazy rabbit hole with what you can and can't do the idea of being able to target people -- remember the one they did a couple months ago where you could target people who are gun owners who don't like certain religious groups >> right i think i told you years ago -- i have a real experience buying facebook ads because years ago when we were trying to sell too big to fail you could literally go on and say i want to target people who work at goldman sachs, morgan stanley, the treasury department, the s.e.c. or they went to this business school or worked at this law firm. >> very useful as somebody who's trying to hawk a product. >> you can say my favorite book is this. i loved "barbarians at the gate." you can get pretty granular with
this stuff. >> okay. you want to reach me, guns and garden or the aarp there are some great things in there. >> by the way, if we were advertising in aarp -- is anyone going to complain if it was aarp young people >> no, but you could happen to pick up the magazine trump just tweeted about the tapl a fx anndake media, it's got it all we'll have it when we come back first thing. ♪ ♪ ♪ what we do every night is like something out of a strange dream. except that the next morning... it all makes sense.
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♪ have a holly jolly christmas, it's the best time of the year ♪ ♪ i don't know if there'll be snow ♪ that's burl ives you remember him >> he was the snowman in "rudolph." president trump just tweeting "the massive tax cut which is the fake news media desperate to write badly about so as to please their democrat bosses will soon be kicking in and will speak for themselves. companies are already making big payments to workers. dems want to raise taxes and they hate these big cuts." that's -- it's not every waking thought, but that one was
thought about a little bit and there's a little emotion there and a little bit of content there, which is in a lot of his tweets i think, right? >> very true. >> my guess is he wrote that one himself. >> maybe i wonder which network he was watching this morning, if he was watching any. >> i don't know. i'd be upset with my -- >> i was going to say that among the stories front and center, shares of retailer bed bath & beyond are under pressure the company did beat estimates on the top and bottom lines for its latest quarter but the quarter was marked by heavy discounting with profits down significantly from a year earlier. the stock is down by almost 5% a well-known magazine has a new owner. pinsky media has brought a controlling stake in wehner media, the company behind "rolling stone." it's estimated pinsky paid $50 million for that stake
name nike will be issuing is revenues after the closing bell. the stock had been under pressure for most of the year on competitive concerns but it has jumped about 20% just over the last two months. 2017 was the biggest year for vc fund raising in over a decade with more than $80 billion in deal value. we're joined with more on the booming business of venture capital right now, diedre? >> good morning, andrew. that's right, also for a third year more money went into fewer deals at later-stage companies, unicorns like airbnb and lyft and chinese ride hailing service didi now, in total, $57 billion new startups were minted included reddit and coinbase and more than a third ofthem coming out of china seven startups including prosper and the honest company fell off the unicorn list
their valuations dipping below that billion dollar mark in terms of vc-backed exits, app dynamics was the biggest you might remember it was acquired basis c-- by cisco. meanwhile snap, blue apron and roku were among the biggest ipo exits. prominent silicon valley firms like light speed, gray lock and benchmark are the vcs that cashed in big. but the biggest player to storm on to the scene in vc was undoubtedly softbank with its nearly $100 billion vision fund which is likely to drive valuations and affect exitsor la 2018 while uber, airbnb and lyft may be prepping for ipo, ample vc money in the initial coin offering which played a big part, that phenomenon could continue that trend of more
companies staying private for longer, joe, back to you. >> deirdre, thank you for that. meanwhile, the u.s. commerce department is imposing duties of nearly 300% on passenger jets made by bombardier it's a win for boeing which lodged a complaint against its canadian rival and phil lebeau joins us as a special guest. take it away. >> let me bring in alain bellemare, ceo of bombardier let me get your reaction to the commerce department finalizing the tariffs that it wants to slap on this airplane of nearly 300% what's your reaction >> good morning, phil. i think that this is very disappointing. we strongly disagree and we disagree for a very simple reason, there's no case here the fact is, boeing did not even compete at delta and they don't have a product in that range and delta needed an aircraft between 100 to 210 seats and boeing
didn't have one. so it's a case that is unfounded. >> but boeing says you're damaging us, you're dumping these planes, selling them for allegedly $20 million when the list price is $80 million. >> we're doing exactly what everybody in the industry does which means when you launch a new program, you have aggressive pricing to start with and boeing does the same thing. they did the same thing on the 787. that's no different than what we did at delta to relaunch the program. >> when you look at this trade war brewing here, if you could sit down with president trump and say something to him, what would you say? >> i think we have had an amazing relationship between u.s. and canada and i'm very confident and optimistic that this will continue for years to come this case is unfair, it doesn't make sense. >> but from the perspective of boeing and the united states it does make sense. >> well the fact is very simple, the aircraft you're seeing here
has got 50% u.s. content there's over 22,000 jobs, workers attached to the c-series on top of it, we are now committing to putting an assembly line in mobile, alabama so it will become a u.s. domestic product so, again, the agenda is about creating jobs in the u.s., that's what we're doing. >> and they say they're creating this by forcing you to create that plant down in alabama and so from the perspective of the trump administration, they might look at this and say well, this is the right thing to do they're keeping them from throwing these planes into the u.s. >> there's a win in doing final assembly in mobile, alabama, and creating more jobs in the u.s. because we're committing to investing $300 million, which is going to create an addition 58 00 jobs. then for the better. but the fact is this is a great aircraft and it's going to bring tremendous value to airlines and to the flying public, that aircraft brings tremendous value to the u.s. market.
