tv Squawk Alley CNBC October 26, 2017 11:00am-12:00pm EDT
welcome back to "squawk on the street," i'm dominic chu markets are higher with materials standing out as the best performing sector leaders include air products, dowdupont. so far this week, stocks are higher, despite a record close on tuesday now that's it for this hour of "squawk on the street. let's send it back downtown for the start of "squawk alley." back over to you guys. >> dom, thank you very much. good morning, it's 11:00 a.m. on wall street and "squawk alley" is live. ♪ ♪morning,
welcome to "squawk alley." i'm carl quintanilla with michelle caruso-cabrera, john fortt. sara eisen has the morning off we have a vote in the house on the budget elon >> hi guys, the house has passed the final version of the 2018 budget, clearing the way for tax reform to be completed without any help from democrats. now, we're told that they have reached that 215 marker that they needed in order to get this passed there were at least 19 republicans that voted against this doesn't appear that any democrats supported this minority leader nancy pelosi even called this budget immoral and a raw deal now, some of the republicans who voted against this, those are expected to be protest votes over the potential elimination or capping of the state and local tax deduction, so there is still going to be a lot of really tough negotiations under way over the next few weeks as
republicans hammer out the details of their tax bill. but for now, a big step forward and something that can give them some crucial momentum as we move through the fall back over to you guys. >> thank you for that. obviously, makes it easier for the senate to do this by a simple majority. john harwood joins us this morning in washington, as well, and this was, i don't know, john, fair to say maybe a little more of a nail biter than some expected elon mentions those protest votes. does that say something about where the direction of salt may be headed? >> yes, i think the salt break is going to be not entirely eliminated it may not be touched at all when we get to the end of the bargaining, but look, this is a significant victory for republican leaders there are many fishers on tax reform and the budget, which are tied up together one of them is higher deficits there are a lot of house freedom caucus members that don't want higher deficits.
they have just swallowed a senate budget that allows for $1.5 trillion in higher deficits you have the salt deduction. there are 35 members from just new york, new jersey, illinois, california alone whose constituents would be affected by the loss of that deduction. nevertheless, they got the votes to get this over the finish line that is to the credit of house republican leaders they were able to keep their people together however, at every stage when you get closer to a tax bill, which is the specific enactment of these details, it gets harder and harder we don't know if they'll be able to clear all those hurdles in the end. >> elon, talking about salt, which is the state and local taxes deduction, explain this is still in there at this point, right what's the likelihood it will stay in in the end >> we do not know exactly what
is in this tax bill. we do know that there have been some intense negotiations between members from those states and with house republican leadership over how to handle this deduction there are some proposals of capping who can qualify for this deduction, depending on income of up to $400,000, perhaps, but we don't know where they've settled in those negotiations and there's still time for them to hash this out republicans are not expected to release the details until next week, november 1st, and then after that there will be time for debate before the final text of the bill is actually released so, these are some of the dials that republicans are going to be looking to turn as they try to both make the numbers work and fit within the constraints of that $1.5 trillion tax cut this budget lays out, as well as make all the members happy and ensure they have support to get this done >> michelle, just to add on what elon just said, another one of
the dials they might turn has to do with carving out property taxes. you could deduct property taxes, that's a way to limit the impact and get more of those votes. >> got it, okay. good insight, thank you. >> we'll talk more about that later in the hour. meanwhile, it's the busiest single day of earnings season for the quarter. big names like alpha bet, microsoft, intel, all reporting tonight. internet companies, as well, expedia, amazon, twitter already reported this morning and our next guest warns amazon's guidance may miss wall street expectations, but twitter is having its best day in over a year, up more than 14% approaching their first ever profitable quarter on a gap basis. take a listen. >> our goal is to overcome every headwind we have and we're working every day to do that we're going into the fourth quarter with -- very well positioned
it's really just about execution. we've been able to really increase the portfolio of live product we have and content. we've had over 850 events in this most recent quarter, which is a significant increase versus prior quarters this is international, not just domestic >> joining us, heath terry glad to have you back. >> thanks. >> what's driving this drive to profitability? >> it certainly has been a cross cutting story. the big part of the reason revenue is down is because the company has been rationalizing a lot of the expenses they've got, shutting down telepart division, which contributed revenue to the business, so taking that tradeoff of lower revenue, but significantly better profitability. >> the number of users is up they are saying that's a result of going after more live events. do you believe that turnaround, and do you believe the reason why? >> i think that's one of many reasons. i think they've also made a lot of investments into improving
