Transcripts For CNBC Squawk Box 20121206

But first lets get you up to speed on other stories. Joe was talking about apple. It has been a rough ten weeks for the most valuable u. S. Company. Shares tumbling more than 6 yesterday shedding 35 billion of market value. Among the reasons cited by analysts, a forecast by an Influential Research firm suggesting that the iphone and ipad maker is continuing to give up ground it rival the android gadgets. There were also unconfirmed reports that at least one major stock Clearing House was raising margin requirements. And then theres the fiscal cliff. Analysts citing fears about a hike in Capital Gains tax in 2013. Rick santelli has been talking about this, though, the things that were up in 2012, those are the things being sold now, whether that be gold or any number of assets that rose appreciably over the course of the last year. Well be talking about the future of apple and the outlook for its stock a little later this morning with Jonathan Geller of the boy genius report. Good old bump on the road on the way to a trillion dollar market cap. Got to 600 pretty easily. And now its back at 500. Above 600 i guess. Tough to get to a trillion dollar market cap. Cisco got to 600 billion once, too. Its at 100 billion. Apple still at 500. We talked about are they going to come out with the chartreuse slightly smaller mini ipad. And thats going to be the a lot of people waiting in line for that one. I do have to say, im in the market for a mini ipad. Not for the max ipad . No, i want something smaller to carry around, but bigger than my phone. I have a hard time seeing my wifes iphone, so the ipad was a solution for that. I want something thats smaller to carry around. I have an ipad at home, but i dont carry it out with me. Sgl the ipad is too bulky. Boy, the u. S. Consumer is fickle. We are. One of the ideas to continue to bring gay products by tesla. Remember when someone said that . But that just shows the absurdities weve reached. What would you do next . Theyre not sure he want to do tvs. Tried make a smaller ipad. Different colors . If you had told me a Computer Program would create a device to play songs, i probably would have told you youre crazy. Sometimes there are people smarter than we are. But theres no based on valuation metric, you cannot explain no reason why that stock should have dropped from 700 or whatever it was back to 500. Based on valuation. The penetration of the iphone in the total Smartphone Market is still down here. No reason that should have happened except that it does happen. Thats why i buy into santellis take on this. He was the one saying last week that the reason youre seeing stuff like that, the best thing he can do to explain it, he thinks that its because what you see are the big winners for this year when people are looking at Capital Gains, when theyre looking at ways to lock in their gains, theyre looking at the things that were up. Thats true. I had the early call on apple. I did. I knew at 200 that that stock was getting overheated. You and greenspan. Right. I was even earlier. Im so early i missed the whole move up. Exxon has a pretty good business. Theyre global, they got all these you know what exxon does. Oil. They sell fuel. They refine it, they produce it, they got global operations. And this was 60 more than exxon. Well see. Well call you early joe from now on. Yeah, a bad thing to be. Fast or early. Apples heavier than normal volume explaining a lot of the broader story. Accounting for the entire fall of 1. 1 . Meantime the dow enjoyed its best day inside severally last week. Travelers announcing plans to resume stock buy backs that it temporarily expanded. That stock up pretty sharply about 4. 5 . Citigroup gained ground on its announcements of job cuts. Talking about laying off 11,000 people. Citis news lifting the banking sectoroff all. Wall street journal suggests the new ceo still needs to set the a new path for the bank to follow and argues corbat is unlikely to get anything close to 100 Approval Rating especially if he chooses to postpone returning money to shareholders. There was a lot of different cross currents from what people were hearing yesterday in washington. Market well above 100. Ended up 85 for the day. I guess the demise of john boehner as speaker was greatly exaggerated. Did you see this New York Times piece . More support for boehner now than anytime in his speaker ship. Is thats setting up for but it is social media and twitter allows to you see these things. Sausage factory into the front of the kitchen. Exactly. Geithner didnt use the word marginal rates had to go up, just said rates. Rates are already going up. There will be a tax increase to people making more than 250 anyway because of the health care law. So the idea that somehow they will get a freebie is just crazy. California at 52 , new york and other places when you add up all the state and local taxes. Hawaii is above 50, as well. Hawaii is worth it, though. California is not bad either. Unless you need to drive somewhere. Right . And dont have a helicopter. Theres a reason the president takes a helicopter anywhere. You cant drive in d. C. Sdl those a boston in the city can get like that. Last night i was thinking in my mother was still alive, cincinnati versus here, she would see like ten cars an and go oh, i cant believe people if she had seen the line of buss that basically was a wall of about 60 buses, they get precedence to go in, and then like 16 other lanes getting down to one to go into the tunnel, and youre just sitting there, like no within in the world does this. I got stuck in a broken down truck in the holland tunnel last night. Its amazing how fast they get that truck up and out. They better because there are fumes and Everything Else. But if you try to go from pasadena at the wrong time in l. A. , its three hours. In other news out of the Financial Services industry, jpmorgan is naming cochief control officers the new positions are aimed at beefing up controls. Investigations gators still examining risk control surrounding the trading. Meantime office i have the control of the currency is expected to serve jpmorgan with a formal action alleging weakness in its antimony laundering system. In the front page article in the ft today, three former Deutsche Bank employees say the firm failed to recognize up to 12 billion in paper losses during the financial crisis. The individuals have made complaints to u. S. Regulators, including the sec. Employees say Deutsche Bank misvalued a large derivatives position known as leveraged super senior trades. Probably shall wiggle room. They allege its capital would have fallen to Dangerous Levels that might have required a government bailout. A lot of people werent marking things where needed to go. I have a lot of questions about this story. Its an amazing allegation. 12 billion in paper losses. A lawyer from one of the whistle blowers will join us at 6 50. In a statement to cnbc, the bank says that allegations have already been investigated and all accounting was proper. My biggest questions are the allegations say the bank was doing it 2007 to 2010 and nobody came forward until late 2011 to make any complaints. I just wonder if you had been complaining the whole time along we just had this discussion about how far away do you need to be to where its a false mark. At least 10 wiggle room. There were no buyers. If there is buyers, does that make it zero. Basel 2 created a system that if things became less liquid, there is no change in the actual value of of the underlying asset. Just couldnt sell it. So its a bit like saying my house is a lesser asset because i cant accept it right now even though i dont want to sell it right now. Who marks their house in the market in the middle of everyone did. Nobody marked it down in terms of what taxes you owe. We all live in new jersey, i think, so we know how that is. Also Standard Chartered expects to pay 330 million to secretary a case with u. S. Regulators who accuse the bank of failing to comply with sanctions against iran. The fine is on top of the 340 million already paid to new york state. The bank says the payment will further dent Profit Growth this year. And hsbc reportedly might pay a fine of 1. 8 billion as part of a settlement with u. S. Law enforcement agencies. The settlement could be announced as soon as next week and has to do with Money Laundering lapses. The deal could be a test case for just how big a signal prosecutors want to send to halt the list of flows of money through u. S. Banks. But that was billion with a b. Lets get a check on the markets this morning. After the moves we saw yesterday, the dow up triple digits at one point. That the poebts you can see that the futures are indicated higher once again after it closed up about 85. In europe, right now at least there are some green arrows. Best performer among those three indexes is the dax in germany. Up 75. You also see gains with the cac in france and the ftse in london. In asia overnight, you did see slight drop by the hang seng and shanghai, those were big gainers the day before. And in japan, the nikkei up by 0. 8 , kospi up 1 . Oil prices this morning are trading up about 28 cents, 88. 16. The ten year note this morning is sitting right at 1. 85 . You to you see pressure on the yield. Dollar down once again today. The yen at 82. 37. And the euro at 1. 30777. And gold prices at this point are up 1. 20. 1659 and ounce. Wonder what boehner and obama talked about on the phone. I think it went Something Like this. Your mother no, your mother. No, your mother. And then it went back and forth. Your mother to infinity. No, i think what happened is we realize that theres been an awful lot of theatrics. You dont think they said your mother . No. You dont think they hurled insults at each other . No. Actually, boehner was just a dial tone. You said im supposed to do what to myself . No, thats not boehner. On the economic front, i guess there are things going on. More Employment Data on the way. Tomorrow the big jobs report and then there was the issue of the fiscal cliff. 11,000 in citigroup. I wonder if we start seeing things before next year. People are not hiring people. And weve talked a lot about this, ceos have already had to make their plans known to their boards. So its had its impact. Getner says the Obama Administration is only too willing to go over the qulif. Cliff. Do they mean marginal rates, or just rates. Thats whats going to be worked out, the last minute deal thats where you find wiggle room. I guarantee you theres guys in boehners camp that are ready to go over, too. But hes been moving to marginalize those peel. This is his way of taking control of the party. The question is why do they care where the money comes from. If you have a revenue target, then fine. But we need 800 million in revenue. John wehner figured it out. And boehner can turn around and say i need 6 trillion in titlement cuts. And they can each take each others playbook and try and figure out what they would like best to figure out the number and figure out how to get there. I dont know. Both sides seem to be only too willing to do it. Theyre in the booking rove on fox because of that fiasco. Which made good tv, but apparent apparently, i dont know, but he says republicans will get the blame for going off the cliff, but the president will be weakened the most. And orrin hatch called geithners statement one of the most stunning and irresponsible statements that hes heard in some tile. Soo can the economy avoid the cliff and rides above . Anyway, senior u. S. Economist and managing director at ubs. Do you think well get a deal . I think well get a deal. Do we get it before the holidays or after for markets, it matters. Its been a drag for the last nine months. So the idea that there is more uncertainty now than there was six months ago, how does that work . There was no fiscal cliff deal six months from now and still no deal. So im not sure why we think theres more uncertainty. I would say if you really think about it the president has a lot of ways to delay the impact. For example, our withholding table dont have to get change order january 1. Even if you havent struck a deal, you dont adjust the withholding tables. For now you can delay the pain. So there is wiggle room in terms of when the impact has to be felt. But is there where wiggle rom the investing world who looks at the United States and says these guys are a bunch of keystone cops. This cost us with the last round of negotiations back in the summer of 2011 when the debt rating agencies said if you cant find some civil way to talk to each other, were going to cut your rating. It was nice seeing the ratings agencies make a