Transcripts For CNBC Squawk Box 20121219

400,000. At this point, having a backup plan to make sure that as few american taxpayers are affected by this increase as possible. Now no one expects that the gop bill will pass the democraticcontrolled senate. In fact, harry reid said forget it, theyre not going to be passing any of these things. But this is another option out this. And it does change the dynamics in terms of whos going to be blamed for raising taxes. Well see how this plays out. Among our guests on the topic this morning is dccc chairman steve israel, congressman from new york. Plus, well also be talking more about whats at stake in washington and how the fiscal cliff is likely to effect Investment Decisions. We have Value Investor leon cooperman, hes going to join us on set starting at 7 00 eastern time. Then at 8 00 eastern, we have black op cofounder and ceo Ralph Schlosstein. And Lynn Hutchins will join us. Well talk about what they see playing out and what they think is working when it comes to the markets now. The bill that the president says is in the house that he will sign if thats in the senate the senate. The senate that he will sign if the house passes it is what . That is . That is 250 . 250 . He said 400. He said, i have the pen, lets keep tax rates where they are for everyone at 250 and below. So this one, thats c these guys are pretty clever because that would keep rates where they are for everyone at a million and below. No middleclass taxpayers up to a Million Dollars thats no matter what, isnt it, in either bill . Yon r i think it would be the same in either one. Thats not what reid and i guess pelosi, you saw that, said she opposes the milliondollar thing. A lot of people if back on what they say. The difference would be that one is 250 and below, and the other is a million and below. More taxpayers would not see a tax increase. What does it do with the budget cuts in either one . Does it not deal with them . Either way oh, no. The sequestration budget yeah. In the budget cuts go in for plan b. No, they would be delayed. They would . Yeah. This is a way that, you know, theyre trying to shift the onus now back to where it would be the president and the and the senate thats saying no to keeping rates low for the middle class. So theyre both trying to political maneuvering. A tie ground. Someones trying to be on the high ground. I wonder what would happen if the republicans say they go to 400. I wonder what would happen then. Would reid pass the 400 . Probably. I mean, since its on the table from the president , why wouldnt he . I guess the question becomes, can he get the votes for it. Because at that point there are r some people who think that the white house doesnt really necessarily want a deal that badly. Thats the slow walk and everything else. If you do the 400, that takes well no longer have the taxes to talk b. And all were going to have at that point are entitlements and spending cuts. That would be a discussion that maybe some people, you know, cant deliver on and dont want to have. It is late in the day to be dealing with this stuff, though. December we would pass it, but then the next deadline becomes a debt ceiling. Thats the other thing that, you know, the white house really wants. They want a twoyear i dont know, if they did 400 well see. What if they do five, maybe they come down to 500, kind of a compromise people thought for a long time maybe they end up. Right. I think boehner and at this point it might be in the white houses best interest to maybe do something at 500 instead of having this plan b where they say no to that, then anyway. Yesterday big gains. 115 points for the dow. Yeah. For whatever reason. It kind of that was in the face of what senator corker told us, and it went back to thinking that maybe there is some movement happening here. I wonder if we go up so much in anticipation that when it finally happens, we sell off. That were just relieved, and that you dont get the huge bounce. But europe is also tracking what were doing here. As it should really. Our economy is much more important to the globe than what happens in any of those little economies over there. The shares drifting higher in early trading on expectations that a budget deal is closer. In asia, japans nikkei rising above the 10,000 mark, wow, the first time in more than eight months. Still a ways from 50,000. Among the catalysts, expectations of more aggressive monetary stimulus from the bank of japan. The boj wraps up a twoday meeting with a policy announcement tomorrow. The world bank in the meantime is raising its 2013 Economic Growth forecast for china and for developing east asia. The Organization Says that the region remains resilient despite the lackluster performance of the Global Economy. The World Bank Sees china expanding by 8. 4 next year. Its expecting that it will be fueled by fiscal stimulus and the faster implementation of large investment projects. Todays forecast is higher than an earlier one that was sited in a World Bank Report in october. 8. 4 , not bad both if you can get it. Speaking of china, the United States is moving forward with plans to slap steep antidumping duties on wind turbine towers that are imported from china at prices that are deemed unfairly low. The news from the Commerce Department comes as u. S. Officials welcomed a highlevel chinese delegation for trade and economic talks. The u. S. Trade panel has final approval over the duties and is expected to vote on the case in late january. In corporate news, ubs hit with a 1. 5 million fine today. That will add up, a few more of those. The swiss bank admitting to fraud, it paying bribes to brokers. And pervasive, they call it manipulation of libor by dozens of staff. The penalty was agreed to with u. S. , u. K. , and swiss regulators. It is more than three times the 450 million fine that was levied on barclays in june. The second largest fine ever on a paid paid by a bank. It only was topped by the 1. 9 billion penalty that hsbc agreed to last week to settle that Money Laundering probe. Crazy thing that stocks up. Its leading the exchange there today because people had been expecting maybe a slightly higher fine even than that. Three times the amount. It was supposedly taking place for five to seven years, 30 to 40 traders have left. Pretty pervasive. I wonder how much they they make money or lose money after after all was said and done. 1. 5 billion. Probably lost. They did well. The libor stuff, if you can set rates well, and the crazy thing, it affects so many different instruments and so many people and so many businesses. Right. I dont know that you could ever actually figure out all the implications from it. Right. From everyone. And in a related story this morning, the f. T. Reports that the new york fed was warned as early as mid 2008 that banks might have been misrepresenting their libor borrowing rate. That was to aid their own trading positions. And that date is much earlier than previously known. According to the f. T. , yep, thennew york fed president tim geithner was told by a senior colleague in a may, 2008, email of her concerns about banks deliberate misreporting. The email part of an internal push among some at the new york fed to press the bank of england and British Bankers Association to reform the benchmark lending rate. He did raise some of alarms. He did talk to them, just didnt stay as publicly as some say he should have said. I mean geithner he did kind of warn them about some thing. Right. The sec is outlining potential ways to reduce conflicts of interest at the countrys largest Credit Rating agencies. The Regulatory Agency failed to take a strong stand on specific industry reforms. The sec report abstained on next steps, and it also recommended further discussion of the matter. The report was required by a provision thats known as the franken amendment. In the 2010 doddfrank reform law. The franken provision, yes, you know whos probably named after, required the stoek conduct a review of the feasible of a new system in which a public or private utility or board would assign work to the agencies on structured product ratings. Huh . Tough do you understand any of that . No, but its tough to jump from snl to the Senate Without like the bill Murray Amendment. Fred grande did it. You laugh at the bill Murray Amendment or the Garrett Morris provision. I guess the kidding around is at this point. Or, you know, that shows im pretty lame. I cant remember anyone except pack in the way, way yeah. A lot of how about chris farley . Poor chris. Yeah. Jim blushy john belushi. That would be alcohol for everyone, i think, amendment. Beers for college for everyone. Yeah, college for everyone. No studying, but college. Yes, but college with your college sweatshirt. U. S. Authorities are examining trading by one of sac Capital Advisers most successful portfolio managers. Kate kellys been reporting on the story. Reuters says that the latest manager in question is gabriel platkin. A probe into the 14 Million Investment in Weight Watchers last year. Platkin is a specialist in consumer and retail stocks. He makes Investment Decisions for more than 1. 2 billion worth of assets. And we do have a winner. Getco buying Knight Capital for about 2 billion. It sweetened its offer for the marketmaking firm to beat out a rival. Getco said to have clinched the deal after it increased the amount of cash in its cash and stock offer. The deal is 2 3 cash, and it values knight at 3. 75 a share. Stock as you see in the premarket, well below that at 3. 42. In earnings news, oracle says Software Sales growth will stay strong going into the new year despite the fiscal cliff fears. Quarterly revenues and earnings were better than wall street was looking for. And ford says that a recent spate of safety recalls have not hurt sales. Chief operating officer mark fields told reporters that consumers have a good perception of the quality of ford products, and overall sales are, in his words, doing well. But he declined to offer an estimate of december sales at this point. Lets look at the markets again this morning. We did show you the futures. They are indicated slightly higher after big gains over the last two days. Markets have been up Something Like 2. 5 . Just over the last two trading days. You see the dow future up again, up 35 points is the indication above fair value now. S p up more than four points. Oil futures up 42 currents to see 88. 35. The tenyear note, the yield is wow, 1. 8 today, joe. 1. 801 . Still well above holy smoke. Moving higher all the time. If you leak at the dollar this morning, also youll see that the dollar is down against the you are again, 1. 3274. Wow, weird moves. The dollar is up again the yen, 84. 41. You saw the moves in the nikkei in japan. Huge moves there because of the expectation that theyre going to be doing more to help things out, more stimulus is expected. And the bank of japan expected to get involved. Of course, that hurts the yen. Thats why you see the dollar higher against that. Gold now up about 4. 10 to 1,674. 8 an ounce. Below 1,700. Time for the Global Markets report. Kelly evans is standing by in london. A lot of action over there today. Thank you. There really has been. And in fact, its the greek banks which are leading the way. I cant remember the last time we said that. If you look at trading broadly, its the most beaten down areas where were seeing the strength this morning. Again, here are some of the names to mention whether its the National Bank of greece. We saw these up in the range of better than 8 earlier. Now in the range of 5 to 8 . Again, if you look at the levels, you see were snapping up from low valuations generally speaking. It doesnt take a lot at 63 cents to get an 8 move. Quick look over here if you want to take a shot of the wall behind me. It is green for the most part. And greeces borse is one adding 2 today. Were seeing that reflected across the bond space. Portugal for example seeing tenyear yields falling. Same for spain and italy. The boreses and footy 100, the xetra dax, this has been the outperformer up in the range of 30 . Another. 3 after the ifo out of germany. Came in better than expected. Again, a good sign for growth. Not necessarily, though, for those who would like to see a weaker europe. The ibex 35 adding 1. 3 . And the nikkei, as you mentioned, up above 10,000 for the first time in eight months. Adding 2. 4 . Better hope the moves in the japanese government or bank of japan pan out. Well get the bank of japans decision tomorrow. But this comes on the day when, remember, its on the weakening of the yen which we can show you on hopes that that will help the Japanese Corporate sector. Remember, we saw export figures showing a drop of 20 in exports to the use. 15 to china. Again, theres a lot of expectation built to this. The aussie dollar remains the underperformer as we continue to evaluate chinas internal rebalancing. Now the sterling is stronger, the dollar yen you already mentioned. And the euro dollar to get back to the point about the ifo survey is adding. 3 to 132. 1. 