On wall street, and squawk alley is live good friday morning, welcome to squawk alley. Im Carl Quintanilla with john fortt, Morgan Brennan is at post 9 for the hour, sara eisen is off. S p 500 tech sector is the best performer this year by a long shot, up almost 40 . The question is, will this continue into the new year mark mahaney joins us to start off the hour, just published his 2018 internet sector outlook mark, always good to get your take happy friday good morning, carl. Whats the headline on this one . Going into 18 we have three constant and one change. At least for the internet aspect, theyve been extraordinarily consistent and we think those Revenue Growth trends can continue into next year second, the multiples are the same they havent changed over the last three years, which should mean the outperformance weve seen in the stocks to date, its all bottom line driven or Revenue Growth driven. Theres less downside risk, despite the outperformance going into 18 and the third thing, still expect heavy investments from these names top picks for the year going ahead are facebook, best growth valuation across all of technology, second netflix, and third amazon you have a 230 target on facebook, 250 target on netflix, 1,200 on amazon. The recent very tactical weakness in tech as this tax bill has come to the floor, is that a reason to be cautious in 18, at least the start of 18 we went through the same thing last year, carl, i know you know this well in the last two months of 16 we had a down draft away from tech and people were looking for other areas for Growth Growth did not change at tech with the leading tech assets like the fang names, and growth also didnt change in the rest of the economy, and thats why investors swirled back to buying growth at reasonable prices. I think the same thing is going to happen here at some point along the way, this growth overvalue trade will end i dont have a near term reason for it to end, possible it does in 18, but barring a major portfolio shift, no reason the fundamentals and current valuations of at least the high quality internet names shouldnt set up the stocks for outperformance in 18. Mark, a lot of focus here on tax plans potential for tax reform, but what about europe . Amazon settled a dispute in italy, europe looking to rewrite tax rules for the big Tech Companies. How closely should investors be watching that next year . They should be absolutely watching this. Two things to watch out for, government footsteps, which is Greater Regulatory pressure and the regulatory pressure is most severe in europe, especially for a name like google, but also the secondthing is the changing ta structures all in these companies, these multinational tech names wont see as much tax relief if the current tax plans go into effect as the rest of corporate america, but they are still going to benefit from it its a tail wind for them, and that probably offsets, you know, heightened Tax Collections in europe netnet, large cap tax are still neutral to positive going into 2018, not negative mark, you mentioned the internet as being a major and important continuing trend im wondering are there any dark sides to that, either in terms of costs as we see some of the major video providers trying to link up, disney fox, or in bubbles . You know, we have a number of companies producing video that seem to be going under the Digital Media space. Is that a risk for companies relying on that video . I tell you, it should be an opportunity for one group of people there are three, four, five megacap large Balance Sheet bidders for content today, so for content creators, this should be a golden era when you have that kind of buying power out there. Amongst those buyers, im talking about facebook, netflix, amazons, googles of the world, theres heightened competition, but thats always been the case and it probably means whoever has the most scale is probably going to have an easier time winning. And thats probably netflix. You have 100 Million People paying you 10 a month and rising thats a lot of purchasing power that nobody else has anywhere close to those subscribers and purchasing power, so it probably separates the winners and losers in terms of the buyers side there is an outside risk that disney fox could cause rising costs for netflix, but i think thats an outlier and i dont think thats a material negative risk for near term finally, mark, we know whats happened to cash balances at the 20 Biggest Tech Companies this year, and you mention disney fox what does the large cap m a picture look like in 18 one thing, carl, i hope i know youre talking about m a, im hoping it means more share returns to shareholders. Cash returns to shareholders great to see a rising level of share repurchases, especially at google 100 billion in cash, please, return more than 7 billion a year, especially since youre generating 20 billion plus in free cash flow, so investors first want to see that and maybe a dividend payer in here ebay or priceline would be a healthy thing. Then, you know, its probable that youll see more m a and maybe amazon will do more like they did last year with whole foods. If google cloud doesnt gain enough organic momentum, i dont think