Transcripts For CNBC Squawk Box 20121207

Research Senior Research economist michelle mire and well talk through everything thats been happening through jobs and what to expect. But first, there is a developing story. An earthquake off the northeast coast of japan triggered a tsunami warning. The warning has been lifted, but it was a 7. 3 quake. So far no reports of any injuries or damage. It was for the same area devastated by an earthquake and tsunami back in march of last year. We will continue to bring you any developments. In the meantime, steve has some of the mornings top other stories. Lets start with the markets. Asian stocks rallying to 2012 highs overnight. The nikkei edging lower after hitting a se hitting hitting a seven month closing high yesterday. European trading, shares seem to be fwllat. Bundesbank announced it had cut its Growth Outlook for the country. In the u. S. , the nasdaq snapped its losing streak yesterday with its first gain in five days. The dow was on pace for its Third Straight weekly gain. U. S. Equity futures at this hour we dont have them. Maybe joe has them. Steve, you are here because its jobs friday. Are you here representing c innocent objects t cnbc or the bls . Im representing myself actually. Good to have you. In Corporate News, netflix, regulators warning they may bring civil action against the company and its ceo for violating Public Disclosure rules with a Facebook Post. Reed hastings posted netflix monthly viewing exceeded 1 million hours ever. Theyre required to make full and fair Public Disclosure of material nonpublic information and hastings i guess thought it was okay and its a gray area. Isnt that full and fair . I think it is a gray area because weve always made the argument if youre watching cnbc its okay because this is a Public Disclosure, right . I guess facebook maybe its different because you have to be a friend to be able to get access to that information. If it was twitter, maybe a different story. I wonder if thats how deeply theyre digging into this. He doesnt think theres anything. He dismisses the contention saying he doesnt believe the Facebook Post was even Material Information. It wouldnt take a lot of youd have to do the math to figure out what that says about the results for the quarter. In a letter yesterday he suggested that the post was accessible to more than 244,000 stub describe subscribers. Maybe he has a public page. Lets say you talk to a reporter who represented a paper with 25,000. But this is much more. This is ten times that. He would have satisfied his seems to be one of the dumber things thats out there. Kind of a chilling thing from the sec. A chilling effect. Well see what the share disafter the bell yesterday. Knoll not whole lot happening. This is stupid. Cant have everybody working on steve cohen, can they . Why are you laughing at that . And a judge naming lead plaintiffs in litigation dealing with the ipo of facebook. A group of investors including state Pension Funds will assume the role in a proposed class ax case. Being a judge also named lead plaintiffs for a lawsuit against nasdaq, that exchange also being sued over allegations that orders to buy and sell facebook were not properly executed on that first day of trading. And speaking of text lawsuits, yesterday apple tried to convince a u. S. District judge to ban sales of sam sisung. A ruling will come at a later date. In august a jury found samsung had copied critical features of the iphone and ipad and awarded apple damages. Speaking of apple, apple is arguably the stock of the week. Shares rebounded yesterday after a rough session on wednesday. Todays heard on the street column says that the stocks 22 drop creates an opportunity for investors. The reason theyre citing is that apple is more of a Software Company than a hard one, and that means that profits are likely to remain stable for some time to company. Meantime everyone is still talking about tim cooks comments in an interview with brian william, he says his Company Plans to produce one of its exciting lines of mak executers in the United States next year. There are skills that have left the u. S. Not necessarily education, but stopped producing that. How do we get that back is this. Its a converted effort to get them back. And with this project that ive talked about are we do a mac in the United States next year, i think this is another good step for us. Software sales declining by 11 from last year, still better than 13 drop analysts had been expecting. Hardware sales were down 13 while accessories dropped by 8 . And the john mcafee saga continues to unfold. The Software Guru is now back in a Detention Center in guatemala. He was taken to a hospital yesterday for what his lawyer described as two mild heart attacks. Mcafees Attorney Says his client suffers from anxiety and hypertension. The software pay near is being held by guatemalan authorities for entering the country illegally from belize. He fled belize after authority wanted to question him about the death of one of his neighbors. Mcafee said the police were behind all of this, hes been set up in all of this, but hes also tattoo on his arm. Hes also publicly blogged about using i want to convene our kids investment committee. Your daughter has a smartphone, right . Oh, yeah. What kind . Iphone. My son has a samsung. I asked him if he cared about getting an iphone. He got a droid. He doesnt care. Hes cool with the droid. And our data from the all America Survey showed that in tablets, iphone ipad leads samsung, except in the 18 to 34 demographic. Where the aspirations are equal. So i just part of the interview brian did, they show that add where the parents are the young guy holding the line for his parents. They get an iphone and hes already got the they try make it hipper to have a samsung, right . Theyre trying to do that. And both my kids have its nonstop. I dont think they ever put them down. Your youngest is how old . Ten. We had a rule in our town among all the parents no cell phone until fifth grade. All the parents got together and agreed. Because it if one kid got it, we all about a dozen pafrpts in t parents in the same community. Weve held off. Its an Internet Access device for him. It was just a matter of stopping the tech envy going on in town. In washington news, both parties hinting at renewed talks on the fiscal cliff. The acknowledgement of open lines of communication passed for encouraging news. A new survey finds more than 60 of leading investment professionals predict a shorp stock decline in the market if the government fails to come up with a deal. In this case defined as a more than 10 drop in the dow. 56 surveyed foresee a deal to avoid the cliff by year end, 44 predict failure in the ongoing negotiations. As for Corporate America, through yesterdays close, there have been 70 announcements of special dividends. These special difference deebds are valueded a more than 30. 1 billion. Among the latest names, mcgraw hill will pay a special dividends of 2. 50 a share before year end. And drop its previously announced plan to buy back up to 200 million more of stock this year. Everybodys paid their dividends this year, so they wont be paying them next year. This is a major issue. Whats going to happen is we have two great economists onset. But that money will get annualized, so the 30 in the gdp accounts is 120. Theyll multiply it by four on the dividends income. Its quarter to quarter change at an annualized rate. So its times four. There is the marginal propensity of those people to get to consume it. Lets ask them now. Thats why everything that i say is nuts. You can almost get any kifrnd info you want. And when we talk about the jobs report, seasonaled justments will be a huge factor relative to sandy. Bob and michelle are here. And my biggest question, if all the companies are pulling the give dends forward, the u. S. Government thinks it will be taking in x amount based on what they would normally get for dividends plus whatever the hirer rate is going to be. It will drop substantially, correct . Youll get leads and lags in the revenues. A lead into this year, a lag next year. Pretty obvious how this works. In terms of tax planning, let hope they know to take account of this. The argument will argue how great this is working and when theres a shortfall, how did that happen. So i hope we dont go that route. But this administration has been very big on these kinds of things, basically distorting whats going on and this current thing about the mandate really bothers me. So i woouldnt i think the challenge is being forward looking. Theres big challenges not just because the challenge in terms of getting all the information, but also if win terms of trying make the budget numbers look good and you never really want to take that hit. So you want to pull forward as much and i dont know how many assumptions you can make, but when and you have tax policy that changes every six months or a year and you dont know whats coming, obviously the lead story in the wall street journal is about Charitable Giving and in some cases people are even paying their mortgage in advance. Some people think that money is better left in the private sector. I dont know. Companies seem to think that, charities seem just seems like a better place to leave it. People are very resistant to giving money to people that they think will waste it. Thats the same problem with all of this, we have a housing sector thats just now starting to have a Real Recovery going and now theyre talking about taking away the mortgage interest deduction. Does this make any sense to anybody . The housing recovery is fragile. Looking better than it was. But its still fragile. Did you really want to its almost a regressive it hurts the people that youre trying to help. You have to do it some time. The amt takes that away, right . If youre a wealthier person and if you have excessive deduction, whatever they are, it just at some point takes them away and throws them away. But i wouldnt argue that the current tax code is a good thing. I think if you can zero it out and start from scratch, that would be a much better and by wealth you mean if you make like 70,000 a year. There is no simple answer how to obviously solve the tax problem, so ultimately you have to simplify the tax code which is what theyre trying to do by changes in deduction. You but i agree, i dont think it makes sense to change the mortgage Tax Deduction. But you could make a decision that you were going to grandfather it out over the next five to ten years, 12 years. I think thats what they did this britain. You have to make the decision that this is something we will no longer pay for in the future. And if people are forward looking, they could potentially plan. For the first year, a higher dividend collection rate may already be offset by everybody moving forward. And in the last couple of week, the great fact in britain where they went to 50 on millionaires and they ended up getting half as much revenue. Ive been thinking about this and i cant figure it out the macro effects of this dividend boom that were going through right now. First thing i figured out i think is that this is not advantageous to more than half of all rs. If you figure out that half of all shareholders are tax exempted and they dont really care, thats one. The second is not all shareholders had a plan you would assume to sell that stock and get that dividend. They may have been long term investors, so they dont benefit, they dont really care. And the other thing is when it comes to Capital Gains, right, so they dont care when you think about the problem of youve distributed the money to me. What do i do with it, how do i invest it in a beneficial way. To i spend it, do i reinvest it. Is the idea that i then take this money, that the stock market adjusts lower because of the dividend payouts, and i reinvest it at a lower rate, is that how its beneficial when you think through the flow of money that will result from this . Id rather have nowhere to put it than not having it and having the government have it. Its a serious investment quandary. Insiders are the ones were worried about here. Thats what im talking about. Is this something done by insiders for insiders . We know it doesnt help half of the folks. Because of the tax deferred stuff. What happens to the money . What always happens to money. We have an environment where the Interest Rates are low, so if you reinvest it in a fixed income product, you wont make much return. Youll have capital losses on bonds. Im very concerned about the low Interest Rate in the bond market and the long period of time weve had bond yield this is low. And in the stock market, you have to be careful because there could be a sorting out among stocks between high and low dividend stocks and how they perform when these guys go x dividend. Why couldnt you invest in g chlt and g e or comcast and get a 3 yield there. Either one would be a good place. Or comcast and get a 3 y there. Either one would be a good place. Wasnt i invested in company x before, didnt i have that money in there and now theyre giving it back . Now you own a larger part of the company. No, because if you reinvest it and they buy more share, you own a larger piece of it. It should be equal. Theyve taken that cash out of the company. The stock price should adjust lower. But cash is not the same as the ownership portion. Your thought would be if you can buy more of the company, you get a larger share. Youre getting bogged down in minutia here. Im worried about you again. You know who else youre bogging down is this all of our viewers at home are now tired. Its exactly the problem theyre going to have. Viewers are going theyll get this special dividend and the issue becomes what to do with it. I think also what youre potentially getting at is the idea of a financial wealth effect. We always talk about how household Balance Sheets matter a lot for Consumer Spending. Most of the time we focus on housing assets because its more of a permanent change this wealth, so consumers tend to spend out of that, but is there a financial wealth effect and will that start to show up in Consumer Spending. Thats where i think people are a lot more mixed because you often think the changes in financial wealth are more temporary, so youre not as inclined to spend out of it. But youre not running yahoo are you. Who is that . Youre Michelle Mayer. Yeah, thats marissa. She has blond hair. How do you think its going at yahoo . Never mind. Michelle mayer. All right. Coming up, jobs report expectations, plus Morgan Stanleys new pay plan. But first, the National Christmas tree is now aglow are red, green and white twinkling lights. Its they call it a holiday tree. Last night the flipped the switch on the giant blue splus. The starstudded event entertained the crowd were through . I was in d. C. . No. That one has nothing on 30 rockefeller. Try running four. Ning a restaurant is hard, fortunately weve got ink. The starstudded event it givess on our internet, phone charges and cable,it givess plus at Office Supply stores. 