>> should the trump administration be worried that this case is further jeopardizing what's happening not only with you guys but nafta and trade between the u.s. and canada >> well, for sure. every time there is tension in the system it's not good for anybody. so i think that the sooner we resolve this case, it will be better i mean, i'm not sure it will put at risk the nafta ongoing negotiation but it doesn't help so i think this is -- again, it's a case that is totally unfounded. >> would you call it a stupid move by boeing >> i think this is ridiculous, to be honest with you. you have an aircraft here that nobody else produces except'm bra embraer. so this is a largely u.s.-based product creating u.s. jobs serving the u.s. market, u.s. passenger customers, the flying
publ public people should look at it hard. >> last question -- if itc says we agree, put the tariff on this plane, does that hurt jobs in the u.s. and here? >> well, we have a solution with the assembly line being in alabama. by doing so, this aircraft will become a u.s. domestic product and therefore there's no duty applicable toll a u.s. product so we have a solution. but the fact is this has -- there's no case for boeing on this -- on the c-series and we're optimistic that itc, the international trade commission, will look at the data, look at the facts and look at the law and they will rule in favor of us. >> alain bellemare, the ceo of baghdad. guy -- bombardier the folks in canada are not happy about this case but what they're seeing in terms of the
trade relationship in canada and the united states. it will be interesting to see how this develops over the next couple months. >> been doing the emphasis on e lebeau to pretend you're not american when we come back, senator bob corker will join us to talk taxes and much more. check out futures at this hour we have seen gains in the futures. dow futures up by 38 looks like the s&p opens by 5.5. "squawk box" will be right back. oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies see it- and see it through-with digital.
welcome back to "squawk box" this morning taking a quick look at futures this thursday morning, the futures right now after this tax bill and some announcements by some major u.s. companies planning to spend some real dough this holiday season, at least some bonuses and other things dow looks like it would open up 37 points higher, nasdaq up about four points and the s&p 500 up about five. republican legislators joined president trump at the white house yesterday to celebrate passage of the gop tax plan our next guest was one of them let's bring in senator bob corker, republican of tennessee, chairman of the foreign relations committee and a member of the banking and budget committee. senator corker, thanks for
joining us good to see you. not everyone is in the beltway and sees all this -- all the things that you see and that you're hit by on a daily basis so we should do a little background you were a no initially and you were a darling of the left and the media when you were a no on this thing god you were like riding a white horse. you were -- i saw profiles of you on some of the other kpabl networks, you were a great guy you switched though and voted for this not getting quite the same treatment now, are you >> it's a little different that's part of it but, look, at the end of the day, joe, i did everything i could on the senate side of the bill to try to contain the deficit issue and the final analysis is in current policy we've got $43 trillion in revenues coming in projected over the next ten years and there's no question that there's
a possible gap of about $500 billion per dynamics scoring and all the things we do. >> got that. >> i did everything i could to close that the final analysis you have to decide hey, is this policy better for our country or not? and i spent a lot of time with people all across our country, many people who come on your program talking to economic development folks throughout our state. in particular the foreign direct investment but i think for me to have the corporations and our country be competitive, it will be fine. >> so let's talk about what happened you had a reporter call you and mention to you that there was something you weren't aware of that was in the bill that was going to benefit you personally in terms of real estate, right
and you told him when he called you that you weren't aware of it and he knew you didn't know it was in there at that point is that a fact >> so let's walk through so the senate passes the bill, the house passes the bill. and so as that was being reconciled i sat down with the leadership one on one. obviously they were hoping i would support the bill and i went through all the provisions that were different. this one, obviously, was not a part of that, not mentioned, not thought to be a big enough issue to mention to me so then the bill gets -- on friday i decide that i'm going to support the bill i get a call saturday evening about this provision. >> so you had already decided. you had already decided to support it. >> absolutely. >> and you swear >> well, it was already public at this point. >> and these people know that, okay. >> he didn't know the other thing was in there. >> i know, but it was already public what he decided. >> yeah, it was already public
so this particular entity knew i didn't know about it and then all of a sudden acted as if somehow this affected my vote. >> you got bought. >> and by the way it was totally debunked by everybody on the tax-writing pieces but the social media phenomenon gets -- >> it's not just social media. i read in the huffington post that your defenders in the gop immediately covered for you by saying that you didn't know so i mean, bob, senator, at this point you have not always been on the same page with president trump. but -- >> that's correct. >> at this point you may even have some afinnive t ive affinie news you spoke to the president and told him i know what you're talking about with fake news now because of this? >> he called me yesterday morning and we had a long talk about numbers of issues and i said mr. president, i'm going to be honest with you, i have not
liked the tearing down of media institutions i respect the media. i haven't liked the tearing down of other institutions, the fbi and others, but i have to tell you, after the experience i have had over the last several days where a social media phenomenon can turn real live people that you respect in reporting to start writing things that have been totally debunked but writing things as if the opposite is true, i have some empathy, if you will, for what you have been dealing with so, yeah, i mean, i still don't like the whole -- i've never even used the word, to my knowledge ever "fake news. i don't like all that. but i now understand what some of the things people are dealing with and to have it dealt -- to have me -- i've had to deal with that recently and i now
understand the problem apparently these things get trending, otherwise respectable reporters begin to feel like they have to get in on it and fortunately it's been totally debunked but it puts you in a very uncomfortable place. >> senator, i know that -- again, we haven't spoken through this but i've seen that you were angered by this, you wanted to go back and find out how this actual amendment got dropped in in the first place did you ever get any answers on that >> and that's the other thing. dropped in the fact is, the house has been pushing for this since early november i was over at the -- kevin brady is the one that's been pushing, mark meadows, there's been numbers of people there pushing for this particular provision and, becky, i'll just tell you, every group has had people pursuing you know, the c-corps, the international community, some of the individual pieces, you've had rubio and others i haven't pushed for a --
there's not a word in this bill that i've had anything do with but i will say the pass-through community from my perspective, if i was going to criticize the bill, everybody bill has pluses and minuses, the pass-through community has been dealt with incredibly generously and my guess is other time -- >> now you have andrew's attention. >> what's that >> now you have andrew's attention. he likes it now. >> i think it's been -- i think it's over the top and in the beginning i couldn't believe we were doing anything with pass-through because they could easily convert to c corps. then i began to understand there were large pass-throughs competing directly but at the end of the day, look, we'll make adjustments over time. many i guess is that will be an area i think there is some concern that people can take advantage of the pass-through legislation to do things that was never intended to do so i think it's been overly -- >> i want to read you a quote