they have a choice but to make a Strategic Acquisition using the cash and equity they have those would be the two areas of m a id be looking for that would be a big story mark, thanks so much mark mahaney and last night oracle reporting reporting earnings and estimates, adding 12 billion to its Share Buyback program, but the cloud guidance is weighing on the companys shares this morning. Joining us now on the cnbc newsline, oracle ceo mark hurd always great to have you, good morning. Thanks, john, how are you doing . Im doing well. Your stock is down 4 this morning on this cloud guide. Analysts were looking for somewhere closer to 30 growth in the Current Quarter tell me, is this a speed bump based on things you mentioned on the call, getting certain customers up and running or have analysts overestimated the speed of growth for oracle and the cloud . John, i think it would be helpful if we just started again. Let me take you through sort of the headlines of all this. Tell me the story im going to tell you the story, i appreciate you asking so, revenue for the quarter was up 6 in total our cloud and software revenue, and thats together, thats our on premise business and our cloud together was up 9 in the quarter. So these are, john let me start with that, these are big, big numbers. Our sas growth was, again, significant in the quarter, and so it led to not only Revenue Growth, but led to Income Growth of 10 , earnings per share growth to 14 , so line by line it was a very Strong Quarter one important thing to note that i really just havent heard a lot of people talking about, which relates to your first question is that our license performance in the quarter was the best license performance weve had in a long time our license business was flat. You know well weve been doing this transition to the cloud, thats weighed a bit on our license business as weve grown, our Cloud Business, we introduced in the quarter the concept of bring your own license and, john, i want to make sure i explain this so theres no lack of clarity here. This is where customers now have the flexibility to buy a license the traditional way they bought it and they can literally now take this license and bring it with them to the cloud and now they can bring it to our cloud and then buy infrastructure and software around it. That has caused a higher license number in the quarter. So again, and this is why, john, and you and i talked about this before, i try to talk about the company more in the applications ecosystem, combining our clouds and application license revenue, and our support. That business in usd was up 15 in the quarter i just want mark, this is complicated stuff and analysts and investors have gotten used to thinking it being either or, license or its cloud. So when they see license growing, they think thats negative for cloud i think what youre saying is the way you have engineered things, people can get that license and it helps them transition to the cloud. But im also interested in getting to your outlook for how 2018 is going to go, because people are wondering where there are Growth Prospects on the call you guys talked about how january is going to be the start of a ramp for database in the cloud you dont have much of the database Cloud Business growth happening, but now this is going to open up the doors for the autonomous database business to really grow for you. You were talking about it. How quickly is that going to grow, or is it going to take several quarters for the numbers to get significant well, it will be a ramp, but let me make sure im clear on the point, because youre right. Well go into the market imminently, shortly, with our Data Warehouse autonomous database, and this is a big release, perhaps the most exciting database release weve had since the beginning of the company. Youll seat Transaction Processing version of that sort of mid year as we go but john, i want to emphasize there very likely will be customers who will choose to take some of the options that are part of getting to that autonomous database, they may very well take them in license so you may continue to see this mix that youre describing by the way, i think you should, you know, also do analyst work on the side, and i think its likely you may see more of that. Whereas if you looked at our guide for q3, the implication is licenses, again, will be more of what you saw in q2 similarly youll see that in q3. That is, again, for our Business Model and investors, not a bad thing. Its flexibility for our customers and its opportunities for us both models for us, the cloud model and the traditional model are, as you well know, very attractive for us and for our investors. So, mark, what is the number that investors should be tracking to understand growth overall, though . Youre saying its not just the cloud number, its also going to be the license sometimes is there kind of a lagging number where we get to see how that license growth translates into cloud over time let me try one more time, john, because i really want to get this through we call this thing the ecosystem metric, and it is look at our total applications and just look at our total database business, our total tech business, if you will