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. Managed to close higher yesterday, but today well give back less than 0. 2 . Making headline, Morgan Stanley unveiling a new pay plan. The firms Financial Advisers, ploer, being ensivent advised t increase client loans and transfer accounts with less than 100,000 in assets to a client advisory center. Transfer accounn 100,000 in assets to a client advisory center. And transfer ac than 100,000 in assets to a client advisory center. Transfern 100,000 in assets to a client advisory center. Increase client transfer accounts with less than 100,000 in assets to a client advisory center. Transfer accounn 100,000 in assets to a client advisory center. Increase client transfer accounts with less than 100,000 in assets to a client advisory center. Weve been working only for the last couple of years to build outbanking and lending business. As we get more of our Financial Advisers to use our lending products, we have Significant Growth there. My mind just jumps around. Yeah, just suddenly fred no becky will read a story in a second. Greg fleming has been working on building up the units lending business to increase its return on equity. Now to todays Weather Forecast according to Steve Liesman. Is that me . I wanted to get right to it. Stitching. She would jump on things when one person stopped. That way the people at home never get a chance to even they cant blink. No dead air. You cant go to mika and joe. Now to todays national forecast, reynold wolf joins us from the Weather Channel and it looks like a rainy saturday for us here in new york. It does. You know, parts of the southeast could definitely use the rainfall, but youre guys are hogging it. But temperatures will remain fairly mild at least through much of your weekend. Here is the story for you as you mentioned, rain in the northeast, mostly cloudy, spotty showers parts of the southeast coast. Nations midsection, some snow showers in the twin city, dallas looking beautiful with 72 degrees. Out west, looks like all of the moisture will be limited to parts of the made civic northwest. High mountain, cascades. Snow could be over a foot 7,000 feet and up. Ski country, fantastic. So thats certainly the good news in that part of the world. In term of your air travel, backups are possible in chicago. Rain is the issue. Low clouds, too, limiting visibility. But minneapolis, new york, miami, miami is misspelled. Ill stand in front of that. Miami and seattle, you can see just minor delays there. Lets send it back to you. Good job, reynolds blocking maimi. If you could talk to someone about snow in the rocky, would you . Are you going up . Eventually. Steamboat springs will see over a foot of snow between now and sunday. Thats good start. But we didnt know anything about january or february . Not yet. If you get a chance to hit those maps to move stuff over the rocky, if you could. Well do what we can. In squawk sports new, are the broncos made their eighth straight victory look easy last night. Peyton manning threw for 310 yards and had his 30th touchdown pass of the season on games opening drive. The broncos handing oakland its sixth straight loss, 2613. And in College Shorts news, the awards last night, National Quarterback award went to Johnny Manziel. The first freshman to win this award. Johnny football. 500 more yards than cam newton, i think. The jim thorp award went to Jonathan Banks of mississippi state. Nations top receiver, marcus lee of usc. Winner of the hoe depot coach of the year is notre dames brian kelly. Kelly and his fighting irish will meet the crimson tide in the bcs National Championship game. The maxwell award is given to the nations best allaround player and the nominees for this trophy are the same three vying for the Heisman Trophy this weekend. Manti teo is the first defensive winner since 1980. Heisman is handed out saturday night in new york city. In the running, collin klein, johnny ma Johnny Manziel and manti teo. Coming up, its jobs friday. People know that. So that means time for predictions from our guest hosts. But first, the Worlds Largest cut stone on display. Called the dom pedro gem. More than a foot tall. Weighs nearly five pounds. [ 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 . Can i help you . 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 grounipping at fedex office. Made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. When you want a Financial Advisor who sees the whole picture, turn to us. Wells fargo advisors. Who sees the whole picture, turn to us. Wooohooo. Hahaahahaha oh. There you go. Wooohooo. Hahaahahaha im gonna stand up to her no youre not. I know. You know ronny folks who save hundreds of dollars switching to geico sure are happy. How happy are they jimmy . Happier than a witch in a broom factory. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Somebody called popo, 5150 is the police kacode it crazy person is on the loose. In this case hes crazy about a woman, although that can be bad. Believe me. Like i am about penelope. Crazy. Popo means police. Good morning. Welcome back to squawk box. Im joe kernen along with becky quick and Steve Liesman. Todays top story, the november jobs report. The dow jones news wires poll of forecasters finds that the economy likely added 80,000 jobs last month. Its worth noting that the reuters consensus a little higher, 93,000. Unemployment rate expected to hold steady at 7. 9, but liesman says its possible we could have an 8 again. Economists say the slowdown will reflect the effect of sandy about which well ask zandi. Joining us this hour to talk the economy, Michelle Mayer and bob bruska. A great morning to have both onset. First a developing story, a strong earthquake centered off the coast of northeastern japan. Triggered a tsunami warning from officials. Although that warning has been lifted. So thats good. We hope there wasnt a lot of damage. This could either be an actual earthquake or one just shaking the camera. The 7. 3 earthquake shook buildings as far away from im not convinced. Im almost sure i could do that. So far no reports of any injuries or damage. The tsunami warning is for the same area devastated by an earthquake and tsunami back in march of last year. Well continue to follow this story and bring you developments as they happen. All that uncertainty surrounding the fiscal cliff is leading to a boom in Charitable Giving. Taxpayer and charities are trying to maximize donations before end of the year. Reason of course is for the Tax Deduction thats given for Charitable Giving. Its coming under pressure as part of a broader fiscal cliff deal. Theres an article on the front page of todays wall street journal that highlights other ways people are trying to take advantage of the certainty over the final few weeks of 2012. Some of the examples they cite are people said to be accelerating large medical expenses for this year and selling appreciated stock in some cases even prepaying their mortgages so they can make sure they get the mortgage interest deduction. And, bob, you think for a lot of people that wont matter . You have the amt. So if you take excessive deductions, they just disappear. Which is one of the things about all of this about limiting these deductions which is kind of silly because the amt does it in the aggregate. And of course the amt is grabbing more and more people and its one of the things they want to reform, but if they reform it, they have to raise taxes someplace else. So its confusing. But thats the worst part of it, a simpler tax code that someone could actually understand and now how things work that allows less room for loophole so is that people who have accountants who can find all these loopholes for them a simpler tax code is what they have to come up with. Sounds like a good idea as long as its a sensible tax code. When you hear people talk about simple tax codes and then they start having their exceptions and everybody wants to tweak it, we have two parties with agendas. And its in the simplicity. A lot of lobbyists looking for ways to and a lot of Tax Accountants who abhor simplicity the way nature abhors the vacuum. Starting next year, annual contributions at ibm will be made on december 31st and nonretirees who leave did have december 15th dont get a penny. The wall strewall street journ reports the new system could save the Company Millions of dollars each year. The story is notable because ibm has been considered a fleerd paying benefits. So the decision could ripple through Corporate America and change the way other Big Companies make their contributions. Ibm has always been incredibly generous, too. Somewhere between 6 and 10 of your annual salary into the 401 k every year. So a big deal for people who are leaving the company and, b, you worry about the idea of putting in gradually over the course of the year, so you get it smooths out if there are bumps in the stock market along the way. Do people leave december 15th as opposed to december 31st . No. Just wondering if theres something that goes on there that theyre taking advantage of some idea that people leave before christmas or its a very generous program. They do pay in 6 to 10 . Joining us from the futures pits, ira harris. Were looking for this jobs report that comes out later today. Expectations are relatively low. Is the expectation that if it beats those numbers, you would see a pop in the stock market . I think it would have to be the original when you take out the effects of sandy, they were looking for 145,000 to 150,000. If you happen to get that, i think the equity markets would view that as a positive. In this light, we also get the canadian number at the same time, 8 30 eastern time. And they used to be earlier, but that becomes significant because so many automobile manufacturing takes place in ontario and with the robust numbers that weve seen out of auto sector that we saw earlier this week, it will be interesting to see if manufacturing jobs in canada show themselves. So im actually looking up there as a better indication. Because by the time we talk out sandy from in number, it will be meaningless anyway. So im going to look at the Manufacturing Sector out of canada as probably a better indication of what the u. S. Job numbers ought to be. How long will sandy mess up the numbers . Is this a year that we have as to worry about the numbers. Two to three months is what i read. I think thats probably read. If you look at katrina, it hit the end of august 2005. September and october were artificially low. And then you got a pop higher in the third month aunt then you returned to some sort of normal trend. So if it follows the same path, youll get about three months. Im no longer confuse aed about the dividends thing, but i am confused about something else. Couldnt the sandy weakness then be followed by fiscal cliff worry weakness. Even if we dont go over the cliff. We could go above 8 and all of a sudden we could. And im expecting over 8 today or around 8 or more. And just to explain, theres a couple things going on. Its an earlier thanksgiving. So as i understand it, the bls moved survey week backwards to 11 5 from 111 12. That means it further back into the teeth of sandys effects. All the peek out ople out of wo couldnt find work if they were looking for it. However the earlier thanksgiving also means retailers hire earlier. So you have these two forces. And zandi said there was two things, plus 86 from sandy, minus 60 or 70 because you have a seasonal effect of earlier retailers. On the jobs number. On the jobs number. So these offset . Hiring for retail means a positive. Less hiring for because of sandy is a negative. Could they offset . There has to be some netting. There are special effects in the reports youre trying to sort out. And theres also the question of what the the economy is really doing. And one of the other problems is that data had been revised up and people had been increasing i think thinking the economy is doing better, but it seems really the actual because revisions, its like expectations have been moving up, but the data themselves seem to me to be getting weaker. So im concerned that the economy actually is weakening coming into this period. Ism services was better than expected. Manufacturing was down. Employment component is worse than this only 36 of the time. Production was up. Very surprising strong report especially because in the third quarter, Consumer Spending on services up, but only 0. 3 at an annual rate. So what the heck is going on in the services sector. If people arent buying anything quite a shift. Adm showed a lot of hire. Plus 141 or Something Like in a. I understand why you are turning your eyes north and looking to numbers from somebody else. Thank you for joining us this morning and have a great weekend. A pleasure. Thanks. Coming up, the cnbc challenge, rise above. Congressman peter roscom, well see if hes ready to accept the call it action. 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. 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. You can see the dow futures are down by about 23 points. S p down by 2. 25 points. In our headlines, head of irs warns if Congress Fails to reset the alternative minimum tax, there could be a delayed start to 2013 tax season. In programming its systems, the irs considered the congress would patch the amt. Without another patch, the amt could hit as many as 33 Million People for the 2012 tax year and it will take them some time to reset all of those forms. And squawk is in session thorn with congressman peter roskam, member of the ways and means committee. Thanks for joining us. Good to be here. One of your quotes is that House Republicans are prepared to get the yes, but not prepared to get to foolish. And 1. 6 you would think is foolish. 