the news feed itself so you're not digging for information as much as you used to, bringing machine learning technologies to bring content to the surface more certainly, there's a lot going on in the world. that's also helping drive people to twitter live events help, as well. >> heath, going forward they said cost cutting isn't going to get them much. so, should we still be excited do you see the appropriate measures in place to spark that revenue growth >> what this comes down to is whether or not people are using twitter and user growth increase, daily active users increased 14% this quarter, faster than last quarter eventually the revenue will catch up with that what we're seeing now is a restructuring that's caused those two things to disconnect eventually they have to match up >> ad revenue down, yet users are up you're not worried about it because you don't think that reflects what the underlying ability is to monetize those
users at this point? >> we know what online users are worth, right facebook has proven this out, google has proven this out, twitter and snap are proving it out in realtime. eventually they'll monetize the right way. we're just seeing that disconnect >> why are you so confident? >> we talk to advertisers and aad agencies all the time. they know what people are worth, they know what getting a message to those people is worth and ultimately those things will match up >> you're a buy on twitter >> we are. >> feel lonely >> yeah, we've been alone on that island for a while. >> for how long? why haven't you rethought it >> well, for what it's worth we've had a buy since the company went public. clearly, that's been right, that's been wrong more than it's been right the reason for that is we just simply see that as being an incredibly valuable platform look at the influence this platform has, the amount of time television shows are spending talking about twitter, the
press, our politicians talking about twitter, the influence of that platform is worth something, whether they are monetizing it the right way through advertising or not, the platform itself is that valuable >> how much m & a is in that rating and target? >> there's real -- we have it ranked number one on our scale, which means it's the highest you can get in terms of likelihood of acquisition that's something that, you know, we reflect, if jack, anthony, ned, can't get this right, somebody else will >> i want to talk amazon anticipating those numbers coming out you think the guide is going to be disappointing given what we've seen in earnings thus far with investors reacting in a muted way to positive news but dramatically to negative news, what's that mean >> to be clear, we don't think it's going to be disappointing on the buy side. this is something people have expected for a while disappointing is not the right word it's going to come in below where consensus estimates are. look at the way amazon has
underperformed over the last five, six months that's clearly already well known out there. we're certainly not the first people to be saying this i think our point more than anything was, because of that underperformance the bar is low. and so revenue guidance is likely to come in above where consensus is, almost certainly because of the whole foods integration, but beyond that is going to come in and below because they are investing when amazon invests, that's a good thing so them putting more money into the business and they put 70% more this year on a trailing 12-month basis than the prior year, that's a good thing for investors. >> we've had some well known money managers, hedge fund managers, question the relationship between earnings and valuation. if all that matters, they say, is being disruptive, where's that leave their value strategies what do you think about that >> particularly, you can look at
their operating cash flow number separate the investments they are making from the cash they are generating, you can understand these are profitable businesses, and i think investors are willing to look out or separate the part of their business that's generating profits from the part of their business that's investing and generating profits in the future >> even if they've been doing that in some cases for years >> right, right. that's where those returns come in if they weren't generating those returns, you wouldn't be putting -- you wouldn't want them putting money back in the business, but they generate roughly a 40% return on cash investment if you had a portfolio manager generating 40% returns, you'd give them more money >> explains why they get such confidence in investors. >> heath, thank you. always good to have you. when we return, former directv ceo michael white is going to join us to weigh in on a busy day for media earnings, including comcast,time warner, mark parker on his company's relationship with amazon, the
pipeline, and later the budget just passed the house. speaker ryan on today's vote and now the possibilities for tax reform when "squawk alley" comes back "volatile markets." something we all think about as we head into retirement. it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife.