3274. We get a rally in the euro. Our guest this morning suggested it will be the 150 to 160 range before that becomes any real problem for competitiveness. Guys, if we get anything near there, that will certainly be a troublesome development, shall we say, for the rest of the periphery. A lot of cross currents this morning. Back to you. Did you see the berlusconi saying that italy might have to leave the euro i love this guy. And joe, ill tell you, he has a point. A lot of people say if italy wasnt in the eurozone now, if you were to analyze the italian economy, current account surplus or ability to get there, its competitiveness, that actually it would be in a decent position on its own. You know, thats a counter factual that may not be worth exploring. Although berlusconis clearly exploiting that perception. If germany doesnt agree to have to be a real central bank. Hes looking good, 76. Hes going to run again. His hair is jet black. And i think hes still im sure its natural. You want to avoid him if you can. Like keep your distance if you would. No, i dont have to joe, hes engaged now. He has another a new wife. I didnt realize that. Then definitely. Yes. Im devastated the worlds women are safe now. Hes engaged. Now, in february, theres another election. This is what i love hes way behind the leading party which has 30 . The leading party is able to over there, you got to i know. I cant believe you can run a country or yeah . Just keep in mind there may be an ulterior motive for his return to politics. He is looking for immunity from a lot of charges against him that he could get by having some position in the government each if hes not prime minister. Wow, you are up to speed on this. You got to go over and look into this a little closer. That would be a good excuse to go to italy, the greatest country i think, at least that ive been to. Thanks, kelly. Appreciate it. France is pretty good, too. Bye. Coming up, the early read on the trading session from the futures pits in chicago. First, are you expecting a yearend bonus . What is that . You ever heard of no. We have not. A survey by challenger, gray, and christmas finds three out of four three out of four . Will be handing them out. Three out of four. Thanks, nick. Were the bottom four. Were the four. Handing them out, up 53 . We get these buttons. Thats up 53 from a year ago. [ male announcer ] when gloria and her Financial Advisor made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. When you want a Financial Advisor who sees the whole picture, turn to us. Wells fargo advisors. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 ml350 for 599 a month at your local mercedesbenz dealer. Dow futures up. S p 500 up. Dow up jed by 15. Big gains. The markets up 2. 4 over the last couple of days. In our headlines, u. S. Cigarette makers have reached a settlement with 17 states in a longrunning dispute over the payments they are required to make under the 1998 landmark antismoking agreement. Under the saidment, states will settlement, states will receive 4 billion in disputed payments. The manufacturers will receive credits against future payments, as well. Time for the National Weather forecast. Todd santos is standing by at the National Weather channel. Good morning. Good morning. Actually were tracking snowfall. At least in the northeast today. Shouldnt be an issue as far as travel is concerned toward boston. A good stretch of maine dealing with the snow. Rain line will be moving closer toward the portland area next few hours. You see that here on the model forecast through this afternoon. Notice all of that remaining well to the north of boston. Pitts field and western mass reporting light snow the last couple of hours. Otherwise into wednesday, much of the action centered well to the north of some of the big transportation hubs. Mostly sunny today toward new york city. D. C. , as well, coming in quiet. Philly, temperatures, getting to the 50s that direction. 45 in new york city. The big story is actually going on to the west. Did want to show some of the snowfall totals to the north. Some of that includes the system that will be getting going the next couple of days. Here it is in the four corners. Flying out of denver, an increasing chance for snow across the area. Also really gusty winds on the back side of the system as it pushes out. Doesnt look like much. Denver to cheyenne, snow. Sweeping east. Not too big of a totals to start with, but tonight and tomorrow, by this afternoon, may get snow going toward omaha, nebraska. Then it picks up, bigtime windmaker. Winds west to the northwest. Blizzard conditions, even into portions of southern wisconsin as we get in through thursday. And of course even chicago, starting with some rain late tonight. Maybe switching to snow tomorrow. Heres what the system looks like. Temperatures around 23 in denver. Thats today with snow in toward des moines by later this evening after the commute. Then theres tomorrow. Late with the rain, then the snow in places like chicago. Northern portions of, say, lets theft once you get into the great lakes, dealing with the snow side of things. A stretch of michigan could see mixing. Into friday the system makes its way to the east coast. New york dealing with rain in the morning. D. C. May be safe from that. On the back side, a lot of us will be cooling down. A bigtime travel week, especially toward the holiday season. So a number of things to keep a close eye. And saturday almost all the close eye on. And saturday almost all the snow is lakeeffect snow. The eastern edge of the lakes through western p. A. , western new york, the better chances for some of the snow with that system. A lot to watch there, guys. All right. And you dont thats all loaded into your thing. You press press it, and it just it happened. You dont have like youre not pressing snow. You dont have like a rain button or sleet button. You cant just turn that into sleet, can you . If i could do it, i would turn atlanta into a ski town. That would be good. In denver now, do you know, is it going better than last year in the reeks there, do they have a better base . Is it looking good for the season, do you know . So far, its actually looking pretty good. And with this storm, places like steamboat likely to get hit with the powder. Next week the northwest gets going into seattle. So far the ski season out west is looking good. Come up with the name draco. Oh, draco . They pulled that out earlier. That was not mine on the list. The storm. From harry potter . I dont know. I dont know. Anyway, should have been listening. I didnt thanks, todd. I was looking at denver and saw snow. I was hoping snow in the rockies. Lets get ready for the trading day. Michael gerka of spectrum Asset Management joins us from the cme. Id like to ask you, michael, about sort of a composite of all of these different markets because some of them, i mean, the stock markets been going higher. The euro is pretty amazing. Back to 132 even though the fed did all of that stuff last week. And gold, i also thought we might see something there with all of this all of this easing. Its stubbornly below 1,700. The bond yield, its not a lot but back 1. 8. Whats going on . Do you know . Well, i will say this, joe. That you know, i sat in that Morgan Stanley office by you last week, and their forecast of 138 in the europe looked pretty heavy up there. But it you know, what ive been looking at the british pound also. Its a runaway train in currency land. I think roger waters a week ago at the same time said it best. Its comfortably numb. Theyre willing to give it away. And thats kind of built into the cake. It has nothing to do with the cliff. Its just that a softer dollar is in the cards. Im not surprised that you continue to see that followthrough. You know, one of the levels that im looking at or that you said about gold is that as gold continuously got hit and hit, and im like really watching closely this 200day moving average because it held so well the last two times it was touched back in september and in august. And that level was 16. 62. And lo and behold, look at where the low was that came in within the last 24 hours. Its done nothing but bounce from there. I think we regain back to those levels again, which is a little bit more of a bid in gold. At the same time, watch the s p. Ive got a huge trend line up at 1 1,459. The strength in the stock market is inexplainable right now. Weve been looking for that for about a quarter. And it continues to build on it. Earnings or not. But really i think the big talk or at least what im watching a lot is the dollar and the way the dollar continues to get a lot weaker here. Its okay. So that makes sense. The dollar will get weaker. So the market should do i guess a little bit better. Some things seem like theyre decoupling from the relationships that have been in place for a couple of years. Heres my decouple, all right . In the last 72 hours, weve continuously been hearing about how weak crude is getting. Were at 50 project forecast for where crudes going. And its been slowly and slowly and slowly going good. I think the real question in crude oil land is the spread between brent and wti and how weve got so wide above 25. Then the forecast was that we should probably narrow from there, and its done nothing but that. I think thats the big talk right now is the how this spread has narrowed. A lot of it has to do with a lot of global pressure overseas. Especially on the brent side has subsided. And at the same time, were watching all how the dollar plays inhe you is this forecast, a weaker oil, and weve rallied. Youve had nothing but talk of, you know, a strength market in gold. And its come off. Then all of a sudden were starting to see this whipsaw back. This is when markets are really thin, thin and volumes low. Thanks. We appreciate it. Covered a lot there. Dont really know anything yet. But well have thing to watch. Thanks, michael will. See you. Thank you. When we come back, well talk about why the average american might be spending less than normal this month. Plus, you remember the saga of former imf head Dominique Strausskahn and what happened between him and the New York Hotel maid . That drama is now on stage. Well have that story. Whats next . Hes going to apply testosterone to his underarm. Axiron, the only underarm treatment for low t, can restore testosterone levels back to normal in most men. Axiron is not for use in women or anyone younger than 18. Axiron can transfer to others through direct contact. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these signs and symptoms to your doctor if they occur. Tell your doctor about all medical conditions and medications. Do not use if you have prostate or breast cancer. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet, or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. See your doctor, and for a 30day free trial, go to axiron. Com. Nespresso. Where i never have to compromise on anything. Where just one touch creates the perfect coffee. Where every cappuccino and latte is only made with fresh milk. And where the staff is exceptionally friendly. Nespresso. What else . I 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. Good morning. Welcome back to squawk box here on cnbc. Andrew ross sorkin is home sick. Another key read on real estate. November Housing Starts and Building Permits are due at 8 30 eastern. Starts seen falling 3. 2 . Permit expected to rise by 1. 4 . Yesterday a National Association of Home Builders Sentiment Index rose to the highest since april, 2006. Instagram is creating something of a user uproar. The popular photo sharing service is owned by facebook, revealing changes in its user agreement. The changes give broader rights to use its members photos in advertisements. Responding to criticism, inys that it has no plans to incorporate user photos into ads, but this were stories about how they could own your photos if you upload them. A lot of things. I dont know what kind of privacy you can expect once you start posting pictures into the public sphere. Cool pictures. Your daughters on instagram. She does. Shes got all these followers. When they bought it, they told me it was something that made picture that was brian door. It makes there he is again. Hes working for us this week. Deans over hes putting pictures of himself in there . I guess its better than stealing somebody elses and putting them up. I thought it made pictures look antiquey. You can do cool effects. Thats what they said it did. They didnt understand why they were buying it. I know exactly where that is. That leads to loveland. Pretty good. Theres a play. I love this. The saga of former International Monetary fund chief donnique strausskahn and what happened i hope its a musical. Him and a hotel estimated on stage. Its in a play titled uhhuh suite 2806. Really . There should be singing here. Ahh. Strausskahns room number, what he had at that hotel, the hotel. The director calls it a 60minute study of morality, sexual addiction, and power with money between a character very similar to strausskahn and a hotel maid. Both the hotel guest and the maid come off as manipulative, and the audience says its hard to know who to believe. Its been a year and a half since the former imf chief and leading contender for the presidency of france faced Sexual Assault charges braud braut by the hotel maid. I think his wife the wife is filed leaving him, yeah. Criminal charges were dropped, and the two reached an undisclosed settlement. And dsk faces charges in an unrelated case in france this. Guys all over the place, living the life. He will find out today if the charges will be thrown out. Or gees, all kinds of stuff. A strange fellow. Interesting that they had him in a robe. According to the charges he wasnt. Hes full of life, becky. In a european way, hes full of manliness and life. A freak. Hes a sexual freak. But dont you think it would be better as a musical . Yes. That point i agree with. Seriously. This should be then i might go. Lets check the markets this morning. As weve been talking about, the futures have been indicated higher. Right now you see that those dow futures are up by 33 points. This comes after two big days of gains. Theres a lot of talk that they are moving closer to some sort of an agreement over the fiscal cliff. Now you also have this plan b that boehner has come up with. This is going to be something where in his idea they would raise they would keep tax rates low, keep the same tax rates on anybody whos making a Million Dollars or less. The rest the plan in the senate is for 250,000 and below. The president has talked about 400,000 and below. But this plan b is interesting because it does keep the sequestration cuts in place. Weve got to deal with the 1. 2 trillion in cuts, more than the president is offering. This is something that harry reid said will not pass the senate. Obviously this is a lot of the political maneuvering that takes play ahead of time as they continue negotiations. Huey lewis had an album and song called plan b. I think whenever we saw plan b that we should play. It it was called plan b. Is it ready yet . I dont think well get it. I took the kids to see spiderman on broadway. Rise above is the theme song. Did you remember that . That may be subliminally where i got it. Lets look in europe also. With power comes great responsibility. Thats what we think about here. This is true. Green arrows in europe, as well. Ftse up by. 6 . And the cac in france is up by almost half a percent. In asia overnight, you saw Massive Gains there, too. The nikkei in particular, up 2. 