800 people think maybe thats doable. Could it just look like this, ill cut to the chase, we go up we start at 500,000 and above. We go up 2 Percentage Points to 37 and do a couple things on deductions that are politically possible to do to get to a trillion dollars. If the president were to come down to a trillion, could we go up would republicans go up to a trillion in that. Ill give you a straight hans, but inhan answer, but in a minute. Let me get to the big concern. The entire conversation since the election has been litigating gone squaquarter of the preside own architecture. All were talking about is revenue, revenues, revenues. The white house has been absolutely silent on 75 of their own described remedy and that is where are the cuts. Now, secretary geithner comes to capitol hill and with a straight face says we need to spend more money. We need more stimulus spending. Look, i come from the state of illinois which is an example of what not to do. The state had the same underlying problems, that is runaway spending problems, and they came up with the wrong solution. Raise taxes, dont deal with the underlying problem, chase an entrepreneurial class out. 7 billion in unpaid bills and higher average Unemployment Rate. It is a system for failure. So whats happening with my neighbors in illinois, and these are the people that are minkd their own business, not paying attention to all this stuff, all of a sudden theyre looking up and saying why is it more expensive for my child to go to the university of illinois than it is to go to indiana university. Why cant my kid get into a state school. All of these things which is the Ripple Effect of, what, bad policy. And it is denial behavior. And i think the president s problem right now, hes overselling. Hes overselling the revenue side and hes creating the impression that, hey, you pay a little bit more taxes, and i mean you pay a little bit more taxes, and all of a sudden the stars are going to be brighter. Change what you can, dont change what you at least accept the things that youre unable to change. You cant training i dont think the president on what you just describes. What can republicans do to get to an agreement where we or steve did an enter swru ghitner the other day. And i dont know whether he slipped or whether it was intentional, i dont know whether they want to go over the cliff, but theyre ready to go over the qulif. So theyre poised for operation geronimo. We want to owe voter iowvert i. The best indicator of future behavior is past behavior. President obama twice before has made declarative statements about what hes not willing to do. And frankly, all weve heard from the white house is what theyre not willing to do. So the president has signed the it tension of these rates in the past. I think the underreported story in all of this drama are Senate Democrats that are wringing their hands and avoiding eye contact. Mcconnell would have produce the brought it up not just as an amendment. Were too busy today, forget it. They cant pass it in their own house. So here is the question. The operative question is does this administration really want to take to us 22 trillion . Is that really where they want to go . Because thats the pathway. And if they do, arent we better to deal with this right now . This doesnt get any better the longer we wait. When you have the speaker saying were willing to move, our movement is to put revenue on the table are you saying a bucket of crazy is better than the long term implications . Thats what the country is dealing with. Neither are things you want to embrace because theyre both miserable. But based on experience in illino illinois, illinois is in a very bad state. The president comes from that state, too. So that suggests further that is his world view. What has the city of chicago be doing . Rahm emanuel took on the teachers union. He got rolled. And theyve been selling assets. Its been asset sales, parking contract, not dealing with the underlying spending problems. So House Republicans are determined to deal with this debt question. So when boehner comes out and gives his talk right after the election but honestly, the administration has criticized the republicans because there are no specifics in the spending cuts. Come on, look. The Erskine Bowles language you know how this works. House republicans are will give me one. I wont play that game and heres why. House republicans House Republicans are willing to sit. House republicans are willing to sit down. Theyre not any more anxious to deal with the cuts and pass the cuts than anybody else is but we demonstrated through the ryan budget, we did it once, we did it twice ill give you that point. I wish everybody would stop talking about this in public and get behind closed doors and actually make this happen. I cant believe the amount of tough that is talking, the tough talk, well go over the cliff, well go over the cliff. Let me ask you a point. Its a fiscal speed bump a 600 billion tax we need. The real thing were headed for is the longterm progress we have to make. Im very concerned the atmosphere is very poisoned the 600 billion problem when we have a multitrillion dollar problem where you want your energy placed. People are folding in longerterm fixes, right, that you cant agree with. Youre never going to agree on the end of the year for them. Why dont you put it off until next year and solve all of it in the context of a real multitrillion dollar renegotiation on what the longterm fiscal situation looks like . Doesnt that make a lot more sense . You would have to elect romney to do that. Youre not going to extend the bush tax cuts for the high end. For another minute. Not even for a milliseconmil. The republicans want to bargain away and let taxes go up by the end of the year and have the big negotiations occur next year when the president will want even more increases in taxes. Let me ask a different question and its sort of the and then we got to go. Heres the opportunity for the president to eclipse the whole thing, i dont think hes going to but he could eclipse the whole scene. Lets not relitigate 01 and 03 lets bridge to tax reform and move forward. The Senate Democrats not answering their phones are the ones to ask about this one. Congressman, thank you for being on. The final countdown to the jobs report. Stick around. Mom . Dad . Guys . [ engine turns over ] [ engine revs ] hell be fine. [ male announcer ] more people are leaving bmw, mercedes and lexus for audi than ever before. Take advantage of exceptional values 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. All right. We are wrapping up our first hour of squawk this morning and we want to thank our guest hosts this hour. Thank you very much for spending the hour with us. Its been a pleasure having you both here. Thank you. Okay. Do we have to go immediately . We do. All right. Well take a quick break right now. Well have more of the mornings top stories when squawk box comes right back. Plus, what do the nba, mortgages and the motor city have in common . Todays guest host quicken loans chairman and cleveland cabs owner dan gilbert, the economy, investing and the fiscal cliff when squawk box returns. If you think running a restaurant is hard, try running four. Fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. 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. You know, one job or the other. The moment i could access the retirement plan, i just became firm about it im done. Im out of here. You know, its like it just hits you fast. You know, you start thinking about whats really important here. The latest coffee machine from nespresso. Modular. Intuitive. Combines espresso and fresh milk. The new u. Nespresso. What else . Available at these fine retailers. Well, having a ton of locations doesnt hurt. 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 ] break from the holiday stress. When you take a closer look. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. Getting america back to work. Our guest host is doing his part, spending millions to jumpstart the motor city. Dan gilbert is the founder of quicken loans and blackrock ventures. He tell us about the opportunity detroit. Netflix in the news. What you are about to see is channel 4 news. Now the s. E. C. Is showing interest in ceo Reed Hastings. We check out the good, the bad, and the ugly. Its jobs friday. Squawk box begins right now. Good morning, everybody. Welcome back to squawk box on cnbc. Im becky quick along with joe kernen and Steve Liesman who is in for andrew ross sork been. The futures are weaker this morning. The dow futures only down 15 points right now so theyve shown some improvement. S p futures down 1 1 2 points. Investors focused on the november jobs report which is out 90 minutes from now. The dow jones forecast is calling for 80,000 new nonfarm jobs for november with the Unemployment Rate remaining at 7. 9 . Reuters is expecting 93,000 jobs. Theres no deal to resolve the fiscal cliff but there are indications of insidethescenes talk. The white house told reporters that lines of communication remain open not sure exactly what that means but a spokesman for House Speaker john boehner used a similar phrase. Maybe that means call me . I dont know. Analysts say there are some suggestions that theres Real Progress that can be made. A 7. 3 magnitude earthquake hit the northeastern coast of japan this morning, the same area as the devastating march 2011 quake. But there was a tsunami warning canceled and reports of injuries or damage even though the quake shook buildings. Workers at the Fukushima Nuclear plant were ordered to Higher Ground as a precaution. Our guest host is dan gilbert, hes chairman and founder of quicken loans and the owners of the nbas Cleveland Cavaliers and among the topics were ready to talk about dan, the risk of the looming fiscal cliff and the broader economy. Well start with this mornings other top stories. Dan, welcome, great to have you here. Great to be here. We want to find out about a lot of things including the Housing Market, because i know you have a really good feel for it. Theres a lot to talk about thats for sure. The cliff and some of the stuff happening in michigan as well. Netflix received a notice from the s. E. C. Regulators warning that they may bring civil action against the company and Reed Hastings for violating Public Disclosure rules by posting something on facebook. Back on july 3rd the ceo posted and heres the quote netflix monthly viewing exceeded 1 billion hours for the First Time Ever in june which seems he thought that was fairly innocuous, but the s. E. C. Says it violates regulation fd which is the Public Disclosure. You have to make full and fair Public Disclosure of what would be considered material nonpublic information. And hastings says this is crap. Hes dismissing the s. E. C. Contention saying he did not believe that the post was material on facebook. In a letter yesterday he also suggested that because the post was accessible to more than 244,000 subscribers to the page, it was very public. Shares of netflix not much happened. There are other things happening with the company, too. Well talk with an analyst who covers netflix in about 11 1 2 minutes. This is kind of a crazy story, i found out its a public page so its once you dont have to be friends to get on to it. Anybody can look at it. You hear a situation like this the s. E. C. Breathing down his neck on this. Would it occur to you that was something . Im glad were not a Public Company because if my twitter account ever got big trouble. You know, hes just posting sort of what you said an innocuous statement and the whole world can get to it, i dont know what the issue is. It wasnt on the prompter. I threw that on. Do you think . I might be violating Public Disclosure an oxymoron just a sense, right . For posting on facebook, for not publicly disclosing something that he posted on facebook. Sounds like it contradicts itself in the very sentence, right . That he publicly disclosed. On facebook. Thats right. Maybe he had to be on twitter also . I wonder, wouldnt you like the people involved at the s. E. C. Just like the four or five, maybe theyre, you know, 26 years old or something . Who are they the people that decide . Id like to ask them. I think becky said this the last hour, you hope they have Better Things to do. And i think we established earlier if regfd fulfillment is telling a reporter who could have 25,000 readers he has 220,000 potentially. And 243. And its public how could this be anything other than a Public Disclosure and its immaterial, right . We talked about how if you talk to a newspaper that had 25,000 readers that would be considered published. That would be considered fulfillment of the reg fd public announcement. Is it overstating to say the s. E. C. Should rise above in this case . I think its clearly not. Let me get my pen. Could a Corporate Bond bust be coming . Toprated companies are on pace for a record year of debt raisings in the United States with deals already topping 1 trillion in value but the wall street journal reports some of the biggest Fund Managers are warning dangers are lurking in what were once seen as the safest investments, Interest Rates are low and bond prices are high and some managers say there is little room left for gains and a small Interest Rate gain can eat away at bond cautious. U. S. Companies have been stockpiling cash but numbers from the fed yesterday showed some of the firms slowed their savings as the economy has emerged from recession. Companies may no longer be adding to their cash reserves but they arent growing the balance either offsetting business uncertainty. Some companies as we discussed issuing special dividends trying to beat possible tax hikes and the fiscal cliff uncertainty could lead to an increase in mergers and acquisitions. They look to complete transactions by year end and i made a fool of myself the last hour trying to go all the way through. Not doing it anymore. We do that all the time here. Thats what we have three hours for. It was dumb. The name fiscal cliff where did that actually come from . I dont know. Bernanke maybe. Maybe. Really . Maybe bernanke. That thing really stuck. Thats a good question. Thats good trivia. Ill goog it. Weve said its not really. It doesnt happen really. Its more of a ski slope its not a Black Diamond slope. Its more advanthan advanced. A double blue. But not without a lot of moguls. Dan gilbert is the own of the Cleveland Cavaliers and the founder of quicken loans and youre the perfect person to have here because you have your finger on so many Different Things happening in detroit and around the country. Lets start with the housing industry this morning because people have been trying to figure out if the resurgence there is for real. You see so many people who are coming in either for mortgages or refinancing. What do you see happening . Well, you know, real estate is local as we all know. Its a marketbymarket thing and when you put a National Number to it youre taking an average that is sort of meaningless if you put it that way. Some markets are doing well and most of them are still fairly flat. I think we got a little bit of a bump. I wouldnt by any means call it a major recovery yet. But were seeing areas in the west, were seeing areas in the midwest, not so much in the northeast, a little bit in the south that are starting to bump up a little bit. In terms of prices . In terms of prices. You had the inventory that peaked at 12 months is now down in the fivemonth range. The average time a house stays on the market before it sells, so thats one indication. By no means if somebody were to tell you a few years ago wed have 3. 25 Interest Rates, 15year rate at 2. 