controls celgene missed expectations on revenue and lowered its forecasts for 2020 celgene now expects total product sales of $19 billion to $20 billion down from $21 billion previously it also lowered guidance by 50 cents. the reductions come after a failure last week of the company's experimental drug for crone's disease. now lost a third of its value in the last month and at the same time celgene hiked the price of its biggest medicine by 9%, bringing total increases on that drug this year to almost 20% celgene expects revenue will draw more than $8 billion in revenue this year. celgene says it plans to aggressively buy back its stock at these levels. back to you. >> thanks very much for that interesting day for the spice. in media, time warner charter comcast reported earnings this morning, beating on earnings, but reporting the largest quarterly loss of cable tv subs in three years
brian roberts joined us earlier this morning and talked about users switching from cable to broadband. >> we believe we've kind of pivoted to where broadband is sort of the first product. we now have 25 million broadband customers, 22 million video. broadband is more profitable, now a majority of the cash flow comes out of a broadband business, and there's two parts of it, residential and business. >> joining us at post 9 this morning, joined us last night, michael white, former ceo of directv and former cfo of pepsi co., thanks so much. how do you value these companies and which metric mix is the most important at this point? >> i think cash flow is the most important metric, but i thought the numbers weren't that bad i thought comcast had a decent quarter all the way around it is challenging out there, i think, for all the paid tv
providers, charter also lost video subs, so there's no question that kind of the whole issue of the growth in streaming, millennials' habits are different, there's no question about that. you're in the middle of the river now with this shift going on it's going to continue so you are seeing cord cutting, that's a reality, but the advantage is you can sell broadband still. at&t has directv now, which i think is a terrific product. >> has cable become the new landline phone now we see landline phones going down or dial-up internet going down okay, it was profitable in its day, but it's not the most important thing. we tend to focus on video subs because that's what we think of when we think of comcast, video. but the argument they are trying to make is broadband is more profitable and goes to the cash flow statement you just made is that where we need to shift our attention? >> just think about attention span 20 years ago the only device
that would get your attention other than going to the theater, the movies, whatever, was that box in the living room that day's over. you spend more time on your iphone screen today or ipad screen than you spend with the television, and i think it's no longer a monopoly. that's a reality and so for all of these companies, i think there's no doubt about it that the internet continues to be the most important story. and if you think about 5g, if you think about health care in the future, there's so many more apps we're just beginning to see this technology change accelerate, i think, and the role of broadband is only going to become more important in the home. >> you mention we'll spend more on our telephone screens or ipads than we are necessarily looking at the tv sometimes. what do you think of the move into wireless and selling wireless as a new kind of a triple play? >> you know, i think both verizon and at&t have tremendous
infrastructure and capability. i think every business you think is simple is always a lot more complex than you think there are tremendous advantages to scale, so i'm not so sure i see the cable guys making a broad play into wireless they may play around with it doing all the bridging and whatever >> might it at least help retain customers if you pick up a wireless, erosion is slower? >> no question that bundled products, whether you're bundling with a triple play in traditional sense or bundling with wireless always have lower turn >> that's why. >> there's no question bank of america, we've seen the same thing, if you can sell more good products to good customers, it's way better than trying to chase new customers that you don't know loyal customers are important. >> you are on the board of b of a, which is important to note. amazon and twitter nibbled at nfl. could you see -- could another big direct to the consumer buyer
come in and would the league say all right, that's a great check you're going to write us, but the viewers of broadband is nowhere near television is >> no. you can't say anything -- you can't say never to anything anymore. furthermore, with the long-term deals, the question you're asking is what's going to happen in, i don't know, 2025, and i'm not that smart to predict exactly how that will be having said that, i still feel sports is the only live thing, even with the ratings being down this year with the nfl >> stock market also >> yeah. but they are still the only live thing, other than the stock market, that people will watch and you can get advertising for it, so i think from a media company's perspective, i still don't see sports not becoming really important, kind of the anchor product for everything else they do and i still think it's hard to imagine on a broad scale the nfl's been pretty smart about
how they've kind of split and give a little bit to everybody slice the salami thin. >> even by the minute. >> even by the minute. >> michael, what's the right over the top approach for the mainstream providers right now should they be even more open to these over the top services and getting a cut of that, since they are trying to solve broadband, or what >> i think you definitely want to sell broadband, first and foremost because, as i said, that is the information highway for the future the role of data, big data is only going to get greater. applications as you get faster speeds, you know, we're just at the beginning of that change you look at microsoft and what they are talking about there's no question technology is going to continue to accelerate i think in terms of the content products, any of the smaller bundles works. directv now is a great little product for a millennial that doesn't want to pay for the whole bundle you know, i still think the
satellite sound and picture experience with the dvr is the best, but there's no doubt at&t is going to launch a cloud dvr in the spring and i think it will be terrific so, i think you'll see a little bit of everything. everybody is trying everything, and that makes more noise and more fragmentation out there i don't think there will be one home run hitter that will dominate you're going to see a whole bunch of experiments >> it was great having you at net net, good day to have you here thanks, mike >> great to see you all, take care as we head to break, other earnings movers on our radar plus, nike's ceo mark parker speaking to our sara eisen yesterday weighing in on the company's product pipeline, expansion in china, and partnership with amazon. >> we're still in the pilot stage, so we're learning a lot we're still conversing on how to best move forward, but i will say we're encouraged and we've seen a lot of learnings on both
sides over the past few months it's really incredibly important that our brand is represented at the highest level possible i think partnerships like t mall and china and europe are great examples where a large digital platform partner can auactlly help us move the brand forward and grow our business.