from gary cohn yesterday on another issue that we've talked often about which is carried interest he said in an axios event, "we would have cut carried interest, we probably tried 25 times we hit opposition in that big white building with the dome at the other end of pennsylvania every time we tried. it's just the reality of the political system." what do you think happened there? >> i have no idea. i know the holding period has been moved to three years which will affect hedge funds who really weren't the beneficiaries, it was really private equities, i know there was an amendment that was considered that said hey, you've got to hold for eight years which would have eliminated most of the private equity models i will say i don't remember. i wount on the tax-writing committee at all i had nothing to do with a word of this legislation, only tried to contain deficits but i don't know where the resistance was on
this i don't. and obviously that's a gap in our legislation. >> you know, andrew, trump wanted -- i know you're outraged by it, but you can't point at him. he wanted to get rid of carried interest so you have to be mad at some of these other republicans, i don't want your anger and ire -- it's got to be placed directly at who did this. so don't use it to -- normally you use it to -- >> completely cynical view but after the fact that gary cohn is now blaming everybody else except -- >> senator, very quickly, back to pass-through, you think they were dealt with too generously. >> i do. >> do you think it will be audited more he lheavily by thes >> well, look i probably should haven't ventured in. i know i'll have tremendous amounts of incoming from the pass-through world at the end of this interview but any time you pass a major piece of legislation like this,
adjustments, the same thing happened under president reagan in '81, there were two changes after that i think as we move along with this and if, in fact, people take advantage of the pass-through situation in ways that were unintended i think there will have to be revisions. again, to my pass-through friends, it was generously dealt with and, you know, that's at a cost and i've had both c-corps and pass-through it will be an area that's adjusted over time. >> you had an interesting take it's that the reporter calls and he's well intended, is that who it was >> it was a reporter who works for serrada. >> i had a run in with that guy like ten years ago that scared me so you have a run in with him and then you think social media takes over and then goes back
and then the reporters of the mainstream media are affected by social media you think they're well intentioned and objective from the start and it's social media that gets the snowball or -- i don't think you can do a chicken and egg. i think it starts with them and social media pofollows along. they're only too happy to go along and start the social media stuff. >> not being an expert in how these things happen. >> i'm an expert and i'm telling you. >> what i can tell you is immediately thoroughly debunked. thoroughly debunked, period. >> it's a good story that you got bought >> i didn't believe it. >> it's a good story though. >> let me tell you now what's happening. i was at dinner with a few other senators which i rarely do but we did last night, tom coburn was visiting and now other senators are sort of being, if you will, caught up in this around the country again something that came from
the house. totally debunked at every level and anyway, that's the way it is. >> i saw the tennessee paper was even worse than the one in your hometown anyway -- >> look, it's vicious. we're in a vicious environment. >> we are. >> anyway, thank you, great to see you, thanks for being with qus rng.in "sawk box" will be right back. you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect.
to talk about the tax plan and the looming risk of a government shutdo shutdown. here are the futures at this a i, take a quick look. weren the green. "squawk box" returns in a moment dow up about 35 points working as an emt in a small town usually means ho aren't very close by. when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. we call that the golden hour. there's nothing worse than when we're responding to the hospital, and the hospital doesn't have the right specialist. evaluating patients remotely, by an expert, is where i think we have a potential to make a difference. robots can do a lot in medicine these days, but they can't think. they're still machines. for nuanced decision making, we still need humans. 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 breakthrough innovations to take place. as we get faster and faster wireless connections, it'll be possible to bring those capabilities to more remote sites, and be able to operate on a patient in a way that was just not possible before. when you think about underserved areas, you tend to think of remote locations. but the reality is, an underserved area is anywhere where the person that you need, who has the expertise for the problem that you have, is nowhere near you. low latency is crucial for things like surgery, because the response time has to be immediate, it has to be real. i could put on vr goggles like these, and when i move my hand, the robot on the other side will mimic the movement, with almost no delay. who knew a scalpel could work thousands of miles away? (dr. vasquez) it's going to be life-changing,
tax reform victory the dow pointing to a higher open after passage of the historic tax bill. special coverage of the tax overhaul this hour with a lineup of news makers including house minority whip steny hoyer, ways and means chair kevin brady and house speaker paul ryan. plus, corporate america responds to tax code changes. >> at&t plans to increase u.s. capital spending $1 billion and provide $1,000 special bonus to more than 200,000 u.s. employees and that's because of what we did. >> and it's not just at&t. other businesses announce new investments. details coming up as the final 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" here on cnbc live from the nasdaq market site in times square, i'm joe kernan along with becky quick and andrew ross sorkin futures have been marginally positive for most of the pre-market session they are currently -- wow. up 29 points now, up five on the s&p, nasdaq up 4.25. in europe there wasn't a lot happening in terms of activity it was mostly negative but it's all right around the flat line the treasury yields, the ten-year was above 250. now 248. big hour coming up steny hoyer, kevin braid diand house speaker paul ryan all coming up. in corporate news, conagra out with earnings, the food producer beating estimates by three cents reporting quarterly profit of 55 cents a share
conagra saying it expects organic net sales and earnings for fiscal 2018 to be at the high end of its prior guidance that stock is up by 3.1% shares of athletic apparel and footwear retailer finish line are higher as well. the company reporting a lower-than-expected loss for its fiscal third quarter with revenue beating forecast finish line also posting a surprise increase in same store sales, the first comparable sales increase in five quarters and the stock is up by 7%. walmart is developing new services aimed at high-end consumers. recode reporting the retail giant is working on stores without checkout lines or cashiers, similar to amazon's go stores which were announced last year. let's get to our special coverage of tax reform corporate america responding to the passage of the overhaul bill with several companies putting out statements promising to pay more workers and make more investments including at&t, cnbc's parent company, comcast