99, what is the Housing Market doing, you would think it would be booming. Do people need to rush . Is there too much complacency . I think a lot of smart corporations have floated a lot of long term these are rates you would dreamt about remember late in the 70s and 70s 17 for a mortgage rate. If i had to make a prediction where rates would be at the end of 2013 was it you that was mad that he had to make you yes. You were mad the company asked you to make a prediction. I said watching Interest Rates next year would be like watching paint dry . Grass dry. Or watching paint grow. Those were my two analogies but cramer thinks they could go significantly her. If bernanke tells us where they could be, we could believe him. Do people have time to have this once in a lifetime . I do think theres some time. Again, it seems to be that things have bottomed, right, you look at housing prices and inventory of homes, it looks like things have bottomed. Youre certainly not hurting yourself by any means to wait for rates to go lower and housing prices to go lower. I think its definitely a good time to buy. To have a situation where you have the rates where youre at and housing prices where theyre at, usually theyre opposite, right . Theyre inverted so given what joe just asked do you think they could go up next year . I dont think theyre going to go up next year. Could they . They could. I dont think its likely. I dont think its likely, i think the fed will because the economy will be so weak, right . You could have an increase but you could have marginal depression which is what i wanted to ask dan about. On the surface if you dont understand how you fund your loans, it looks stupid to give somebody a 30year loan at, what are we talking about, 3. 5, 3. 4 in some places. Right. And joes suggesting Interest Rates could rise. But that doesnt really get into how you fund yourself. Right. Is it dumb to come in and make a loan at 3. 5 . Most Mortgage Companies are taking the risk off the table and selling the loans in the secondary market. Who is buying them . The fed as you know is buying. And you still have the Pension Funds and Insurance Companies and you still have Worldwide International buyers that are buying this stuff. So, we are. We are. They average, though dumb money. It averages 6 1 2, 7 years, even though its 30 years, the average duration before people pay off and move or refinance. The lower the rates go and the longer the mortgages will last theoretically. Especially if rates go up because people wont have incentive. The fed recently has indicated they would like to see rates go even lower, right . I have said publicly that a fed member was opining with me about a 2 mortgage. I dont know if it can go that low, but the conversation was something along the lines of i said theyre really low. Could they go any lower . What do ul think would happen if Mortgage Rates were 2 or in the 2 range . Is that possible . I certainly think it is. Now i believe anything is possible. Two years ago if you would have said youll see a 15 year at 2. 99 which it is this morning, i would have said youre on some kind of drug. Anything is possible. Will it really help the Housing Market . If its not sparking it at 3. 5, 2. 99, i dont think thats the reason. I think job security drives it more than anything. My argument has been and im happy to change this that it may not be the answer, but its part of the solution and it helps a bit. But the important question on the other side of that is it doing harm . Well, i dont know how it would do harm unless you started looking at, you know, bubble situations, again, like we had in the 05 or inverted bubble . I dont know whats an inverted bubble, i dont know what you would call that. Were not anywhere near Something Like that. The harm could be the fed is growing its Balance Sheet too high and it will have to eventually settle. I think the fed can hold on to the mortgages and not do itself harm by selling them into the market at the time. And the other harm thats been mentioned is its ruining the normal function of the market and the other harm out there is the fed is forcing people into other riskier assets, cant sit on the mortgages anymore, they got to go other places they shouldnt be. It looks like cash is still very, very scared and on the sidelines in everything, right . You have cash in banks at an alltime high. Its never been this high before and you do have some appetite for borrowing but not anywhere near where it is. And whats the policy that will shift the cash on the banks Balance Sheets into the economy. I dont know if raising the Capital Gains rate will do but, you know, theres got to be something that the banks will eventually do with it. What does someone need at this point . The other big criticism has been people that can use the rate relief in terms of what theyre paying cant get access to the credit. What does someone need at this point to go to quicken loans and be able to refinance their mortgage . Theres sort of two worlds going on at once now. You have the harp world which is the federal program that says if your loan was originated before june or june of 2009 or earlier and the loan was guaranteed by freddie or fannie right now there would be no look at the value of the home currently if your payments are on time. A lot of people dont know that. I didnt know that. And you can go up to 200 loan to value or even higher. Theres no loantovalue limit. If somebody is under water today and this is a shocking thing ill tell you right now when did it happen . It happened over the last six months but theres been a a year even. Theres been a few changes or loosening of that even. Heres the thing that will shock you. Our company is pretty good, our company quicken loans is pretty good at getting ahold of the consumer. We like to pride ourselves on that. Only one in four homeowners that we have the information on that says youll qualify for this harp loan whos under water and whos rate is much higher than the market. 6s, 7s. 6s, 7s, 5s. We do three out of four. Some we cant get ahold of or they dont believe us. I didnt know about that either. We talk about it all the time. This is something that changed in the last six months. Maybe you went before and you tried to get refinanced but the assessment came in at the wrong level. If youre one of those people, you should go back and try again . Absolutely. Theres a boatload of consumers, i mean a boatload, tens of millions right now, who doesnt believe that they can refinance. Theyre making their payments on time, you know, so for fannies and freddies standpoint, too, you know, its a win win. Performing mortgage, current on payments, a loan to value up to 200 . It can go higher in some cases. Do you even need an assessment . You dont need an appraisal in some cases. You to a quick loan to value, you dont really need one. This is if the loan was guaranteed by fannie and freddie. And it would happen before june of 2009. June of 2009 is when you or earlier. Well dan, whats your phone number . We got a lot to talk about. Usa today, i want to ask you about all the cabs have gone all the athletes, man, anybody who has become a target has a gun, did you see that . Usa today front page. 70 of nfl guys that make some serious money, people know where they live, for protection they buy a gun. I dont know. You dont know . Do i . Yes. But not with me right now. You are just glad to see me. Questions about anything you see on squawk, treat us cnbc. Still to come, union showdown, and then future of netflix and then in the next half hour a leading economist weighs in on the jobs report. In this state of history 71 years since the attack on pearl harbor more than 2,300 americans died that day. Sfx sounds of african drum and flute look whos back. Again . Its embarrassing its embarrassing we can see you carl. We can totally see you. Come on youre better than this. All that prowling around. Yeah, youre the king of the jungle. Have you thought about going vegan carl . Hahaha you know folks who save hundreds of dollars by switching to geico sure are happy. How happy are they jimmy . Happier than antelope with nightvision goggles. Nice get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Welcome back, everybody. Our futures this morning are indicated a little bit lower. Dow futures down 17 points. S p futures off one point. Obviously weve got the jobs report coming up in an hour and ten minutes and it could make a difference at how trading goes this morning once the opening bell rings. Two different forms of righttowork legislation being pushed through the michigan legislature. Despite protest from unions the state republicans used their sixvote edge to prohibit private unions from prohibiting nonunion employees to pay fees. They have to agree on a single bill. The law would make the home of the u. S. Auto industry the 24th righttowork state banning mandatory unions. A Facebook Post back on july 3rd leading to a wells notice for the ceo of netflix. The stock took a hit after hours. Joining us on the squawk news line, the managing director of Equity Research at webbush securities. You have a very different analysis. You said it should have been an 8k and the information of a billion hours, that that was material . I think yes, on both of those. I think that reed is defining public the way noah webster defined public, and unfortunately webster doesnt run the s. E. C. The regulations are pretty clear and they specify the manner in which you can make public dissemination of Material Information and facebook just isnt one of those. So were wrong, then, we have been under the impression that a ceo could come on cnbc and release nonpublic information and that would be okay because were public. You think the only way to do it is an 8k . Theres a specific rule for news outlets, i know it may shock you guys but you qualify. I dont know why 243,000 people that can look at the are the rules outdated because they havent taken a look on social media right now . I think thats fair. I think the rules should probably consider this and reed writing his blog post yesterday his Facebook Post yesterday taking on the s. E. C. Is maybe directionally the right thing to do, but it shows some hubris. The s. E. C. Hasnt done it yet. So, dont decide for yourself that facebook is a news outlet. Im one of the 243,000 and i didnt see it until the next day which was july 4th. Why do you think its people knew, what, people thought they had 900 thought they had 900 million views and then he said now we got up to a billion and thats i mean, where do people why is that material . Why is that such a big difference to what people previously thought . I think your question and reeds response are both disingenuous. The stock was up 4 the day that he posted it. It was up 9 the next day, so when the material when the information was widely disseminated, that stock went from averaging under 70 for the 20 days prior to his post to averaging over 80 for the 20 days following. Why is it such a big deal . A Material Movement in the stock. But why was it such a was it a big shock that there were a billion views . What did you think the views were before that . The last time that they publicly disseminated the number of views they said 2 billion hours for the quarter in december. Seasonally viewing in june is lower. So i thought actually it was maybe 700 million and to be perfectly honest i dont regularly read the netflix blog on netflix. Com i didnt see the Vice President who said nearly a billion hours back on june 4th. I dont think anybody saw that. So, no, to not think this was public i do not think it i mean, i do think it was material, and honestly i think if you just look at the share price clearly investors agree with me. They moved the stock higher and, oh, by the way, the stock dropped 23 more when they reported exbecause it turned out the billion hours wasnt an indicator of their financial health, earnings was. Isnt the issue on that the medium that hes using . I mean, if you would have said that on cnbc or some other outlet, the stock would have moved as well, probably please, guys, i mean, facebook doesnt use facebook to disseminate Material Information. If facebook doesnt use their own platform, then i would say the average reasonable person knows thats not a news outlet. Its always so hard to, you know, as an analyst im surprised you would ascribe definitely ascribe a movement in the stock but, you know, you say that citygroup recommendation didnt do anything . It moved up 4 on the citigroup recommendation. Thats a lot. Sandy now was supposedly caused by Global Warming just because it what happened, you know, when we had warm weather doesnt mean it was caused by Global Warming. But anyway, thank you for your time. [ male announcer ] its that time of year again. Time for citi price rewind. Because your daughter really wants that pink castle thing. And you really dont want to pay more than you have to. 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Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to squawk box, everybody. In our headlines were about an hour away from the november jobs report and the numbers are expected to be impacted by sandy. The dow jones forecast is calling for new 80,000 nonfarm jobs. The reuters forecast is calling for 93,000 new jobs. Ibm is implementing a significant change to its benefit program. Starting next year matching contributions to employees 401 k accounts will be given in one lump sum on december 31st. If a worker leaves the company before december 15th, they wont get anything from that payment. Also video game sales fell 11 in november from a year ago thats according to the new figures from mpd group. A smallerthanexpected drop. The biggest selling game was call to duty black ops schs 2. Joining us is a globe strategist. Good morning. Good morning. Lets talk about ranges and if were in the 50 to 100 ranges and 150 to 200 are there three different outcomes or takeaways from that . I think the first two wont make much difference. 