i think that the obsession with what line on the pnl it shows up in is just a question of were gaining share in the database business, were gaining share in the applications business. Right i guess investors have gotten used to one legacy business and one Growth Business and they dont want to mix the two, but lets move on from that. Talk to me about who youre seeing in the marketplace. I heard you say a couple of quarters ago you dont talk about google, because you dont see google ive been hearing a bit more about google since then. Is that a company that, you know, from a customer perspective, im sure they are buying stuff from you, is becoming more significant either in the way they are buying your stuff for use in the cloud or competing with you in the cloud, as well . Well, listen, i dont know who you talk to, john, so im sure you talk to all kinds of people i can tell you what we see, and im talking about it from a customer lens perspective, we compete, one, in the application space, so generally who do we see . People particularly legacy companies, older nonmodern applications, well see them, see people newer sas companies, thats who wed see in the space. In the database space its us and a blizzard of smaller competitors and thats who we see. Then on the infrastructure space, more often than not we would see amazon thats one of the reasons why you would hear larry talk about amazon as you do, perhaps, on the calls. But those are the primary people that we see when you asked about it in aggregate. Whats your expectation should we for how the Cloud Business model holds up under that scenario versus how the previous model did in other words, is there Slower Growth that perhaps the cloud gets faced with, or does that in some way accelerate a move to the cloud . How are you modeling that once we get out of this Global Growth tide that seems to be lifting all boats . In the end, i think the winners are still the companies that have the best ip. The companies that have the best ip at the end of the day win if you have the best applications, you win. If you have the best tools, the best databases, et cetera, you win. Is it a softer hit . Is it a softer hit if we go into a downturn because of the cloud model, or likely to be just the same as it ever was in Enterprise Software, you know, if theres a recession that hits somewhere thats significant for you businesswise well, remember certainly, if you look at it from an oracle point of view, and, of course, i happen to often, a big percentage of our business is now recurring. So our recurring revenue as a percent of our business is now high let me give you an example, of our total system, more than 80 of that is now recurring revenue. So its a very and by the way, adding to that, john, this isnt just about infrastructure replacing a computer in storage. When you have applications and you have database capability with the years of programming and the features we have, this is really sticky, sticky stuff so the substitution capability of just raw infrastructure, relatively high. The substitutability of applications, database, and tools, very low. By the way, let me just add our contract lengths of our products, they are actually lengthened, not shortened. You see that show up in our growth what we reported last night, as well all right so i guess well see how that plays out. Eventually, who knows. But mark hurd, thank you john, john could i say one thing . I wanted to give a quick shoutout and tell him how absolutely, and she speaks so fondly of her dad so often when she and i speak. Glad to hear hes tuning in. Hes tuning in and hes listening, so hello. Thank you for joining us, mark hurd, oracle ceo. Newly elected to the disney board, by the way. Keep that in mind, as well still ahead, another cnbc exclusive, ceo of adobe will join us to talk about the companys latest Earnings Report republicans hammering out tax reform, counting their votes live in washington with the latest and facebook hitting back at chamath who called the social media giant out right here on cnbc squawk alley is back in a minute at fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. The market. Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Welcome back to squawk alley. Were getting updates on tax reform this morning. Lets get straight to washington, d. C. A leaked document with changes, what are you learning . Well, some of the details of the final version of the tax bill are as follows. The top rate will be 37 , but will apply to individuals earning 500,000 or more or joint filers earning 600,000 of income or more and there are seven individual rates altogether were also learning that the estate tax will be kept in the final version of the bill, but the exemption for qualifying for the estate tax before it kicks in is doubled. We also are seeing that the medical expense deduction will be expanded. That was something that was very important to senator Susan Collins of maine, who has remained an undecided vote on this bill. Also some other details we previously reported confirmed by this document, the corporate rate will be 21 , it will take effect immediately, and the corporate alternative minimum tax would be out this document also