4 . This is the first time that the nikkei has been back above 10,000 since, when is it, march . This is, again, just the idea that theres going to be stimulus coming from the bank of japan with the change in leadership in that country. Oil prices have been a little bit higher this morning. You see now theyre up about 37 cents to 88. 30. The ten year, we looked a few minutes ago, the yield was above 1. 8 . Its still there. 1. 803 . The dollar has seen interesting moves today, as well. Down against the euro which is all the way up at 132. 77. It is up against the yen, though, because with that stimulus from the bank of japan, that would put pressure on the yen. You see this morning, dollar yen at 84. 42. Gold prices up slightly, well below 1,700. Up 1. 70 at 1. 629. At 1,672. 4 an ounce. Im not going to speculate but we have clarification that the plan b plan in the house definitely keeps the sequester in there. And that is part of the negotiation. All right. Consumer confidence could be plunged off the fiscal cliff. Not only are businesses spending less, but a survey says that individuals are now holding the Purse Strings tighter, as well. Joining us now from palm beach, florida, is greg mcbride. He is senior financial analyst with bankrate. Com. And greg, whats happening to this point . We had seen the consumer kind of hanging in there and being resilie resilient. Are they starting to worry about the fiscal cliff as well . They r. One in three americans say that just in the last 30 days, theyve cut back on personal spending, specifically due to concerns about the fiscal cliff. And weve seen a big change really just since election day. Since the election was resolved. We saw consumer focus shift toward the fiscal cliff. Weve seen a change in terms of how they feel it their overall Financial Security. And now the recognition or acknowledgment that theyre dialing back on their spending. And the people who will are really dialing back are those who are under 30 or over 65 . Under 30,000 a year annual income are those most likely on the basis of income to dial back, which is not really a surprise. On age, we kind of see polar opposites. Retirees, those 65 and up, many of whom have seen their Interest Income squeezed in the low rate environment. They are most likely to cut back. We look on the basis of age. Those under 30 ironically were the least likely to have cut back on spending in the last 30 days. Okay. And where are you really seeing this play out . I mean, this is something that they say very much the fiscal cliff is just because its been worked under the front pages of newspapers at this point, talked about on air . Yeah. Absolutely. I think, look, a lot of this feeds into the concern that people will have about is this going to lead to a recession. I dont think its sing later that gee, higher taxes or spending cutbacks. I think its the broader macro view. The concern that whats going to happen economically in 2013. Its not the type of environment that inspires the type of confidence we need for people to spend when theyre concerned about whats going to happen with the economy. What that bodes for unemployment, their income. That makes them more inclined to be tight fisted in this allimportant Holiday Shopping season. Greg, how long have you been conducting the survey . How does it match up to previous years . Weve been doing this for two years. And with in every month except for two of those 24 months, people have indicated that their Financial Security has deteriorated over the prior year. The exception was a couple of months earlier this year when everybody was feeling a little better. But that was the exception. We did see a big turnaround really since october. Again, once the election was resolved, the focus shifted toward the fiscal cliff. We saw a big drop in both november and now again here in december as consumers worries about the fiscal cliff and the Economic Impact ramp up. All right. Greg, thank you very much for joining us today. Appreciate it. Thank you. Flaernl arent enough republicans that would even agree if you raised taxes even on people above each above a million. Thats what they called it talk about the slippery slope, that are you agreeing to raise taxes. They say its a bad way to start negotiations. On the left, the cost of living increases, theyre allaying fears. And what obama offered, theyre trying to keep the far left from breaking with the president. Both sides are having trouble with what we have now. Yeah. With as far apart as we are now i read paul krugman yesterday why . I read him all the time. You pick up a a karl marx book once i follow him on twitterment a twitter. His latest point, hes been thinking about the latest offer from the white house la, blah, blah, blah, blah, blah, blah, what, blah, blah, blah, blah, blah, blah, blah, blah. I dont want to know. Blah, blah, blah. You dont either, do you . It was would you join us so i can talk to but this . No. It was i dont care what he [ all talking at once ] the lesser of two evils. Blah, blah, blah but he would not agree to anything else if there was any other budging on it. Made you hear it. No, i didnt. Anything you see on squawk, tweet us, squawkcnbc the handle. Coming up, why canaccord enuty is downgrading shares of the tech giant. Tdd 18003452550 this morning, im going to trade in hong kong. Tdd 18003452550 after that, its on to germany. Tdd 18003452550 then tonight, im trading 9500 miles away in japan. Tdd 18003452550 with the new global account from schwab, tdd 18003452550 i hunt down opportunities around the world tdd 18003452550 as if im right there. Tdd 18003452550 and im in total control because i can trade tdd 18003452550 directly online in 12 markets in their local currencies. Tdd 18003452550 i use their Global Research to get an edge. Tdd 18003452550 their equity ratings show me how schwab tdd 18003452550 rates specific foreign stocks tdd 18003452550 based on things like fundamentals, momentum and risk. Tdd 18003452550 and i also have access to independent tdd 18003452550 firms like Ned Davis Research tdd 18003452550 and Economist Intelligence unit. Tdd 18003452550 plus, i can talk to their global specialists 24 7. Tdd 18003452550 and trade in my global account commissionfree tdd 18003452550 through march 2013. Tdd 18003452550 best part. No jet lag. Tdd 18003452550 call 18665069616 tdd 18003452550 and a global specialist tdd 18003452550 will help you get started today. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. In that time thereve been some good days. And some difficult ones. But, through it all, weve persevered, supporting some of the biggest ideas in modern history. So why should our anniversary matter to you . Because for 200 years, weve been helping ideas move from ambition to achievement. And the next great idea could be yours. Shares of apple losing almost a quarter of their value since the high in september. Can the tech titan make a co comeback, or is the stock past it its barak obama . Joining us is mike walkly from canaccord. 500 billion plus market cap. 25 more than exxon which i know is a big company that does a lot of stuff other than, you know, making these things, mike. Is it cheap you in or i can look at reason that its seeing some of the best levels. Everybody that could ever like apples stock was in at some point. Who was left to still buy it at 700 . Yeah, i think thats a good point. At 700, the iphone 5 into the launch, that was priced into the stock. Clearly our talks with investors is just a worry a year from now, how do they grow after the upgrade cycle to the iphone 5. We think that led to some of the selloff and worries about Gross Margins maybe coming down as they come downstream on their pricing. But we do think at the valuation here, still a good growth company. We have a buy still on the stock. We did lower our price target basically on our checks. We have seen the ipad mini cannibalize the ipad 4 we thought. Thats where we cut some numbers. We think with the iphone lots of opportuniti opportunities for groelthd. We believe apple has for growth. We believe apple has what it takes to continue to grow earning and generate cash to send the stock higher next year from current levels. I wish i could see the future. On the one hand, you know, as you say, the the Market Penetration is still small for apple. Its its not expensive in terms of valuation even though the market cap is huge. Its you know, priced earnings multiple, its not expensive. But steve jobs is gone, and theres smart competitors. I wonder if apple has a lock on what kept it ahead of everyone else. You have smart guys at google and samsung, competitors that see the big pot of gold to go after. And do they is apple going to be able to go next . No natu no more ipads, is it apple tv . One thing weve seen in our check. We do extensive store surveys. This time when the iphone 4, sales tapered off. With the galaxy four and the note that consumers like the larger screen innovation of samsung. Theyve held in and done well. Head to head with the iphone 5. Thats been a surprise in our check showing the innovation curve. But on the same time we believe apple could pull in a product cycle maybe into june, a little earlier. The cycles getting shorter. We think samsung will pull up the galaxy 4 launch earlier. As the titans get more aggressive on products, it could be good for both companies and the industry. Last quarter, they combined for 106 of industry profit. Weve got to go. Would you be flabbergasted if apple was at 532 shares a year from now . No, i it would be justifying a half a trillion market cap and backing and filling. A move from 9 beiillion to 500 billion. To go from a trillion to billion, i dont know. Appreciate your time. Thank you. Thank you. All right. When we come back, you ever wonder what youll look like in 50 years . I want to look like anything. How about yeah. 50 years anything above ground. How about your investments just a few decades from now . One wellknown bank says it could give you a snapshot of both. Scary details coming up. Excuse me, sir im gonna have to ask you to power down your little word game. I think your friends will understand. Oh no, its actually my geico app. See . I just uh paid my bill. Did you really . From the plane . Yeah, i can manage my policy, get roadside assistance, pretty much access geico 24 7. Sounds a little too good to be true sir. Ill believe that when pigs fly. Ok, did she seriously just say that . Geico. Just click away with our free mobile app. What i care about is reducing these deficits. Not only will we have explosive growths in markets, explosive growth in this country. Weve been taking care of volatility. I think technology is kind of interesting should we get a deal. The second largest customer of china, the uss avoiding the fiscal cliff will be very good for them. A lot of people are trading on that. Lets rise above. Eyeglasses, thats an idea glasses, iphones. Iglasses. Theyve already done that. Are you saving enough for retirement . Maybe not. M one bank is resorting to extreme measures to get you to do something about that. Its pretty terrifying. Well show you how theyre tugging at your heartstrings. Its ebenezer screwing with a premonition of hisself. Reporter its not a pretty picture. What will you look like at 107. Will that image get you to start saving . Were taking you into the future. Reporter thats what dean and his team are betting on. They spent years developing face retirement. An application to plan retirement and its costs, wrinkles and all. Its not pretty. The goal is to motivate you to build a bigger nest egg. We had conversations about retirement and we couldnt get them to think ahead for the future and we invented an aging process to get them to think about the future. Reporter behind the shock value, there is some science. Last year, researchers at stanford found young people who met their future selfwere more likely to save. An average 30yearold today needs a Million Dollars to retire by age 65. Half of all millennials age 18 to 25 have nothing saved. Its no surprise that market is being flooded by companies trying to cash in on a sweet spot of how tensional retirees. With 50,000 dollars to 250,000 in assets making up 2500 households. I think we need to be careful. Not optimistic it is an inspiring and harshful message. Reporter how harsh it may be, it certainly gets you thinking. In its first few weeks, 150,000 people have already logged onto mer rim edge to see their retirement reality, however harsh that reality may be, its too soon to see the effects it may have for Bank Americas bottom line. Its a good gimmick to get people to start thinking about what theyre saving. When you log onto this system, it not only digitally ages you, something you can do on iphone, which tells you digitally what things cost. When i retire, the domestic airfare is very expensive. 7 for a gallon of gas. 7 for a gallon of gas . Who knows. Why didnt you ask for an old tape of me. I can show you aging. It doesnt need to be digital. The problem is, even if we took a picture of you now. You wouldnt really age that much. You guys are eternal. I have to say, you dont look that deficit. I have to look pretty much are you going to show andrew is not here and thats a shame. We can do him. Thats you. Thats me. In case you didnt see it in the video. This is andrew. Andrew wanted to make sure he got any lighting right in the picture. The middle picture is andrew if he ever retires. Hes a workaholic. 107. Still alive. He looks pretty good. If youre here at 107, not a bad deal. It cracks me up he was worried about the lighting taking the picture. We went to several deficit cameras. Is he too old to fail . Too old to fail. I wonder if all my efforts by the time hes 107 he will have ever learned anything. I hope so. I may work on him that long. I hope were still here to record that. I hope so. Coming up, one of the most successful Value Investors, leon cooper man. Well talk to him. This is america. 