50 to 150 . Yeah. If you get a very strong report i think it does make a difference. Because it says the economy is so strong it can actually withstand the distortion from Hurricane Sandy and withstand some of the hesitancy to hire ahead of the fiscal cliff and if the economy is doing that well with all of the uncertainty out of washington right now imagine what it can do with some of the uncertainty resolved. How likely is that . If we get a strong number it will cause markets to react. Lets underline the first thing you are saying. The market has discounted sandy effects from this number and its not going to read Overall Economic weakness. Thats right. I think the market will have a very hard time focusing on them because you have both the distortions both sandy and also potentially a delay in hiring because of the fiscal cliff. We know they are both hard to read and theyre also both temporary, if you were going to go cliff diving in four weeks its hard to focus on these two issues right now. That would stand to also affect the upside, too, right . If i see 150,000 to 200,000, i would know the economys resilient and i know the economy could go over the cliff in four weeks. The question is how could investors play this, the key thing to recognize is we dont know exactly what the jobs report will tell us about momentum because of the d distorti distortions, as soon as they come to an agreement even in early january you know the uncertainty tax will go down. The uncertainty on the markets and the economy will go down. And when uncertainty goes down that should push stock prices and Interest Rates higher, i wouldnt downplay this number. Id try to position myself to take advantage of a balance in both the market and Interest Rates when we get the fiscal cliff resolved. Give me a sense, give me a number, what happens on the day that becky goes on tv and says breaking news, a deal has been reached between boehner and the president . How much does the dow go up . Well, im not going to give you that. Come on. Well, obviously, i think it should be worth hundreds of dow points if and when that happens. But, of course that would be becky, though, right . Well see hints this is coming and well probably get news the market will bounce and the day after people may sell the news. Right. But the basis point is this, though, there should be an urgency among investors right now if they look at the relative valuations. We still have this has been a tale of two tales here. Weve got the tale risks and tale evaluations and the problem if you get past the fiscal cliff one big tale risk is eliminated and that should push Interest Rates and stock prices higher. The valuations are very extreme. Longterm rates are just way too low. Given an economy thats it doesnt matter what the deal looks like, it still goes up a couple hundred points . I think thats right. So long as the deal i think what were going to get is a twostage deal where you get a down payment in 2013 which brings the deficit to gdp ratio down from 7 down to 6 . If we could do that along with some longterm agreement well get another trillion out of entitlements or a trillion from taxes or somewhere else but a range of what well do in 2013 where well get the money for the rest of the sort of fiscal issues over the next few years but some down payment. We get the down payment and its a reasonable downappointment not one that will crush the economy, i think the market could react very well to that. Whats your opinion on whats going on in the economy exsandy . You were saying a better jobs number would show the economy is resilient. Do you think it is resilient, if it doing, if you can take out the effects of the hurricane, better than people think . I think its got so much potential. I see all the hesitancy here. But pentup demand is forcing the Housing Market higher. Pentup demand is forcing the Vehicle Market higher. Consumer finances are very much improved. People have locked in the 30year, fixedrate mortgages at a wonderful rate. Everything is actually pretty primed here, its the cloud of uncertainty. Make t when it breaks, it could take off. I think its still a 2 economy but it has the potential to do more than that if we can reduce the amount of uncertainty in washington. I made one of my way 13 predictions that wed have one quarter of 3 growth. What do you think . Were so conditioned to the 2 world. To get the rate down youll need to put 4 somewhere along the line i think we can get a 3 quarter and, you know, ill raise it. I think we may get a 4 quarter. I dont think well get 4 for the year. What about 5 . Ill say 5 . All right, david. Thank you very much. Thanks for speculating. David kelley from jp. Avoiding a debt disaster . What will it take for politicians to rise above the partisan politics and avoid the fiscal cliff . Well talk more with our guest host dan gilbert. And on monday well bring you a special interview with areas skein bowles he was the cochair of president obamas deficit committee, monday at 7 00 a. M. Eastern. Nice. I always wait until the last minute. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. He loves risk. 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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, everybody, on this friday morning. The futures are still hanging in there. Were looking at the futures just slightly lower at this point. It looks like the s p futures are down about two points below fair value but, of course, we do have the jobs report coming up. Dow futures at this point are down about by 22. What impact will going over the fiscal cliff have on stocks . Weve been talking about it with our guest host dan gilbert. Weve decided we have time . As far as the fiscal cliff . No, we have time for mortgages. I think we have time. The fed has stated they want to hold shortterm Interest Rates through 2014. We know they dont technically control longterm Interest Rates unless they are buying mortgages which they have done over the last couple years. So, you know, it appears by all measures that you have some time, but you never know because these things can change very rapidly. Rates tend to go up higher a lot quicker than they come down. Youve seen the commercial allied financial where they say the greatest economists in the world and a Nobel Laureate and do you know where Interest Rates are going in a year, and he says no. We should know what cd rates are going. I think theyve done the best they can what is the maximum amount cd rates could fluctuate in the next 12 months . Could fluctuate . A quarter pobet . A quarter point. Where are they . 0. 3. Long term . I saw the ad, i saw a fullpage ad in the detroit paper recently that a bank was bragging about their incredible Interest Rate and getting 1. 1 for a oneyear cd or Something Like that. Think about that. Thats almost like your in an alternative universe if someone told you that. 1. 1. Ive seen 0. 7 in some places. Listen to it, the high degree of confidence in a year you dont think its 5 . Exactly. If the economy were turned around the commercial is totally fallacious. Lets pause what david kelley was talking about. The fiscal cliff deal is done, uncertainties are removed from the economy and we get 4 or 5 growth rates. Maybe the feds hand would be forced if you had a precipitous drop in the Unemployment Rate down to 5 1 2 or 6. 5 but theyre about to do something extraordinary here, right . Next week theyre going to announce this new thing and theyre going to get rid of operation twist and theyre going to replace it probably with outright purchases. And it could be that theyre buying 85 billion a month in longterm securities. Okay. Where are they getting the money to buy that . Theyre making it. Theyre just printing it. Not even printing it. You wouldnt have to print it today, its an electronic thing. Theyre typing it essentially. Will the resolution of the fiscal cliff and even some progress on our longterm problems, knowing that at best were just putting off austerity, sooner or later its coming, right . Higher taxes and lower Government Spending, right . You combine that with reinhardt, rogoff and the idea were in a 2 world all of a sudden, would doing the fiscal cliff make it possible to do 5 or are we just we know austeritys coming and we know im saying weve got a lot of debt im saying that we are maybe in a new we might be in a new normal. Is there any reason to think we could do a 4 or 5 . Nobody wants to take an automatic hit. The number you want to achieve and achieve it quickly, thats one aspect, but no one wants a huge hit, for example, to defense spending. Do you think well get to 7 in unemployment . I do. 6. 9 . Even though were facing the same kind of austerity as europe. I think American Companies put americans back to work. And freeing up the Corporate Cash will overcome get rid of the uncertainty. Why would the cash be freed up . If you are raising Capital Gains tax all the things were doing are negative. Hold on. I guess i disagree fundamentally that the Capital Gains tax is the definitive reason why you would or would not make an investment. I think theres two pieces. One is the piece that i dont like the higher rate. The other piece is i dont like the uncertainty of not knowing what the rates going to be. That, thats. I think its been sort of known that people are not and companies are not freeing up capital assets, theyre not selling them or making moves. Theyre sort of in a frozen state. The same thing with all the cash on the Balance Sheet, if you want to incent investment raising the price of the investment theoretically isnt a way to incent it, right . Hold on. I thought the deficit was a big rob and want to a measure that helps reduce the deficit help the economy . I just dont know. In the Capital Gains sense i personally think and i think its also been proven in the past if you lower rates it increases the revenue to the government. We should be focused on revenue generation. Lets talk about reality because youre somebody who has money and is looking at situations like this. Has it changed your behavior on investments, you could make, you would make down the road . Thats a great question. I would say me personally probably not. But, you know, i just when i look at the rest of the world and i look i cant understand it and i cant really know why do you think it is, why is there so much cash on the sidelines and earning such a low rate of return as we just saw pointed out . Why arent they investing it into things . What is holding it . I dont know whats happening at quicken loans, i know its a privately held company. What are you doing in terms of jobs, in terms of we are doing really well. We positioned ourselves really well through the mortgage armageddon if you will. We didnt have the massive participation in subprime lending and all that stuff and so, you know, were able to centralize the process and do loans from downtown detroit all over the United States in 3,000 counties. We have an operation in arizona and also downtown cleveland which were highly invested in. So, things have gone very well for us. Youre a contrarian, you picked two cities detroit and cleveland. We believe in lake erie. Lake erie we think is the future. Man, you are getting good deals. We bought a bunch of real estate in downtown detroit and we moved 6,500 people to downtown detroit and so were very excited about that and we think detroit is a do you think right to work would make a difference in michigan . Do you know what, its another great question. Its such a passionate, emotional issue in michigan, you know detroit to me, its weird to me what were really talking about is whether dues to unions are mandatory, is that what were talking about . Is that what were talking about . Dues and belonging to the union. Right. So, if you have all a righttowork state is you can choose whether to join the union or not . If the shop votes as a communist as a guy that lived in russia, how does it seem like thats good policy . How could you argue am i going to dignify if you are someone in a union who has been in it for a long time and you pay your dues, everyone else will benefit from what youre paying and someone is a hangeron and get the benefits the righttowork state in terms of employment. You remind me of guys in saudi arabia. When i was in saudi arabia i talked to a bunch of guys and whats your biggest problem, i was doing this thing on the economy. They said israel. Its 1,500 miles away and youre a country with all kinds of problems. The unions are 12 and declining and the republicans think the unions are the israel of saudi arabia. Its crazy 24 states are right to work now. Why is it such a threatening thing for individual people to be able to say i dont want to give money toe someone who i know is going to give money to one Political Party . I dont think thats crazy. I just think that explain to us i wa to hear dans perspective unions have helped workers make gains. You have a right not to. I want to hear dans perspective on heres their view, im not saying its mine. Their view is if you allow it to happen then the union will be gone because people will say, well, its a union shop and i can benefit by what the union did and everything but im not compelled to im not going to pay. Therefore the Union Membership goes down to almost nothing and the union is gone. They view it as a unionbusting move. I think its different in righttowork states where its always right to work. But there are new rights to work. But i think its because youre going into an older infrastructure. Detroit was the capital of the unions. The fifth largest state i think for union involvement, right . And probably was number one. Because its not as much uaw anymore and and trade workers. Okay. Dan gilbert is our guest host. Hell be with us for the rest of the show. Coming up at 8 30 eastern time we have the november report. The dow jones estimates the economy added probably 80,000 jobs last month. Reuters consensus is higher, coming in at 93,000. But well brick you tng you the and the reaction from our panel of experts. Dont start your day without knowing the names that will make you money. Joe has your list of stocks to watch right after the break. 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. Welcome back, everybody. Random house is giving employees a 5,000 bonus to celebrate a profitable year. The payouts cover employees from top editors to warehouse workers. You can call it 5,000 shades of green. Many say the Publishing Industry is dying random house published e. L. James 50 shades of gray and it is profiting big time, its tond the New York Times best seller left for 37 weeks and counting. Another twist in the hp economy saga. The wall street journal reports that auditing wasnt all deloitte did for that company for autonomy. The uk unit of deloitte was in charge of signing off on autonomys Financial Statements also before hp bought the company in 2011. But deloitte was also paid significant fees for other work it did for autonomy like Due Diligence work on a potential acquisition and to many observers the multitasking is potentially an industry problem. Lets take a look at stocks to watch this morning. Well start with the first one, well look at enbridge which at this point is not doing a whole lot. Its indicated up 0. 