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let's get to dom who's got a news alert on ge dom? >> according to the "wall street journal," general electric is looking at alternatives, including a possible sale of its ge transportation division this is the unit that makes things like diesel locomotives, freight trains, that sort of thing. this comes amidst new ceo and chairman john flannery's look to rightsize the company, get out of certain businessesthat aren't exactly making the returns they want to
this could be an interesting move it would be also fair to point out here, guys, that the ge transportation division accounted for about 3.5% to 4% of total revenues at ge last year, not a large unit, but still one of its oldest and high profile ones we see a lot of those ge locomotives across america, guys, back to you. >> thank you very much, dom. let's get to seema mody at head quarters >> ecb announced it will scale back its bond buying program in half beginning in january and continuing until the end of september 2018 or beyond if necessary. that news is sending the euro to three-week lows against the u.s. dollar at a news conference in frankfurt, mario draghi says the bank has flexibility to extend the bond purchases listen in. >> our program is flexible enough that we can adjust its
size, we can adjust, we can carry through smoothly, and that's been the area we've given until now. and it only comes to this committee today. >> all right, the bond market is responding to the ecb announcement sending the german ten-year bund lower. and if we look at spain as we digest the ecb announcement, the catalan president has ruled out snap regional elections, calling spanish government's plan to intervene in catalonia's autonomy unconstitutional. still, that news is a positive for the markets. you can see spanish banks are on the rise today, led by sabadel sticking with banks, let's look at two banks moving to the downside barclays, deutsche bank each reporting a 30% cline in quarterly trading revenue. weak volatility also part of the story there.
what is an answer and how can you measure the value of one? today trusted answers from trusted sources are rare and precious commodities. they're out there but finding them on your own has never been harder. it's why at thomson reuters we provide you with the intelligence, technology, and human expertise you need to find trusted answers. the answer company. thomson reuters. good morning, everyone, i'm sue herera here's your cnbc update at this hour new security screenings beginning today for all passengers on u.s.-bound flights. it's part of a white house decision affecting global travel air france says it's abiding by
the rules by conducting interviews with a special questionnaire they hand out to all their passengers more state and local governments may soon start flying drones, or more of them anyway the trump administration launching a pilot program that's expanding the testing of those devices. it allows drones to fly beyond the operator's range of sight, nighttime operations, and flights over people. authorities are expecting the death toll to rise in today's deadly explosion at a fire works factory in indonesia. that blast killing at least 47 people and injuring dozens and snow is covering japan's highest peak, mt. fuji, for the first time this season what's noteworthy is it came a full 31 days later than it did last year. and it is beautiful. that's the news update this hour back downtown to "squawk alley." john, back to you. >> all right, thank you, sue we continue to watch shares of twitter on track for its best day in more than ayear as the
company beat on the top and bottom lines you can see there up almost 15%, adding daily active users rose 14% year on year plus, a number of big tech names reporting after the close today, including alphabet, amazon, intel, microsoft, but before we get to henry blodget, let's get to paul ryan >> too long the american people have been living under a broken system where they see too little of their hard earned dollars, they spend hours and dollars just doing taxes so much time and money is wasted come complying with this complicated tax code, only rewarded by a big chunk of their income taken and claimed by the government it's unsustainable people are struggling in this country. so many people are living paycheck to paycheck families deserve a break single moms deserve a break. parents working to send their
kids to college, they deserve a break. the guy who got a job a couple months ago who was unemployed for many months, he deserves a break. that's what this tax plan is all about. our tax reform plan invests in these people, in real people because we really believe that families know how to invest their dollars better than the federal government we believe that families need a break. tax reform will help reignite the american dream it will help bring us back to a place of confidence, freedom, happiness, a stronger, healthier economy, and this budget that the house just passed 20 minutes ago brings us closer to making that dream a reality good luck with that. >> 2-year-old's hair -- >> got a bowl, cut around it >> more or less.