confirms something that representative kristi noem, a republican on the Committee Told reporters earlier today, that the refundable portion of the Child Tax Credit would increase from 1,100 to 1,400, and that was a concession made to try to win over senator marco rubio of florida, who has threatened to vote no on this bill unless we saw a more significant expansion. Now, the last that we heard from his office is they had not seen the final numbers in the bill yet. He has still reserved judgment, so no official word on where he stands again, some of the final details of this bill now starting to leak out back over to you guys. Ylan, that comes after some reports that rubio was a yes and that did cause the s p to spike and hit a record high. Softened just a bit from there i guess rubio thing were waiting for a firm answer. The other thing were hearing is it really is about the senate bill, the Senate Version winning out, right no question about that thats right. The senate here is sort of the framework for the bill with some changes that were important to house members. Again, the corporate rate taking effect immediately, the deduction for state and local taxes being in the final version of the bill, so the senate is a framework, but the house certainly had a lot of input so in light of all of this, who should we be watching most closely in terms of lawmakers right now . We definitely want to hear an official word from senator rubio. Also at least five other senators who remained undecided on the bill. Senator bob corker is one of them he had voted against the initial Senate Version of the bill, but in conversations with him over the past few days, he said hes undecided on the final version he wants to see how all of this plays out. And also still up in the air is exactly which chamber is going to vote first, house or senate there are a lot of moving pieces depending which senators might be absent, which might be present, and some of the sort of very arcane parliamentary rules of congress. Back over to you guys. Ylan, busy day for you. Russell up more than a percent this morning, close to session highs. That tells you something about what the market thinks about the prospects for the bill when we come back, facebook hitting back at their former executive who says the social media giant service is eroding society. He said it right here on cnbc. The companys response when squawk alley returns as we go to reak, check out th markets, awfully close to session highs on the dow, s p is up almt os20 and russell session highs, as well back in a minute the moment a fish is pulled out from the water, its a race against time. And keeping it in the right conditions is the best way to get that fish to your plate safely. Bacteria can multiply to high enough levels that even cooking it will not destroy all of them. Its definitely the most important thing in my business. How fresh is the fish . Where it comes from . How it gets here. The more i know, the better. Sometimes the product arrives and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. We took our world Class Network and we developed devices to track environmental conditions. This device allows people to understand whats happening not only with the location of that asset, but also if its too hot, if its too cold, if its been dropped. Its completely unique. We ship fish, beef, poultry, vaccines, insulin. This is about monitoring and protecting everything we ship. I catch all this amazing, beautiful fish and then once its out of my hands, i have no control over what happens to it. If you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. Its really all about the network. You are looking at trillions of transactions a year. Not too Many Companies in the world can even scale to that type of volume. Who knew a tiny sensor could help keep the food chain safe . Food has to be fresh. Its that simple. Welcome back facebook hitting back at former executive chamath, lets get to Julia Boorstin with more what is facebooks response . Well, morgan, remember earlier this week he attacked facebook and other social media giants take a listen to what he said on cnbc i think the tools that have been created today are starting to erode the social fabric of how society works. Today facebook defending itself in a blog post saying they want facebook to be a place for meaningful interactions, which actually improve Peoples Health and happiness, saying, our research and other academic literature suggests its about how you use social media that matters when it comes to well being. Going on to say we supply social psychologists, sociologists to better understand well being and work to make facebook a place that contributes in a positive way. To that end facebook is announcing changes, prioritizing posts from friends and demoting click bait headlines, allowing people to snooze or hide a person also introducing a tool called take a break to enable users to hide their exes, also introducing new Suicide Prevention tools and last night chamath walked back his critique on facebook, posting on facebook, i generally believe that facebook is a force for good in the world, so id like to expand on my comments. Going on to say, facebook has made tremendous strides in coming to terms with its unforeseen influence and more so than any of its peers. The team there has taken real steps to course correct. Saying he meant to start an important conversation, especially how to empower younger generations to use these social tools responsibly, and he certainly has started quite a conversation carl, back over to you indeed, he has. Thank you very much, julia Julia Boorstin on that Facebook News elon musks spacex launched its first rocket this morning out of cape canaveral, carrying nearly 2. 