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. 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 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. Hanging with mr. Cooperman. Hedge fund, titan and ceo of omega advisor. Can a shipping giant deliver for investors . Inching closer with washington on the First Quarter . I dont know. The second hour of squawkbox begins right now. Good morning, everybody. Welcome back to squawk box on cnbc. Im becky quick with joe kernan. Andrew is out sick and hope he is better quickly. Listening to plan byeb huey. It was in the 60s and he has a new album plan. Futures are higher even after the big gains we have seen. Dow closed up by 115 points yesterday. Gains the day before. The s p is up almost four points at this point. This is why we were playing plan b. Those disagreements get louder and investors are taking that as good news. Republicans are pushing a plan b to get over the First Quarter and keeping bush era tax rates for those who earn a mil ylion dollars or less. The white house is pushing back against that idea. The white house came to the plate with 400,000 and below and those people would not see any increase in tax rates. There are a lot of maneuverings, each side saying the others fiscal cliff solution is not balanced and a lot happening behind the scenes and were getting to the real end of the year, december 19th, not a lot of time to make that happen and wall street saying, maybe there is some movement. And reuters is reporting a final decision expected on google plus probe. It centered on the search practices. And more than half of catastrophe claims seen in 2011, that says the bulk of this years total came from weather disasters from the United States, 25 billion from Superstorm Sandy alone. Nike capital agreed in principle to be acquired by getgo on the cash portion of the bid. Knight capital agreed. The cash portion a prior bid increased. 3. 75 a share and knight ceo, tom yois, would have been the chairman, instead be executive chairman. Our guest in the first hour, one of wall streets most successful Value Investors continues to deliver for his clients. His fund is up 30 this year. Joining us now, Lee Cooperman, chairman of omega advisories, delivering alpha Advisory Board and speaker, something we put on every year. I can hear all this stuff, i guess it was greatly exaggerated, the demise of investing and investing in general, and you can only get 5 or 6 if youre lucky and here you come in this past year with 30 . The year is not over. 7 1 2 trading days left and were watching it closely. Youve basically done this by staying positive for most of the year. Positive most of the year and continuing mildly positive now, less positive than we have been. Really . Why on earth were you positive at the beginning of this year when everybody else was talking about europe, china, the election, the slowdown. So many reasons to be negative. Historically, bear markets precede recessions. You get the market down a lot and its highly probable. We dont think recession is probable in 2012 and 2013. If you dont have recession, the market is such i dont think you go down a lot. The economy is creeping 2 growth rate and one thing that worries me, not out of the view, is the Federal Reserve has an environment there is no consensus to common stock. I may have a zero but bottom line, what do i do with money . Keep it in cash, zero. The fed has told us it will be zero a couple more years. Put it in u. S. Government bonds, 1. 8 . Thats ridiculous. Adjusted for taxes and inflation, you get a negative return. Rates dont belong where they are. We made a great deal of me on the last couple of years at high yield. It was 25 in 08 and 23. 6 and credit markets are unusually tight because no particular bargain in high yield anymore. Youre left with common stocks. You can find many common stocks yielding more than bonds and growing businesses and discount net asset value. By default, common stocks win. Thats the way weve been playing it. The right view. We had other ancillary strategies. Done well in credit, done well in stock picking. By having the correct view of the market, we had above average exposures to equities, which has worked. What causes a recession typically . A lot of people were saying i think going into 2013, there is probably 1 in 4, 1 in 5 chance. What causes it . I would say accelerating inflation and the fed tightening. The fed tightening. You see the fed tightening and told us we have to get to 6 1 2 . That may be a while. Not any time soon. Yeah. Ultimately the markets will turn on us. If anything bothers me is the reality 20 trillion deficits and Interest Rates at zero are not sustainable prescription. We wake up and the markets will turn on us. We face that risk. We dont know whether its 2014, 2016 event but somewhere out there. We hope we get the leadership in this country to deal with it before it becomes a crisis. Deal with it how . What do you want to see . Its a combination. I dont disagree with raising taxes on high income people. Im one of them and dont disagree with taxes. And we have to deal with entitlements and Health Care Costs and general expenditures. We have to have the political will to do whats got to be done. Thus far we havent. I look in a nutshell. Lets say were at 15 and spending 25 , there are people that would like to raise 25 and keep funding the government as it is now, maybe increase the government. Most people, in a poll, would say, no, i like small government. When you actually pin them down, what do you not want that youre getting right now, they want everything theyre getting right now. There are people that make the case the American People want 25 government spending. This was a defining election in the history of the country. It didnt go the way we were hoping it would go. We all both want the country to do well and hope the president does an exceptionally good job and if he does well the country will do well and well do well and we have to get down to business and deal with these issues. If we dont, ultimately, we will have a problem. One of my favorite stories, a distinguished Goldman Sachs partner, i was with the firm 25 years, in the early 70s, the former secretary of the treasury left and joined Goldman Sachs, he was very good buddies with pete peterson, very sicivicmind citizens and took out a one page ad in the New York Times alerting people to the deficit. That was in the 1980s and its much worse than back then, we have the worst deficit ever in the country. Until we start feeling pain we will kick the can down the road and hopefully it will change and hopefully wont change until its too late to do something about it. What will be the signs youre watching that will tell you the markets are starting to turn. Right now, youre fully invested. Pretty much fully invested. Were very bottom up. I have to say, im trying to find a word to describe my view, im like a buffalo. Could see it go up 10 next year, down 10 . More likely up and down because of the economy and because of the fed. Were in a condition we havent seen in many years, half the stocks are yielding more than fixed income. You have to go back to 1998 to see that condition. Its great conservatism on the part of the investor because of the beating they took in 2008. Youre still seeing liquidation. I saw a huge piece in the journal over everything that hit the individual investor over the past five years, people are saying the love for equities and the equity dreams, its over. I dont think so. That was a positive article for the prospects of the future. You have to doubt that. I feel comfortable with the statement. Zero short term Interest Rates and 1. 8 10 year u. S. Government bond rates have an implication for perspective terms for the bond market and telling you theyre less than historical but i think superior than earning in Interest Income. In my bones, i feel over the next three or four years, you will have significant negative returns in bonds and make no sense. What would be the signs . Dollar Exchange Rate hit and dollar weakening, not happening presently and zero rate inflation is another sign basicall basically. What got us and hit us hard in 2008 was the overleverage in the system and Banking System. Consumers were over11 valeverag housing too high. The Interest Rate staying this low has helped everyone sort of at least deleverage to some extent but have we transferred all that private sector leverage. To the Public Sector . We transferred it to the fed. Its still there. Does it eventually mean our purchasing power the dollar has to go down. Ultimately, there will be more inflation. Everybody else is better. Consumers are deleverages, Housing Market deleveraged. All these things that allow it to do well. Corporate Balance Sheets deleveraged. Can you get the government to start this deal with its issues. Im not one of these people that says its not solvable. Its solvable. We have to give up a little bit suffering, some old time virtues. Basically, its solvable. Simpsonbowles was start, the president s own commission. I think he has to move in that direction and hopefully we will before we have the crisis that forces it. We have evolved into a system of leadership out of crisis. We dont have a crisis right now. We dont have the leadership. In 2008, they didnt get along like they dont get along now but they did what they had to do because they had a crisis. Financial asset prizes dont discount a crisis. Im not looking for the crisis to precipitate leadership. I want any leadership before the crisis. Right now, my principle bullish nish is around 75 or 80 cents from companies. It motivates me. I like everybody else has to decide what to do with my d clients money and my own money. You have to have cash because theres tail risks out there. I go to work everyday because i want to go to work and dont have to go to work and dont ever want to be in the position i have to go to work. We talk about what rates would be. Up next, oracle shares jumping after the company boasted better than expected results. Well talk about tech and stocks to watch after the break. At the top of the hour, two powerhouse Global Equity players will join us for the hour. Squawk box is coming right back. Comments, questions, send them to quarterba squawk on. Squawkbox on cnbc and on twitter. Tdd 18003452550 you shouldve seen me today. Tdd 18003452550 when the spx crossed above its 50day moving average, tdd 18003452550 i saw the trend. Tdd 18003452550 it looked really strong. Tdd 18003452550 and i jumped right on it. Tdd 18003452550 tdd 18003452550 since ive switched to charles schwab. Tdd 18003452550. Ive been finding opportunities like this tdd 18003452550 a lot more easily. Tdd 18003452550 like today, tdd 18003452550 i was using their streetsmart edge Trading Platform tdd 18003452550 and i saw a Double Bottom form. Tdd 18003452550 i called one of their trading specialists tdd 18003452550 and i bounced a few ideas off of him. Tdd 18003452550 theyre always there for me. Tdd 18003452550 and ive got tools that let me customize my charts tdd 18003452550 and search for patterns as they happen. Tdd 18003452550 plus webinars, tdd 18003452550 live workshops, tdd 18003452550 research. Tdd 18003452550 whatever i need. Tdd 18003452550 so when that Double Bottom showed up, tdd 18003452550 i was ready to make my move. Tdd 18003452550 all for 8. 95 a trade. Tdd 18003452550 can you believe it . Tdd 18003452550 i love it when you talk chart patterns. Tdd 18003452550 trade up to 6 months commissionfree tdd 18003452550 with a 50,000 deposit. Tdd 18003452550 call 18007903807 tdd 18003452550 and open an account, tdd 18003452550 now with no trade minimums. Welcome back, everybody. Take a look at the futures, dow futures up by 34 points. Moody says it may down grade alcoa because of a 20 drop in a aluminum prizes next yeces next could put the Credit Rating in junk category. Lowering aluminum demand largely because of chinas economic slowdown. Lets look at stocks to watch this morning. First on the list, sirius x works, currently president of sales and operations, succeeding m mel, who wont be renewing his Current Employment agreement. Is he going to do anything . I dont know what he will do but i will follow him. Hes a great ceo. If he has a chance to needle me, he will do it when watching me. Telling me im out of the demo and it doesnt appeal to the older demo. You dont have it . Im basically on the stingy side in terms of gadgets. I dont spend a lot of time in a car. And everybody that has it loves it but i have 3 1 2 position in my portfolio. You own the stock but dont use it . Exactly. I dont spend much time in a car, in front of a computer. Everybody that has the product loves it. Im sorry to see mel go because hes a terrific ceo. I listen to really young things. All nations. General mills, s of 86 cents above expectations of 79 cents, right in line. Oracle, we told you, reported 64 cents, 3 cents above expectations, revenues was above consensus and forecast new Software Sales would rise 34 for the current quarter. Oracle thats general mills. If you can bring up oracle. Oracle has been a real shining spot in technology, got all the way to 8 and all the way back to the 30s. Knight capital to be acquired by getco for 2 million. Getco sweetened the cash portion of its cash and stock bid and beat out rival virtue. General electric has been removed from the key call list at ubs, saying an uncertain macro environment may result in weaker than expected earnings, from ubs. Health net says it will weaken in 2013 because of weakness in the commercial market. Hertz global, cut iting it to 7. 4 . And delphi automatotivautomoti. , i have one more here, seeing ubs, remove iing general electr from its key call list. Ubs agreed to pay a 1. 