off tax, what the conference did earlier this week, seemed multiple informations into elements of the 2016 campaign, allegations this is a partisan effort, effort to distract what's your sense of the end game, and you had strong words about subpoenas related to the dossier issue. what are you willing to do >> the point of the investigations is to find the truth and make sure if laws are violated or mistakes are made, they are not made again, and transparency is what gets you there. it is our job under article i in the constitution, legislative branch of government, to conduct full and thorough oversight over the executive branch that's an important responsibility for congress. that's why we're frustrated to learn through the media aspects about this investigation that we've been asking for documents from the fbi for months. and so since -- since yesterday morning, the fbi got in touch with us yesterday afternoon and
they have informed us that they will comply with our document requests and they will provide the documents congress has been asking for by next week, and we expect the fbi to honor that commitment >> on tax reform, you guys did pass the final version of the budget, but more of your members voted against this version than voted against the original version that passed the house. many of them from new york, new jersey, high tax states. what are you doing to ensure that you get tax reform passed and address their concerns >> first, look at the big step we took today, an enormous step towards getting comprehensive tax reform and tax cuts for middle class families over the line, into law, done so that is what -- you okay? so this budget that we just passed, that is really important for getting tax reform done. the ways and means committee will be putting out a specific plan very shortly, and they are
going to work with all of our members to look at and consider and address their concerns i believe the ways and means committee will be working with these members in particular to find a solution. >> earlier this week in an interview you wouldn't guarantee this tax bill won't raise the deficit. can you guarantee it will cut middle class taxes >> the entire purpose of this tax bill is to cut middle class taxes. >> chairman brady said about 401(k)s you left the door open >> i'll bring it up to kevin brady and the ways and means committee to tell you about the details. that's their job if you have design or detail questions, i'd refer you to the committee. i used to run the committee, i didn't want leadership doing my job. >> do you have a preference -- >> on principle, though, do you agree with the president these retirement accounts should not be touched >> i agree with comprehensive tax reform and getting the ways and means committee the latitude they need to write their legislation. remember what we're trying to achieve here we're trying to achieve giving people a break on their taxes,
making it easier for people to plan and save for the future that's the whole purpose for this many different ways of accomplishing that and the ways and means committee is working on that. >> another easy subject, on immigration, can you clarify what you may have told conservative colleagues regarding whether -- >> yeah, i notice i was leaked incorrectly. there are no decisions made about the timing and the nature of daca. how it would be structured and when it will occur there's this ongoing conversation -- >> when a vote would occur >> correct or how a vote would be structured there are ongoing conversations occurring among all of our members about the various possibilities and how to address the situation. you know we're working on a daca solution there's no secret there. we're working on a daca solution, and i'll say it again, we want to work on a daca solution in such way we don't have a problem five, ten years down the road, and that means we have to address border security and enforcement because of that. how we're doing that is an
ongoing conversation we're having so a selective incorrect leak is not a way to convey the message. we're talking to members about all different kinds of solutions. >> earlier this morning your office described the tax foundation as nonpartisan. among its board is bill archer, phil english, and american action network president -- >> great economist >> you've taken your shots at the tax policy center, which most people see as bipartisan, because it includes staff people from both sides, including two gop ex-ceo chiefs. compare and contrast these two think tanks. why you think one is nonpartisan and the other isn't. >> i think without going deep into the modeling, i think having a model that disrespects or disregards mobile capital flows doesn't make a whole lot of sense so i think there's some model flaws. i think larry and allen, who are phenomenal molders, leaders in their fields, model i used to work on when i was younger, the