and boeing, wells fargo and fifth third bank are raising their minimum wages to $15 an hour president trump tweeting out this morning "the massive tax cut which is the fake news media is desperate to write badly about so as to please their democrat bosses will soon be kicking in and will speak for themselves companies are already making big payments to workers, democrats want to raise taxes, hate these big cuts." exclamation point. while the tax reform story continues, the threat of a government shutdown is once again looming over congress. joining us is house minority whip steny hoyer good morning to you, congressman. >> good morning. >> before we get to what's now looming upon us. i want to get your thoughts on the tax bill and specifically give than you didn't support it how you react and think about the statements that some of these companies like at&t and the parent company of this network have put out around bonuses and other investments they plan to make as a result of it. >> well, the issue is are they
going to be sustained? are they happy about getting huge tax cuts? i'm sure they are. as you know, 83% of the $1.5 trillion in deficits will be going to the tom 1% in america and 17% to everybody else so obviously there are people are very happy about this and it appears it's going to have some positive effect immediately. but what we are really concerned about is the long-term effect of this, the skewing of benefits to the wealthiest in america. the fact that medicare is going to be exposed to a $25 billion cut next year and 13 million americans are going to lose health care. so we think there will be a lot of very negative effects of this tax bill going to undermine the ability of the united states to fund its priorities. so yes there are short-term benefits apparently and that's not surprising but what we've seen as the long
term down side of these tax cuts, whether they were in '81 o or '01 or '03, they didn't work out for our economy. >> it gets complicated quickly joe was asking me whether today the democrats have to effectively root against the economy, root against the market, if you will over the next year or two as it may go up given what you're talking about. how do you think about that? >> well, as i say, i've been here for some period of time and i've seen the downturn of what can be short term stimulus but long term at verz impacts both in terms of the deficit that is created and the stress to the economy. as i said yesterday on the floor of the house as they were talking about their tax cuts, much of the rhetoric was very like we heard in '01 and '03 and what did we end up with at the
end of the bush administration the worst economy we've seen so hopefully -- i don't want to wish against the economy and i want to see employees doing well and our country doing well, but i think this was an irresponsible act. >> leader, those weren't corporate tax cuts for bush. the rationale of trying toget the u.s. corporate sector more competitive with some of the tax rates around the world, democrats in the past have signed on far. >> we're for that. as you know president obama in the state of the union some three years ago said we needed to bring the corporate tax rate down so that it would be competitive with the rest of the world. we think that's correct. we would have supported that as you know, joe, this was a totally partisan bill and unlike the '86 bill which was bipartisan bill and was paid for, this was paid for all with deficit spending which we think will have ultimately a downturn on the economy but, yes, we
could have worked on and we support in many respects bringing the corporate rate down so we're competitive with the rest of the world. that's a good thing. >> when you use the '83 number, by definition when the main part of the act is based on lowering the corporate tax rate are you throwing the 1% -- so the corporations are part of the 1% benefitting because i've seen figures where if you take out the corporate side of things the middle-class shares a much better part of the tax cuts, if you exclude the -- you know what i mean if you could say 83% and most of that is the corporate tax rate which you agree is something we should try to do but i don't know if that -- it just sort of -- you know, it's apples and oranges kind of. >> it may be, joe, but the point we make is yesterday chairman brady and paul ryan when we initially passed the bill through the house, what did they talk about they talked about the average
family making $59 four people. >> corporate tax cuts aren't popular. cutting corporate taxes, even though it might be something you think we ought to do, it's never going to poll greater than probably 30%. >> the bill doesn't poll very well, as you know. only a third of the people think this is going to help them or our country so it doesn't poll well but the point is if you're selling a bill for the struggling people who are working day to day and week to week paychecks and then you give 83% of the benefits not to them, it's hard to just argue that this is what this bill is about. it's not about that. yes, you're right bringing the corporate rate down to bring it competitive with the rest of the world can have a long-term benefit on the creation of jobs but i think it's a fair figure when you hear this constant discussion about how this is for the struggling working people of
the country. >> have you seen those numbers on the individual mandate? i get that, too, so the 13 million that lose insurance are going to decide not to buy it because they don't have to pay the penalty anymore. >> but you've seen the figure that the people that pay the penalty, for the vast majority, 80% make less than $50,000 a year and here they are paying a tax on not getting health insurance, so that was just -- that's designed the wrong way isn't it >> well, you know what, joe? this was a heritage foundation idea which was everybody needed to take personal responsibility and they needed to have insurance for themselves and the massachusetts model, which was applied in the aca was, look, you need to have insurance because everybody needs to be covered so you're not passing the expense to somebody else but if you can't afford it we'll help you that was the premise and the 13 million people, many of them are going to say look, i'm not going to get it. i'm healthy, i'm young and what's that going to do to
the premiums of everybody else raise it because the risk pool will be more expensive that's the point and the whole point of the mandate was to -- like car insurance, if only reckless people drove, boy, you couldn't afford your car insurance. but because the risk is spread and most of us don't have accidents, it brings down the cost to an affordable level for us the same principle applied. >> i understand. it just seems like there's a better way, it was unintended consequences >> frankly -- joe, let me say there was a better way if we would have come together for the last month, last 11 months and worked in a bipartisan way i think we could have come up with some really good improvements to the affordable care act but that was never the intention of the republicans, either on taxes which was -- this is the most partisan bill, secret bill, non-transparent bill, rushed to judgment in stark contrast to t the '86 tax reform bill where we
had hearings and witnesses, over 450 witnesses and a bipartisan effort between president reagan and tip o'neilo'neill, rostenko and packwood i think we'll find out that this bill is a very flawed bill not only in substance but in specifics. did i lose you >> no, we're here. >> are you just stunned by that comment? >> stunned silence it's a rarity. >> congressman, we wish you a happy holidays i imagine, i hope we'll get to talk some more we hope there won't be this looming issue and it will get resolved >> i hope so, appreciate it. >> thanks, leader. we have brady and ryan coming up so i don't know. they'll probably just make you mad if you watch those guys. anyway, tune in. in the next half hour, as i said, we'll have kevin brady, house ways and means chair then at 8:40 eastern, house speaker paul ryan. he was giddy yesterday
he was very happy. he's been working on this back to jack kemp days so he was happy. we'll see if he's still giddy. but up next, why rbc says they expect a new slate of alexa this holiday season. ♪ he' be millcong down the chimney down ♪ it's all yours. wow! record time. at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. get ready, because we're helping leading companies see it- and see it through-with digital. ♪