5 tons of equipment and supplies to the International Space station. Shy of eight minutes later it lands back on the platform it was spacexs 17th launch of the year i think we also have some video of musk himself standing and monitoring the launch at the command center in cape canaveral. Tweeted a link to the web cast, so he was paying very close attention, as you might expect yeah, this is a big deal. This is a recycled rocket, specifically the main engines, first stage booster. First time that weve seen that go up for nasa or for a government customer, although it is the fourth time theyve reused one of those first stage boosters this year also, this is the 20th time theyve actually relanded one of those boosters this is really key to the reusability concept, because a huge percentage of the costs of making a rocket and going to space are tied up in that first stage booster. The most exciting part was seeing that land again youre saying this is number 20 . This is becoming routine for them this is becoming routine for them how many have they blown up two, i believe. Thats a pretty good with the falcon 9 in recent years. This was the first launch at this complex since the explosion in 2016. Yes and now whats going to happen is, youre going to have the dragon capsule, also flown before, rendezvous on the International Space station sunday, but all eyes on the falcon heavy, the next generation rocket. And that is expected to happen in january, and he is sending up, musk is sending up, his red tesla on that launch all right everybody get ready to move to mars still ahead, shares of adobe on the move this morning not up as much as they were after hours, but still positive. The company posting a beat and some positive guidance the Ceo Shantanu Narayen joins us in a cnbc exclusive for more on the latest quarter and plans ahead when squawk alley returns. I used to have more hair. I used to have more color. And. I used to have cancer. I beat it. I did. Not alone. I used to have no idea what the American Cancer Society did. Research . Yeah. But also free rides to chemo and free lodging near hospitals. I used to maybe give a little. Then i got so much back. I used to have cancer. Call 18004944357 today. Your contributions to the American Cancer Society fund valuable research. But thats just the beginning. A cancer diagnosis can kick off years of challenge. And thats where your donation truly shines. You help us fund free rides to treatment. A live 24 7 help line, free lodging near treatment centers. And even efforts to expand access to insurance. So, please donate today at cancer. Org and help attack cancer from every angle. Hi there, im Contessa Brewer heres your cnbc news update at this hour. A new study finds more than a quarter of Canadian Companies could move part of their operations to the united states. This comes amid uncertainty over the future of nafta. Carl icahn is stepping up its stand against sandridge, calling on shareholders to vote against the companys plan to buy bonanza creek. Sandridge is icahns biggest stockholder. Star wars opens nationwide last night, already it is smashing records i feel like its all people want to talk about. You go to a party, its all star wars and may the force be with you. Fandango says the disney film is now the top advanced ticket seller of the year hey, check this out, a traffic cop in the philippines was spotted dancing and wearing a santa claus costume on the job. Now that is spirit he says traffic is terrible and its his way of bringing joy to the people of the world. The cop also noticed that motorists started paying more attention to him, which is helpful. They were looking at his hand signals if he danced, as opposed to ignoring it hey, maybe well see more Police Officers carl, new york city santa traffic cops maybe thanks, contessa seems dangerous to me dow just hit a record high, up 163 lets get the european close, as well, with dominic chu hey, dom carl, not quite as good as whats happening in the u. S. Right now. Modest moves for european stocks in todays session despite gains in telecom and utilities, retailers among todays biggest decliners, especially when it comes to the fashion side of things check this out, h m sliding to levels not seen since 2009 the Swedish Company citing fewer shoppers visiting its stores, saying it plans to close more stores, boost online efforts as it grapples with what the retailer calls a Challenging Market situation also down sharply, the luxury Goods Company warning it will remain in a turnaround phase for 2018, adding it cannot confirm targets it had set for the next three years. And in brussels, European Union leaders have given formal approval to