comments on u. S. Democracy. That was helpful. I think, though, is there some deal that can be struck, yes. When does it get done, i think its probably less important to be better before year end. Equity markets are looking at it now. If they dont have something done by the end of next week, equity markets will say these guys are never going to get anything done. The fiscal cliff hits. The arguments i just pa about the withholding tables and cutting spending, are not generally talked about. A lot of people deny they can be done. Were confident they can. So the question then becomes whats the impact, where is the impact. And the impact is equity markets end of next week will say these guys arent going to get it done, we wont have a deal january 1, everything falls apart, thats assuming of course we all get past december 21st. So basically week and counting before you think the equity market really drops significantly . If we do get a deal done do, we just maintain the 2 that were stuck in with the high unemployment and not go down . Or does it actually allow us to start growing again . Is anybody talking growth . Were talking growth. Is it possible to ever get back to that in this environment . It is. You have a lot of problems with the piece. Do you briyou believe if you rote deficit two different ways. You either keep the government that you have and pay for it by raising taxes, or you kind of leave taxes where they are and you shrink government down to where it pays for it. Does it matter for the future and for growth which way you do it in your view . It does. If you put it all into like a tightening, so how much tightening occurs in the economy that would slow the economy, its far better to actually reduce Government Spending than it is to actually raise taxes. Although that hurts the economy, too. Everything hurts the economy. So its a question of which is most or least harmful and that tends to be cutting Government Spending. But i do think its although tim geithner would disagree with me. One side wants to keep the government and entitlements like we have it. And the other side wants to take away all the excess government i think both sides agree that you need to do both. Just a question of how much. We need to do both to do a deal. I dont think both sides dwre that its the right thing to do. Just to get a deal done. I think moderates in both parties people on the right think were plenty big. And there are other people on the left that would like to do more social even grow government and pay for it up to 70 . So there are people. All right. When we come back, well talk about why manufacturing optimism is falling and falling fast. But first, gangnam style is on its way to racking up 1 billion views on youtube. With one song, this 34yearold is set to become a millionaire and the dance is so popular that even alan simpson is doing it. Yeah. That alan simpson. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Jay timmons is ceo of the National Manufacturing factors. A survey has troubling results. Jay, tell us about this because were trying to get a feel for how the fiscal cliff is actually impacting hiring at this point. Well, i think its impacting it quite substantially. Our Quarterly Survey with manufacturers industry week survey shows that the optimism index among manufacturers has plummeted from 88 in the First Quarter of this year to about 51 . 43 of manufacturers have contracted their Investment Decisions and about 36 have either paired back on their employment or quit hiring all together. Kind of dismal when you think about the impact of investment and hiring in the future and what that does to the economy. We spoke with bank of america, mr. Moynihan, and he said he talks to a lot of Small Businesses including a lot of manufacturers and theyre telling him that not only is this impacting 2013 plans, but if there is not a solution that comes early in the new part of the new year, theres not a solution early that deals not only with the fiscal cliff but also the fiscal abyss, that he expect this is to start affecting hiring plans for 2014, as well. Is that a serious concern for your Manufacturing Base at this point . I think it is a very serious concern. We did a survey, a study a couple months ago called fiscal shock. And it showed that weve already seen a 0. 6 contraction in the economy because of manufacturers concerns about the fiscal cliff thats coming up. And the report also showed that if we go over the cliff, meaning if we just go over it in the first few days of next year, that we could have a 13 cumulative contraction in the gdp between now and 2015. And 6 million jobs lost. Now, a lot of those will come from small and medium sized manufacturers who just arent willing to take the risk, but i think youre talking to doug in a little bit and Larger Companies like caterpillar and doug is the incoming chair of the National Association of manufacturers, Companies Like caterpillar rely on those supply chains. So they want to make sure that the small and medium sized manufacturers are just as healthy as the larger. Jay, thank you. We appreciate your time this morning. Coming up, police arresting john mcafee. The details next. So as you can see, geicos Customer Satisfaction is at 97 . Mmmm tasty. And cut very good. People are always asking me how we make these geico adverts. So were taking you behind the scenes. This coffee cup, for example, is computer animated. Its not real. Geicos Customer Satisfaction is quite real though. This computeranimated coffee tastes dreadful. Geico. 15 minutes could save you 15 or more on Car Insurance. Someone get me a latte will ya, please . [ male announcer ] when gloria and her Financial Advisor made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence [ penelope ] i found the best cafe in the world. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. Good morning and welcome back to squawk box. Im joe kerr he then along with becky quick. Andrew ross sorkin is off today. Making headlines, john mcafee has been arrested for illegally entering guatemala. Authorities say theyll seek to expel him to neighboring belize. Mcafee fled belize after being sought for questioning about his neighbors murder. And he had sought political asylum, but not happening for him. Weird story. The more you read about this on the internet, the stranger you find out. Hes a weird looking guy. Probably under a lot of investigation. Yes. He was hiding on the beach outside under the hell of a mug shot. You know how mug shots make you look they wouldnt even need a trial. Also weve been talking a little bit about the sec today. The sec charging wells fargo Investment Banker and nine others with fraud. This comes in connection with their alleged role in an Insider Trading ring that earned more than 11 million by trading on tips aboutimpending mergers. And the front page of the New York Times looks at the trail to a hedge fund. Federal investigators have charged many former employees of Steven Cohens sac capital with trading on insider information. Cohen has not been accused of any wrongdoing, but the article notes this trail that leads to sac has emerged out of a cluster of cases. A lot of those cases were originally connected to the prosecution of raj rajaratnam. Investigators heard incriminating wiretaps from that case. Other times informants accused of fund of misconduct and it has a Pretty Amazing web that it lays out. Also the dow backed off its highs of the day, but still managed to close above the critical 13,000 mark because of a jump in the financial sector. Also apples 6 decline dragged the nasdaq lower, but it wasnt rejected in the dow. Joining us is michael gurhka and lou breen. Lou, lets start off with you. Just on the idea that there could be a deal emerge, you saw big movement from stocks. Dow up triple digits at one point. Is that telling that you its going to be a huge jump if we do actually see a deal . Well, i think that well get a jump when we see the deal. Whether its huge or not, or whether its xlens rat commensue kind of decline we would have if it starts to become a realistic thing for us to go over the cliff, i think that whether theres a cliff deal or not, whether if we fall off the cliff, i think that its pretty clear according to the cbo, according to bernanke that well probably have a recession and i think that because of the state of the economy kind of fundamentally weaker versus historical levels, that that sort of thing is not particularly good. Even if we get some kind of a deal, theres less spending, more revenues and thats probably going to kay on tweigh economy, as well. The s p when you have a looming uncertainty, they tend to fall back to the charts and thats what weve done recently. We fell from the september high down to the november low and that was an exact retracement and now weve rebounded and the recent high 1424, 618 retracement back up to the september high. So the market has fallen back into those charts. We get above 1424, technically there will probably be buying. You get a nice resolution to this, there will be buying. But over the medium and longer term, neither resolution is necessarily conducive to growth for the economy. Probably true. Austerity no matter how you cut it usually ends upping an economy, not helping it grow. Michael, we just talked to drew mattis who was telling thaws the strategists at ubs are thinking we maybe have another week before the markets get very concerned about whats happening with the fiscal cliff. They see shall sort of a big drop at the end of next week if theres not a deal reached by then. Is that where you see things . Theres a couple ways of looking at this. And one of them is if we have that big drop, theres a lot long term investors that are looking for opportunity. And without question, youre starting to see just with the inklings of yesterdays news how the market is poised to rally. But either way, i continue to reference a comment i heard on tuesday about how she feels 2013 could be as good if not better than 2005 because of the framework of the economy is going regardless of growth. And youll see that somewhat implemented into these equity markets. So my point here is that watch the dollar, watch how the euro is really starting to cap itself up against 1. 31, but i think the s p in particular is really poised to continue to have another good year. And i dont think thats very puzzling compared to where we were before, but theres a lot of things in the framework right now at least that it seems as though theres a bullish scenario unfolding. Whats in the framework that makes you feel that way is this. The Housing Market is clearly in the right direction and the framework is there to see things look better. I dont see the Employment Situation getting worse. Im not a huge bull in the scenario that employment is just looking better than ever. But i think a lot of the bad parts could be behind us. This double dip recession if it does happen, how long is the drawdown and more importantly how long will the bond markets create any kind of fervor that rates will keep higher proportionately. I think the recipe is there for a lot of the preponderance thats out there that things are actually better than being perceived. This uncertainty in the markets is the only thing capping right now. We get another employment number tomorrow for the government. And we do expect job growth, just not great job growth. When do you expect people coming back into the market looking for work . I think as people come back into the work, that kind of dynamic does push the Unemployment Rate higher. Even with the improvement weve seen in the labor market, theres a lot of things in the labor market that just are not improving. Even if we get 125,000 jobs or so on friday, thats extremely mediocre. And so i just have although we can muddle along, i think that there are some indications, for instance four of the last six ism manufacturing surveys have been sub 50. And concerning the forward looking things, theres a sister indicator for the economy called the gross domestic income, measures the same thing that gdp measures, but at a different angle. And the Second Quarter was revised to negative, from positive 0. 2 to negative 0. 