ggm model is their current model. i think they did a lot to poke holes in the tpc model i'd say the base is they've put a bunch of assumptions in their model, made a bunch up, came up with a conclusion that seems to me overly partisan, which, in fact, isn't the decision that's been made. that's my fault with the tpc model. >> thank you, mr. speaker. there were strong words coming from a couple of retiring senators, republican senators this week, about the president and about his behavior and his style of government. do you share any of these concerns, particularly the concern raised by senator blake that he does not want to be complicit in the -- >> here's what i think about all of this. first of all, jeff flake is a good friend of mine and i think the world of jeff flake and wish him the best of luck in the future i think i put a statement out that more or less reflected that he's a good man, helped us with earmark bands, was a voice of
fiscal restraint here in the house, but i don't think the american people care about that. you know what the american people want to see us do solve their problems i don't think the american people want to see us up here yelling at each other. they want to see us fighting for them the american people want results, and so that's what we're focused on i honestly believe the more unified we are in pursuing solutions that solve the american people's problems, that's what the people who sent us here do, that's what they expect we work for the people who elect us those are our employers. and so if we're calling each other names or calling each other out, or saying things against each other, what does that do to help a working mom get ahead? what does that do to help a veteran get the health care he deserves what does that do to help rebuild our military so the strongest, undisputed military in the world, what's that do to advance tax reform, which will give us faster economic growth and bigger paychecks nothing. that's why we need to stay
focused on solving people's problems and being concerned about their issues and moving this agenda forward. and that's what our focus is totally all about. >> last question >> mr. speaker >> i don't do the blurt out thing. somebody tell him about the rules later. >> you often talk about tax reform, a series of hard choices, but the president has twice now -- pretty big for chairman brady between what you were a fan of and the 401(k) issue. are you concerned he's not going to maybe like some of them and tweet something about it >> he's going to be in asia, number one no, i'm not, because we're working very, very closely with the white house on this. as you know with the big six, we worked very hard on the parameters and the design decisions on what goes into this, the tax writers are
working on the actual granular details and how to make this framework work, and we're working very, very closely with the white house, so there will be no surprises from our partners, you know, in the white house or the senate when we do this thanks a lot, everybody, appreciate it. >> all right, that is speaker ryan not weighing in on the specific elements of tax reform, saying you got to let ways and means committee have the latitude to write their own legislation, and he knows, having chaired that committee in the past clearly, november 1st is going to be busy not only are we expecting now some language, legislative text from ways and means, but that's the day facebook, google, and twitter are expected to be on the hill it's going to be a big day >> absolutely, and he also was, obviously, very happy about the budget being passed, as ylan pointed out in her question, closer than expected, fewer votes than last time because it raises questions about whether or not they are going to allow people to deduct state and local taxes, but, clearly, marking
what an important event this is to get them to tax reform. >> right also mentioning, by the way, the fbi told them they will comply with a document request regarding the trump dossier by next week. ylan joins us from the room. welcome, once again. >> good morning, carl. last time 18 republicans voted against the house version of the budget this time 20 republicans voted against it one republican who switched his vote was tom mcarthur of new jersey, so that does speak to this issue and how big of a challenge it's going to be for leadership to be able to work with some of those individual members to alleviate those concerns about eliminating or capping that deduction and speaker ryan signalled as much during his comments. he also talked about the latitude the weigays and means committee will need, even leading up to kevin brady, the chairman, the details of whether or not to cap that 401(k)
contribution as this rolls out, you're going to see a lot of individual members start to have concerns about what might be in this bill and that can potentially create road bumps down the road michelle >> yeah, certainly we'll be watching for that thank you, ylan. as speaker ryan said, house ways and means will release the tax bill next week our next guest calls the gop tax plan a scam that won't create any jobs joining us now, second avenue oes cofounder and partner nick hanover, the first outside investor in amazon good to have you here, nick. >> good morning, how are you >> good. i'm reading an op-ed you wrote where you clearly state you think the wealthy should pay even more in taxes what's less clear to me is how you feel about corporate taxes, which the stock market is so interested in. do you think that the corporate tax rate should also be raised >> raised, yeah, absolutely. while the statutory rate is 35%,