the opening of the second phase of brexit negotiations, which will focus on a transition period and future trading relationship between britain and the eu the approval, though, is a signal efficient progress has been made in the talks, but the pound still falling after Commission President juncker said the second phase of brexit will be more difficult than the first and that the quote, unquote, real negotiations will not begin until march. That pounds decline, as you can see here, helping to give a lift to uk exporters, resulting in the better week for the ftse a positive one, that index outperforming the german dax and french 40, carl, back to you thank you very much, dom. Stocks are at session highs. One stock not moving higher is csx, announcing Hunter Harrison is taking a medical leave of absence. Morgan, you were on the call and know more about this story as were seeing stocks rally to session highs, thats been the case for the transports, only component in the red, down 7 right now Hunter Harrison taking a medical leave of absence, csx ceo jim foot is taking over as acting ceo. No details in the press release released last night, no details on the call today on the illness or medical leave or when he might return, saying only harrison had a complication after a multiday internal meeting and continues to improve every day, that its too soon to talk about succession plans. Foot really stressing the, quote, battlefield has returned. Critical talent is also in place and, quote, no reason to diminish our expectations concerning the pace and magnitude of our future progress also that its been astonishing how fast harrison was able to put these changes in place at csx. He took the helm as ceo back in march. Hes been able to do that versus a process that took years at canadian national, 18 months at Canadian Pacific and that the performance metrics are starting to show that, but expected to get this rescheduled investor meeting in march now. In the meantime, we get earnings next month a lot of uncertainty and youre seeing that in the stock before today it was up 60 year to date. Yeah, big jump in january february it looks like and now its taking a dive, perhaps as you said on this uncertainty. See where it goes from here. Yeah. Well watch that, as well as the overall tape, which, of course, is quite strong. When we come back, ceo of adobe is going to join us in a cnbc exclusive squawk alley returns in a moment Rick Santelli, you have a lot to watch today. Absolutely do a lot of market relationships, even structural relationships between us and some of our counterparts in europe are changing rather dramatically, so were going to talk about reversal of some distortions right after the break. Well, its earnings season once again. Yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Adobe reporting better than expected Fourth Quarter earnings take a look at the stock right now up over 1 , but its been on a run up almost 70 for the last 12 months. Joining us now, adobe Ceo Shantanu Narayen great to have you. Great to be on your show, john shantanu, some changes coming next year. Youre changing the name of your marketing business, and youve got some strong projections for the cloud, but on pure percentage point terms, perhaps expectedly not as strong as in the past tell us where we are in the growth of cloud for you guys is it maturing to any degree and how do you continue to fuel growth well, john, some things remain the same and some things are changing what remains the same is our mission of continuing to empower anybody who has a story to tell, to create that story and helping businesses transform i think whats changing actually is were targeting a much larger opportunity in the enterprise, and thats the expedience Business Opportunities so to your point, were renaming the Digital Marketing segment, the digital experience business, because its a much larger opportunity. Weve identified that its a 53 billion addressable opportunity in 2020, and were the clear leader in that new, emerging category as it relates to both the document crowd and Creative Cloud the momentum continues. I want to stop you there, because marketing is a term people understand better than experience, so whats new that you see in that opportunity thats going to go beyond what weve come to understand as marketing . Well, we targeted marketing as the first end, because we thought that unlike other Enterprise Software functions that were automated, we wanted to really bring to bear our Great Technology on helping people deal with both art and science. However, its become a much larger opportunity, because every digital touchpoint that exists, people are now really focused on ensuring that the engagement that they have with customers, whether that be through the internet of devices, whether that be through Digital Screens and retail stores, whether that be through autonomous cars, is a personalized engaged experience, and weve identified that as one of the big Growth Opportunities for us so thinking about not just how you do marketing and visitor acquisition, but thinking about that engagement in a deep and fundamental way is how we think that this opportunity is different. So are you becoming more