welcome back, everybody. a report from propublica and the "new york times" says companies are using facebook to exclude older workers from job ads. the report says employers including amazon, verizon, goldman sachs, target and facebook itself place recruitment ads that are limited to particular age groups facebook responded to the story and defended the practice saying that age-based targeting is an acceptable industry practice and compared showing job ads to different age groups to running job ads in magazines and television shows that are also targeted at younger people or older people as part of its investigation, propublica bought job ads on google and linkedin that excluded audiences that were over aged 40 linkedin has changed its policy to prevent age-based targeting
you wonder when you get into discriminatory hiring practices, it's not facebook doing the hiring but when do you start running -- >> well, often times a lot of companies are saying we want to diversify our work force big issue, we want more women in high-ranking positions, more minorities, all of these things. so then the question becomes if you're trying to reach those -- >> if you're trying to reach out to groups that have traditionally been discriminated against, that's one thing. if you're having the same conversation and saying we don't want women or we don't want anybody over age 50 you would be in big trouble. >> not all quotas are created equal. >> if i said i was just -- a lot of companies have programs to try to hire kids out of college, starting jobs, if you were trying to reach those people in an online world you would say i'm going to look for -- the age group i'm looking for is people 21 or 22 years told 34 years
old. >> i understand why you're doing this. >> by the way, the college campus recruiting programs are somehow discriminatory i'm just saying -- >> i agree here's where we may be conflating it. it's just the idea that we're going after the advertising company versus the company that's actually doing the hiring i would guess as a company doing those things you might have that facebook ad that you placed come back to haunt you if you are later accused of age-based discriminatory practicing in your hiring or gender based. my guess is it isn't facebook who's in trouble you set the parameters. >> you're immortal, andrew you're never going to be old just keep with your ways now, your drinking and carousing. >> he wouldn't see these ads, either. >> but the flip side is let's say you were looking -- >> you're not going to live forever. >> let's say you were looking for a very senior executive with a lot of experience. you probably -- and you were trying to reach them in a social media -- >> that's different. >> you would exclude people
under 30 years old. >> that's different because you know you want people who bring this to the table not based on what they look like, different -- it's -- there's so many ways you can look at it i don't know that it's facebook or linkedin's problem, i think it's potentially the employer looking to only hire somebody within this item who could get in trouble for doing that. it's not facebook's problem if you're going against hiring laws, anti-discriminatory hiring laws but it could be used as evidence against you. >> keep it up. keep it up if anything ever happens to me i'm going to slap you with a discrimination suit so fast, sorkin. >> i'm getting older, too. >> you never know you think that you think you're immortal. >> that's so not true. >> burning the candle at beth ends, the carousing, the drinking, all that stuff. >> carousing >> the carousing >> carousing >> i've seen you in davos. >> can i say in this environment -- >> he does not do carousing. >> i don't drink, i don't do anything. >> you don't you work.
>> i do work i do work. >> you find cynical people that agree with you to undercut the tax bill. >> maybe we should move on. >> i'm going to save our viewers and talk about amazon's echo i'm not going to use the other word you know that i could use -- >> you mean alexa? >> don't say it because then all of our viewers who have one on right now, now it's listening to us. >> alexa, play christmas music. >> i can't believe you're doing that you're doing that to people all over. >> alexa, turn on cnbc oh, wait, that won't work. they have to be watching cnbc. >> our next guest says the devices could generate $10 billion to $11 billion in total revenue in the next three years. joining us is mark mahaney, great to see you this morning. >> good morning, andrew. >> a couple questions. you think that alexa -- see, i said it and now she's listening. you think that the amazon echo is going to have a material impact for amazon. why do you think it become s kmd
t -- commoditized now that we have google and amazon isn't it one big microphone. >> it's the voicefication of the internet i think that's one of the most interesting new trends that comes out there. the win for amazon is probably not just selling devices it's as people use alexa devices and echo devices and the technologies embedded in other devices, you're increasingly seeing that in light fixture, sonos speakers there are more ways people can interact with amazon so 40% -- this is the win. 40% of people who own these devices shop more with amazon. you're creating more opportunities for amazon to be there with the shopping cart in front of you that's a long-term win for amazon. >> that's a long-term win. i assume there are a lot of losers as a function of this brands do brands matter if you can't see them if you speak out loud and say i
want tissues or whatever it is how does advertising work? it has major implications. >> it could. my friend scott gallaway, another contributor here, has made that point as well. we have yet to see the platform revenue generated off these devices. we think they have 40 million installed devices worldwide which is a relatively small number when you get to 100 million xx 00 million then you have platform potential think of the app revenue that apple generate, that google home generates. if you have a platform where services and apps are fighting for attention with consumers, there's a way you can -- i'm not sure how it looks like but there's a way you can prioritize or give placement to advertisers that pay for that placement. that's also another win for amazon. >> is it your expectation in three to five years from now everybody will have one device that will have multiple services on it?
meaning you'll talk to alexa, you'll talk to cortana, which is the microsoft service, you'll say hi google if you're looking for a google search item you might say hey siri by the way, i think sonos is one is probably the closest to that currently or do you think you'll have multiple different brand devices throughout your home >> i don't know. the company that -- not just around the home, by the way. in the car, the workplace, when you're walking around. the company that may be the best situated if there's a multidevice world may be google because of its google assistant technology and knowing who you are in multiple devices but there is an advantage to having a large installed base for whatever that technology is and when it comes to voice recognition, voice interaction, the technology of the company that's most commercialized is amazon and these alexa devices have almost gotten two carelean holiday seasons. >> are they making money on each
device at this point you can buy an echo dot now for $30. >> they don't disclose the margins. my guest amazon's strategy would be sell them at cost or 3% 5% gross margins. that would be amazon's strategy because the win is the incremental retail sales and then platform revenue. >> great to see you, happy holidays i should mention when we were doing that interview and i said something like hey siri, my phone went off and siri said "i really couldn't say! and that was her answer. so you did better than her. >> mark, all i do is dictate stuff. if the internet is going to be voice activated, god help us the stuff she comes up with when i dictate stuff, no planet in the universe would i be saying what she prints out. i'm saying the most obvious thing. maybe i don't. >> announcer:@ we're in trouble if they don't get ai better quickly. coming up, apple confirms a long time conspiracy about the iphone battery life. it does seem to get tired.