5 billion fine for investigation of manipulating libor rates. How do you like that . Kidding. Kidding. Ge owns 49 of this network. When i return, much more from leon cooperman, as we take a break. A look at the euro surging. Its a 16 month high versus a yen and 7 1 2 month peak against the dollar. Squawk box will be right back. Coming up, can fedex deliver. The Company Expected to cut costs and clip its wings after a rough three months. The numbers and streets reaction just ahead. Squawk box is back after a quick break. Would it matter at this point . Lets get more from our guest host, Lee Cooperman. Get a loan from him. Not really. Ceo omega advisories. A delivering Advisory Board member and speaker. What would you change if we go over the fiscal cliff . I think the market would correct 5 to 8 and be disappointing and me philosophically because it would indicate the inability to compromise and do what has to be done over the next four years of the president s second term. What if we went over the fiscal cliff and didnt fix it . What if we went over and stayed over, would that cause a recession . I would say so. Youre assuming that wont last. It would be more than 8 . I think we have to, if the stock markets start getting riled, politicians will wake up and do what they have to do. Just a darned shame they cant do what they have to do now before they precipitate jeff immeld say it has gotten soft because of the uncertainty surrounding the cliff. You want to talk about bubble s . You mentioned the tech bubble in your previous comment. I was looking at numbers i find interesting. In 2000, cisco was selling at 100 times earning, had nobody recommending it and had no yield income and dividend dents at 6 1 2 . This morning, cisco less than 10 times earnings yields 3 and 10 year governments are 1. 8 down from 6 1 2. 3 substantially over 10 year Government Bond rates. The government isnt an equity market, in my opinion a 10 year yield equity market. Do you like cisco . We dont own it. We own qualcomm, we own sprint, googl google. You dont own apple . We did own apple. We did very well in it. We had a position through options but much smaller than it was. There are questions, issues. Im not keen on their financial management, in terms of sitting on all that cash, earning zero. I think we should be more creative and innovative. A Great Company and great product. I have an iphone 5 and very pleased with it. I have an ipad. Im not a Big Technology it got the cisco market cap, only 15 times earnings. Got back wasnt 100 times earnings. Thats a deficit business. A google model is more enduring, apple making hardware sales. What made you get out . We respect the market and understand the issue. You didnt get out of the top . We didnt get out of the top. Where it is right now . We actually just yesterday reestablished a position. You did. You got out above this. I doesnt own it but thought at 250. If we ever get out at the top or in at the bottom, its sheer luck. If youre somewhere 22700 and and between 700 and we got out. Since we dont run a Leveraged Fund we have plenty of Borrowing Capacity and sold some puts to create the stock at low levels. We will continue this conversation with lee. Hes here for the rest of the hour. If you have any questions, email us squawk cnbc. Com. Steve lgets up to speed on what the latest situation is. Could end with adding a close friend. The lexus december to remember sales event is on. This is the pursuit of perfection. [ 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 e . Welcome back, everybody. Take a look at fedex at 1 shrine versus 149 the street is looking at now. Revenue is 1. 4 billion. The Federal Express segment was 6. 86 billion, the ground segment revenue. 2. 59 billion. The number people were looking at for revenue was below so thats above. It is a little bit higher now. We will look for guidance. Sandy had an impact by 11 cents a share and reduced shipment volumes and incremental operating costs. The new guidance quarter is below the high end. It backs fiscal earnings per share 6620 to 660 thats in between. Whats the stock doing right now, can we tell . Not much. They said operating income for the quarter improved in fedex freight and ground because of increased volumes and higher yields. Persistent weakness in the Global Economy and increased demand for yielding limited the profits at Fedex Express. A couple deficit situations adding up. Superstorm sandy, i didnt realize they would have that kind of impact on the company. 11 cents a share because of that. For the next quarter a little below. For the year, it looks pretty good. I dont imagine people would be saying, wow, the company is negative about the fiscal cliff. Oracles numbers yesterday were pretty right. Excellent. Well keep an eye on it at this point. We will talk to an analyst. We will talk to bart in a couple minutes. Well have an mcco in. In the headlines, were an hour away from the latest Housing Markets. November rate is expected to fall to 865,000 units following a 6 increase in october. Mortgage applications dropped by 12. 3 last week. Applications are at their lowest of the month although theyre above record lows. As weve been talking about, ubs will pay fines in the libor case. And switzerland was fined 450 million in connection with the libor case back in june. Other banks are expected to be fined in coming months. As weve been discussing all week long, president obama and Speaker Boehner appear to be inching towards a deal. House republicans are now pitching a plan b in case talks feel. Steve liesman is here with more on where we stand on a possible deal. Have you talked to any since yesterday or have you just been musing and thinking with that big brain pan of yours. No. Mostly ive been sleeping and drinking. We assume that. As you know, ive been on the phone pretty consistently since leaving the squawk set yesterday. I want to preface what im about to report. This is about the hardest thing ive done. I think ive reported really complicated stories, t. A. R. P. And securities in the fiscal cliff and fiscal crisis, explaining where they are is like a Football Game and the lights have been turned down and you have to guess where they are. My second chart, i have never done this before, i know the second chart is wrong but its the only way to present to you where the sides are. Lets start off with what i think is right, the revenue side and i think theyre pretty close. Tax increases, dems ahead of republicans, 600460. I have to say the republican side requires me to make certain assumptions i have run by the gop side and they tell me are not far off. If i look at deductions versus tax increase, it could end up being 50 50. Hard to tell where it is right now. The estate tax, democrats have 100 billion in revenue right there. I dont think the republicans are on board with that at all. Note the deficit definitions of the differences. The gop says that the democratic revenue number is actually higher because of a change in the cpi. Go to the right hand side of that column. Either 200 or 300 apart on revenue. Not the worst thing in the world. Go to this next chart, the fiscal cliff interferences when it comes to spending. Folks, i have no idea if this is correct. The red numbers from the gop are numbers sent to me on friday. The 1. 4 trillion was the total of these numbers on friday. As you know, boehner is talking about a trillion. Go through it, cpi changes, they have deficit numbers because democrats want to take some of the edge off of the effect in the change of the cpi for the poor and elderly. Health savings, we think they may be talking about means testing for medicare. Other savings or administmandat savings, we think the gop is talking about Social Security and Obama Administration means Discretionary Spending and defense spending inside their amount there. We know it is wrong but dont know how it breaks down. Lets look at possible differences or places for savings. What you will find, means testing for medicare is on the table. Agricultural subsidies, something the democrats want to target. Additional discretionary defense cuts and raising retirement age, we think saves about 100 billion. Take a deep breath, total it all up, show you what weve got. Revenue. 1. 2 trillion for dems. Assuming you use the democrats definition where tai are. I have a question. For raising the retirement age, thats not anything thats going to happen in the next 10 years, right . Talking about doing this way down the road . Further down the road. These arent savings youll see in the next 10 years. Youre right. It would not be within the budget window, a correction right there. Not that complicated, just want to follow along. 2 2. 4 trillion for the dems and 1 1. 9 for gop. Its the spending side. The revenue, seems like theyre a lot closer than they were and maybe joe knows better the difference between 400 thousand a million, is that an unbridgeable gap if you hit 750 . Thats the best i can do. The trillion of debt and it will wipe out the savings. They have to send out a simple question. What should the maximum tax rate be on wealthy people. I believe in a progressive income tax structure and wealththy people should get more. The major part of the income they get is from wealthy people. And you determine the tax size and determines the revenue yield. Were nowhere near that. We have to get Health Care Costs under control, raise Social Security retirement age. We have to also to get a number, you need to get rid of all the noise and all the deductions. Thats why tax reform would be important to get a number the rich are actually paying. I have no problem with that. The marginal tax rates are the big question. You need a tax rate thats real. Great idea, leon, except youve got 12 days, buddy. Were going to fix this. Were not going over the cliff. If we go over the cliff, well fix it in january. How do we fix it . Thats the question. Youre right, im a little short term. I completely agree with all your long term ideas. What you have to do to fix this in the next 12 days is deal with those numbers i came up with or maybe the plan b is the way to go. Were somewhere around 6 or 800 billion off. Thats the difference. Remember, 400 billion is what killed us last the deal we almost did. The difference is twice as much. Youre already hearing carping, i understand from the conservatives and from the dems about even the are you moreorless optimistic now after we reported those deals from yesterday . Im with you. I think they can do it. I think theyll find something. You think they can do it. I do. I hope so. Wait a minute, steve. You bring up plan b as if thats something that might go through. Harry reid said thats not passing the senate. Harry reid said plan b keeps all the sequestration cuts. That will be kept if we go over the cliff. Yesterday, geithner was strong saying it could lead to potential down grade of the United States. You think of why the s p down grade of the United States, it was political dysfunctionality. This would just prove it. If all they do is plan b, it will show we cannot make a deal, even faced with that kind of sequestration and they will have been proven correct on that. Its a real possibility because if they dont come together on spending things, i think op boehners thing on revenue of 1 trillion as a request to obama. I think boehner is asking obama maybe i can get you 1 trillion in revenue. You have to give me something on spending. Its like a bridge, you say 2 of clubs, show me what you have, partner, give me something so we can get to game. I think thats whats happening here. We need to know whether the president really wants to some look at these ulterior motives he wants to go over the cliff. Yikes. I would tend to doubt that. Hes willing to do that, because this public will blame the republicans. Harry truman says the buck stops here. If we go over the cliff the president s leadership cant bring us together, along with congress, theyre all a bunch of bums if they dont do it. Our polling backs us up, were the only station that asks people, would you blame both . The public says they blame both. Faced with only democrats or republicans, they said republicans but they said they would blame both. You spend too much time away from us on the phone. You can start making more calls. You got a line into boehner yet . Never mind. Dont answer that. This is harder than reporting on russian politics . Russian politics was easy. All you had to do was learn russian. It was always the opposite. That was easy. Quick mention, Knight Capital and getco have now confirmed thank you. Thank you. Have now confirmed their agreement to merge. Done. Knights value at 3. 70 a share. And instagram and twitter, involves your photos. You know what i mean. Details after the break. Tomorrow on squawk box, yahoo board member and advisor and chairman and ceo harry wilson joins us as guest host, plus, we rise above with forbes editorinchief, steve forbes. Tomorrow on squawk box starting at 6 00 a. M. Eastern. Profit from it. [ male announcer ] at scottrade, you wont just find us online, youll also find us in person, with dedicated support teams at over 500 branches nationwide. So when you call or visit, you can ask for a name you know. Because personal Service Starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. Our support teams are nearby, ready to help. Its no wonder so many investors are saying. [ all ] im with scottrade. Welcome back, everybody. Checking the futures, dow up by 3 points. On the ongoing supremacy battle between facebook and twitter. Facebooks instagram disallowed allow i allowing photos to twitter and in return, twitter is changing things similar to instagram, making pictures black and white. Instagram exceeded twitter in daily users and the two have been sparring for the same advertisers. Cofounder was originally an investor in instagram and once sought to buy the company. You ever tried to put a photo on twitter . I have. I dont. I dont know how. Youre afraid, arent you . Theyve learned how to do it in black and white. Thats an advance. Honestly, i dont use instagram, i use twitter. When tvs went from black and white to color, that was the right direction. Now were going in reverse. Thats a feature, to make it look avantgarde . Really cool. You dont even know what im talking about. I like to be anonymous. Right. Putting a photo on i look at every word, i spell something when i tweet or im going to do something wrong. Im so afraid. I have 200 tweets in eight months. Never put you in that category of being too afraid. This is i have a 17,200 followers. They get nothing from me. I dont know why they follow me. I really dont. I dont. I get 450 emails a day. Wow. A lot of spam. No. Emails. It happens basically, wall street, i have a beef with the sec. I think its important that the brokers be profitable. The reason the liquidity left the market, theres no money in trading stocks anymore. Commission rates, you can trade for a penny a share. Whats happened, wall street firms dont want to pay for postage and paper and print iin and distribute research via email. If you want a hard copy. Im oldfashioned, like to read the hard copy with a cup of coffee whatever, hit the print button, your paper and fax. The thing thats really nuts, i love lloyd blankfine, a terrific ceo and Goldman Sachs will give you research and maybe one page of research and nine pages of disclaimer disclaimers. Disclosures. Why dont we send two pdfs, one with research, one with disclosures. We know there are conflicts, we accept that. I have a son who has a phd degree, an environmentalist. If he knew how many pages we are printing. I will show you how to print one page. You know how to do that . Yes. I will fix it on the break for him. Dont teach me how to put a photo on my twitter. I wont. When we come back, omega advisories and ceo charmed leon cooperman and we will see what hes watching in 2013. 