of a data and Analytics Company for corporate data that goes beyond just the idea of marketing and acquiring customers and knowing whether they are looking or not, going even deeper into the enterprise that way . Is that what i should understand absolutely. We process over 160 trillion transactions in the trailing four quarters, and that was the reason why at adobe summit, john, we announced were going to take the analytics, which is the Central Nervous system of an enterprise, and pull that out, so it can be the core intelligence of an entire enterprise and i think sas has delivered a great amount of value, but the upside is even more up ahead, and weve moved from just collecting that data, to providing action and insight, and thats a leadership opportunity that we think exists for adobe. And shantanu, lets talk taxes for a moment, because on the call last night you talked about potential tax reform, the proposition to more freely access foreign cash. What would you do with that . Well, i think we continue to make sure that, you know, we are really good custodians of all the Financial Assets that we have with respect to the foreign cash specifically, weve already paid a lot of that in terms of accruing it, and so if the tax law passes at 14 , we will bring all of that back, and whether thats stock buyback or looking at dividends, but more importantly, i think focusing on the continued opportunities that we have as a company in terms of addressable markets. You know, we will look at all of that but i think we first have to wait and make sure that the reconciliation happens and get the exact specifics of what we can do with that cash. Thats, as you know, for us predominantly offshore you mention buybacks and dividends, but a lot of people might not know you already have a building expansion planned in san jose you guys are building bigger facilities, adding more people, does the governmental picture and tax policy change that plan at all, expand it, or perhaps you are already expecting some change in taxes, or is that completely independent of whatever happens in washington i think anything that makes our, you know, country more competitive from our perspective, john, is a good thing. But were really focused on a multiyear growth imperative for adobe, and as it relates to our own growth and hiding plans, its completely determined based on the opportunities that we see ahead of us. You saw we had our first 2 billion quarter. Each of the different clouds had record revenue, and, you know, there are very few companies that have the profile we have, which are growing the top line and bottom line at the margins at which we have and with everything were doing around Artificial Intelligence and adobe sensing, now is the time to really double down on the opportunities that the company has and to extend our lead so, i think that the tax reform will help us with respect to providing a better financial environment, but were really focused on customers and the Growth Opportunities that we identified as our analysts meet. Congratulations on your first 2 billion quarter i remember your first 1 billion year, thats how long you and i have been doing this, but i appreciate you joining us exclusively on cnbc this morning. Thanks for having me. Lets get to the cme group this morning, check in with Rick Santelli and get the Santelli Exchange hey, rick. Hey, carl you know, if we look at the last couple of months, what we started to see, of course, is that were going to have a handoff with regard to our Central Bank Head and thats going to happen next year. Path seems to be clear removal of stimulus, we could debate whether it started too late, whether its going too slow, but you know what, youve got to give a double thumbs up its not easy. Its not easy, central bankers if they go down the wrong road in their loss, i dont see them saying, oh, we did something wrong. The stability that Central Banks supposedly bring to the table means many times they have to stay on a course and when they veer off because they dont think its working, they have to do it quite slowly this morning i had former ecb president John Claude Trichet and the topic was differences between things, relationships. We talked about taxes. Id like to look at that whole topic in a different light feedback loops you know, after the crisis we had, in my opinion, many negative feedback loops, inversions, calibration of tax policy between countries, not calibrated correctly you had regulations growing on all sides of all borders globally, and, of course, we had Central Banks and lots of stimulus now, forgetting whether we needed them, we should have done them, that was the world we had. And that feedback loop started to grow, because when one something does something where government is growing, productivity is shrinking, makes it easier for other governments to continue. And the crisis was a big reason wow, pits are getting busy here. Thats a short rate pit. Maybe we should be watching the market, as well, but the distortions reversing, negative feedback loops are turning positive on taxes. You know what, as we lower taxes, other countries on that relationship are going to have to do something, so the positive feedback