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coming up, breaking economic news jobless claims and the third read on third quarter gdp. plus, a big half hour ahead as we continue our coverage of tax reform in america. we'll be speaking to top gop tax writer ways and means chair kevin brady. that is next then, house speaker paul ryan will join us at 8:40 a.m. eastern time stick around, "squawk box" will
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that definitely could be -- >> threes, baby, threes are wild. >> that could be a bit second on first, third on second the third on the fourth. the futures are up 45 points now. it was amazing watching the news yesterday. so many clueless anchors on other channels asking why did the market go down yesterday if this was such a great deal a market up 35%. anyway, rick standing by in chicago. >> i asked that this morning. >> not the same way, though. >> all right, here we go threes are wild. third look, third quarter gdp expecting 3.3. one-tenth disappointment 3.2. 3.2 so sequentially we drop a tenth but it's still back-to-back threes and we're looking at a fourth quarter that may be solid you want to dig through internals? let's look at consumption. 2.2, that's a tenth light. the price index 2,.1, exactly as expected, exactly as our second look was if we look at core person consumption expenditures quarter
over quarter, that's 1.3, a tenth light. last look was 1.4. jobless claims, 245,000. that's an increase of 20,000 from 225, a bit of a jump on continuing claims from a slightly revised 1.88 9. up to 1.932. does it end there? of course not. philly fed, a very contemporary read, 26.2 better than expected that's four points better than our last look. let's go back to the 33 on the quarter gdp. corporate profits move from 5.8 to 5.7 so a minor loss there of a tenth. the market still hovering, 3.5 basis points higher than last year in ten-year note yields, the curve is behaving a little different as rates move higher versus lower and europe is
following along with us, albeit calibrated at much lower level back to you guys. >> thank you, rick for more reaction, let's bring in steve liesman, the professor, sir >> the big consideration is to whether or not we're moving into a higher level of growth i want to talk about a couple things quickly, the first is let's look at where we are for the fourth quarter, this is before this data came out, this is our -- actually, they have the fed rate hike probabilities up there let's talk about that. we march, a 64% probability of the first hike that means jay powell's first meeting will be a rate hike. so will his second press conference meeting which is 55% and we're debating the third rate hike in december. now let's look at where we are for q-42017 right now. 2.6. i think that's a victory, i'll tell you why, if you did a big
tr threes in a row let's look at who is wear. steven stanley, amherst, pierpont up 3.6. the high on the street atlanta fed 33 joe, you said you had the new york fed at four >> well, it had been. >> they only do it every week so we don't do in the the rapid, it's not rapid enough for us but they have a model worth considering and barclay's was down at 2.5% we're thinking whereabout th iis additional growth is coming from three areas stand out. equipment and spending it's adding a half point to gdp. in the previous four quarters it was adding less than.04% inventories are adding a half point to gdp now it was previously negative and also net
exports, that's your global synchronous growth coming into the u.s. helping out that's adding .3 of a point. before that it was minus .2. so those three areas combined give you that additional 1.5 points so we have to ask, the equipment spending, maybe deregulation, maybe part of the increased confidence on the part of ceos. also worth pointing out you had a big slump, '15 and '16, could be pent over demand on the equipment. >> very quickly -- >> the growth coming back from the global synchronous markets is just part of the growth we exported as the biggest economy in the world is coming back. >> that's not crazy. part will be that but part will be indigenous growth onthe par of europeans and other countries as well. >> very quickly. for next year, what are the early gdp expectations on wall street if you had to say before this stuff. >> we did a bunch. we're seeing 2.5% to 3%. they've made changes in the bill which for whatever reason, maybe some is politics, maybe some is
economics, they pulled forward a bunch of the benefits of it into the first four years so what i see is a bunch of estimates out there where -- morgan stanley is a good example they were at 2.4 next year but they go down to 1.9 thereafter a bunch of guys, mike england from action, he's a three plus for next year and he continues that over time so you see a bunch 206of 2.5s. so there is something of an upward shift here. maybe a half point, we'll see if economists are underestimating the hopes and dreams of the supporters of the tax bill. >> i ask that for a reason because i'd like to question our next guest about this, too republicans taking a victory lap after passing their long-anticipating tax overhaul before the end of the year joining us is house ways and means committee chairman kevin brady. he also served as conference chair to finalize the tax bill details. chairman brady thank you for being here today. >> thank you, becky. >> we have everybody who is
coming down on this. you are taking a victory lap, a well-deserved one after the hard work that went into this a lot of critics are questioning what will this mean and my question to you is how will you judge if this bill is working? are there measuring sticks we can look to in nine month's time, 12 month's time to say it's working or not? >> there are two measurements we start out, you and i talked about this several years ago we set out to create a tax code built for growth, jobs, paychecks and the economy and we want to leapfrog america into that lead pack globally so we can compete and win anywhere in the world. those are the measurements i'll continue to use. the tax code, this new one encourages new investment by businesses in america, in their company, this in their workers in a big way it allows people to keep more of what they earn more importantly we redesigned this so our companies can compete and win and bring those earnings back to reinvest in
america so i think we've got -- i know we've got the fundamentals right in this tax reform bill. it will allow businesses to make those investment decisions, they've been holding off for probably too long. >> are there other measurements that we can look at from the outside and say okay, gdp is hitting x%, we know that this is because of this and we can say that's right or something comes in -- are there unemployment figures we should look at are there gdp figures? what are the measuring sticks we standardly look at in economics to watch >> having chaired the joint economic committee we've had discussions about the fed, the roll of the economy, savings, investment we're going to have to take a broad look at this both how we're doing on job creation, where paychecks are moving, what is the business investment for the past deck kate that's been themissing ingredient in
this economy the reason we went all in on expensing was to drive productivity that's probably a longer term type of approach here but think that's key to growing the economy over thedecade and that's what we want to do. every economist seems to be snuck this slow growth 2% mode for the next decade, that's what we're trying to shake up, not just quarter to quarter. >> we had mike allen on from axios this morning and he pointed out about the unpopularity of the bill, we know that's the case but he ran other figures against it and said right now this tax bill is less popular than tarp, less popular than the bank bailouts, less popular than past tax rises that have gone into place and i just wonder how you try and get your message across to the voting public before you come up against election day. >> that is a great question. i think the answer is what questions are being asked because if you ask people what do you think the trump -- what do you think the tax reform
bill -- it's only what they've heard but when you ask them do you want the standard deduction double so fewer people have to itemize to get their tax cut, do you want lower tax rates on you and your family? do you want more help raising your kids with a bigger child tax credit should american companies be able to bring their earnings back to be reinvested in your community the answers are overwhelmingly yes to that so i think look i understand the general question about tax reform but when you dig into it i think americans strongly believe in what we're doing. >> chairman, a couple questions for you. we were talking to senator corker earlier and one of the comments he made is that he expects there to be changes over time in terms of how the pass-through is enacted given the questions people have about people's ability to gain that. do you think that changes? are there other parts of this tax proposal that you think will
be adjusted? >> i think we're probably getting more heat for having such strong guardrails. some businesses feel like they're left out of that but we said strong guardrails, we put that tax relief towards those main street businesses, those pass-throughs are creating jobs i think we did the right thing there. could bit better absolutely the international area is one we want to listen to carefully. these are major policy changes businesses are analyzing that role so i expect to be revisiting, fine tuning, listening to that area that's one, for example. >> explain this one to us that we asked bob corker about as well this is gary cohn yesterday. "we would have cut carried interest, we probably tried 25 times. we hit opposition in that big white building with the dome at the other end of pennsylvania avenue every time we tried, it's just the reality of the political system." who is he talking about?