7. And a lot of times that with foreshadow trouble it for the economy. So with the labor market, i think its just simmering along. And if we do get some kind of austerity or can to a thelma and louise off the cliff, then i think that the economy is not in a state where it can really handle that very well. Lou, michael, gentlemen, thank you both. Thank you. Coming up, Congress Convening a significant fiscal cliff hearing today. So we have that going for us. And before he heads there, one of the experts testifying will join us next. First as we led to break, check out whats trending on yahoo right now. Leading the way, susan luckey dies. Best known for playing in the music man. Shes dead at age 74. Made a commitment to the gulf. P bp has paid over twentythree billion dollars to help those affected and to cover cleanup costs. Today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. And bps also committed to america. We support nearly 250,000 jobs and invest more here than anywhere else. Were working to fuel america for generations to come. Our commitment has never been stronger. The u. S. Equity futures are indicated a little higher this morning after the gains we saw yesterday at least for the dow. The nasdaq and s p 500 gave up some ground because of the losses with apple, but this morning moderate green arrows. In our headlines, adults can now legally buy marijuana in washington state. Last month voters approved a measure make Recreational Use of marijuana legal. And that go mrs. To effect today. State law now allows adults over the age of 21 to possess up to an ounce. That contradicts federal law and the question is whether that bring a debate. Will the feds be forced to take action. Washington state now though will be licensing make your mayor grower, processors and stores. But driving under the from yinf marijuana is still unlegal. No idea how they measure that. I think theres a way to measure thc content. Like a breathalyzer . I dont know. I dont know how you do it for i figure if you see someone going really slow with a car full of twinkies, you say you have reasonable of course its hard to get twinkies. Anyway, this morning the joint Economic Committee will be holding a hearing on the fiscal cliff and protecting the middle class and what can we expect out of the hearing. Kevin hasset will be testifying today. Director of economic studies. He also served as economic adviser to former president ial candidate mitt romney. Kevin, whats your feeling now . I saw one of my colleagues tweeted a i dont get the washington post, but dana milbank said republicans are raising a white flag as big as a bed sheet. Is that how you see it . It is interesting if you look at the negotiations that president obama offered this massive tax increase with no concessions and this sort of outrageous request on the debt limit which was a really aggressive first offer. And then the republican s countered with a moderate reasonable plan exactly modeled after a proposal by erskine bowles. So if youre trying to handicap the negotiations, youd have to concede that dana is on to something. Really. So at least like the starting point. So basically the starting point for the republicans is what president obama probably would have viewed as a victory if they had the negotiation. Yeah, he wanted another 400 supposed supposedly. How does simpsonbowles get to how does it raise revenue . Whats the number that it raises . Well, it depends because they have a bunch of different simpsonbowles plans. Like in the bowlessimpson report, there are three different tax plans and then the thing that the republicans modeled after was something that bowles said in a hearing. Its interesting when you look at what these plans are laid out, yesterday tim geithner said the republicans have not told them how they plan on raising any of this money and thats the big problem they have with this deal. I dont think thats true. Its very, very easy to have some kind of bas broadening that raises that much money. The revenues are very easy to make line up especially over a decade. So i think he knows that they could work that out in an even. I think the bottom line is that the president , theres wind in his sails from the election and he feels like he ought to be able to squeeze a heck of a lot out of them. And hes playing hardball. And the cost is that as you folks have noted, we definitely absolutely 100 will go into a recession if they fail. And by playing chicken like this, what the president is doing is telling people right now in december to stop their Economic Activity because theres this scary thing that might happen if the coin flip comes up. So i think that eat big problem right now. I initially read the New York Times piece about boehner gaining some backing of the house. Its basically saying the guys that wouldnt have gone along with them before in caving are now ready to careful with them. So its like the same article. I think its 50 50 that we dont get that. Im not exactly sure that the president doesnt think that if we question over the cliff, that he can blame that on republicans. And then try to fix it next year. But from a position of money. Secretary geithner said theyre ready to go over the cliff. And i think that they are. And its really up to republicans to either cave or go over the cliff it seems if things continue to go like this. All right. I hear music, kevin. Thank you. Thank you. Well see you. Coming up, a story plastered on the front page of the Financial Times thorn. Three former Deutsche Huang employees say that the bank failed to recognize up to 12 billion in paper losses during the financial crisis. We have the story from one of the whistle blowers right after this. [ male announcer ] what can you experience in a seat . Inspiration. Great power. Iconic design. Exhilarating performance. [ race announcer ] audi once again has created le mans history [ male announcer ] and once in a great while. All of the above. Take your seat in the incomparable audi a8. Take advantage of exceptional values on the audi a8 during the season of audi event. I have obligations. Cute tobligations, but obligations. G. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. The Financial Times reporting three employees are blowing the whistle on multibilliondollar securities. We reached out to Deutsche Bank for comment and the bank says the allegations of financial misstatements which are more than two and a half years old and were publicly reported in june of 2011 have been the subject of a careful and thorough investigation and they are wholly unfounded. Joining us now is jordan thomas, head of the whistleblower practi practice, represents one of the whist whistleblowers, any merit to what Deutsche Bank is saying . Id like to see the investigation they conducted. As the Financial Times reported three insiders independently reported significant concerns relating to how they valued their book and other banks at the same time were valuing the gaap option at 3 to 10 which would have equated for a book like Deutsche Banks which was 120 billion to 130 billion, a substantial misstatement. I dont understand, 3 to 10 . Can you point to identical securities at other banks and they were how much different than what you saw at Deutsche Bank because who knows at that point in the financial crisis what any of the prices really were at that point with the liquid markets and the panic and Everything Else. I cant speak to a specific security but what i can speak to is the range and the fact that banks like Goldman Sachs were valuing the gaap option and Deutsche Bank did not value the gaap option. Gaap, is that what they were doing . What do you mean gap option . The gap option is a buyer of a note provides collateral and the gap option is the difference between the collateral and the amount that the seller is required to pay. They didnt ask him to put up more. They were supposed to account for that in their financials and they did not and as a result they went through a series of workarounds, used an arbitrary and fixed discount, used an inadequate reserve and ultimately chose not to value it at all and this is particularly unusual because it would be like becky owing me 1 million and then i owe you 1 million but i report out of my financials that im a millionaire, ignoring the fact that i had this milliondollar obligation to you. Thats not the way that financial matters should be reported. I read part of this concerns the deal with berkshire ha hathaway. Is that involved with your client . My client did not provide information relating to the Berkshire Hathaway piece of the story. Its my understanding Berkshire Hathaway helped Deutsche Bank during this difficult time. You come at this as a former sec lawyer, too, looking at these things. What did you think when you first talked to your client and heard what we to say . I was at the sec for eight years and i supervised a number of highprofile mooters and i was shocked by the size and scope of the misconduct alleged and its the kind of thing that the Sec Whistleblower Program was designed to bring in to the sec and i expect there are more significant cases in the pipeline. The new Program Allows whistleblowers to get proceeds of the profits. Would your client stand to get some cut of 12 billion or how does that work . No, whistleblowers are entitled to 10 of the monetary collections collected. If the sec finds misconduct and theres a settlement or court order would provide my client with some portion of that 10 to 30 . Where are you going to find a judge that knows what the hell theyre talking about. Theyre going to look at you with the glazed look in your eye and say i cant understand this mess, no . No, i dont believe so. I think unlike tv where you have a short period of time to convey these things. You saw the glazed look in my eyes . Youre hoping the judge sees better. The sec regularly deals with the complex cases. I just wonder, you dont think two and a half years makes it tough . Most misconduct that the sec deals with has some lag between the misconduct and the time in which its investigated. I thought i was free and clear, so in two and a half years, wow, i could still be youre still in harms way. I am . Crap. Thank you. Good to see you. Quick break and then top stories when we return. From one treasury secretary to another, weve heard from tim geithner. Is the administration prepared to go over the fiscal cliff in. Absolutely. See what Larry Summers thinks of the fiscal negotiations in washington. Hell rise above with becky and joe. Maybe New Buildings . 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Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. Avoiding the cliff or going over. A distance apart but the broad outlines of a framework now look inevitable. Rise above or kick the can. Former treasury secretary Larry Summers warns us of the compromises if lawmakers cant compromise. Remain calm. All is well. Caterpillar digs into the cliff, where the confidence level is and apple, should investors be worried, why apple may still rule christmas. Ho, ho, ho. Squawk box begins right now. Good morning, everybody, welcome back to squawk box here on cnbc. Im becky quick along with joe kernen. Andrew is on vacation this week but hell be back next week. Our guest host is former treasury secretary Larry Summers and secretary, great to have you here this morning. Good to be here. We have a lot to talk about. In the meantime a quick look at the futures this morning, stocks are indicated a little higher. Actually they just turned down, down 0. 5 below, sitting on the flat line waiting for some word on whats happening with the fiscal cliff out of washington, the bank of england leaving its Interest Rate unchanged. At this point were a few weeks away from the end of the year. Money managers have an uncanny ability to drive stocks higher allowing them to claim quarterly performances that attract more money and higher fees. The practice is illegal but experts say that a sudden spike is a deliberate distortion of prices. As youd expect window dressing is more common with thinly traded stocks and among the names of stocks appear to have been used as window companies, iridex, carver bancorps, altagen and legaga holdings. The next day the stock gives back some percentage of the gains, at least 3 . The parade of companies announcing dividend changes continues because of all the uncertainty surrounding the fiscal cliff. Cme group declared an annual variable dividend of 1. 30 a share and accelerating the timing into the current quarter. s Sporting Goods is announcing a Cash Dividend of 2 a share and says cfo tim coleman is retiring. Zynga i like to say that, zynga is filing preparatory paperwork in nevada, it currently lets players buy into the social players with real money but cash out in virtual currency. Its amazing how many people, you give really money and get some different points. You can buy stuff online but not real stuff, imaginary stuff. Its a great gimmick. Ive seen the kids get dragged into the games. Its a gimmick. You give them real money they give you fake stuff. Something i hear about all the time instagram, abandoning a twitter feature that allows photos to appear in the twitter feed. It is a big deal. Instagram for the first time got more unique visitors who are coming to it than twitter did so that was a big deal. So you send a . You can put an instagram picture you can do cool effects straight into your twitter feed the way you send the things. This is not an Anthony Weiner story. Anthony weiner predated instagram. So he was able to do it without. Yes. If i say weiner, they play this is early in the morning, joe, early in the morning. There are days your daughter should do your job. She knows this stuff better than you do. Oh, her instagram. And my son. Shes 14, 13 . 