these other countries that we compete with wont have to make a move. The loop is reversing. On regulations, listen, whether you agree or disagree with the current president , regulations, talk to anybody in manufacturing as we have as guests, its a good thing and other countries will have to make structural reforms, too france is seeing the light and finally on Central Banks and stimulus, the conversation has changed. Now mario draghi, mr. Kuroda, mr. Carney, have a baseline of less stimulus by the biggest economy in the form of the u. S all these things are going to happen slowly, am im sure all along the way ill have issues with how its progress, but in the end the loop is reversed, and the distortions will reverse with it. Jon fortt, back to you. Thanks, rick. Have a great weekend the nasdaq hitting or touching yet another new record for the first time in december the dow and s p also reaching highs. More when squawk alley returns. The smart ones look to fidelity to find them. We give you research and datavisualization tools to help identify potential opportunities. So, you can do it this way. Or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just 4. 95 per online u. S. Equity trade. Fidelity. Open an account today. Im scott wapner coming up today on the halftime report. Is todays russell rebound something to believe in, or is your best tax trade to go big or go home . Well debate where your money will work best under this plan, and the stocks and sectors wall street thinks are most likely to benefit, and the latest on first in and first out industry insiderch on whether that controversial part of the plan will be in the final bill or out you know what our larry kudlow has been reporting over the last 24 hours plus, calling a bottom in under armour that stock beaten up is it finally a buy . One firm thinks so thats why weve made it our call of the day. Morgan, well see you in about five minutes. Sounds like another actionpacked show looking forward to it. All right. Still ahead, the last jedi hitting theaters today and the latest picture already breaking records. The numbers when squawk alley returns. [vo] progress is an unstoppable force. The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. It has been a big week for disney and they are not done, the latest Star Wars Film officially hit theaters last night, already breaking some records. At least for 2017. Let get back to Julia Boorstin for more on that hey, julia. Reporter carl, last night the last jedi grossed 45 million in north american theaters, the second biggest thursday Night Opening ever after only after the force awakens and the film is on track to bring in over 200 million in north america this weekend bolstered by a Rotten Tomatoes critics rating and this weekend should be more valuable to disney once the fox deal goes through. Fox owns the rights to the original Star Wars Trilogy and plus the prequel trilogy characters from the first six films to fuel the Consumer Products powerhouse projecting 3 billion in licensed star wars merchandise sale this year and it could bolster the potential for two star wars land opening in 2019 and its a win for disneys streaming app launching in 2018. A big win to have all of the star wars movies included. Back over to you julia, have you seen it yet reporter i have seen it, and, you know, carl, i loved it. I am a star wars fan im happy to admit, and it was great. I would say its visually stunning, and i think it will do really well. Ah, i have not seen it yet. I cannot wait. Got see it this weekend. Jon, i know youre going. Tomorrow. Fun fact for you. That nasa mission we were just talking about with spacex earlier in the hour, one of the patches they designed for that mission is actually designed by lucas film and its a star wars theme. Something thats not so fun perhaps for some about disneys growing power, think about they now have the power to gill in emerging technology. Remember that bluray and hdtv fight, what they will have if that Technology Goes through there was a huge battle involving sony so were used to sort of migrations like that get used to this market rally as well dow up, slightly off the session highs and record highs for all three major indices. Nasdaq getting its first record high of the month since november 28th as were getting ylan mui continues to tweet out some details about the tax bill regarding the estate tax and top rate of 37, and we look to see more confirmation of that later on today nice to have you here. I dont know how you do this and all the stuff you do off the desk, amazing. Thank you have a good weekend. Let get to the judge and the half. And welcome to the halftime report. Im scott wapner our top trade this hour. Taking stock with the tax vote closing in new questions today about where your money will work best in the months ahead, even as the s p hits yet another record high with us for the hour today, josh brown, jon najarian, kate moore, blackrocks chief equity strategist and erin brown is here, the head of asset allegation at ubs. Market is higher as details of the tax plan rex pected this afternoon. Details already trickling out. Still a number on questions on whether the republicans have the votes and even