>> so hoar's what i know about the carried interest provision while it's a small part of the tax code it's a big part of the political discussion what we ended up with was a balance between those who wanted it eliminated, those passionate about keeping it as it is and those who want to reward long-term investment in our communities because many are those projects that build the local apartment houses or industrial parks or all that and so at the end of the day we found a balance between lawmakers who had these different opinions. >> we have paul ryan coming up i'm going to talk to him about it, mr. chairman, because we're out of time. but you know you needed to do the individual side of things to get this thing through and everybody loves a winner and it's through but then you're going to see everybody's going to compare what individuals get and since most of this was about corporate tax reform it's always going to make it look like the
individual -- and i'm talking middle-class -- that they're not getting a fair shake but when you look at the numbers if you take the corporate side out, the middle people do much better than some of the others. but that's why it's unpopular and has to be explained but when you decide to do it with the individual rates you know you're going to get this criticism. i understand the constraints of washington but it's like catch-22 you had to do it but it makes a comparison. >> but don't underestimate the middle-class tax relief here. >> i'm going talk about that with paul. what the middle-class gets as a percentage of what they pay how much of the tax cut they get because it's more than -- >> they are. >> i know. >> they're big winners in this. >> we have to get that out i'm going to talk. paul is coming up. that's why we have to say good-bye to you chairman. >> i'll get out of the way. >> the north star of tax reform. i was right, too. up next, our special coverage of tax reform currents.
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comcast business outmaneuver. joining us now, house speaker paul ryan. i don't know, speaker, whether you were listening when we were talking to chairman brady, but i referenced it, that i would go to these facts here because i'm trying to help, you know me. trying to help you. >> i heard a little bit, i walked in when he was leaving.
>> here's what i was saying. everybody loves a winner, congratulations so the strategy of tying individual cuts along with corporate cuts is what got you to the finish line so i understand that but my point was that also brings up the -- at least allows democrats and opponents to minimize what the middle-class is getting because the lion's share -- a lot of it was what the bill was intended to do, and that's make our corporations more global competitively. but if you can take out that part -- and democrats act like they wanted to do that, too, speaker ryan, they wanted to do it, too. but that doesn't stop them from including that and making it look smaller what the individuals are getting but they wanted to do it. let's say you take it out. then the middle-class does get the lion's share of the cuts based on how much they pay but i don't think that message has gotten out. >> that's right. you've got 40% to 60% drop in
people's income taxes in many instances. it's kind of funny obviously they're being partisan and they want to try to deny this achievement and try and talk it down and obviously you have six figure income people on tv -- no offense -- just saying this is nothing. if you're living paycheck to paycheck, more than half of the people in this country, making the median family income of four and you got a $2,000 tax cut next year, that's not nothing. it may be nothing to somebody making $600,000. it may be nothing to somebody in new york or california but to families struggling, that's something. doubling the child tax credit, doubling the standard deduction, lowering rates across the board, that means a lot to a lot of people almost 90% of people can fill in their taxes on postcard. >> and add in whether they get bonuses or $15 an hour add in what the corporate side does hopefully down the road but here's one thing that i got from
this joint committee on taxation if you take what we think of as the middle-class, people earning between $40,000 and $200,000 not the top 5%, between the top 5% and the bottom 50%, that 45%, they pay 37.6% of personal taxes, of the total, they get 52% of the tax cut whereas the top 5% pay 59% of the taxes but only get 43% of the tax cut. so that's 87% more that the people in the middle-class are getting so how is it characterized as a tax cut for the rich when you're hearing that, do the people saying it really know it's sort of -- >> it's just the one page of talking points that gets e-mailed around. >> it's picked up -- every headline i see in every newspaper and every cable channel i turn on that's what i see so who is not doing -- or is
it impossible to get the message out? >> it's impossible to get the message out in the slew of this because that is the mantra, it has been the mantra, it will be the mantra, it's always been the mantra on the left, people look at life and the economy as a zero sum game, that it's not dynamic. that someone's gain comes at another person's loss. that the economic pie in life is fixed and that it's government's job and role to equitably distribute the pie we have a different philosophy we believe in equality of opportunity, not equality of outcome. this is the equality of outcome philosophy so you have to understand the philosophy behind making those talking points and that's what it is. look, all i care about, joe, is growth i want growth. >> me, too. >> i want growth and growth helps everybody. i want to grow the pie so everybody gets a bigger slice. >> i'll let andrew and becky in. but there is a notion that on the left maybe the government -- if they start at 100% of what you earn and then anything below that you're stealing from these people what, you're taking it out of the hands -- instead of it
starting with zero of what you earn and deciding what the government -- it's like stealing from other people. >> stealing from other people and spending they're saying reckless and spending we have a different philosophy this is people's money in the first place and the government takes from takes from them they see it as the government's money and then the people are taking from the government that's just a different philosophy that's just how it works around here >> speaker, to put one fine point on it, i don't think that -- i don't know if anybody who literally thinks that all of the money is the government's money. >> oh, you should come to congress -- is that andrew you should come to congress. i would like to introduce you to a few people >> i don't know those people >> i do. >> i don't know those people >> quick questions on salt, in terms of the budgeting calculations you made, and a lot of salt states right now, there are people, at least on the wealthier end who are thinking about pre-paying as much of their contributions as they can this year. was that put into the calculus