12. She started a social thing that has 3,000 people and they are all shed get all this stuff. I dont know why pictures and social wolves, i dont understand. We should do an investment roundtable of 13 and 14yearolds to explain where to put the money. The content is more in facebooks realm of control, it underscores a growing tension against twitter and facebook, we like that, before its acquisition instagram used twitter carve, a technical feature that renders photographs so they appear properly, whoa, in the twitter stream. Im going to go back and read what i said again, becky. Call your daughter. Youll get it when you read through it again. Okay. We should point out apple had one of its worst trading days on record, the stock tumbled 6. 43 , the worse decline since december 17 of 2008. The oneday loss erased nearly 35 billion in market capitalization, the chunk is bigger than 417 other individual s p 500 companies, just what they lost yesterday, celgene, walgreen, Morgan Stanley and more. Apples ceo tim cook talked to Nbcs Brian Williams in a rock center exclusive. How are you not steve jobs . In many ways one of the things he did for me that removed a gigantic burden that would have normally existed is he told me on a couple of occasions before he passed away to never question what he would have done, never ask the question what steve would do. To just do whats right. Were going to air more of this interview later this hour. See the entire interview tonight on rock center 10 00 p. M. Eastern time. In the latest in the fiscal cliff negotiations treasury secretary tim geithner not mincing words in his interview with steve liesman. There was tough talk that came out of this. I was surprised. I was, too. Couple different interpretations from tim geithner that the white house would go over the cliff unless theres a tax hike on the wealthy, those making more than 250,000. Heres the quote people are talking about. I want to understand the administrations position when it comes to raising taxing on the wealthy, those making more than 250,000. If republicans do not agree to that, is the administration prepared to go over the fiscal cliff in. Absolutely. Theres no prospect to an agreement that doesnt involve the rates going up on the top 2 of the wealthiest, remember its only 2 . On the one hand senator orin hatch called one of the most stunning and irresponsible statements hes heard in some time. He says it will put jobs and peoples paychecks and retirement at risk. What geithner was state the administrations existing position but just in harsher and clearer terms. Previously the white house said no deal without letting the tax cuts on the wealthy expire. Saying they feel strongly tells the opposition how serious they are. This makes the white house as extreme in the house who are willing to go over the fiscal cliff instead of raising taxes on the wealthy. Hes talking about the rates. He said rates on the wealthy. Larry summers is a former treasury secretary, very smart, a harvard professor and we agree on a lot of things and that was not new. Theyve already agreed to raise rates on the wealthy. Raising tax rates has been something the president s insisted on for two years. It was a central issue in the campaign. Dont you think the republicans i think everybody gets it. The president is not signing legislation, no way, that does not raise tax rates. I think the president has been as clear as day that he will not do it without raising the level of tax. Marginal . Including marginal tax rates. He said the 35 rate has to move up, that base broadening alone is insufficient. Maybe not 39. 6. He has been as clear as day on that point. The president s position as i understand it has been that we have to raise rates but he is certainly prepared to combine rate raising with base broadening, so hes prepared to use both approaches to do it in a balanced way. The alternative position is again take only one piece. Its only get money by broadening the base, dont touch rates. Again, the president is open to using all the tools we have available. The alternative position is more restrictive. The republicans have at least come to the table and changed their mind on raising revenue. The president is for revenues and expenditure cuts and within revenues the president is for raising rates and base broadening. First the republican position was only expenditure cuts. When that position became untenable, it was only base broadening to raise revenue, not a willingness to look at all the tools available. This snt bea politics. This is about the basic economic arithmetic. Since the republicans said no revenue that was the deal last year. Youre going back a long time. And then during the campaign they were on the other side of that. The Crucial Point the secretary sees what boehner offered as progress. Youre right that was on the table last year but whatever the reality is geithner sees boehner as making progress. Im not here to we only have 27 days. Thats the deal. Im not here to do the negotiations. The truth is that when we had a 39. 6 rate, we had the best economy and well over a generation. The truth is that staunch traditional opponents of the president s Political Party like fred smith and rehn alds stephenson have recognized that raising rates is not enemical to raising the deficit. There is no reason why going back to the clinton era rates is, were going to do you might not get the benefit if you dont do anything to the deficit youre talking ten times the revenue if you go below the 98 . You cant return to clinton prosperity only raising taxes on 2 . Its different for all taxpayers. Am i right . Youre almost entirely wrong. Why would raising just on the 2 get us back to the clinton prosperity youre talking about . We cant return to the spending levels either. Getting to a sound fiscal position is necessary to protect the economy. If we dont do that, as this economy recovers, that recovery is going to be aborted and thats going to do damage. Then the question is how you get there, and the president believes that we should raise revenues with a tax system that has been proven in the past to go along with very substantial you cant conflate the two. You have the entire joe, joe, if you go back to this, im not sure what youre arguing. Raising on 2 is different than the other structure. The reason its different is that the tax rate on everybody else is going to be lower. Right. So you dont have nearly as much money to balance the budget in the 90s. Many other things have changed in the interim and we have set as a framework and its a question you can discuss whether a 4 trillion deal of the kind which is where the discussion is, is sufficient progress on deficit reduction. My judgment, its a very important move forward for the process, whatever will be necessary ultimately you can debate that but again the question here is why be absolute and religious . The president s position is take both sides. Yes, theres scope for tax reform, yes, lets look at base broadening and if we can raise revenue with base broadening thats fine but at this late date there has not been a model put forward in a way that is economically credible and politically plausible, eliminates the need too raise rates as part of what we do. Thats what people outside of this process youre looking at me and im feeling uncomfortable, starting to sweat a little bit, you look mad. Is this the same feeling you had when they were in your office, this is not as bad . Youre not wearing a suit. Joe, im just not going to go there. Its a good try. Im not really there. Folks seem to be stuck in absoluteness. I dont think so. Really . I really dont. You can argue and see how the negotiation proceeds but it seems to me that the president has not said absolutely repeal the bush tax cuts in precise bush hiring form. He has not said 39. 6 is not a glass ceiling. They are flexible. He has said, the president said repeatedly and the president was right to worry at this debate to arithmetic reality and the reality is that if were going to get sufficiently far, we need to raise rates as part of what we do. The with igle room, is it 39. 6 or 37 . Still to come well dig into the fiscal cliff with caterpillars ceo. First as we head to break a drawing at sothebys in london sold for nearly 48 million, nearly double the expected price, it was sold to an unsided buyer. We are gathered here today to celebrate the union of tim and laura. Its amazing how appreciative people are when you tell them they could save a lot of money on their Car Insurance by switching to geico. They may even make you their best man. May i have the rings please . Ah, helzberg diamonds. Nice choice, mate. And now in the presence of these guests we join this loving couple. Oh dear. Geico. 15 minutes could save you 15 or more on Car Insurance. Welcome back, everybody. Weve been watching the futures, they are mixed, dow slightly higher but you can also see futures are lower for the s p and the nasdaq. In our headlines apple and samsung are back in court in a high profile patent case. Samsung is seeking to overturn an august verdict that found it guilty of infringing patents and ordered it to pay apple 1 billion. Apple is seeking 500 million more. Sales of homes in the middle of foreclosure process were up 22 in the Third Quarter compared to a year earlier. Realty track says a third were short sales where a lender agrees to accept less than what the homeowner owes on the property and the eurozone gdp fell by 0. 1 from the Second Quarter with the in thor lands reporting the largest contraction among the eurozone countries. Earnings report lululemon 39 cents a share, a twocent beat. Dont miss the companys ceo on squawk on the street at 10 15 eastern. Joe . Larry is here. Were talking, and we were listening to you, larry well talk about this again. Weve almost got it down i think, almost finished. We just got to send an email to both sides and were done. Coming up if you want to know whats really going on with the u. S. Economy, we certainly do, cnbc polled the American People looking for answers. Steve liesman will be back with those answers, next. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. To provide a Better Benefits package. Oahhh [ male announcer ] it made a big splash with the employees. 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[ male announcer ] break from the holiday stress. Fedex office. Welcome back to squawk box. Im steve liesman. We have a result of our cnbc allamerica economic survey. Lets get right to how americans view the current state of the economy. Lets look at the change from last time around, what we see is a big drop in the americans who say the state of the economy is poor. How about stayed the same, those who say its fair, up to 41 , up a little bit and a slight increase in those saying its excellent, good. People view the current state of the economy better than at holiday time last year. The outlook, this is interesting, starts to get political, look at those who are saying it will get worse, 35 . That is driven largely by republicans from before the election to now, their outlook on the economy went way down and helped stay the same that came down, too, and right here those who say its going to get better. Stalemate here well see some of the reasons how that affects Holiday Spending plans. First we look at inflation and wages. The inflation outlook one year down the road and the wage outlook and weve had progress when it comes to december 2011, wages, thats in the green just 2 . Lets look at back in september, just 2 again with a big bump in inflation and then again here we go, so the 4. 3 Wage Expectations over the next year is the highest weve had since 2008. Inflation has come down but were starting to see a seasonal pattern where december comes down more. What does this mean . Look at peoples outlook for inflation, wages and the economy for Holiday Spending. Were going to take a trip through the recession, you can see right here, could we do that here . There it is, 694 average spending for 2008, it will stay down in 2009 and 2011 and 2012 right there, its right here, 2012 just a very minor increase, 0. 