26 points above fair value. Well be right back. In the next hour we welcome ceo ralph slochlossstein. Rise above and profit from it. 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. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a welcome back, everybody. Fedex reporting Second Quarter results a few minutes ago. Art hatfield joins us from memphis, a transportation analyst with raymond james. They came in a little short this quarter but the guidance for the year is a little high. Whats the key take away as the stock is trading higher . It would remain the same. I think its difficult for them to be anywhere but at the low end of that range given the guidance they gave for the fiscal third quarter, they guided to a rang of 1. 35 to 1. 45, below where the street is. Unless things pick up in the fiscal fourth quarter, its difficult to be anywhere but at the low end of that range. Theyre dealing with ships away from express services to more Deferred Services and thats hampering Revenue Growth and margin improvement at this point in time. Why is the stock trading higher at this time, do you think . It will take time for people to looking through their numbers and look at the outlook. One of the key things for this story is what kind of progress are they making on their socalled restructuring or Cost Containment programses. They have an initiative to improve profitability by 1. 7 billion on an annualized basis. Today, theyre saying theyre making progress on that. We need to keep in mind the full benefits of that are still two years away. I think the market may be getting ahead of itself a little bit and not realize in the near term, earnings are probably going to be tough for them to show real strong earnings growth. They will be okay. Unless the economy gets better, it will be a difficult earning environment the next couple quarter quarters. Youre skeptical on the stock . Im skeptical the way its trading this morning. As people get through the call and look where were at over the next couple quarters, we may see the stock sell off a little bit. Thank you for joining us this morning. Youre welcome. Lets get final thoughts from our guest host this hour, Lee Cooperman, chairman of lee advisors and chairman and ceo of saks management. For 2013, you have talked about you think overall, the market is likely to go up than down. You asked when what im watching in china, european economy. A good plus for the economy is home prizes are starting to strengthen a bit and home sales picking up. The Banking System is extremely liquid. Gasoline prizes six or eight months ago were 3. 3. 80 a gallo and the last i saw was 3. 30 a gallon. Thats a plus and watch inflation and overall retail sales. To get the market down, you need a recessionary environment. It does not look recessionary at the moment. If we cant get the right leadership out of washington, we go over the cliff, no fix, we could wind up with a recession. Thats the one thing that could screw this up . I dont think its logical. It would be a bad signal to the world we cant govern ourselves. In a couple months the debt ceiling comes into play and if you cant resolve the cliff problems, the debt problems linger. Why put the economy through the winger and scare them and then fix it. You would also like to see serious changes take place. If this just gets kicked down the road as i said before, i thi think i think roughly 70 of tax revenues to the government are coming from wealthy people. Lets sit down, republicans and democrats and have an intelligent conversation, what should the maximum marginal tax rate be. Mr. Buffet, i have enormous respect for warn. He said if you make over a million or 35 or 40 , i can live with that. Take that marginal tax rate and determine your dwreeld to the government and lets size the government to that revenue yield. Were just kidding ourselves. Its just not a revenue problem we have a cost problem. A straight analysis like that is not likely to come out of washington, right . Ultimately, it has to. You have to live within your means. The market is not forcing that right now, around the world, everyone is in a race to the bottom. We have to ultimately get there. The question, will we get there with a crisis or without a crisis. I want to get there without a crisis, im not a good crisis investor, i tend to be more long oriented. Nice to have you here. Coming up, power players and their take on the fiscal cliff. Ralph hutchins and and Ralph Schlosstein. [ 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 . Avoiding fiscal disaster. Speak Speaker Boehner has a plan. Our plan b would protect american taxpayers who make a Million Dollars or less. We will have two ceos to join us to tackle debt negotiations. The third hour of squawk box begins right now. welcome back. It keeps happening. Im having a conversation and here you are. Give me a second no, im kidding. Welcome to squawk box, first in business worldwide. Im joe kernen and becky quick. Andrew sorkin is off today. Im here with Ralph Schlosstein. Do you have to go slow with that . Its tough. First, Steve Liesman joins us. I told him to make a phone call with breaking news. Steve. Make a phone call, like de niro, right . Yeah. Treasury saying its going to exit its total ownership of gm in the next 12 to 15 months in two methods. In the first method it will have gm purchase 200 million of shares at 27. 50. In the second, the remaining 300 million shares will be sold in an orderly fashion over the next 1215 months quote subject to Market Conditions, it will begin the disposition as soon as january 2013 through a prearranged written trading plan. That will exit treasury or the u. S. Government from its position. Remember, that came out through the t. A. R. P. Program about five years ago at a controversial investment in the auto industry. The treasury saying that overall to date, repayments and income through t. A. R. P. Has recovered over 90 of the 418 billion it dispersed through t. A. R. P. This will obviously help out quite a bit. 200 million shares will be purchased by gm at 27. 50, the other 300 million sold through a prearranged written trading plan over the next 1215 months. I guess thats a bit above market, that 2 27. 50, if were doing 27. 23. I dont know. Is that a live chart were looking at, joe . It is. Trading up on that news. A 7. 9 premium above yesterday. It closed yesterday at 29. 49. The stock is up on that news and a premium from where it closed. I wonder now that the election is over, we will lock in a loss. Phil is on the line. We needed to get back to what . M you needed to trade at 54 to cover all your investments. If youre not selling at 54, selling at 27. 50, basically 50 cents on the dollar of the investment you needed to sell. It doesnt mean overall the government wont give only half the money back it sunk into General Motors. It is well short of what they needed to sell. It will be good for gm. I talk antidotally. There are still people going to ford and saying im going to ford and dont like the governments moniker on gm, not looking whether the cars are good, have something against buying gm because of the bailout. Absolutely. That has been a cloud over sales since the first time the government invested on the company. Another aspect often overlooked, comes down do how General Motors operates its business. They have long felt they need complete autonomy. Its not that the government was telling them what to do. It wasnt telling dan ackerson how to run his company. You guys understand you couldnt do simple things like, hey, we want to charter a jet in order to go and make a deal. You cant do that. You had to fly commercial. People sit there and say, thats a little thing. The bottom line is this. If you cannot run your Company Feeling you have complete autonomy, it becomes much more difficult to make the kind of Strategic Decisions you want to make, at least thats the position of the gm executive and they are welcoming this news. They wanted to do this. They could have done this a long time ago. The government wouldnt take 27. 50, right . Exactly. A lot of people said, listen, as long as youre holding this stake and youre fairly confident General Motors will continue to rack up the profits its racking up. Remember, were looking at gm having ids sect or third most having its second or third most profitable year ever in 2012. If thats not the case, why not hang onto the stake . The flip side is the longer it drags on the longer it continues to fester as a problem for General Motors and headache the Treasury Department didnt want and said at the end of the day, lets unload. Do you remember when there were engines being made in china or somewhere abroad . Did they bring them back here . Did they keep more distributors open or autodealers open than they really wanted to for political reasons . There are a lot of things they pointed to politically incorrect things they couldnt do. Is that part of it . I dont think there was ever a decision they made they made it strictly because the government has a stake here. When you look at all the restructuring done by all the automakers, particularly gm and chrysler, when it comes to closing the dealerships, they started with a grandiose plan, we will close so many dealerships, it will make us much more efficient and drive the profit through the dealerships much more. Theres a congresswoman man every district where one is getting closed. Absolutely. For the longest time, that has been a complaint at General Motors, that the government they never said you are doing this and that, the government has always been the big brother looming over the shoulders. Will the volt will they still make that thing . Absolutely. They will . Absolutely. Thats a government thats a government subsidy that allows that to even be sold, doesnt it . Thats all electric vehicles. All electric evacuation. Doesnt matter who you are, if you sell an electric vehicle, you will get the federal tax rebate. Dan ackerson and his team believe in electric technology in terms of electrification of vehicles. Thats a separate debate whether that will pan out. They do believe that is the future of the automotive industry. That is not going away. Some natural gas cars might be an idea, dont you think . Yes. They will tell you they are working on that. 2 i mean, yeah but you have to have the filling stations and infrastructure to go along before it makes sense. A chicken and egg question. If were doing long term stuff it will never pan out. This will pan out with what we have with natural gas. Anything else, phil or steve . Steve, i thought you had a deal on the fiscal cliff. You have nothing . Sorry. I do have calls out as you instructed. I thought you made a call, breaking news and put you on. I came back with 220 million times 7. 50, that has to help us, the little bit of money i came back with, if you think about it. Right. I was thinking if it had a gain on it maybe the government would have been taking its gain before capital gains. Thats not it. Its the government. That doesnt quite work. Have two guys who are so smart at this stuff. Thank you. I am curious why its trading up. Seems maybe phil is around, i know you have to go, its hanging like a cliff here, this idea the shares were out there, taking that 200 off the market, putting it at the bank at the gm treasury, maybe thats a relief to the market. Why wouldnt it be trading up if you sell it at gm at 27. 