3 of a percent. Enbridge has raised its dividend by 12 and it sees strong growth in its outlook for next year. Next on the list which is coming up now is cooper. Cooper Fourth Quarter profit rising 27 on continued contact lens sales. So, this is theres, like, six different coopers at one point. This is the contact lens. Theres cooper tire. Different one. Cooper company, and cooper. Dan, when you take a look at everything thats out there, everything thats happening in the economy, whats happening with washington, whats your biggest concern . Well, biggest concern for us right now and the quicken loans side is dodd frank and, you know, the new regulations and the uncertainty of all of that. I think it was something, like, 1,100 of new pages of regulations just dedicated to mortgage alone. So, our folks are going through all that trying to understand that. Trying to actually work with the regulators to get them an understanding of what happens on the ground floor on the ground level of mortgage product and production and all that. So, thats probably our number one concern. The uncertainty of knowing what will happen with that. One thing i hadnt realized before when you are looking at ideas, good commonsense ideas at the time, the idea that if you are a Mortgage Broker you should have to hold on to at least a percentage of that so you are not making stupid loans, so you have skin in the game, too. We all settled on the idea, yeah, if you held 5 of it, that would be a good thing and keep you from giving money to people who would never repay the money. You pointed out theres a problem with trying to do that. A little bit of a problem, if a Mortgage Broker, lets say, were a little bit different, but a Mortgage Broker if theyre making, you know, 2 , 2. 5 , 3 gross and the loan amount is gross revenue, holding 5 against that mortgage wouldnt work, right . Because youd be losing money. And theyre not highly, you know, highly they dont have a high net worth. So, you know, you can deal with it through net worth requirements maybe Capital Requirements overall. But when you try to say, you know, youre going to hold a percentage of that mortgage, theres huge disincentives for most Mortgage Companies, banks, obviously the loans can come back to you and they can be put back to you. Fannie and freddie are putting back more loans than theyve ever put back to the banks and theres a lot of argument and fighting going on about this. So, you know, theres definitely a disincentive. On the Mortgage Broker side, i think what youre talking about, you know, theres just not enough net worth there, you know, for that to be a big threat. But then again those loans are being underwritten by the larger net worth companies and they should never get past that point, you know, they shouldnt be approved because theres a huge disincentive. Is it harder to flip the loans back to the government than it used to be . I asked because i refinanced with quicken loans. I went through your 800 line and i did it a year and a half ago and i did it a few months ago. The first time i did it you sold it immediately to fannie or freddie. This time you still own the loan. We dont own the loan you hold the servicing on it. In the last two years thats been a big strategic move of ours to move back into the servicing business. We service 99 of the loans we originate these days. Thats changed over the years. When you say flipping back to the government, fannie and freddie really are guaranteeing, you know, its an implied guaranteed as they say, but most of the loan production in todays world, right . More 90 , right . It used to be half or a little less than half. Right now you have to theyre the only game in town. In fha as well. Dan gilbert, again, is our guest host. Hell be with us for the rest of the program. When we come back, weve got the november jobs report. Its 35 minutes away. Jared bernstein and mark zandi are here with expectations. Well have that when quarterbs box comes back. The countdown is almost over. Well get the november employment report at 8 30 eastern time. The job numbers are expected to be depressed by superstorm sandy. Well get instant analysis when the report comes out. Plus, a motor city makeover. What does opportunity look like . It looks like detroit. Guest host dan gilbert on his efforts to revitalize detroit as the third hour of squawk box begins right now. Welcome back to squawk box here on cnbc. First in business worldwide. Im joe kernen along with becky quick and Steve Liesman and Andrew Ross Sorkin is off for one more day. Our guest host dan gilbert, founder of quicken loans and owner of the Cleveland Cavaliers. Well talk about a lot this hour but the big 50 is the november jobs report. It comes out at 8ky there. The dow jones news wire poll of forecasters, we thought this was so interesting we wanted to get a reaction shot of you. Did you see how long you were on . We wanted you to we wanted a lot we wanted angst, we wanted suspense and disappointment. How did i do . I dont know. We were waiting for something. I didnt know i was on. You were. The button was stuck. The economy likely added 80,000 jobs last month, reuters consensus is higher at 93,000. The Unemployment Rate ispected to hold steady. Mark zandi and Jared Bernstein will join us in a moment with predicti predections. A strong earthquake off the coast of northeasten japan a couple hours ago triggered a tsunami warning. The 7. 3 quake shook buildings as far away as tokyo. No problems have been detected at the regions Nuclear Power plant. The tsunami warning was for the same area that was devastated by an earthquake and a tsunami back in march of last year. This is two years ago actually. March 11 . March 11 . Yes. Okay. I take that back, march of 2011. Well continue to follow the story and bring you developments as its happening. A year and a half ago. I was trying to figure it out. Your life is defined by that. In Corporate News netflix receiving a wells notice from the s. E. C. Regulators warning that they may bring civil action against the company and its ceo for violating Public Disclosure rules with a Facebook Post. On july 3rd ceo Reed Hastings posted netflix monthly viewing exceeded 1 billion hours ever for the first time in june. The s. E. C. Regulation requires that public Companies Make full and fair Public Disclosures, material nonpublic information. Hastings is dismissing the s. E. C. Contention saying, first of all, he didnt think the Facebook Post was Material Information. He also said the post was public because it was accessible to more than 244,000 subscribers to the page. We spoke with an analyst in the last hour who disagreed with the statement. He said, first of all, the rules are clear you cant use facebook. And second of all, he thought it was material. But you can bet this will be played out time and time again. There was Stock Movement on it and then which would almost suggest it was public if people found out about it. Second of all, the market then later dropped it because the rest of the earnings didnt match up to that kind of forecast. But this is something thats hashed out ive been trying all morning ive been trying to find the reg. Its very unclear. We havent talked about it. But im trying to find it. If you can email it in, the section dealing with media. And who qualifies as a media outlet. Who qualifies. What we said if you said it on cnbc it would be considered a Public Disclosure. I dont know foreign media. I dont know. See, the government cant be involved in sanctioning official media because that two, then, be a First Amendment issue, right . So they have to somehow how do you figure this out . Jeffries is the latest to accelerate payment of a First Quarter dividend into december. Wow. 30 billion and counting. I havent looked at this but apparently if you release something on cnbc it is considered public and our competitors dont count because they have no viewers. Lets check on the markets u. S. Equity futures have been weaker ahead of the jobs number but at this point the dow futures are only down 25 points and s p futures are off by 2. 8. Asian stocks rallying to 2012 highs overnight. Among the catalysts were that chinas economy is stabilizing. The nikkei hit a sevenmonth closing high yesterday. And in europe you can see the markets are indicated slightly lower but, again, these are the same sort of moves in the futures here. A lot could depend on what happens at 8 30. Why are you shaking your head, joe . Nothing. I was getting info. A new survey by Potomac Research group finds 60 of leading investment professionals predict a sharp decline in the economy if the government fails to make a deal. Its defined as a more than 10 drop in the dow. Hes still shaking his head. The group polled hedge fund and Pension Funds and money market managers and 56 surveyed said a deal to avoid the fiscal cliff by year end. 44 predict failure in the ongoing negotiations. Lets get back to the jobs report due out, in less than 30 minutes, joining us now is mark zandi, chief economist at moodys analytics and Jared Bernstein former economic adviser to Vice President joe biden. He has the finest nod and smile when hes introduced of any of our guests, hes currently a senior fellow. Do you practice in front of a mirror, jared . Im just so happy to see you guys. Its totally natural the way it happened. This is what i like to do at 7 00 a. M. In the morning. Its 8 00 now. This is what i like to do at 8 00 a. M. In the morning. Were glad to have you. Especially with mark hurricane zandi. I know. Hes a boxer. The hurricane. The hurricane zandi. I got to work on my smile. I have no hair. I better get the smile right. You just mentioned jeffries moving up its dividends. D. R. Horton is the latest. Its now saying its dividends for all of 2013 will be accelerated and paying 15 cents a share paying at the end of this year. The corporate scum that keeps declaring the dividends. I see you shaking your head. Youre nauseous. Youre sickened. Im glad to hear the top 0. 1 percent continue to do great while the middleclass continues to struggle. I knew youd like that. What does Corporate America have to do with the middleclass . Nothing. Anyway, mark, what are your forecasts for jobs today . Im looking for a gain of 105,000 payroll jobs. Higher than ever, right . But you cheat because you do the adp report. Well, i am consistent with the adp report, you know, since i got that gig im consistent with the adp report and i believe in it. So, well see. I wouldnt even jared, i wouldnt even try to compete with him. Hes got all the inside information. Hes got nonMaterial Information here. The problem is listen, the problem is i pay very close attention to what mark says. But the problem is that inside information like that doesnt help you on the jobs report that much as i suspect mark would agree. Theres just such a large confidence interval around the numbers and in a month like this ive got two words to you, signaltonoise ratio. Maybe thats not two words. Theres two kinds of economists, those who can count and those who cant. Anyway, my point is that what is your point . My point is that i would look for 80 total, maybe 90 on the private side on the payrolls with unemployment ticking up to 8 or 8. 1 and i do think when you have a hurricane of this magnitude hitting the most densely populated labor markets in the country which is what it did, its going to take a whack out of the payrolls. Jared, i wonder what you think about employment for next year and, you know, we have the fiscal cliff and lets say that the only thing we did do, the only thing really that seems like the president is most focused on, lets say we did raise taxes on the top 2 and didnt do anything else. How would that bring down the unployment rate next year . Well, i think the resolution of the cliff would very much help on the macroeconomy on the Unemployment Rate, and, you know, i take my prediction visavis what you said from the congressional budget office, the nonpartisan scorekeeper, that tells us if, in fact, the middleclass tax rates are frozen on 98 of households in the top 2 reset at higher rates, that might cause a tenth of a percent gdp growth next year, so i consider that to be minuscule and i think the resolution of the uncertainty would help boost the macroeconomy and jobs. Mark zandi, go ahead. I was going to say if the only thing we do is allow the tax rates on the upper income groups to rise, thats the only thing we do, then, no, the economys not going to go anywhere. Weve got to address the cliff. Weve got to raise the debt ceiling. And most importantly, we need longterm deficit reduction to get the fiscal sustainability. So, theyve got a lot more to do than simply working on the i agree with that. In fact, the way i put it which is what i meant which is the resolution of the cliff. But i dont think the cliff gets resolved until we resolve the tax rate issue and then the other parts can follow. That makes sense. Theres an editorial, oped in the times today that says do you know what, its an aging society. That aging society means higher payments out to the wealthy to the elderly from the government. Higher medicare spending, higher retirement spending, and especially something we have to get used to and were going to have to bump up the share of the economy, that is, from the government because thats the way were going to have to live if we want to take care of the elderly. Mark, is that a reality . Does that mean higher im sorry, lower longterm growth rates for the economy . Well, yeah. I mean, two things. One is its right that because of the aging of the population, all else being equal, Government Spending as a share of gdp will rise because as definition the elderly will be using medicare and social security. But thats not the biggest part of the increase in whats going on in medicare and medicaid and social security. Its really the growth in health care costs. So, if we can control that and bring that rate down, then well be fine. Well be okay. But youre right about the economy. The broader economy. Because in the aging of the population, and people retiring, the rate of growth in the labor force is going to slow. It already is slowing and the underlying growth rates in the economy are going to be weaker. Heres the statistic of the day, the most important. The largest single age group in the country, there are more of these folks than any other age, joe, do you know what that is . Do you want to take a guess at it . You may be the largest single age group. How old are you, joe . Yeah 55 plus . 60 is the new 40, and im not 60 yet. Im not 60 yet. Timeout tell me. Its 53. 