2 and its hard to know exactly why its like that but if you look at the standoff in the economy you get between those saying its going to get worse and those saying its going to get better and look at the Holiday Spending plans some think its going to get better will spend more. Those who say it will get worse will spend less. Joe and becky are coming right back after the break. Still to come, look past the fiscal cliff. What caterpillars ceo told the president and the companys plans for 2013. Can the economy dig its way out of this slow growth rut . Find out at 7 30 this morning right here on squawk box. Americans believe they should be in charge of their own future. How theyll live tomorrow. For more than 116 years, Ameriprise Financial has worked for their clients futures. Helping millions of americans retire on their terms. When they want. Where they want. Doing what they want. Ameriprise. The strength of a leader in retirement planning. The heart of 10,000 advisors working with you onetoone. Together for your future. Welcome back to squawk box. Were just about an hour away from the first time jobless claims. Planned job cuts rose for the Third Straight month in november according to the latest challenger report that number rose to more than 57,000 last month up 34 from november of 2011. The yeartodate total is still 13 below where it was a year ago. Also the European Central bank will be announcing its latest Interest Rate decision in a few minutes coming up at 7 45 eastern time. Mario draghi will hold a News Conference at 8 30 eastern time. If you havent been paying attention it has been a rough ten weeks for apple shares. Shares of the most valuable u. S. Company tumbling more than 6 yesterday shedding 35 billion of market value. That chunk 35 billion is bigger than the market cap of about 417 S P Companies including walgreens, Morgan Stanley, Texas Instruments and lockheed martin. Well talk about the future and outlook of the stock with Jonathan Geller of the boy genius report. Been a little over a week since he met with president obama to talk about avoiding the fiscal cliff and caterpillars ceo joins us from the nyse to talk about the fix the Debt Campaign and more. You know anything we dont know, doug, that you can tell us about how this finally looks and whether we do it . I dont know if i know any more than you do or not, joe, but weve all been working hard to impress upon our leadership in washington how important this is not to go over the cliff. We had good sessions with republican leadership, democratic leaderships and with president obama in the white house. Nobody over there wants to go over the cliff at this time, theres nothing that wants to do it. Once we get over it, we hope its a bridge to something that will help you and caterpillar compete better in the world. After the cliff, what do you want . Is there any emphasis on Corporate Tax reform that we need or how to bring 2 trillion back to this country . Arent those things, did you talk about any of those or the cliff . We talked about all of those, longterm competitiveness for our country, Immigration Reform that needs to happen, and theres a lot of bipartisan support for corporate and personal tax reform next year and i know j. Timmonds was on earlier. Private factories in this country need more also. Thats a hot topic right around the corner but its important we get through the cliff, that government governors, we get leadership, get over the cliff and move to the next thing. I think everybodys talking about it. Doug, let me ask you a question. I think theres a strong case for doing a whole set of things about Corporate Taxes as you say but im confused by what i hear from the Business Community. On the one hand people say its important to bring down the rate and broaden the base, the tax expenditures. On the other hand, the largest tax expenditure we have is accelerated depreciation and the Business Community is asking that its really important that that be continued, so where is the priority come down on accelerated depreciation and corporate rate reduction . We had a good discussion on this yesterday, and where you have to start is take away everything, and what rate is that . Is it 22 . 15 . 25 . I dont know what it is, and you start adding back to priorities you want and everybody has them. Whats important to our country . Is Business Investment important, is accelerated depreciation important so we can continue investments . Those are tradeoffs that come out through a reform process thats not going to be as easy and fun and as bloody as the fiscal cliff charade but has to be done. Are there any specific tax expenditures directed at corporations whose elimination you would favor as part of bringing down the rate . Well, no, actually, if were all in for this, lets clear it out, broaden the base and get after a very low rate. Im asking which one, so youd favor complete elimination of accelerated depreciation, balancing Capital Gains. I think go right down to the bottom and start there and whats a priority. All of us from different interesting, manufacturing has a set of priorities, farmers have a set of priorities. Thats where the debate, discussion, a lot of give and take are going to have to happen. I guess im asking you when that debate takes place and do you eliminate everything and some things get put back on the table as necessary and others stay out in order to finance the rate cut. Im asking you which provisions you think probably cant get put back on the table even though they have their advocates, which things do you think will end up giving up at the end of the day in the Corporate Tax reform . Well your first question is when, and i think that has to start right away first of the year, new congress is sworn in, both committees, senate and the house are ready to go with their finance committee at ways and means to look at reform. The iron is hot, lets strike. To me a depreciation schedule is probably one that will stick around. People like Business Investment, it draws capital from around the world. Lets let it happen. I am not positioning for anything. Who is not going to stick around . They all should go, i said that before, start from zero. Were not going to eliminate and have a 22 rate. Its important to do just that but i guess im asking you to identify something. Im not going to do this. In the negotiation to start this, you have to start from zero because everybody is going to have their pet deduction, their pet credit, whatever it is, but lets all agree we start from zero, whatever that tax rate is and go from there, just like on the personal taxes. How holy is the charitable deduction, i think its very holy but thats a thing for society and our country to settle. Just the idea we havent reached any agreement on the fiscal cliff, we dont know what next years tax structure is going to look like, how has that impacted caterpillars plan . The deadlines of the fiscal cliff is driving us into our corners and i talk every day to our customers around this country, around the world sometimes for that matter, and in this country and they are scared to death what happens in january. Nobody knows. Going over the cliff is not an option we stare in the face. Theyll figure out a way to get us through this in one form or fashion. Theres outlandish guesses on both sides. I dont think we should risk it at all. If we do go over the downside is capex for next year, what could or should we do if everything slows down, i dont want to have to face and decide that. Our outlook for 2013 is morms what 2012 is. Thats the best we can see and theyre three weengz away from the beginning of the year. Ill look forward to the day when youre in here again and can sit here for two hours and well run v. O. Of big caterpillar equipment and talk about whats going on in china and i hope we get back to that. Youre right thats all were talking about instead of talking about caterpillar and what you do well as a great company. Thank you. Again, every time i come to the floor its the hub of our greatness in this country of business. Its why were here. Its really fun and exciting and let answer get into 13 and get into real things. Im with you, joe. I know, but this deal has to play in peoria. It will play. Compared to what you got in illinois now anything looks good. Thanks. Okay. The executive chef tpz at jpmorgan the bank naming two chief officers to oversee things like antimoneying. Kayla tausche joins us. The person to watch everyone watching is looking at jez staly, he was chairman as of july largely viewed as a swank song role that rivals have taken note of. There were discussions over the ceo at legg mason, the baltimore asset manager. The talks fell apart and staly was the top of the short list for the board and recruiters after being serious talks for the job before the financial crisis. Im told the Supreme Court talks were part of staly being promoted to ceo in an Investment Bank where he was expected to succeed jamie dimon. Dimon replacing staly with two younger colleague this is summer. Hes largely viewed as a free agent he was a finalist for barclays ceo, they went with an insider fearing an exodus of managers within the bank and should americans run the british bank. First of all previous staley said he would maybe work at one of the banks internal arms but he has his sights set on a publicly traded company and with his record a lot of people think he can do that. Legg maceson used to be close to a 10 billion market cap but its now down by who . Ceo mark getting september down in october for that reason and the firm hired corn ferry asry ree kruter b ee ee eer recruites kept from agitating for change but that deal expifrd last month. The spokesperson told me they hope to wrap up the ceo search expeditiously. Watch the stock because we could find a find. Do you remember that high flier a couple yeenchz. I do, i was in high school watching the stock market. You remember the high, 140 . Thats joining the ranks of jpmorgan asset management. We talked about legg mason. Its not like they dont have candidates to succeed fetting. They have those on the short list. So im told they do have Pretty Healthy short list. Staley was toward the top of it. When you rule him out the question is who would be next. When we come back a government study finding a new way to gas up the economy. Apple brews, the tech darling tumbles as competition in the competition market vmk squawk box continues. [ penelope ] i found the best cafe in the world. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . I have obligations. Cute tobligations, but obligations. G. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Bp has paid overthe people of bp twentythreeitment to the gulf. Billion dollars to help those affected and to cover cleanup costs. Today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. And bps also committed to america. We support nearly 250,000 jobs and invest more here than anywhere else. Were working to fuel america for generations to come. Our commitment has never been stronger. Welcome back. Ecb unchanged for those of you that care you now know. It hasnt been changed in a while. The news will be when they change. Lets look at the futures which the market did have a good day yesterday but it didnt close on the ties and had never been 15 or so and now down 2. 5 points, just so you know it equates to 0. 