50. Thats the government selling. You dont get to sell it in the market, i dont think. Go ahead, phil. Sorry. I think a lot of investors for a long time have said, listen, once the government starts to exit General Motors, you will see at a minimum, a relief rally. At a very optimistic rally, you will say these shares are going to start to pop. Im not in the camp they will pop but i think were in the relief rally. One thing they have done well, the treasury has done sales in a way attentive to the market. This idea of 1215 months as Market Conditions dictate. That has to be a relief how theyre doing it instead of dumping it in a politically charged sale. Has any at gm going to be affected by the 400 does any make over 400,000, maybe all these people get a tax break. Is there any executive compensation over 400 grand at gm right now . Yeah. I believe there is. There is . Thats her to aspect. If they wanted to go out and hire a new executive, bring somebody in from a competitor or other industry, you had to have the governor sign off on that. Its tough enough in this day and age when it comes to competition to hire any executive in a very competitive market and say to the government, let me get your okay for the pay package. They will be glad to have that off their shoulders. Even a millionaire or billionaire who makes 500,000 a year . Over a certain level. Thats what we call those guys. You need to get approval. We call those guys millionaires and billionaires. Thanks, phil and steve. See, ralph, i can get in little digs. No prompting. No prompting, right. Im having trouble making the math right. On the deal. How many years it takes 400,000 to equal a billion. Dont ask me. Ask your guy. He calls him that, anyway. We have been talking about that fiscal cliff. A lot of people watching whats happening in washington. Negotiations continue and we are all trying to figure out whats happening at this point. House republicans have announced plan b, thats in case the talks fail. That plan b would move to pass their own tax bills and automatic budget cuts set to happen next month. Actually, it would not avert the automatic budget cuts. That would still be in there. From everything we heard, the automatic sequestration budget cuts would continue. It would only avert the tax portion of that and extend low tax rates except on those with incomes a Million Dollars and above. President obamas latest position puts the threshold at 400,000. No one is expecting the gop bill will pass the democratic senate. Harry reid saying it wont. Each side continuing to say the others fiscal cliff positions are not balanced. We have watched the markets and they have thrown through this rhetoric. The dow futures are up after yesterday gaining the day before that, too. Overseas in asia, you saw gains in tokyo, that market up 2. 4 , the nikkei above 10,000 for the first time in march. In europe we see green arrows. The biggest gainer is in france, up a half percent and the same story with the ftse in london. Our two investors, Ralph Schlosstein and ceo and blackrock cofounder and Glenn Hutchins cofounder of silver lake partners. And also joining us is congressman steve israel chairman of the Democratic Congressional campaign. I dont know how long it takes to become a billionaire, how long does it take . A lifetime. Since we have the congressman with us, i know you have to run, congressman, tell us where we stand now. We heard about this plan b. Do you purely view that as what we see often, a stalking horse in washington . Do you think boehner and the president can actually get together and work out a deal before christmas or before the 1st . Yes to both questions. A few weeks ago, i met with some ceos connected with fix the debt. They said to me a bad deal would be worse than no deal. What Speaker Boehner has done with plan b is combine the worst elements of a bad deal and no deal. No deal because it does nothing to avoid the fiscal cliff and puts us right back to where we were in january. Doesnt do anything on Long Term Debt problems, does nothing with respect to entitlement reform. Its a bad deal. Its no deal because all it does is generate 270 billion in revenues on a 2 trillion debt problem. Lets get together. The speakers putting out this stunt, lets let that pass, get together, lets get real and get a deal before we leave. I think where both parties i hope are headed in the right direction. Both of you gentlemen have more than just a casual interest in this. Youve been part of the whole process. What do you think, glenn . Start with you. Two things. One, i think its absolutely vital to get a transaction done. Its not sufficient but necessary to begin the process of Real Recovery in our economy, get the uncertainty behind us and have the country on a path of fiscal santi. Thats really really important. The second thing, the two sides are very very close. A good week. Ive gone from big spread on taxes was a trillion and trilliontwo. Do you think boehner has given up more . I dont think so. I dont think its good to look at it that way, unconstructive. I think they both moved. Number one, there is no real plan b. This is like, youre sick, you need five drugs and an operation. They say, okay, you can have one drug. It doesnt solve anything. Whether plan b is at a Million Dollars or the bill that passed the senate at 250,000, it doesnt do what needs to be done. Plan b basically kicks it down the road, does not deal with the caribbean expenditures doesnt address the debt ceiling or expenditures no one wants. It says we will use the debt ceiling. That was a disaster, julyaugust of last year was a disaster. Can both sides deliver, congressman, if they do get a deal, do you think boehner can deliver it with his guys and the president can apiece apiece he can appease, he has people way left of where he is now. People are willing to compromise, yes. On our side, the president has put tough medicine in there Many Democrats would have a problem accepting like a chained cpi, a reduction ultimately in Social Security benefits. I would say this, we are prepared to work on a compromise, as long as it is based on fairness, big, bold, balanced, we will consider almost anything. What republicans need to do is learn how to take yes for an answer. Let me say one other thing. I am very pleased that the president has moved off the 250,000 threshold or income and now at 450,000. Ive been critical of that position. 250,000 may make you rich in some areas of the country. Billionaire. Does not make you rich on long island and in new york. Bottom line is the president was at 250, now, hes at 400. Boehner was at zero, now at a million. We can find a compromise somewhere in between. Tell the people theyve got to start complaining about that a little bit more. Both sides need to be complaining a lot. Right now, im hearing more complaining from boehners side and makes me think youre putting one over on him. We need more complaining and get together and they have to really be complaining for us to think the deal is going to come together. Can you do that . Look, ive been very critical of the positions up to now on 250,000. I know. Youre in new york, congressman, you know. I get complaints but we need compromise. Were ready to compromise, the president has shown compromise. We need somebody to compromise with and something to compromise over. I want to emphasize something i said earlier, we are within spitting distance of a transaction. It might not be 4 trillion but its pretty close depending what numbers you add up. What we should be doing, im part of the fix the debt group in addition to folks at the white house he consulted with in the press. We should allow for them to get a transaction. Whether than losers and winners, get in the room, we know you will get in a zone of discomfort and hold your nose in the last trade, thats where you get the deal done and go get it done. Thats the message we should give. Congressman israel, thank you. You gentlemen will be with us the rest of how much time do we have . 43 minutes. When we come back, Time Magazine naming barack obama as 2013 person of the year. Find out why. And pole yove picks for 2013 and check out the smaub market indicator. Welcome back to squawk box. Futures right now indicated up to 33. Its been a pretty good market for the last two weeks or so. Time magazine is unveiling its person of the year, a man of the year this year, we can call it a personal, the person is pc. Its the president. The honor going to president obama. Time writes were in then midst of historical cultural and demographic changes and barack obama is in some ways the symbol and some ways the architect of this new america. In 2012, he found and forged a new majority. He turned weakness into opportunity and sought, amid great adversity to create what time says is a more perfect union. Ubs hit with a 1. 5 billion fine. And manipulation by dozens of staff. The agreement was agreed to with u. S. And swiss regulators. They should have dean this earlier, barkleys only get hit for 250 million, you wait too long and end up with 1. 5. Barclays was hit back in june. The second largest fine ever only by hsbc 1. 9 billion penalty agreed to, to settle the laundering probe, u. S. Probe into laundering money. And, if you havent heard yet, we want to let you know, getco is doing it, beat iing ou and values knight at 3. 75 a share. Sirius xm radio has appointed jim meyer ceo. Beckys hair is falling down a little bit. When women move their hair like that, its something people need to see. Thank you. Appreciate that. A good luck. On walt thl street, that wou have been a fat finger trade. And the market down 80 points. Here, we took the wrong camera. And replacing mel karmazin. And that picture has to be 20 years old because that picture doesnt look nearly that young. Dating him. The governments latest Housing Starts data expecting 865,000 down from october. Where should you put your money in the new year . David herro on the best bets for your money. [ male announcer ] this is joe woods first day of work. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. 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. Welcome back. Kodak has announced the sale of its digital patent portfolio at 525 million. The buy er is intellectual ventures and the seller agrees to financing for kodaks plan to emerge from bankruptcy. A bankruptcy judge still has to approve the deal. When we come back when did i say that . 30 seconds . Will you please return my barmitsvah picture . I will send you a new photo at the appropriate time. He admits that is classic. We have breaking news in Housing Starts. Stick around. [ 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 . We believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. We are seconds away for Housing Starts for november. Rick santelli standing by. Please. 861,000, seasonally annualized and adjusted in terms of those units. 861,000 is down about what, 3 . From a revised 888,000. Originally 894, moved to 888 and our comp, moved to 861. Lets look at permits. Under 900,000. 899,000. That is an increase, a little larger than the decrease we saw on the starts, up 3. 5, about 3. 5 or so. Thats coming off minus 2. 5 , also subtly revised. I guess if you take a step back, consider this. The 888,000 we had last time, even with this revision is the best number since july of 08. This one obviously deteriorates a bit. But you get the picture. Most of the housing data, investor sentiment, there is improvement. But were coming from a fairly low comp back a few years ago. Preopening equities strong, dollar index is down. Its not only down because of the euro and the pound, but this is negating some what the big gains against the yen. That has been a huge move. Thanks. Back to our guest host, Glenn Hutchins and Ralph Schlosstein. Weve been talking about the fiscal cliff and what this means and i know youre both very concerned about whats happening with the negotiations. Glen, you said you want to see it get done to see what we can get done and that we can govern ourselves. If you look whats on the table right now or where the spread is, there are details really important. If they can move toward the middle we have a deal that makes a lot of sense, a nice balance, include the budget control act, spending cuts to new revenues, and a deal that creates conditions for Corporate Tax reform i think is a very important next step. You have a process that you have a process that will be in place that will make these things binding and reliable to the markets. You said Corporate Tax reform. Do you think its 2. 5 . I have talked to people, if you include the budget control cuts from last year, depends not really it will make everyone feel a lot better if they really thought it was 2. 51. Its already 1 1. 2 trillion thats been done in the budget control act. As a wind down to the wars . Thats something deficit. These are real cuts. Even if you take a trillion or a trilliontwo, you will pined up with Something Like 2. 2 or 2. 4 in budget cuts and 1 to 1. 2. Thats the bid ask. Theres not a republican in the world that thinks that way. You hear what theyre saying, they dont think the president is coming to the table, just hyp hype. I understand that. The problem we have here, is unfortunately, our political system is a little warped at this moment. You look at the republicans, this is not a criticism of them. 88 of the republicans were elected in districts where they won 55 or more. The same is true almost of the democrats. Youre talking about in the house . In the house. In these, for these congressman and the senators, the primary is the election, not the general election. So if youre sitting there as mitch mcconnell, you know, his greatest worry is not that he can win reelection versus the democrat, but hes going to be primaried on the right. Unfortunately, your phrase, rise above is what we really need here, because the country, business leaders, the economy, desperately needs certainty and a comprehensive solution, not a plan b. Did you know we will now use that as a sound we will have a commercial where we have ralph saying what we really need is rise above . Did you do that on purpose to live on forever after you leave the show . Joe, that was my goal coming on today. That will work you do it, too. You say what we need to do is rise above. Becky and i will quite easily be able to rise above this conversation. Theres another point to be made here, which is that everybody wanted a big bang here, 4 trillion this time and we have to do that or nothing and the smaller deal lacks credibility. You look back at the 90s, when ralph and i were involved in t the Carter Clinton administration, we had three steps that got us to the balanced budget. Andrews air force deal under bush, the first clinton budget, and then you had the 96 budget deal. Those things added up to the successes that we came out with out of the office with in 2000. Right now, if you get to this deal, 2 2. 4 trillion, rough numbers, where we are today, you think about the 4 4. 