53. Thats around what i am. Thats in the ballpark. Yeah. Standard deviation. So, another ten years from now, you know, were going to be retiring. Im actually 53. I represent the largest single age group. No, no, thats two words for you. Andy rooney, im not retiring in ten years. Okay. All right. Mike wallace. A lot of people will be. A lot of other people will be. And so that will i guess one thing that comes to mind is the is another key statistic here which is that i think over the past decade the labor force grew about a percent per year and the forecast for the next decade is half a percent per year, so that right there will slow down the potential growth rate of gdp. I mean, there are jared, i just want to give people a way to ruin their christmas holiday. I did this at thanksgiving which is take a count of the number of people around the table and count how many people are working full time to come up with your familys dependency ratio. I asked a lot of people you must be real fun at the holidays. Half of the people werent working and half of the people werent working. Basically the dependency ratio. Thats another key point. Mark and others are absolutely right about some future potential pressures on growth. But the fact is we still have a huge output gap right now which means were leaving tons of resources on the table mostly in terms of hours worked and a trillion dollars of gdp if you look at the difference between where we should be and where we are right now. Before we worry about kind of whats baked in the cake in the future, lets mop up the output gap now. All right. All right . All right, gentlemen. Thank you. Mark zandi, mark superstorm zandi, and Jared Bernstein, thanks, guys. Coming up were counting to 8 30 a. M. Eastern for the jobs report. The final predictions from a panel of experts ahead. And dont forewet the nail of the number sweepstakes, tweet your payroll predictions for your chance to win a cnbc picture frame signed by the squawk on the street gang. Back in two minutes. Coming up, the campaign to rebuild detroit. Bringing in labor to fill job openings, incentivizing workers to move downtown, overhauling derelict buildings. Investing in local talent. Guest host dan gilbert is at the center of it all. How hes revitalizing motor city next. [ male announcer ] this is steve. He loves risk. But whether hes climbing everest, scuba diving the Great Barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesnt nickel and dime him with hidden fees. So he can worry about other things, like what the market is doing and being ready, no matter what happens, which isnt rocket science. Its just common sense, from td ameritrade. We dont let frequent heartburn come between us and what we love. So if youre one of them people who gets heartburn and then treats day after day. Block the acid with prilosec otc and dont get heartburn in the first place [ male announcer ] one pill each morning. 24 hours. Zero heartburn. To provide a Better Benefits package. Oahhh [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at. [ duck ] aflac [ male announcer ]. Forbusiness. Com. Ha ha welcome back, everybody. Our discussion on righttowork states in reference to republicans in michigan passing legislation on that there. Its been sparking quite a reaction on twitter. In fact, unions were a very good thing there in the early days. Today they are a detriment to business and economy. Another says that we must make the union outlawed, eliminate unions on this country and brian turner writes in and says right to work states means right to work for less. If you hear anything were talking about tweet us. We hear a lot about how people are looking for jobs, but some say manufacturers are saying that they are just frustrated with constant job openings and no one to fill those positions. Cnbcs phil lebeau joins us with more on that story. Phil, good morning. Good morning. Were just outside chicago, start of the first shift here. This is where they make components like this that will go to the aerospace and electronics industries. They have 10 to 12 openings here and this is a story that were hearing throughout the Manufacturing Base in the United States. Take a look at how many manufacturing openings have been created over the last three years. Its gone from essentially 90,000 up to 247,000. Some of those openings they seem like theyre permanently open. We went down to Metal Technologies an auto parts supplier just out of bloomington, indiana, they have five to seven jobs theyre ready to fill but they cant fill. In fact, theyve had situations where theyve had applicants come in, theyve hired them and then the people who have been hired have said, do you know what, no thanks, id rather stay unemployed. Weve had people that weve interviewed, that weve agreed to hire, and at the end of the day, theyve turned around and said were not going to take that job. We just found out that Unemployment Benefits have been extended and they dont take the job. That is a common story in the manufacturing industry. This is a big deal because 33 of the auto final Assembly Plants in the u. S. Now run three shifts. You need to fill the second and third shifts. In fact, when you look at the auto parts suppliers over half of them run three shifts. Guys, the bottom line is this, if the manufacturers cannot fill the second and third shift openings, theyre going to go to light manufacturing, but theres a lot of demand that theyre not able to meet. Here, 10 to 12 openings they would fill immediately but the owner here said they had zero zero applicants for the most recent job postings. Is that because people dont have the qualifications for these jobs . Its astounding when you consider that were at 7. 9 unemployment and that probably underreports the people who are really looking for jobs. Some of it is because they dont have the skills needed to run complex machinery, but a bigger part of it is, becky, theyll take people and train them but they find people will not come in and start at 12 or 13 an hour because they say its not worth it. Its not worth it to start at 12 or 13 an hour. You will hear this from all the manufacturers. This is a very common problem in the United States. Wow. Im kind of stunned hearing this. This is a new phenomenon, this is a new problem . It is always been a little bit of a problem but it has really perked up over the last three years. I mean, the level of frustration, becky, i cannot convey this enough when i talk to bill black the owner here, he essentially said hes thrown up his hands. He sometimes wonders if people just dont want to get up and go to work and you start at 13 an hour here. Part of it is people dont want to start at 13 an hour because . Ultimately the people here are making about 29 an hour. Its a matter of whether or not you want to work in a manufacturing job, becky. Is there that demand in the United States. Dan gilbert is our guest. What is the alternative . Does this mean that they may be on some kind of program or some kind of you know, that theyre making more or close to 13 an hour . Phil, what do you make by not working . Dont you have to make more than 30 grand to offset what youre getting in government assistance. You would think that. When we talked with some of the manufacturers theyre telling us that theyve offered people to come in start as an apprentice making 500 or 550 a week, thats not great money but thats what theyre starting at. A lot of people said ill take 450 and stay on unemployment. I know its hard to believe. I dont think its hard to believe. Thats where the argument comes from on the other side of, you know, of all these wellintentioned things we do if youre making 450 and youre watching, you know, katie couric during the day who wants to sit in there, you know, slaving for eight hours . Sitting there watching katie couric during the day. I was watching a show called jail yesterday. Have you seen that . Its like cops but instead youre in jail. Thats why you have the movie channel. What im wondering, sure, phil, some people will take the deal and stay home. But ultimately theres an upside to that which it helps people that cant find jobs anyway. Theres a negative effect. Okay. Thank you. We know that, thats why we to it do you have to point out theres a positive effect on unemployment . No, its not thats what it does you dont agree . This is pointing out the other side. We know the other side, why do you think we do it in the first place . The research has been done why we do it in the first place. It has a 1 effect on the unemployment. They cant get anyone to work for 12 or 13. They should go to 20. Theyre competing with the government. They shouldnt have to compete with the government. Not forever. Not forever. Joe, heres the other problem with these jobs being open what . You guys, the other problem with these jobs being open, they cant fill the second and third shifts. Theyre losing business. Their customers will go overseas. Theyll go somewhere else. Someplace that will fill that demand. If you cannot fill your second and third shifts, you lose your business. Thats the bottom line. And we are moving towards second and third shift operations when it comes to manufacturing in the United States. Wow. I also think that the person who may be on the unemployment, there may be also some cash businesses or ways theyre earning money on the side that may even take them higher. So, therefore, its a net you know, theres no net gain at all. Phil, thank you. All right, coming up were closing in on the november jobs report. Well get back oh, i said goodbye to those guys. We need them back, mark zandi and Jared Bernstein for final predictions and theyll stick around for instant analysis when the report comes out. 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. 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 to squawk box, everyone. As we wait for the november jobs report in a few minutes heres one hopeful sign from the labor market. Monster worldwides monthly online was up compared to a year earlier. It saw growth in 14 of the 19 industries that it monitors. When we return november jobs that is a few moments away. Economists are expecting weaker jobs growth skewed by sandy. The s p futures are weaker, down 3. 5 points. 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 . All right. Here we go. Welcome back, everybody. We are just a few seconds away from the november jobs report. Again, ahead of the numbers weve been watching the futures and things have been held in a very tight range this morning. Kind of bouncing around. Right now the dow futures are down 25 points and the s p futures are down less than three points. A lot of expectations that this will be a relatively weak number because of what happened with sandy. Again, though, well get those numbers in a moment. Cnbcs Hampton Pearson is standing by at the Labor Department and he has those numbers. Off 146,000. November nonfarm payroll increased by 146,000 jobs. The Unemployment Rate is 7. 7 average Hourly Earnings up 0. 2. The last time we had Unemployment Rates this low was in december of 2008. Private sector job growth last month, plus 147,000. However, we had downward revisions for both september and october, 49,000 jobs fewer than what had previously been reported previously. On the question of Hurricane Sandy and its impact, the bls says, quote, it did not substantively impact employment and unemployment in november. December 21st two weeks from now there will be a better barometer when we get new data from the states. Job gains in november. Retail trade, plus 53,000. Professional and business services, up 43,000. Leisure and hospitality, up 23,000. Job losses, construction down 20,000. Manufacturing down 7,000. Now, again, back to Hurricane Sandy. From the commissioners statement, the storm we saw happen on october 29th, the next pay period ended on november 12th. The way bls essentially keeps score it says workers have to be off work for the entire pay period to be counted on the negative side. On the Household Survey side, persons who missed work for weatherrelated events are counted as employed whether or not they are paid for the time off. We did have a drop in the Labor Force Participation rate, down 0. 2 to 63. 6 . How did we get to 7. 7 unemployment . Basically the number of unemployed persons dropped more than the number of employed and there were downward trends in both those categories. Lots to chew on. Back to you guys. Hampton, thank you. We are kind of scratching our heads. Lets get more reaction from our panel. Mark zandi and Jared Bernstein are here with us. Mark, what do you make of this number . Weve set this up as numbers were not going to be things we watched closely because of sandy. Id say two things, becky. First i think these numbers will be revised as they get more information. The survey responses probably were very weak coming from new york, new jersey. They didnt supplement them it sounds like and once they get that information in, my guess is well get some big revisions next month to be more consistent with what all of us are thinking. The second thing, though, id say is, you know, underlying sandy and all these other technical measurement issues it looks like the job market is holding firm which is encouraging in the context of the fiscal uncertainty and thats a real plus and it has to chiming through the data. I want to chime in here, the revisions just head scratching. They revised down october Government Employment from originally 13,000 to 51,000. Now, first of all, i dont remember seeing a revision to Government Employment that big, but the notion that government cant count the amount of workers in government is a little bit beyond the pale and maybe revised it down . From minus 13 to minus 51. I dont know what you call it, 38,000 downward revision. And they revised up the private sector in the month of october, so that was good. The other thing its very hard for me to believe here that there is not a sandy effect in that i see a minus 22 and a minus 20 on construction. Mark, would you just chime in on that . I mean, i guess what even if hampton is still there, i dont know, they said no sandy effect, but im seeing a minus 42,000 on construction and goods producing. How can that not be . No. I think thats some of the sandy effect coming through. With katrina what the bls did is they made some adjustments for the fact that they got a lot fewer respondents from the people who were affected by the storm and my guess is this goaround they decided no to the do that for whatever reason, wait for other data to come in. Once we get that data coming in, they will revise down. What youre seeing in the construction jobs, that makes no sense. Thats not consistent with whats going on in the construction trades and that probably is sandy effect. So, it probably is that well see more of it. One point about government, if you remember a couple months ago, we saw huge upwards revisions to Government Employment and now they are taking it back. Hampton whats the government said about sandy here . Well, we only got these blanket statements as you said as far as the no substantive impact, but specifically on the surveys in the affected states, they said that even despite the superstorm, the responses to the survey was, quote, within normal range. So, no big swing there. Thats another head scratcher, though. In my way of thinking. A couple of things jump out at me. First of all, this looks like one of those months where the gains in unemployment, the reduction in the rate, comes more from a decline in the labor force than more jobs from what i yeah, absolutely. So, the employment on the household side looks like it didnt grow at all which is actually fairly consistent with the past two months being large positive outliers. Look, heres something we havent mentioned yet, the average workweek was unchanged in november and, in fact, the manufacturing