02 . A government sponsored report says the u. S. Economy would benefit from exporting natural gas. I didnt want to bring this up, even though doing so would raise energy prices. The report is expected to help shape the Obama Administration response to more than a dozen proposed pet projects. Its because it helps the economy and really helps the economy. You are a huge block, youre standing in the way of it. Ive changed my mind about a month and a half, i got beat up by jack i think. By a lot of people. I still think there is an argument to be add that if yourelogical looking for energy independents you would keep some of the stuff here but i understand if youre looking at it from the prism of jobs this is something you want to tackle. Were a free trade country and part of it is you dont make a rule that says why cant regoing to say the Food Companies cant sell, cant export. You got to be willing to permit exports especially when as in the case here there arent many things where the american price is a fifth of the world price. Thats a huge opportunity. There was one line and i just want to throw it out to you that said they were talking about who doesnt want to export it and not you, environmentalists dont want to do it because they say that it would cause an increase in the production of natural gas. How do you deal as with the Obama Administration, how do you deal with people in would look you straight in the face and say we dont want to produce another natural gas because of the sand dune. I think its good to produce more but joe you have to give the Environmental Community something here. I like clean air and clean water. But here is the point because its been a striking four years. Obama administration did more to encourage offshore drilling than certainly any Democratic Administration had before and then you had bp. We would never then we were supportive of Nuclear Power and then we had fukushima. So i think that the better part of valor here is being careful. Of course the right pulse is to maximize our resources, but its not, weve had these examples where we did it per pet usely. Theres a difference between ground water and fracking and whether we build hydrostructure based on client change. He has to deal with those people. The big mistake people make is they treat all fossil fuels the same. The greatest potential thing that we have over the next decade is to replace coal with natural bass which will do a arvel amount for climate change. Apple investors have seen their high flier come to an end. Whether its big swings in the stock price or new product rollouts theres always buzz. Why cant you be a made in America Company . The engine of this iphone is made in america and not only are they made in america but engines are made in america and exported. The glass on the phone is made in kentucky so weve been forking for years doing more and more in the United States. Next year well do one of our existing m autoc lines in the United States. Say barack obama called you in tomorrow and said get everybody out of china and do whatever you have to do, make everything you make in the you sat, what would that do to the price of this device . Its not so much about the price, its about the skills, et cetera. Wave pied piper. While how are you not steve jobs . In many ways. One of the things he did for me that removed a gigantic burden that would have normally existed is he told me on a couple of occasions before he passed away to never question what he would have done, never ask the question what steve would do, to just do whats reegt. See the entire interview tonight on rock center 10 00 p. M. Eastern time on nbc. Joining us is Jonathan Geller, editorinchief of the boy gene success report. Whats happened with the products is one thing and what happened with the stock price is another. Why do you think the stock and cheap, bad made products to be competition. The other products are starting to take market share. Theyre taking market share but if you look at usage the ipad has 90 of all mobile browsing for tablets. People are buying them and not using them. Theyre not the type of person to buy movies and apps, so i dont think apple really cares about that to be honest. What do you think about the microsoft tablet out now . I dont like it. Microsoft has trouble in the consumer space. Over time theyll become more of an energized company. With the shares, stocks dont always operate the way people might expect or based on whats selling, they operate on what they see far down the road. The stock price do you expect this to rebound or where maybe le suchz some of its eyes. That would be apples holiday quarter. They inside the i2350e7b, brand new n cl, mini, a new ipad. It has the teen factor, too. Joining us, talking about americas debt crisis. Or that printing in color had to cost a fortune. Nobody said an allinone had to be bulky. Or that you had to print from your desk. At least, nobody said it to us. Introducing the business smart inkjet allinone series from brother. Easy to use. Its the ultimate combination of speed, small size, and lowcost printing. Coming up the congressional joint Economic Committee meeting holding a hearing, senator Robert Casey Anne congressman kevin brady theyll talk to squawk first after questioning there. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. [ male announcer ] at scottrade, we believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. Rising pof. The obligation is first do no harm. We will etrying to find Common Ground before todays fiscal cliff hearing. And mobile apps changing our daily lives. Where is the joker . I dont know. Where is he . No idea. Come op. I really have no idea. Our bit runner series continues with a 24yearold founder of mobile Development Company applico. The third hour of squawk box starts right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick. We have replaced Andrew Ross Sorkin with Larry Summers. You be the judge. Former treasury secretary, currently a professor at harvard, someone that played him in a move iie is now a movie s. I think it gives you street cred. My wife says i was better looking than the guy who played me on the show. You know, winklevye as well. A lot to be said about the winkle vyes. Have you been follow their career . Its not been a preoccupation, let me put it that way. Coming up, a hearing op. The fiscal cliff, the chairman and vice chairman will join us first on squawk to talk about the debt negotiations. At 8 30 eastern the weekly job numbers. And a disruptor, applico founder and ceo alex moazed will join us at the bottom of the hour. Becky if you interview him its moazed so if its wrong stick with that so no one will know. We shed 35 million of market as well mopping the reasons cited by analysts a forecast by an Influential Research firm suggesting the Iphone Iphone is giving up to googles headlines. Apple accounts for the entirely of the mass dnasdaqs fall of 1. Apple is enjoying its best day since early last week. Didnt close on its highs but equities up 8 points or so. Futures back in positive territory, up 15 and down and up five or so. Everybodys watching whats going on in d. C. Overnight in asia it was mixed but not big moves sni where, japan had a good day and in europe we have green roar rows yesterday morning which pour tended good things for us here, germany doing the best. As expect the bank of england and European Central banks left their ratings unchanged. Mario draghi will hold his post meeting News Conference. Steve liesman has more exclusive raults from our allamerica economic survey. What do people think about the fiscal cliff. Consumer confidence has remind high. Business confidence is down so the first thing we want to know, thats not the right chart, we want to do on whether or not people heard about the fiscal cliff. Have you heard of it . Comparing it to some of the other times people asked about news event, theres the Trayvon Martin shooting in the street, occupy wall street, 82 , facebook ipo 7 , 70 of the republic has heard it compared to the fiscal crisis in greece, 63 had heard it. In that number 36 had read a lot about it or heard a lot about it. Do they believe a solution is likely . Our numbers different from other poles. Americans are more optic. First of all see what they think, unlikely 73 back in november when we asked about the debt program would there be an agreement, 73 saying that, now 44 . The number you want to think is 4 to 44 thinks a solution is likely. Who thinks its likely, thats interesting and driving this number. He can break it down by party. Look at what we find, republicans 5242, independents, i come back here, there we go, independents 4732 and its really what you see here 60 of democrats think its unlikely. I just want to show you again when we get to the issue of 48 to 44 believing its likely, its mostly different by democrats. We it break it down further into what people expect, what kind of Solutions Work . Think of this chart as the politicians guide to solving the fiscal cliff and remaining in office. The net percent acceptable minus the percent that is unacceptable to give us a net number and we can show you that by democrats, republicans and independents. What you see is maybe not surprising. Raising taxes is the most acceptable thing if you added up for everybody here. Look at that little bit of red here, only net unacceptable to republicans by a little bit, go a little further n fact a cap on deductions for those making 250,000 and more that is net acceptable to republicans, thats the red there, the second most. Cap on deductions for everybody being the third most, every other solution here is net unacceptable to the public. In fact if you look at this red thing here, just zoom in there, reducing military spending is the most unacceptable thing for republicans. Moving along, reducing nondefense spending and come down to the least acceptable thing for everybody involved is reducing medicare spending. You want to know how to fix the fiscal cliff . You have to raise taxes on those 250 above and cap deductions and a cap in deductions on everybody loon looks to be marginally acceptable. Well have a chance to talk about that chart later but i hear you have some interesting guests on this issue coming up. Were talking about that chart and will catch you up later. Also the joint Economic Committee will hold a hearing on the fiscal cliff. Can Congress Come up with a compromise before the looming deadline . Senator robert casey and jec vice chairman tom brady joins us from texas. Thank you for being here. You have a lot of things happening behind the scenes. Senator casey, i know you have said what were watching is a lot of drama and probably taking our eye off the ball in terms of whats happening. Can you tell us if theres progress being made behind the scenes . I think theres a little bit too much attention paid to the back and forth every day. Theres still a long way to go here and frankly a good bit of time to do it in. I think the day by day coverage sometimes misses whats going to happen. Well get some kind of agreement i sure hope and im more optimistic maybe than some of the polling but democrats and republicans have to come together. At the end its not going to be 500 people in a room. Its a small group of people making a deal and seeing if they can get support. Thats the reality. I think the focus should be in addition to getting the fiscal sustainability in place we have to focus on job growth, moving the economy forward and the central focus of that ought to be middle income families. Agreed those are the priorities for both sides. Senator when you say focus on middle income families, to cut through it what does a compromise to you look like . The first step and this would be a substantial step forward if the house would pass the bipartisan bill the senate passed, if they pass that were substantially down the road to getting an agreement. Thats not the end of the work but that would give certainty to middle income families. Congressman brady is that likely to happen, would that house pick up the bill and pass it . The senate was given the chance to vote on the president s fiscal propoedsal, majority leader reid blocked that proposal. I worry that hes already decided to take us off this fiscal cliff to blame republicans. It might be a short term political victory but its terrible for the economy. I think thats the wrong way to go. Senator casey, you heard what congressman brady just said, bills neither the senate or the house is going to pass each others bill. It doesnt make sense to lay out the ideas without getting closer together. What do you think is the realistic way to find agreement and can you two as the chair and vice chair of the jec can you two find consensus . Kevin is a good friend and great vice care of our xhe, we work well together and that mutual respects is part of this. I think theres too much cover annual of the personalities of the president and the speaker and all that. That doesnt matter. The key thing is lets focus on priorities like growing the economy, focus on getting an agreement. We may not get all of this done by the end of the year but i think we can move forward. What do the nuts and bolts look like, we know what the proposals are in terms of 1. 6 in tax increases or 800 billion in tax increases. Do you find Common Ground at 1. 2 billion or 1. 