in terms of just the math of that happening or no >> you mean between -- in the next week in december? >> yes >> no. that's not how joint tax looks at these things. >> you know there's a huge rush among people probably watching this show to do that >> i got that. but joint tax, we have to rely on joint tax estimates and joint tax numbers. that's a question really for joint tax, but i don't believe joint tax does that. when we ran these numbers, we wanted to make sure that there wasn't going to be a net tax increase on people in the middle, or people in the upper middle income. so we literally ran numbers new jersey, in new york, california. they have prop 13, so they don't really have high property taxes, but they have really high income taxes. the highest in the country what we learned is the property tax deduction alone did not help the californians you had people making 102,000, 103,000 that are still going to get clipped. that's why we made it dual operable, you could use it for income and property, because that helped the californians we ran numbers that way, to make
sure everybody got a tax cut we're republicans, we don't want to raise taxes, but there's about 46 states that are paying higher federal taxes as a result of about four big states taxing their people a whole lot more. and the rest of the country is effectively subsidizing that there's a clear fairness argument here, as well >> speaker ryan, let's talk about what comes next -- >> hi, becky, good morning >> good morning. great to see you i read that you addressed the membership saying, great job, but let's keep our eye on the ball there is the potential for a government shutdown unless some new agreement is reached and i just wonder, do you plan on doing that within your own caucus or will you reach across the aisle? because, obviously, we have the freedom caucus on one side that wants to see significant changes in terms of spending and democrats who would like to see some of their own things >> i think the democrats will try to play some partisan games, because they would love nothing more than to have a government shutdown and blame us. we're bringing a clean vanilla
cr, no games, no sneaky things just a continuing resolution to get us through this moment, to get abuse neus into next year. it's as clean and simple as possible but i could see the democrats trying to play some procedural games. >> does that include c.h.i.p. funding? >> yes, it includes c.h.i.p., extends c.h.i.p., includes va choice, we're keeping things going. >> does that include defense spending for a year, or defense spending -- >> no, just -- we're just doing the clean thing. >> okay, thank >> speaker, gary cohn was asked yesterday, what's the one thing he wished he could have changed or gotten done -- >> this is such a part of -- >> he said carried interest. i'm not even going to ask about carried interest >> didn't you just ask brady about it >> we did. what's the one thing, speaker, that you would have liked to have seen in this bill that you didn't get or you may try to get in the
future >> some pass-throughs are not going to get -- because the guardrails i heard you asking kevin about guardrails we have tight guardrails to keep from gaining, but i see this as a feature, not a bug i worry these guardrails may be too tight. i want every business to get the lower tax rates. that's my concern. >> speaker, what was that stuff about you retiring have you picked a date to announce your retirement >> no. no no >> have you picked a date to retire >> no. >> where there's smoke, there's fire where did they get that? everybody says you want to do that it's a hard job, and, you know, who needs it you're not retiring in the next year >> that's right. that's right >> huh no >> so, look, here's what the gossip was he -- he's been working on tax reform for 25 years. >> i know. >> it's his big thing. >> so it's false >> and why would he want to stay afterwards >> so false? >> it was a pure speculative piece -- >> so it was completely false? >> the idea that i'll do a mike drop tomorrow after we do tax
reform and walk away from my responsibilities >> we're saving this tape. >> totally speculation >> oh, speculation could still be true then is it fake news or not >> no, it was a piece based on pure speculation >> not going to happen >> no, i'm staying >> all right, speaker ryan, thank you. i want to get down to the new york stock exchange. jim cramer joins us now. how you play it this morning, jim? >> i think it continues to be that we find companies that are making much more money and raise estimates. and you've got to be ahead of the companies, of the stocks where the analysts raise estimates. duncan d dunc dunkin' donuts, they're going to make more money because of the tax code it's going to happen over and over and over again, andrew. what can i say it's the upside when it comes to the stock market >> is there anybody who thinks is going to be a big loser that you want to run from right now
>> no, i don't think there are any losers in corporate world. i think, by the way, big winners that we aren't thinking about are banks. because the way that you deduct interest overseas is better than u.s., so you need a bank like g goldman sachs to go and borrow money all over the world there are a lot of things here that are subsidies for companies that people haven't even thought about yet. >> okay. thank you for that, jim. we'll see you in a couple of minutes. apple confirms a longtime nsra aut the iphone battery life we've got details about this you've got to hear this. "squawk box" returns in just a minute ng and designer shoe collection were ruined. luckily, the geico insurance agency had recently helped mary with renters insurance, and she got a totally fab replacement wardrobe at bloomingdale's. mary was inspired to start her own fashion line, exclusively for little lambs. visit geico.com and see how affordable renters insurance can be.
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that still may be true, but they say there's a technical reason for it >> did you guys get that siri quote that someone came in, that she came up with when he addi dictated, look into the syrian thing, that crashed just a pumpkin. that's what i get. >> have a great day, everybody make sure you join us tomorrow right now it's time for squa"sq on the street" good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. futures higher as the dow tries to avoid its first three-day losing streak in about three months plentyecon data as we watch companies respond to the tax bill europe's roughly flat. final q3 gdp revised down just a touch, still solid at 32