workweek edged up a tenth of an hour. Again, not what you would have expected given sandy. I agree with what folks were saying on the construction impact. But i also think that this report suggests that the underlying trend in payroll which is about 150k per month which is about consistent with trend growth in the gdp, maybe a little bit better, it does come out of these numbers and that is a good thing. Hey, our guest host today is dan gilbert. Dan, you said earlier in the program that in terms of what you see in the Housing Market through quicken loans, the most important factor is the jobs market. Based on what you see in the Housing Market, how does that jive up with these numbers . Well, i think, you know, we have seen pops in various geographies and various cities and regions in the country. Both on the new home purchase side and existing home sales. But hasnt been a boom by any measure and its certainly not broad across the whole United States. So, you know, any employment numbers that are good are certainly good for the Housing Market because i think with the rates do you buy numbers like this or do you think its weird stuff happening because of sandy . For me when i hook at these numbers, theyre a little bit foreign to me looking at a month by month like this. But i think one month of data is probably not the tellall here. Jared, thats pretty good and that kind of growth. Im just wondering whether we need to frame the fiscal cliff debate a little differently in that maybe the economy is Strong Enough to handle a couple more nearterm negatives than we thought it was . I mean, howard dean says the best deal democrats could get would be to go over the cliff where all the bush tax cuts finally sunset. We seem like were never going to let them go away for good even though they were designed to go away. Does it mean its time to maybe a little more belt tightening than we thought we could have . I dont think so. Its funny, i sort of take it the other way. The more i see momentum in the economy, the more i see improvement in the job market, the more i think what a terrible idea it is to go over the fiscal cliff. I screw up a recovery that finally has a little bit of momentum with a Housing Market carving out a bottom underneath it for the first time in years in a way this kind of raises the stakes to get it right because we seem to be kind of on track. Rick, did they take out rick, did they add those government jobs to get below 8 and now theyre taking them back . Is that what happened . You know, you dont want to go there. Ill go anywhere. Ill go anywhere. Ill tell you what the number is. Hey, hey, hey, hey go ahead, rick. Hey i asked him. Go ahead, rick. How about one second, steve . One second, all right . We lost 350,000 people in the labor force. Were at a time in our history where its all about jobs and tax revenues. The only people who bring tax revenues to the party are people who work. And the discussion is mainly about the people that are working that are way at the top. I urge everybody to read the oped by our buddy peter shipp today because ive had so many discussions about, you know, in the 50s the tax rate was rick, that was great. I tell you what, we have issues in this country and data like this and talking about, gee, how much momentum we have in the job market, 350,000 people, poof, beamed to another planet. 1954 studestudebaker lark has m momentum than this economy. They dont have a figure of who made 91 . That was at 81 . Amt, 400. That was at not a 91. They couldnt find a record. They dont have it. I know people that run the country on both sides of the aisle they love to get elected and they also love to fib about the statistics in any way they can. Once again, i think my common phrase these days is shame on all of them. All right. Gentlemen, thank you very much. Can i point out real quickly. Well, 150k is the underlying trend and that was the same trend before the election, so nothing has changed here since the election. Mark zandi, Jared Bernstein, rick santelli, gentlemen, thank you. The stock market is looking at it as good news whether you believe them or not, the market went down by 20 points to up 61 points, so you saw a big jump. Tim cooks comments fueling speculation that apple could view netflix as a takeover target. That story next. And a programming note dont miss squawk box on monday. You heard of Bowles Simpson . Well, hes going to be on, Erskine Bowles a special interview, cochairman of president obamas deficit commission, his take on the progress of negotiations to avoid the cliff. Thats monday at 7 00 a. M. Eastern. 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. Heartburn symptoms causedelieve by acid reflux disease. During the season of audi event. Osteoporosisrelated bone fractures and low magnesium levels have been seen with nexium. Possible side effects include headache, diarrhea, and abdominal pain. Other serious stomach conditions may still exist. Talk to your doctor about nexium. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Wanted to provide better Employee Benefits while balancing the companys bottom line, their very first word was. [ to the tune of lullaby and good night ] aflac aflac [ male announcer ] find out more at. [ duck ] aflac [ male announcer ]. Forbusiness. Com. [ yawning sound ] we had a chance to talk to apple ceo tim cook, it aired on rock center and the topic of tv came up. Its a market that we see that has been left behind. Its an area of intense interest. I cant say more than that. That led to speck hayes that apple could target netflix for a takeover and the shares rallied but they came back in late trading after the announce of the s. E. C. s wells notice that forced the ceo just speaking up. Jane wells tweeted yesterday where he said i go and turn on my tv it looks like its 30 years old when im watching the tv and jane said he needs to buy a new tv obviously. Hes got awn of the old black and i guess. But i thought it was funny because i anyway, sorry. Julia boorstin joins us to talk about all the buzz surrounding netflix this week. Is it a takeover candidate, julia . Well, i actually think that Reed Hastings is going to try to get to get netflixs house in order, theyve been living down the i would Say Communications snafu and i would say a Public Relations disaster when they tried to hike up prices and split off streaming the dvd business and ever since then Reed Hastings has been trying to show investors he knows what hes doing and i think that the disney deal he just struck earlier this week is a real landmark for the company and shows that netflix can compete on the same level as an hbo and showtime and stars and i think hell try to secure a deal like that and hes in the process of making the company more valuable and hell probably try to continue going down that path. If he thinks he could get more for the company. Netflix Business Model, julia, that they came in and bought rights to stuff to show it online cheaply until everybody else figured out that there was value there and so their Business Model was undermined. We were at a point when we last checked in, does netflix even have a future. You think it does . I think it does. Because i think that they it hasnt been about paying little amount of money for content for a while now. Netflix has been known for paying up, you know, a good amount of money for content. In fact, the media giants freeing up a lot of money and if you lose subscribers because you raise rates and you dont have enough subscribers. They say theyre not going to raise rates and if theyre paying a flat fee for the content and they can grow the subscriber base, theyre in good shape. Its all about growing the subscriber base. And the truth is if netflix is the only place you can go to get highquality kid content or disney kids content which they have the new exclusive deal for, then parents especially are going to sign up for netflix. If youre picking between hbo and netflix, netflix now has, you know, has a real shot. Okay. Julia, thanks very much. All right. I dont know. Everything what . Here we go with sincinemax. Everything i need is on i used to have netflix but i stopped we did get walking dead content for a while. All over that right now. Got to watch the zombie thing. Youre a tenyearold guy. Yeah. You should look at what Action Figures we didnt buy last year because he wasnt into it, what theyre going for on ebay. The zombie . You are very angry now that theres a movie being made by the guy who made twilight about zombies and it shows that zombies have feelings. My son is very upset about this that theyll ruin the whole zombies. Theyre not zombies anymore. Been proven. He wants to do a Science Research project in school about zombies to see if is there a bacteria. One of the stars kept his daughter and wife zombie in a barn with other zombies because he couldnt face killing them and then they tried to eat him. I saw that. They dont have feelings unless hunger is have you watched it . Were set up to watch it tonight. Oh, yeah. Its going to take a hiatus for a while. The one that came on sunday were watching tonight. Yeah, we plan it for friday nights. Nice. Nice. All right. Good family fun. Something to look forward to zombie you should see the video game, too. Unbelievable. Theres five of them. Dan, you dont do this . But im wondering if we have zombie fat heads. I was wondering if we do. It sounds like we need to have them if we dont. Zombie banks. There were. There were zombie banks. And paul krugman said all our ideas were zombie ideas after i called him a unleny corn. Is it bad . Its better than a zombie. I said he needs to apologize. Fatheads, i like that idea. When we come back dont close out your trading day just yet. Jim cramer will join us with stocks on the move. Well be right back. A restaura, try running four. Fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. 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Welcome to the world leader in derivatives. Welcome to superderivatives. Welcome back to squawk box. The futures right now positive taking that jobs number positively which came in above expectations on the Labor Department saying not a big sandy effect inside the number up 146,000. Take a look at this. Pot smokers in seattle celebrating the new found freedom. People openly lit joints under the space needle early friday morning. Marijuana possession became legal under Washington State law on thursday after winning voter approval. Why they had me read that, i dont know. It could have been joe or becky. You cant grow it or sell it so you cant obtain it legally. You can inhale. Yes. The feds can still bust you. For selling it . For having it. In the usa today it points out that the country is still somewhat split on legalization but not if you get a state law, they figure stay away feds. Whats the law . You can smoke it but you cant have it . You can have it. You can possess an ounce. You cant buy it basically because you cant sell it or grow it. Its very weird. 365 days to figure out all of this stuff. Lets get down to the new york stock exchange. To our resident expert, jim cramer. Is that what you were going to say . Jim, anywhere you want to go with that. Unbelievable number for brown forman. I thought what was most interesting is jack daniels way old brand, high Single Digits growth. I think that people just want to get lost in whatever they can get lost in. Booze, marijuana, doesnt matter. I love that assessment, jim. Thank you. Except you drink jack daniels and you drive 90 miles an hour and you smoke a joint youll get hit by someone going 90 because youre going 15. May be distracted by the munchies youre having. John had that terrific cadillac with shot glasses in the glove box. I think about the dude. He was mellow. What about do you think that was a public i mean, if it went up that much, we had an analyst arguing that netflix went up that much after the Facebook Posting so that it must have been the reason but that didnt get him to admit it must have been public in that many people knew about it to bid up the stock. This is a ridiculous story. I loved what you were talking about in terms of Public Disclosure. I dont follow him on facebook. I regard that as private disclosure. This is an abuse of power. The guy runs a private company. Happens to be a Public Company. Does whatever he wants. Theres people that say take over at target. What . By the subscription list . I dont know. Wait until they raise a lot of capital and then you can buy. That makes sense. All right. Jim, thanks very much. Tennessee honey. An extension of jack daniels thats very, very good. Put some in your coffee this morning at starbucks. Should be reasonably described to buy distribution of the information as you pointed out 25,000 paper subscription. Coming up, our guest host is dan gilbert. Well give him the last word when squawk box returns. Announcer monday on squawk box, were kicking off a week of special coverage of the fiscal cliff. A voice of reason on the debt deal. And tuesday its Mission Critical time. Squawk goes to washington to talk with senators and congressman involved in negotiations. Squawk box starting at 6 00 a. M. Eastern. Yearend event. So, the 5. 3liter v8 silverado can tow up to 9,600 pounds . 315 horsepower. Whats that in reindeerpower . [ laughs ] [ pencil scratches ] [ male announcer ] chevys giving more. Get the best offer of the year 0 apr financing for 60 months plus 1,000 Holiday Bonus cash. Plus trade up for an additional 1,000 tradein allowance. Hurry. Bonus cash ends january 2nd. 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We were having a skyscraper sale in new york so we decided to participate in it. It was a great opportunity for us. We decided 2 1 2 years ago to move the first group of people downtown and since that time weve moved 6,500 people to downtown detroit and mostly young folks. They are excited about the city and not only is the Auto Industry doing better but theres a whole entrepreneurial tech startup scene there. Venture capitalist are there. A lot of mobile Development Going on there. Mobile app development. And its very exciting because twitter just took an office in downtown detroit and were talking to other big names. Its not just us. Theres a lot around our area. Were very excited. We watch other the midwest labor force, both cleveland and detroit where were located, i know it sounds cliche but theres a midwest work ethic. Theres no question about it. Theres great people and theyre skilled and universities put out great people. Its where you grow up. We agree with you. There is a midwest work ethic. The young people who are coming out of our great universities, michigan and michigan state, a lot are leaving and going to other cities. They dont go to suburbs other cities. They want a strong, vibrant urban core. Thats what were trying to help with. Thats kind of cool. You look at just about every city has had