2 trillion . I dont think theres any broad agreement what the numbers are yet. We still have a ways to go, but look if we focus on the damage this hearing will focus on today the damage to our economy as the automatic cuts go into fact well be on the right track to understanding the gravity of that and the adverse Economic Impact as well as the adverse impact of not having democrats and republicans come together. Seven and i work well together, maybe it can be a model for others. Congressman, you say that you are not in support of raising taxes because that doesnt solve the problem. Youre not going to get any sort of agreement if thats your bottom line. The bottom line is, what does it solve . It doesnt solve the deficit. Its about eight days of federal spending, certainly isnt good for the economy. I think the question senator casey made this point, it isnt exactly the number, its how we get to that new revenue. We really believe that the key is to fix this broken tax code to generate a stronger economy and the revenue that comes with it, in addition to authentic spending discipline and we need to find a bipartisan solution to save Social Security and medicare. I think chairman casey and i could work that out. We have a long way to go. Senator and congressman you emphasized the importance of middle income families and supporting job creation. One thing congress has to decide is the future of the payroll tax cut which many believe has been an important support for Economic Growth over the last couple of years. Where do the two of you stand on continuing the payroll tax cut . Larry i introduced legislation which has two parts, one is to extend the payroll tax cut as you and others have made clear has been a big winner for everyone, in the past year one of the best estimates, 400,000 jobs created or saved, we should continue that in addition to maybe we should couple that with a tax credit for hiring for businesses, but i think the combined effect of that can have a substantially positive impact. I dont think, if you were serious about saving Social Security you cant continue to pay the tax holiday. Its blowing a hole in Social Security. We had to borrow 165 billion last year just to pay Social Security benefits, permanently or lengthening how long we divert the important revenue stream in that program just doesnt make sense. I think we ought to substitute tax relief as big or bigger but through fundamental tax reform. Congressman, the payroll tax sorry, go ahead. I just wanted to jump in. Kevin and i disagree on this. Social security those who watch the trust fund said this has no impact. Id say i serve on the Social Security subcommittee trustees say weve deteriorated Social Security more in the last year than two decades so it has a serious impact. Congressman can i ask you if the payroll tax is not cut, not continued, a family making a thousand bucks a week is going to see their paycheck go down by 20 first paycheck of the new year. What are you supporting that would replace that, that could actually take effect in time to prevent those paychecks from going down . I would suggest to you the refundable tax credit, a refund itself or more importantly fundamental tax reform but the question is, do we really, does anyone really believe extending that payroll tax holiday is good policy for Social Security and good to make that Program Sustainable . The answer is no. Gentlemen, well leave it on that note. Senator casey, congressman brady we appreciate your time today and we appreciate the work youre doing in washington. Thanks so much. Coming up, more from our guest host and why a major foreign car manufacturer could soon be considered an american automaker and our disruptor of the morning, alex moazed, worked for me the first time sticking with it, started a mobile app company while in college and grown to one of the top firms in the country. As we head to break another fiscal cliff proofing move by sirius xm announcing a special dividend of five cents a share and 2 billion share buyback. Still to come, the closely watched weekly jobless claims number, how much will claims drop after the spike from superstorm sandy. Find out at 8 30 a. M. Eastern. And cut very good. O geicos Customer Satisfaction is quite real though. This computeranimated coffee tastes dreadful. Geico. 15 minutes could save you 15 or more on Car Insurance. Someone get me a latte will ya, please . Welcome back to squawk box everyone. The futures right now are at this point right around the flat line. We had seen the dow futures up by 15 points or so, its come back down but probably a lot of people waiting to see what happens in washington because its been driving trading for several weeks. Honda is expecting within two years it will export more vehicles than it imports from japan. The company says the factories will take on a larger role in Global Product Development at that point. All right, ive been wanting to ask larry some specific questions and im going to do it now because actually some of the stuff you talk about doug oberhelm, you teach economics, youre an economic sage so the mantra and we heard it again that if we could get rid of the, which is hard, but is the Obamas Administration resistance realistic knowing you cant take away deductions and credits or do they honestly not believe that thats a better way of getting growth than raising marginal rates. Would it be better for growth to get rid of the rnd credit and reduce the corporate rate, absolutely not, much more important to support rnd. Would it be better to get rid of accelerated depreciation which has been a substantial spur to investment particularly right now when its depressed. How about health care and mortgage . I dont know if were talking about corporate. Is this mortgage and health care arent corporate. Theyre on the individual side. Where a company gets to should a company get to deduct its costs . The company should get to deduct its costs when it pays a worker, provides a work we are a fringe benefit. It would kill competitiveness to simply do away with it. The different argument which is what about the employee and you can say that people are getting this benefit and they ought to pay taxes on it and thats a reasonable argument. On the other hand, were trying to spread Health Insurance in this country, and it kind of surprises me, people who think like you do, joe, who really want Less Government come down on this side because after all thats going to push you towards less employer provided Health Insurance and thats going to put you back with the government. Look, i think the president s got this right here, which is, you cant do it in terms of absolutes and slogans. You got to look at each one of these things. I was trying to get to do you think the whole idea of broadening the base with fewer deductions in a simpler code, is that superior to, would we have better growth . Is that the republican mantra . We should broaden the base where broadening the base will get rid of tax expenditures that dont provide important benefits, and there will be a fair number of those, but Capital Gains . Once you do, i dont think the cap, depends on how much we can do. I dont think you want to be sending the Capital Gains rate up into the mid30s, that wouldnt be something that i would support, given that what it would do is just cause people to not sell their stocks so the government wouldnt get that much revenue. Why do you have to leave in where are you going . A meeting. I got a meeting in washington. With who . You cant stay really until 9 00 . Youre going to say no to us . I told you in advance i was going to say no, but we have more things to fix. Im here until 8 30 and ready to talk about anything you want to talk about, joe. All right, 8 20, were moving to climate change. Special thanks to Larry Summers for sitting in with us this morning, parting is sweet sorrow. Youre not going to see me talking about boxers and lululemon. Im upset to miss that but maybe there will be another opportunity. Youll be back hopefully. Good to see you. Thank you, larry, we appreciate it. When we come back why lululemon shares are lower and why the company is sending joe a box of underwear. Two boxes. Two boxes, mr. Commando. Mobile apps are the primary point of contact for many customers. Stick around, squawk will be right back. [ male announcer ] tradings like a highspeed train. And you dont want to miss it with thinkorswim by Td Ameritrade. You get knockyoursocksoff tools, simple oneclick orders, realtime paper trading to hone your skills, plus anytime you need it support. Stocks, options, futures, and forex. Get your trading on track. Thinkorswim by Td Ameritrade. Trade Commission Free for 60 days, plus get up to 600 when you open an account. Welcome back to squawk box. Check out the shares of lululemon. Check out the shares there, down 1. 09, the company reporting a better than expected jump in sales. But is expecting a sharp decline in sales growth at established stores. The company ceo joins squawk on the street at 10 10 eastern. Christine sent me two pairs of boxers and instructions on how to wear them. Number one, you dont wear them with lined shorts. And i knew that. You only knew that because she said that on the show. I wasnt wearing them with lined shorts, but i was wearing them with sweats. They were wrong. And the other one, i like this one, special instructions on this other pair, no flap, must pull down. All right, tmi. What do they mean by that. Well be right back. Theyve been committed to putting clients first. Helping generations through tough times. Good times. Never taking a bailout. There when you need them. Helping millions of americans over the centuries. The strength of a Global Financial leader. The heart of a onetoone relationship. Together for your future. Its part of what you slove about her. Essing. E. But your erectile dysfunction you know, that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back to squawk box, seconds away from jobless claims and the buzzer rings. 370,000, thats a drop of 25,000 because the release last week upgraded by 10,000. Many analysts, investors and you the viewers, try to get your gps back on some of these data points. Whether its booms or ten years, were seeing levels that will extend them for maybe three weeks, maybe out to three months. Are things Getting Better . Im not sure, it looks to me like flights to safety yields moving lower, displaced anxiety. Is it syria . Is it egypt . Is it the middle east in general . Is it europe . Is it the in fact that greece may have had a selective default or is it our own backyard, or is it all of this above . Theres a lot to talk about. The dollar index virtually unchanged and the big enchilada tomorrow with the jobless rate. We had a drop in claims of 24,000 in new jersey. 7,000 also in california, unrelated to sandy, 7,000 in new york as well. So this is let me tell you what happened. What happened is that we found out that were not in a deeper hole than we thought we were in, but 370,000 is a little bit on the elevated side. Did claims drop because people havent been able to put them in yet . Because if you look at the claims dropping in areas hit by sandy, is there still some unknowable. Theres still some claims that need to come through, the best interpretation becky is that were seeing the effects of sandy wash out on the claims and thats where im making the conclusion that were at 370,000 which is sort of in the middle of that 350,000 range. More claims to say that the economys doing fine at 350,000. There may still be some more in there. But were looking at trends. As soon as you get done figuring out, how much is sandy, how much is not sandy, we have to start dealing with the fiscal cliff so theres a shock behind us and a shock in front of us. So were in limbo right now. And were expecting a big effect from sandy in the friday number, especially in maybe the household survey, they moved the survey week back a week. Because of an early thanksgiving. They do that so instead of it being the week of the 12th, its the week of the 5th. So this number is going to tell us nothing tomorrow . Know theres going to be a lot of discussion about it. Ill stick to my guns, its a 125 to 150 economy growth some of that could be sandy. I dont donknow if you want to k about that chart. This looks at the net effect acceptable. If 30 say its acceptable and 20 say these are what we asked people. How many is that . Thats five of eight different solutions. People say, yes, were okay dealing with the fiscal cliff, if you raise taxes on those who make more than 250,000 and then you cap deductions, and virtually Everything Else is off the table. You can get a trillion, they think, out of raising the tax back to bush years tax cuts. You can get another piece out of that capping deductions, somebody has to come forward and say we have to reduce medicare spending all thee parties are net negative on raising income taxes for everybody. All thee parties net negative on raising the requirement atireme. Rediscussi reducing net spending, the democrats are a little better on that. You thought it was amazing that 30 of the public have not heard about the fiscal cliff. That didnt raise very high on major issues that are out there. The other thing i wanted to ask you about is the apple situation, after that performance yesterday, you talked last week about how you talked about the people that were selling this