2 trillion e have in the bank from what we did last year, get yourself to place you stabilize the debt at 75 and stabilize the new debt at 3 of gdp and dont bust that until 10 years from now, 2021 or 22, thats a really good deal and might take a third step. I think its an excellent place. You think this gets us to a steppingstone for Corporate Tax reform and did not say individual tax reform. I think both. The key here is we need to get some points on the board and momentum. Is there a ton to do here. We need to do individual tax reform. We need to do Corporate Tax reform and we need to do en enlement reform. All three. All three are critical to getting a comprehensive solution. We need a little momentum. If we end this process with a plan b, whether its at 250 or a mil ylion, it doesnt matter. We will be back. Not the thing about plan b, the concern is if you get a little momentum and go a little way towards solving the problem or decent amount towards solving the problem, you put the critical element of we need something done now, you push that off and the concern is you dont tackle entitlement. I disagree with that and you raise a really good point. One is there is a lot of momentum for Corporate Tax reform independent of this deal by both sides of the aisle. The good thing about this transaction, if it gets the revenue we need, you can do revenue neutral tax reform and becomes easier to do. You take the revenue out and take what they call extenders out, the difference between obama proposals and camp proposals are not that great. As i understand it, they have agreed how to measure it all on both sides. You have a lot of momentum to getting that done. Thats the important thing. This deal would do, as i understand it and details havent worked out, so it could change between now and then, it would give you revenue targets and spending targets today to be replaced by real reforms tomorrow in a process to get it to reforms. If you didnt, youd be at the backstop backstops. There is a carrot and stick part of the approach . Exactly. The other thing that hasnt gotten as much publicity, both sides in their proposals have included extending all of these Corporate Tax incentives, indeed tax credit and others have been annually discussed. So what that means is there is a high amount of tax expenditures in the corporate code which makes it more possible to do broadening the base and lowering the rates. So both sides have set it up. You dont have need for revenue, then you have the conditions for real reform. Do you agree with that . I agree. As hard as it is to avoid this calamity and get people, once we do focus on entitlement reform, the two parties, how far apart are they . May have a revenue number, spending cut in place. For down the road . That will be in this deal. When we actually do decide to tackle that entitlement reform, how far apart are the two sides . Entitlement reform is the toughest of all the things to do, because, lets be honest we decide what kind of country we want. Both parties have chosen a path of not paying for all the government that they want to have. Thats true of both parties. Obamacare, even though we have those numbers, david walker says thats 12 trillion. Health care is a massive problem going forward, whether obamacare. Who as on the way to entitlement reform. You have seen some proposals i think could close the gap, looking at medicare, you know, greater contribution rates from upper income people. I think there are lets not forget that medicare is a program where the average person has paid roughly 125,000 of premium and has gotten back over 400,000 of benefit. Now, we can we may choose to do that for people of little or no means. But we really dont need to do that for people around this table. You say raising contributions versus means testing. Or means testing, either one. Lets be clear about this. As i understand it, the deal on the table has 400 billion coming out of health and 130 billion coming from chain to cpi. Thats 530 billion on the table cut from the entitlements programs. But republican complaints have been they dont know where it comes from and very vague. Of course. Theres a political hot potato i dont understand as well as those guys do. Thats on the table from this administration. Two ways to accomplish that. One is you get to the end of the process and take the cuts because you agreed to it. The other is, between now and then, whatever your fail safe date is, you then agree on real reforms that can get you the same amount. If this deal were agreed to, youd start with 530 billion coming out of entitlements, part of this transaction. You need to remember that. You like my pen. If i was you, i wouldnt be showing that. Viagra will not be covered. This guy has been waving his viagra pen in my face all day. You think im waving, wish i was waving. Becky, i dont know how you do it. Leave me out of this. Coming up, we continue our whats working series with were rising above. Whats the problem. I think were sinking below. Investment ideas for the new year, david herro. He will tell us how stocks in japan will be a better buy that u. S. Equitieses, a hard sell. [ engine revs ] [ male announcer ] the mercedesbenz winter event is back, with the perfect vehicle thats just right for you, no matter which list youre on. [ santa ] ho, ho, ho, ho [ male announcer ] lease a 2013 ml350 for 599 a month at your local mercedesbenz dealer. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. Welcome back, everybody. We are taking a look ahead at stocks to watch for 2013. David herro joins us to talk investments outside the United States. He immigration the five star oak Park International fund that recently celebrated its 20th anniversary. He has been with the fund since 1992 and named International Stock fund of the decade from 2000 to 2009. Thank you for joining us this morning. Good morning. I know you say stocks are still the best place to be putting your money, the same thing we heard from Lee Cooperman earlier this morning. You say places like japan are a better place to invest than the United States. Why is that . You look at valuation differentials, were a long term Value Investor and a good quality stock is one of good quality selling at a low price. The japanese stock market has lagged. Were starting to see things that will help corporate japan improve its profitability and at this time, the weakening yen. Japan is full of exporters and a supply chain that supports those exporters and have been clobbered by a strong yen over the last two or three years and starting to weaken on the election of the prime minister. This might be one of the catalysts necessary to make those cheap stocks reignite a bit. Is part of this because of what the bank of japan is expected to do as well . Exactly. This is the one country in the world that has been suffering with deflation almost 20 years and really the primest candidate for kwquantitative easing. Theyve been relatively lax at doing just that. So theyve been lax at doing just that. But when you are fighting, theyre kind of jumping into the stream at this point, all the other banks are full stream ahead with this thing. This levels the playing field, you think . I think the real key is to what degree they could impact reinflation. They have been in deflation and need to get to 1 positive 1 or 1 positive 2. Its so detrimental to the economy. The investor says why should i spend today if it will be cheaper tomorrow. That has the first thing they have to do. If by reflating, they could do that and get the deflationary expectation out of the mind of the consumer and weaken their currency, two things they really need to perk up corporate profitability. Thats why you like toyota and cannon . Cannon in particular has a big export market to europe. You think the yen has been strong, its been really strong versus the euro. Some of these Japanese Companies that have europe exposure are really hit hard because of that strong yen. Now, were starting to see some of this reverse, which is very good for their corporate profitability. The other stocks you mentioned were i dia irkdaiwa a. Daiwa gives you leverage on japan, one of the largest Asset Companies on japan and a brokerage firm. As more activity goes into the japanese equities, theyre a prime beneficiary. As asset values in japan rise, theyll also make money that way. Plus, its extremely well capitalized. One could argue theyre a bit overcapitalized. Theyre very safe and wellpositioned for a rising market. David, thank you very much for your time today. Thank you for having me. Lets get back to our guests, glenn and ralph. You heard this conversation, where the United States could be versus other countries around the globe. What do you think about what the overall broad market implications are at this point if we assume theres some sort of solution on the fiscal cliff . I think the number one longer term issue for this country and the fiscal cliff resolution is a big part of that, is strengthening our competitiveness in the Global Economy. There are a lot of elements to that. One is getting our fiscal house in order, we talked about. Another is getting Corporate Tax reform, which lowers the rates. We have almost the highest Corporate Tax rates of any Major Economic power. It also means addressing things like regulations and work rules because today the number one issue of winning in the world is having the most competitive economy. I think, you know, because of the financial crisis, weve lost some sight of that over the last few years and we need to get back to cuts on that. Where are you on right to work, out of curiosity . Im a democrat. I know. Its a very very difficult issue. Sounds like youre saying we need to make i think its a very difficult issue because its one of those issues where on the one hand, we want a fair wage, but if we have a in some industries where there is global competitiveness. Exactly. A market price. Its market price and fair wage destroys the competitiveness of our economy. What about you, glenn. I dont disagree but in the tech business, we dont deal with unions. You pay market price. What i would say, im a huge bull huge bull on america. If we get this fiscal cliff behind us, we still have a host of issues to deal with. We have to deal with the huge drag coming from europe. The brazilians have sort of screwed up with all the government intrusion there. We have to get back going again on global growth. But look whats going on in this country with the incredibly innovation of technology, huge opportunities in natural gas, which i think is people are talking about price, but a huge increase in volume. And the uses around the country. And how clean energy is. Its a very valuable, important thing. One of the things people dont understand out of this financial crisis is that our Capital Markets are the envy of the world. Theyre a huge strategic tool we have to fund Equity Capital and longterm debt capital in ways that many of the countries around the world dont have. All youre talking about is privatizing. Both of you see the government as a way to facilitate the private sector, a means to an end. I think the government has to enhance the competitiveness of the private sector. The only thing that i would probably disagree with you is i think a Strong Society is also a society that does not have quite the breadth of difference in resource between the highest and most successful weve got to figure out how to do that. Yeah, we all want to get to the same place. We have to do that without destroying the competitive instinct the global one of the things thats important to me, philosophically, is you take care of the people who cant take care of themselves. Are we not doing that now . No, we need to make sure we do that. One of the deals on the table is it immunizes the poor and old, extends Unemployment Insurance for people who had longterm unemployment. As a part of these cuts, we need to make sure we continue to provide the resources to the most vulnerable. We do take care of them. Hes worried about the people in the middle that are falling behind. What made this country great, i dont know about the people at this table, but both my parents were immigrants, my father was a bartender. And im sitting here. Thats a remarkable thing about this co and, you know, its a little harder to go from that kind of a role to where we sit today, 20 years or 30 years from now. I want to be your child. Weve been to a lot of bars. Anyway, more from our guests, Ralph Schlosstein and glenn. [ male announcer ] you build a reputation by not breaking down. Consider the silverado 1500 still the most dependable, longestlasting fullsize pickups on the road. And now weve also been recognized for lowest total cost of ownership based on important things, like depreciation, fuel, and maintenance costs. Get 0 apr financing for 60 months plus 1,000 bonus cash. Plus trade up for an additional 1,000. From outstanding value to standing the test of time, chevy runs deep. Recognize me. But i am your market data. I know what youre looking for. Im not chained to your desk anymore. Im faster and smarter now. And so much less expensive. I am your market data. And if i do say so myself, i have never looked better. Superderivatives introduces dgx. Data done differently. We have two stocks to watch today. The Treasury Department announcing it intends to sell all its stakes in General Motors over the next 15 months. Theyll buy back their shares for 2. 50 a share. Thats about 5. 5 billion. Thats a premium of almost 8 from where that stock closed yesterday. You see the sharp gains in the stock on this today. Its up by 8. 9 . Also, fedex shares are rising as well. This comes after better than expected quarterly results. Actually, the company was talking about where it sees the guidance for the full year. Art hatfield was on earlier. The stock at this point is up by about 1 . When we come back, the last word from our guest hosts. Squawk will be right back. Power down your little word game. I think your friends will understand. Oh no, its actually my geico app. See . I just uh paid my bill. Did you really . From the plane . Yeah, i can manage my policy, get roadside assistance, pretty much access geico 24 7. Sounds a little too good to be true sir. Ill believe that when pigs fly. Ok, did she seriously just say that . Geico. Just click away with our free mobile app. 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. Whatse . 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. Lets get back to our guest hosts. We dont have a lot of time left. Ralph, it takes me