as everyone knows, the effective rate is far lower than that. estimates are around 15%, and that's because it's so easy to drive your profits through the loopholes that run throughout the tax system the simple facts are that at the peak of american growth and productivity, effective tax rates on corporations were 45% and if i could, let me prove beyond a shadow of a doubt that lowering corporate taxes will not benefit the broader economy, and that's to remind people that today 55% of current corporate profits are used for stock buybacks and 37% of corporate profits are used for dividends, which means companies are currently using 92% of aggregate profits simply enriching the already rich the idea that lowering taxes would somehow benefit the
broader economy is just absurd it's an absurd law >> i think a lot of people would look back and say, look, you know, let's talk about personal income taxes, because he also thinks those should go up. under jimmy carter the top tax rate was 70% under ronald reagan it went down to 28% income tax revenues skyrocketed. that's evidence, isn't it? >> yeah, so -- so here's the thing, if you actually look at the evidence over the last 45 years, you will find zero correlation between the top marginal tax rates and any dimension of growth. not gdp growth, not real income growth, not median income growth >> didn't i just give you some >> you gave me one example, but you could -- >> yeah. it was a big one >> yes, and when -- >> it's the only one we've got we haven't had tax reform since then >> it's simply not true. if you look at the data, you'll find examples of raising rates and having growth go up and
lowering rates when growth goes up, because the simple truth is tax rates on rich people do not affect the broader economy what affects the broader economy are investments in infrastructure and raising wages. look, all a market economy is, is people buying stuff and selling stuff. and the big challenge that we have in our economy today is that we've gone through 40 years of impoverishing the middle class. >> what should you be paying in taxes? >> i would apply a 50% tax rate to all income above a million bucks, if it was me. >> i'm surprised you don't say 100. because if there's no correlation between higher taxes and growth, i would tax you at 100% >> no. that is not logical. it's not that you don't need incentives in the economy, you need some incentives in the economy, but just because you lower rates on rich people doesn't benefit anyone else. it's just absurd
look, the thing that our country is dying for are raising wages and more investments in infrastructure, and since all the income in our country today is concentrated at the very top, that's where you have to tax and so this idea, this trickle down lie if you cut taxes on rich people -- >> nick, other people want to get questions in here. hold on one second john >> nick, you talk about investing on infrastructure. i'm interested in your op-ed and what you say about education that to me seems especially important given the inefficiencies we have in people bekbining education and not being able to finish and wasting a lot of money what should, if anything, should the tax system do to incentivize higher education, particularly among the working class? >> you know, when i went to the university of washington, it cost $250 a quarter. today it's $15,000 a year or something like that. and that is all a -- i mean, there is some inflation in
costs, but most of it is a consequence of tax cuts for rich people defunding our public universities today i believe the number is $1.3 trillion in college debt that both serves as a massive disincentive for people to go get a degree, but more particularly, think about the negative repercussions of that debt -- that debt has on demand from all the people who are paying back college loans rather than buying stuff in their communities. so we have to collectively find a way to make -- to make higher learns, whether it's a four-year degree or a two-year community college degree much more affordable for people. and you're not going to do that unless you tax people and corporations to do it. it's simply impossible >> all right, nick you're definitely a contrarian voice to a lot of the folks that we have on when it comes to this topic. good to have you on. >> i know. you guys are the kings of trickle-down. >> see you later, nick
nice to have you. >> okay, thank you bye. >> when we come back, a lot more on the big tech movers of the day. azitter is up 15%. amon, microsoft are all after the bell dow is up 78 [vo] quickbooks introduces jeanette and her new mobile wedding business. at first, getting paid was tough... until she got quickbooks. now she sends invoices, sees when they've been viewed and-ta-dah-paid twice as fast for free. visit quickbooks-dot-com. we cut the price of trades to give investors even more value.