week. Do you think thats really whats happening in this situation . I do. Whether its that side which is kind of the negative side, you break the piggy bank, you want to beat capital gameins, you wa to beat the tax man. I think both those sides of the equation may have a lot more horsepower than people think, so, yes, im going to continue to monitor that and i think its ultimately, it creates issues. You know, down on the trading floors, sometimes people that are wrong, whatever, come out of the xyz, if they decide to lighten up a bit, and enough people do it, you can actually instigate moves as you move through important pricing thresh holds. A in my opinion its year end issues. This is one more way that it kind of plays out in the markets. Steve, congratulations on your interview yesterday, not only was it a great interview, it was picked up by absolutely everybody. My own observation was i cant believe the president picked tim quite geithner and you said oh, give me some specifics, which is kind of like what the republicans say, both sides are so guilty, i just wanted to scream. Its interesting, rick, when you look at both sides, theyre really digging in. Theyre not digging in, theyre not being forthright about their dynamics underneath. Thats the issue i have. The idea of tim geithner claiming that they were doing something that was politically risky by raising taxes on the wealthy, i thought that was a little bit astonishing, if you really want to make a deal, you come forward and say heres what i need for sure, and heres what im willing to give. But the other side of that, the willing to give, what theyre saying is, were willing to do this after you agree to that. And theyre willing to play a stronger hand. If its texas hold em, then youve got a strong hand there. Dont you have ideas about the ways we can tackle taxes, we have that oped in the journal today. I have no idea what the president or tim geithner, should be age be 68, 69, 70, should there be means testing, i dont think that cans been open and its a much bigger can. I read a good oped in the wall street journal, i guess this was during the debt ceiling debate. Tax cuts are always promised in the future. Steve, you and i can solve this, you know what, if people are going to break tax pledges, they need something in the hand thats tangible about the spending reform, the entitlement reform, the tax reform, so they should let everything expire and then when the president brings forth the actual numbers on reform, then they could lower the rate on whoever. I have one other question, rick, i know we got to go here. This debt ceiling thing, i think the administration is right about this, that they shouldnt do this every time. But my question is why is Congress Allowed to pass spending bills that exceed the debt ceiling, is that legal . Has your family ever spent more than you made on any given month, steve . Shouldnt they sanction themselves, rick . They cant go spending and at the end of the month say i cant pay my bills because i spent too much. When you change things that are almost 100 years old, its because of very bad political motives. I wouldnt let the debt ceiling go in the hands of the president under any condition, absolutely not. Solve it on the front end, thats what i say. Thank you, guys. Still ahead, alex rosen started applico, now the company is the major developer of mobile app. Alex will join us next. And a santa to boot [ chuckles ] right, baby. Oh, sir. That is a customer. Oh. Sorry about that. [ male announcer ] break from the holiday stress. Fedex office. [ male announcer ] i have obligations. Cutestress. Tobligations, but obligations. G. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Welcome back to squawk box, everyone. Apple having one of its worst trading days on record yesterday. The stock tumbling 6. 43 . Thats the worst decline since december 17 of 2008 when it fell 6. 7 . Speaking with Nbcs Brian Williams in a rock center exclusive. Why cant you be a made in America Company . You know, this i found, as a matter of fact, the engine in here is made in america. And not only are the engines in here made in america, but engines are made in america and are exported. The glass on this phone is made in kentucky, so we have been working for years on doing more and more in the United States. Next year, we will do one of our existing mack lines in the United States. You can see the entire interview with tim cook tonight on rock center, 10 00 p. M. Eastern time on nbc. John ford is with us with more on apple. People have been watching this stuff incredibly closer in the last few weeks, right, john . Absolutely. And people have been talking about the comments he made about the mac lines being made in the United States. One of the imac, it says as sem assembled in the United States. If you look at the mix of and t apples products and they make a lot of stuff. Desk tops in general, now fewer than a Million Units last quarter and apple made more than 50 million things if you count iphones, ipads et cetera along with all the portabless et cetera. Yes, given the year that apples had, its still up from where it was earlier this year. Given all the controversies around, you know, their supply chain and then their maps and all the things that i know brian talked to them about. This is a really interesting moment and then here of course on the some drop yesterday, this is a very interesting morning for tim cook to be out there. That is tonight and john well see you a little bit later this morning. And we are continuing our disruptors series. You know, its were, we wouldnt say a 58yearold, theres something about being young that we think that its important to say how old a person is. Alex, do you want me to say how old are you . Ly keep that between us unless you want to sort of tel i feel like it might be a little bit late now. 24yearold, former ceo of applico. Y your friends call you mosed. Do you have any companies that arent just letter letters, lik fbi and gm . Yes, we do. What would the application be that you made up for the fbi . For the fbi, its a lot about communicating with the public, educating on what the government is doing and really opening up that twoway communication with the citizens and the other people. Same with gm and att too, then, its a thread that youre communicating with the public. Initiated on the sales and marketing. How am i using mobile to communicate with my customers. Now year also seeing mobile now transition into companies and how theyre actually running their company or what theyre company is doing, integrating products with hardware and apps and all these kinds of things. How many d disdigit applications are using. We help august mebtd their business with how that translates into a longterm mobile vision and then we hope to go in and implement and execute that. So everything is really tailored for each business as specific to their needs. What could you do for squawk box or for joe kearn, could you think about that and come back and tell me . Vertical is a big business for us. What would you do for me or for squawk box . What do you want we want everyone in the country to watch at 6 00 a. M. In the morning if possible. What youre seeing a lot particularly with networks is mobile and second screen. So how are we letting everyone in the country, for example watch your show . Regardless of if theyre in front of their tv . So i may be on my phone, i may be on my tablet and i want to watch you at 6 00 a. M. And you, of course, together wherever i am. So thats an experience that translates across multiple mediums and you have to have a fluid experience from the user to get updates or get prompts and say, hey, this is what theyre talking about. Alex is coming on thursday morning, i got to go watch that show and then im going to turn on my phone or my tablet and whatever i am i can watch you. Whats what is involved with developing Something Like this . A lot of companies especially within entertainment jumped in very early. We need to get on mobile, lets go make some apps. Now what youre seeing within the industry is these very Large Organizations are starting to hurt from that. Because they developed it themselves instead of having somebody else do it . They developed them themselves but the longterm Strategic Plan wasnt really there. So now what youre seeing in mobile is its not just an app, its really becoming this platform. Everything is starting to become connected across every vertical, especially entertainment, now we have multiple apps on each operating system. So i have multiple code bases. You have a cleaner way of being the guts behind all that . So if youre doing the strategy and the thinking itch front, we can make a platform thats going to scale over the next five, ten years and now you leverage all of these synergies and you dont have to go build it and you have all of the issues with simply maintaining all of these apps. Which is difficult when you look at an application which needs to scale their business. You went to college . I went to bapsons college. Its an entrepreneurial business school. I just took classes that interested me. So i took a business law class, a database class, an entrepreneursh shiship class and those all together. We started with development and everything we do is in the u. S. Our headquarters are here in man at the tan. How many employees . We started with development and now design and strategy. We start with the client with thinking and then we implement it through. Thanks alex, we appreciate it. Very interesting, i still need to know more. Do you know anything yet. No, but im intrigued enough. For more on our continuing disru disrupt disruptors. Well head down to the New York Stock Exchange for the latest from jim cramer. Ready or not, the stock of the day is coming up. Youre watching squawk box on cnbc, first in business worldwide. From investing for the first time. To investing with knowledge. The potential of Td Ameritrade unlocked. Nyse euronext. Unlocking the worlds potential. To a world of superconnected intelligence. The potential of freescale unlocked. Nyse euronext. Unlocking the worlds potential. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Welcome back to squawk box, everyone, the futures are a little bit weaker this morning. Dow futures down about 10. 5 . Jim, we kind of watched yesterday at the dow got up into triple digit gains and gave back a little bit of that and this morning down a bit. Whats really happening do you think . I think that youre breaking to the news your unbelievable caterpillar interview, you can see whats happening which is that we go up and then we find positions have hardened. The geithner interview basically said heres the deal, if we dont get the 2 increase, theres no choice, were going over the fiscal cliff. Squawk box is controlling the discussion. Jim, i didnt think it was that big a deal, and suddenly its starting to sink in and we probably differ on the way we think about it, but did geithner kind of let that out of the bag, that its more important to punitively tax the 2 and above than to lose all those jobs if we go over the fiscal cliff . He kind of let it out of the bag, yeah, well do it, if we dont get what we want here, were going over the fiscal cliff. I didnt hear, maybe it should be 1 . Maybe it should be 400,000. The journals got an oped na said they basically want to win the house in 2014, is there a chance in the back of their minds they kind of want to go over . Im watching the interview like you, and i say maybe to the guys like a cliff jumper more than i thought. This was not a negotiating position. It was okay, here it is. It basically said theres no negotiation. Is that fair, though . To get what they want, whatever it is, that pound of flesh on the 2 , does it really make sense to want to take the country over the cliff if they dont. No it doesnt make any sense at all which is why i keep hoping the rhetoric changes a little bit. This is our position, what does the other side have to say, no, this is our position, see you later. Theyre guilty of the same thing at this point. Im not going to disagree. The fact is that steves survey, is that people arent thinking about the fiscal cliff. What a terrible combination, people dont know whats about to hit them, your paycheck is going to shrink. Grover norquist says theres no negotiation. Governor casey coming on saying, listen, its going to take some time. Rise above, this is like sink below, they think that our position wrong, somehow we are a compromise. All right. Thank you, jim, well see you in just a few minutes. Going to be an important day. When we come back, stocks on the move today. 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