live up to the hype? now top ranked analyst stacy rascot joins us at noon. options traders are taking positions on where that stock will go next we'll reveal that. we also have an exclusive interview with brian moynihan. so much to talk to him about and we'll do that in less than ten minutes, john. >> all right looking forward to that, scott, thanks and we continue to watch shares of twitter as we were before it is a great day for that stock, up now more than 16%. the company beat on the top and bottom lines and it's not just that company also microsoft, google, intel, amazon, reporting later on today. henry blodgett joins us to try to break all of that down. big day for the cloud and advertising, henry from what we've seen so far from twitter, any lines you can draw to what we'll be looking at from microsoft, google, amazon? >> let's go back to twitter
first. i get plenty of things wrong and give you a chance to humiliate me on air all the time six months ago when i suggested twitter might actually have a bright future. i was laughed at it's coming, seemingly, to truth. twitter does something no other service does it is realtime, it is news, back and forth. if twitter disappeared tomorrow, somebody else would create it immediately, because none of the other services do that now they are pushing into video. it's very powerful, it's a new model. they seem to be coming out the other side so it's good to see twitter recovering that's great what does that mean for others others have been in much better shape for a while so hopefully that carries through. >>still need to see ad spend, right? >> one of their new products they have developed is video they have a very good video solution it's incredibly convenient to watch video on twitter, both in terms of some of the live shows, but also just the in-feed video. it's a great experience. they do have an ad unit in front
of that. i think ultimately over time that could become a big business. >> even though users are up and revenue is down, you think that's going to turn around? >> the main problem with revenue is that they are taking an old product that didn't work, that had a lot of revenue associated with it, and they are now replacing it with new revenue. as that all falls off, it's basically like a lobster molting. they have to come out with a new shell. >> i want to come back to these others twitter is really interesting. its market cap is minuscule compared to microsoft, amazon, et cetera, some of the kings of the cloud here amazon's cloud quarter a quarter ago was a bit disappointing. microsoft, the unit that does productivity in cloud is expected to be the one that grows the most what metrics should investors look for. >> in the cloud in particular this is a huge fight. amazon had a real leadership edge this business was a stealth business for years nobody paid any attention to it.
they burst out, now it's driving a huge amount of the value but now they're coming under increasing competition so that's an area that investors should focus on the other thing that happens with amazon often is they seem to be going into another investment cycle where they will be losing money. that often spooks people it has always paid off for them, but it's something that investors will likely focus on. >> data center will be big for intel's service business as well cloud is going to be big for their data center business as well so that will have an impact there as well. henry, thanks. >> great to be here. >> always good to see you. kayla tausche has breaking news out of d.c. >> treasury just pushed to its website a new set of sanctions on three entities associated with the north korean regime as well as seven individuals, including the north korean minister of labor and two diplomats in china and vietnam treasury says this will be included on its reports of serious human rights abuses and censorship and has taken these actions in conjunction with the
state department back to you. >> kayla, thank you for that. today is the deadline for companies to finish building prototypes for the president's proposed border wall our aditi roy is live near the border in otay mesa, california, with the story aditi. >> hi there, john. you can see i'm two miles from the border crossing and the eight prototypes are right here. they are between 18 to 30 feet tall in contrast, take a look at the current existing wall behind me. that's a lot shorter between 8 to 10 feet high and pretty weathered the companies had one month to build their prototypes four of them are made entirely of concrete. the other remaining four have alternative material its like metal. the contractors had a month to put those prototypes together. six companies won the eight contracts. those companies names are w.g. yates and sons, elta north america, fisher sand and gravel
company, texas sterling, kwr and caddell. we got an up close look at the existing wall and noticed plenty of holes where the breaches have occurred officials say a taller wall will prevent more people from crossing i also got a walking tour of the prototypes with the customs and border patrol official who gave us some insight into the type of testing that will occur. >> we're going to be looking at the type of breaches that we see throughout the southwest border. we'll look at techniques obviously we're not going to tell you all the tests that we're going to be doing because there are folks that would be really interested to know how we test them so they can circumvent the test. >> reporter: they have no deadline on when they're going to be making a decision, but a few things can happen. they tell me they can either choose one of these prototypes or aspects of all of them. of course the big question remains, carl, is the price tag for it and whether congress will foot the bill. some estimates put it as high as
$20 billion. carl, back to you. >> aditi, thank you for that of course it comes on a day where the president has declared a public health emergency regarding opioid health addiction and says the wall, a big part of it, is to restrict the flow of drugs into the country. the dow is up almost 80, as john said a big night tonight for tech giants michelle, thank you. let's get to the judge and "the half." welcome to the halftime report, i'm scott wapner as carl just said, our top trade this hour, big techs, big night. amazon, alphabet and others. will they deliver and keep that sector climbing? with us is joe terranova, pete najarian and erin brown. let's begin with that countdown to some of the most important earnings report of the